§ Order for Second Reading read.
§ 3.56 p.m.
§ The Minister of Power (Mr. Richard Wood)
I beg to move, That the Bill be now read a Second time.
This is a short Bill. It is also a temporary Bill. It may be convenient if I begin by trying to explain the financial reasons for it. Just over a month ago we had a debate on the Annual Report and Accounts of the National Coal Board. I took the opportunity on that occasion to refer to the continuing losses which the Board was making. During each of the last four years the Board has sustained deficits on revenue account and during those four years its financial position has worsened to a total extent of £54 million.
Before 1957, its fortunes varied from one year to another, but during those earlier years its net deficit was £24 million and the total of the earlier deficit of £24 million and the last four-year deficit of £54 million brought this deficit at the end of 1960 to a total, which I mentioned in the debate last month, of £78 million. I explained then that this was about £16 million more than the Board's internal funds were available to cover. This gap of £16 million would normally have been bridged by bank borrowings under Section 27 of the 1946 Act, but, as the Board could not then secure necessary accommodation from the banks, I advanced this sum temporarily to the Board.
The position this year is quite different. I have already told the House of Commons, last month, that a further deficit this year is certain. I find it very difficult even at this late stage in the year to attempt a precise estimate, but what I said last month was thata relatively small further loss at the end of this year … will bring the Board's accumulated deficit beyond its probable internal resources and the £20 million borrowing limit taken together."—[OFFICIAL REPORT, 24th October, 1961; Vol. 646, c. 759–60.]I pointed out that this was a serious situation and promised that if legislation 450 were necessary I would bring proposals as soon as possible before the House of Commons. These are the proposals contained in the Bill, because the Government have concluded that the proper course—indeed the only course—is to provide the necessary funds from the Exchequer.
I want to make quite clear that what the Bill does is to add to the purposes for which the money may be advanced to the Coal Board. It gives me power to advance up to £50 million towards financing the Board's accumulated deficit to the end of next year, 1962. It does not increase either the total limit of the Board's borrowing or the limit advance-able in one year—the limit which I always think of sentimentally after the author as the "Nabarro" limit.
That limit, as my hon. Friend the Member for Kidderminster (Mr. Nabarro) will remember, was fixed at £50 million a year, and it remains under the Bill at £50 million a year. The total limit of the Board's borrowing remains at £700 million, which, as the House knows, can be increased, by an order which the House might be asked to affirm, to the figure of £750 million. All that is under existing legislation, and this Bill makes no difference to this limit. The £50 million mentioned in the Bill, I should make perfectly clear, is not an estimate of the deficits that are expected this year and next year. The figure of £50 million is related to the possible gap between the Board's internal funds and the total accumulated deficit. It is obvious that this gap can vary according to movements either in the internal funds or the deficit, and that is why the Bill was drafted in this way.
I will now do my best to try to make the position plain about the £50 million. At the end of this year, the Board's internal funds will probably be about £60 million, and the accumulated deficit is likely to be rather over £90 million. The House will therefore see that the £50 million lending power which I am asking for in the Bill allows me a margin to enable me to go on meeting the day-to-day needs of the Board during next year, until it is possible to make a better estimate than is possible today of the extent of the remaining need for deficit financing by the end of next year. It also enables me to consider the 451 Board's review of its long-term prospects, and its proposals for improving its performance. In any case, the powers I am now seeking will come to an end at the end of 1962.
I have explained the immediate purpose of the Bill, which tries to deal with the question how the deficit should be financed. I said last month that I am perfectly well aware of the much more fundamental question, which I have already mentioned this afternoon—the need to put the finances of the Coal Board on a permanently sound basis—and I should like now to turn to this question. If I may again refer to my hon. Friend the Member for Kidderminster, he pointed out, I think about ten days ago, in asking a Question, that the Bill does not deal with this fundamental problem which the Board faces.
I have already explained to the House of Commons that the Coal Board is at this moment conducting a full examination of its financial position and prospects. It has had the help of a firm of chartered accountants, Messrs. Cooper Bros., as a preliminary to the discussions which it is to have with me on the target which should be set the Coal Board under the White Paper, Financial and Economic Obligations of the Nationalised Industries. This review of the long-term position, which I am now carrying out with the Board, is bound to take some time, and I have already promised to give information to the House as soon as the Government and the Board have together reached their conclusions.
Whatever other steps may be considered, it is quite certain, as I think we are all agreed, that the reduction of costs of production is the most satisfactory approach to financial stability. It is the growth in the costs of production of coal that has made necessary the price increases of recent years, and it is this growth in the costs of production which accounts for the Board's further deficit this year. Higher wages, higher costs of materials and other stores and the increased burden of overheads on a smaller level of production have all increased the outgoings in the first three-quarters of 1961 over a similar period last year.
At the same time, productivity has Increased, too, but the increase in produc- 452 tivity in the first three-quarters of this year, which is 2½ per cent., was insufficient to offset the other factors which I have mentioned. I am satisfied that the Coal Board is well aware of the urgent need for increased productivity and any other ways of reducing costs. I am satisfied that it is tackling with great energy the need to step up mechanisation, the need to put to more intensive use existing machinery, the concentration of working on a smaller number of faces, a more rigorous system of cost control and, last but not least, the necessity to improve its organisation and its administration.
I told the House in the debate last month of the very satisfactory progress which the Board has made in power loading and other forms of mechanisation. Perhaps I may give a very simple illustration which will be very familiar to a great number of hon. Members. I am told that 1,000 tons of coal need 250 man-shifts on hand-filled faces. On mechanised faces they need 150 man-shifts. To me, this makes the advantages of speeding up the mechanisation programme only too obvious.
Partly as a result of mechanisation, there has recently been a most heartening improvement in O.M.S. Against the 2½ per cent. improvement for the first three-quarters of 1961, in the four weeks ended 18th November the improvement has been 6 per cent. compared with the same period during last year. I cannot overemphasise the encouragement which this kind of figure has given not only to the Chairman of the Coal Board, but also to me, and I cannot over-emphasise the significance and importance of these figures for the whole future of the industry.
Convinced, as I am, that the attack on costs must be the Board's main concern, I am also quite clear that the Board cannot rely on cost reductions alone for the solution of its financial problems. I am, therefore, convinced that some immediate increase in the Board's revenues is essential, and, therefore, the Board has proposed to the Industrial Coal Consumers' Council increases which were published in the newspapers yesterday.
I should like to say a word in explanation of this procedure. As the House knows, normally the Industrial Coal Consumers' Council would have been 453 given these proposals in confidence and they would have remained confidential until the Council had had an opportunity to make representations to me. But in view of the debate today and of the relevance of these proposed increases to the discussions which we shall have this afternoon, I thought it right—and I hope that the House agrees with me—after consulting the Chairman of the Industrial Coal Consumers' Council, to ask the Coal Board to publish the proposals which it put to the Council this week.
I should like to emphasise that this change in procedure made necessary by the coincidence of events—the coincidence of this debate at this time—is in no way intended to limit the right of the Council to make representations to me, and if representations are made to me I undertake very carefully to examine them. In those circumstances, I think that it would be wrong for me to speak in detail about the increases which the Board has proposed, but I am certain that the House expects me to say something about them in general terms.
In recent years, as we all know, price increases have been spread widely, affecting all consumers to about the same extent, whether their coal is relatively expensive or relatively cheap to produce and whether it yields the Board a profit or a loss. The Board is convinced—I share its view—that the industry has now reached a point where further general price increases would be increasingly harmful. The Board believes that the production of the lowest-cost and most-profitable coals, which are obviously the coals best able to meet competition from other fuels, was handicapped in the past by these general price increases and would be increasingly handicapped in the future.
On the other hand, the Board believes that the whole future of the industry depends on the ability of these coals to retain, and if possible to increase, their markets. Moreover, I think that it would be wrong for a number of reasons to try to deal with the heavy losses now being incurred in some divisions simply by closing down loss-making pits. Particularly in Scotland, this would mean an unjustifiably large closure programme, because it is in Scotland that the proportion of total output coming from loss-making pits is very high indeed.
454 The Board has this time, therefore, turned from general price increases to proposals for selective increases in the price of coals which involve it in the biggest losses. This means coal produced in Scotland and in the North-West, which are two of the Board's heaviest losing divisions. The Board has also said that anthracite must be considered, because it is anthracite which accounts for most of the losses in the other large loss-making division, the South-Western. Moreover, in all coalfields the costs of producing large coal are higher than the costs of producing other grades of coal, and the need to keep the market supplied with large coal is a handicap, and must be a handicap, to the mechanisation drive.
The Board has said that it does not intend to raise the price of house coal and Welsh anthracite and boiler fuel this winter. It has said that its proposals for these coals will be put to the Domestic Coal Consumers' Council in due course. But, as the Board made clear in a statement yesterday, it is proposing to put up the price of Scottish and North-Western coals for non-domestic users from 1st January, 1962, and it is also proposing to increase throughout the country the price of large coal for non-domestic users. The Board is convinced that these proposals are essential to provide the additional revenue necessary and to bring prices more closely into line with their costs of production.
I recognise, and I think that the House recognises, that these price increases are not the complete answer to the Board's problems.
§ Mr. Wood
Although They help to balance the Board's accounts, they do not make coal more competitive with other fuels, nor do they help to lower energy prices in Great Britain. On the other hand, I am convinced that they do not remove the need for this Bill or for any part of it. I have already said that the Bill does not relate to the actual revenue deficit incurred during this year or next year and that its purpose is to bridge the gap between the Board's internal funds and its accumulated deficit.
§ Mr. William Warbey (Ashfield)
Before the Minister leaves the question 455 of differential prices, may I ask whether he recognises that this is a revolutionary departure from the principle of uniform national prices for equivalent grades of coal? Will he, first, confirm that this policy is fully endorsed by the Government and is, in effect, the Government's policy; and, secondly, will he say how long it will be before this differential in prices leads to its logical consequence of district wage agreements?
§ Mr. Wood
I do not recognise that this is a revolutionary departure. The hon. Member knows that the coalfield adjustments vary very considerably from one part of the country to another, and that affects the pithead price. He knows that the coalfield adjustment in the part of England which he represents is very different from the coalfield adjustment in other parts of the country, and that, therefore, the pithead price of the coal produced in his part of the country is different, and always has been different, from the pithead price of coal in other parts of the country.
In answer to the second question, I am not prepared to say anything about the Government's opinion in this matter until the Industrial Coal Consumers' Council has had a chance to make representations to me. I am bound, under the Statute, to take those representations into account, and it would be wrong for me to express an opinion in these rather unusual circumstances before the whole procedure has been gone through.
§ Mr. Nabarro
Of course, that is the statutory position under the 1947 Act, but we have never been confronted with a situation exactly of this kind before in which the Minister announces price increases to the House before the Industrial Coal Consumers' Council has scrutinised them.
Will not the Minister say something of the impact of these proposed industrial coal price increases on the general costs of manufacture? Is it not a fact that the increased prices of coal to industry will immediately lead to increased gas prices, increased electricity prices and increased steel prices, and will, therefore, diminish the competitiveness of British goods sold abroad? Is not that a disastrous policy to be underwritten by the Government?
§ Mr. Wood
If my hon. Friend catches your eye, Mr. Speaker, he will be able to develop the point that increases in coal prices have effects throughout industry. I think that we all agree with him about that, and I shall be interested to hear him develop the point.
I was about to conclude this part of my speech by saying that the purpose of the Bill is to bridge the gap between the Board's internal funds and its accumulated deficit. I intended to add that if the provision made in the Bill turns out to be more than is needed, then it will not be fully advanced. It is true that the proposed price increases may make this more likely, but the need remains for the provision made in the Bill to enable me to continue financing the Board's day-to-day needs until we can see more clearly to what extent the continuing deficit cover may be needed.
I have explained the purpose of the Bill. I have explained, apparently not to my hon. Friend's satisfaction, the purpose of the price increases. The purpose of the price increases in this context is to reduce the size of the deficit, while the Bill, I hope, will give me powers to help finance it.
It is evident—I turn to another subject—that without the Bill and the price increases the Board would be unable to meet its existing obligations. Therefore, neither the Bill nor the price proposals which I have mentioned are strictly relevant to any new obligations which the demands for increased wages and reduced hours of work which have recently been presented by the National Union of Mineworkers would impose on the Board. Nevertheless, I should not be surprised if, during the debate, hon. Members ask how much influence in these circumstances the Government should try to exert on the Board.
The Prime Minister has already made perfectly plain the importance which the Government attach to the pay pause, and the Government have made their view perfectly clear to the leaders of the nationalised industries. I am myself quite satisfied that Lord Robens fully understands the Government's view. More particularly, where an industry is dependent on Exchequer support to meet current losses, the Government would expect its Board to take this into account in wage negotiations.
457 Where, in the words of the Prime Minister,the Government are acting both as adviser and as banker".it is not unreasonable for the Government to expect the nationalised industries to pay particular attention to its views. Nevertheless, the Government have no power to fix wages either in the private or the nationalised industries, and my right hon. Friends have on several occasions pointed out the inconsistencies of trying to seek such powers.
I am convinced that it would be wrong for me to take special powers to transfer from the Board to the Government responsibility for wages and conditions in the coal industry. Responsibility must, therefore, rest with the Board, but I have thought it right to make clear this afternoon publicly the advice I have given, and I want to make quite clear to the House, so that there is no misunderstanding, that I shall continue to take opportunities to present these views to Lord Robens in the light of the national needs.
§ Mr. Norman Pentland (Chester-le-Street)
Is the right hon. Gentleman telling the House that he does not wish the Board to grant any increase in wages, regardless of any case that the National Union of Mineworkers may present to the Board on behalf of its members for an increase?
§ Mr. Wood
I chose my words very carefully indeed. I said that I have made my views quite clear to Lord Robens. I emphasised the clarity with which I have explained my views by pointing out that where the Government are both adviser and banker they have a particular right to have their views listened to.
§ Mr. James Griffiths (Llanelly)
The Minister is considering the prospects of the industry, particularly for next year. Before he sits down, will he tell us whether he proposes to address himself to what all those associated with mining on both sides of the House are deeply concerned about? If the present trends continue, and men continue to leave the pits at the rate at whim they are leaving them now, before this year 458 is out, and before the Bill becomes an Act, we shall be faced for the first time for many years with a crisis in manpower. Will the right hon. Gentleman bear this in mind? All the best plans in the world will be of no avail unless this problem is dealt with.
§ Mr. Wood
These are obviously matters which the management of any industry must have well in mind. What I have been concerned to do, which I consider to be my responsibility, is to make quite clear to the management of this industry, in the circumstances in which the industry now finds itself, exactly what the Government's view is of the present situation. That is what I have tried to do this afternoon.
§ Mr. Ness Edwards (Caerphilly)
Would the right hon. Gentleman expect the Board to break its agreements with the miners if the agreements did not conform to Government policy?
§ Mr. Wood
The right hon. Gentleman knows that claims have been lodged, which the Board is considering at the moment. I have merely tried lo make clear to the House—I am sorry that I have not made it more plain—the views which I have expressed to Lord Robens and the Board for them to bear in mind when they deal with the claims which are before them. That is all I have tried to do.
I want to conclude now, because there are a number of hon. Members who wish to make contributions to the debate and I should not like to delay them. The Bill is needed to provide the Board with the finance it requires to carry on until the end of next year. I want to make it plain that it is in no way an alternative to measures to put the industry on a profit-making basis. The new price proposals will go some way, but the main object of the Board must be to keep down its costs of production. The recent increases in productivity have been most encouraging. I am convinced that they must be kept up and, if possible, pressed still further. If the industry succeeds in doing this and, at the same time, exercises restraint in wages, salaries and other costs, I have no doubt at all of its ability to improve its competitive position and play its full potential part in the economic life of this country.
§ 4.24 p.m.
§ Mr. Ray Gunter (Southwark)
May I, first, thank the Minister for the clarity which he has shown in leading us through the Bill? I also thank him for the delicacy of his touch in the last part of what he said. We grasped the significance of his words. In his opening statement the right hon. Gentleman said that the fundamental problems of the financing of the Board would have to be faced at a later date. Therefore, I do not think that it is a bad idea to look at the real causes which have created the necessity for the presentation of the Bill.
As far as I know, though I am not too learned in these matters, there has never been a time in industrial history when the fortunes of an industry have changed so rapidly. Within fourteen years there have been two periods. In the first, there was an ever-growing demand for coal. The need was for output at any price. The Board's deficit during this period was due to the Government's control over prices, as well as the loss on the imported American coal.
At that stage, prices were kept well below market value by the Government. This is evidenced by the fact that British coal prices were £1 to £2 a ton below Continental prices at this time. But for Government policy the Bill might not have been necessary, because there might have been a vast surplus in the Board's accounts if it had been allowed to work on the beloved commercial principles of the party opposite. This period lasted until approximately 1956.
From 1957 to the present time there has been a different picture. It has been one of falling demand and a corresponding reduction in production. The deficit in this period was caused primarily by the Board having to bear without any Government assistance the costs of ameliorating the social hardships caused by the Government's change of policy. It arose largely from the costs that the Board had to bear as a result of stocking coal to prevent hardship in the mining communities. In addition, the cutting of production due to the absence of a national fuel policy has meant that fixed overheads have had to be carried, as the Minister has admitted, by a smaller output, which means higher costs per ton.
I emphasise at this stage of the debate that the Government cannot escape their 460 responsibility for the present situation. Capital investment in the industry has been determined by the target set out in the 1956 plan, which was to produce 240 million tons of coal by 1965. This was a Government target based on Government estimates that the total energy requirement in 1965 would be 300 million tons of coal equivalent, of which coal was to provide 240 million tons. It is well to note when talking about the fundamental problems of the coal industry, what the Minister of Fuel and Power said on 13th February, 1956.
§ Mr. Gunter
If the hon. Gentleman does not know his own Ministers, he should not ask me silly questions. Apart from the present Minister, they have got steadily worse.
This is what the then Minister said in answer to a Question by the hon. Member for Eastleigh (Mr. D. Price):On the assumptions of rapid and continuous economic growth and continued progress in fuel efficiency, inland fuel requirements in 1965 might exceed 300 million tons of coal equivalent a year, of which half might be needed by industry and a quarter by households.I am in no position to estimate with any accuracy coal output in 1965, but I would hope that at least 75 per cent. of these requirements would come from home-produced coal and 3 per cent. from nuclear power and hydroelectricity. In that case, we should have to look to oil for about 22 per cent. of our requirements.The Minister was asked this supplementary question by the hon. Member for Eastleigh:Could my right hon. Friend give a little more information as to how these coal demands will be met in view of the rather pessimistic information that has come out in recent reports?The Minister replied:In suggesting that we should look to coal for 75 per cent. of our requirements, I was giving a conservative estimate. My desire is to increase the output of coal as far as possible. I should like to make it perfectly clear that in so far as we cannot do that we are dependent on imported fuel, that is, oil."—[OFFICIAL REPORT, 13th February, 1956; Vol. 548, cc. 2055–6.]The fundamental problem facing us is that the resetting of this target for coal from 240 million tons to about 200 million tons has imposed heavy financial burdens on the Board. This is the Government's responsibility, and they cannot 461 get away from it. The Government were responsible for the original estimates, and it is the Government's policy that has made those estimates abortive; first, because of their general economic policy, which has held back total expansion so that total energy requirements will probably be less than the 300 million tons, and, secondly, because of the absence of any sort of coherent national fuel policy.
I therefore submit that the Board's deficit, whatever it is today or may be in the future, is attributable to Government policy, and is in no way attributable to inefficiency within the industry. As the Minister has himself admitted, output per man shift has increased considerably. There has been a 40 per cent. increase since 1947, and in the last few years alone a 20 per cent. increase. In view of what the Minister said in the last part of his speech, the deficit cannot be attributed to higher wages. In 1957, wage costs per ton were 48s. 3.1d.; in the first half of 1961, they were 48s. 4.8d.—an increase of only 1.7d., or a fraction of 1 per cent. over the last four years.
In a sense, the two industries of transport and coal have been running through similar difficulties—
§ Mr. Gunter
Yes, and if we had had a decent policy before the war we would not have had the trouble.
There is today a case to be made for the Government taking action on the lines they have taken with the British Transport Commission, by easing the Board of capital burdens—
§ Mr. Gunter
In its Report on Transport, the Select Committee on Nationalised Industries, said:If decisions are to be taken on grounds of the national economy or of social needs … then the additional cost should be provided in advance out of public funds. …I shall seek to demonstrate later that a lot of the burden carried by the Board results from its having had regard to social needs.
462 The Select Committee went on to say:Your Committee wish to recommend the principle that where Government action causes a nationalised industry to incur a specific loss or specific expenditure, which it would not otherwise incur, the Government should take steps to compensate the industry.I go to strange sources for further support of that statement. Friends of the hon. Member for Kidderminster (Mr. Nabarro) come in on this score: the British Iron and Steel Federation, the National Union of Manufacturers, the Association of British Chambers of Commerce. In correspondence which they published on 14th March last they stated it as their view that a "not inconsiderable" part of the increased financial needs of the Board was due to social considerations and that these should be borne by the Government and not by the Board or the coal consumers.
Those people are the friends of industry—the honoured friends of hon. Members opposite, but it was they who arrived at that conclusion. They went on to quote the Select Committee's Report on Transport, but they went even further, and said:… we recall that the cotton industry received £30 million from the Government to enable it to contract, and that the Government are proposing to relieve the railways of the whole burden of their accumulated losses, and the greater part of the liability relating to their capital value prior to the beginning of modernisation …They acknowledged—and I applaud them as progressive bodies—that… for the first 8 or 10 years after nationalisation the N.C.B. were a monopoly supplier of a vital and scarce commodity, of which position, however, they were not allowed to take commercial advantage.I therefore submit that there is nothing very horrifying at all in the Board being judged by the same standards as other people, and some relief given to it.
I now turn in some detail to the reason for the accumulated deficit of the Board, which since 1947, has amounted to £77.7 million. Let us keep this in perspective before the drama starts on the other side. In relation to the Board's total turnover, that loss is relatively small—about 0.8 per cent. But what were the years of the Board's heaviest loss? One was 1947, the first year of nationalisation. Then there 463 was 1955, the peak year for importing American coal, and 1959 and 1960, when output was sharply reduced and heavy stocks had to be carried.
The Board has made an operating surplus on collieries alone since nationalisation of £201.5 million, and its total operating surplus would be even greater if opencast production and ancillary operations were taken into account. This substantial operating surplus has been turned into a deficit of £77.7 million only by interest payments to the Minister of £300 million.
What have been the circumstances adversely affecting the Board's getting into gear? Ever since nationalisation—
§ Mr. Gunter
The vulgarity of the hon. Member for Kidderminster is outshone only by his illiteracy.
Ever since nationalisation, the Government have had control over the prive policy of the industry. In the first ten years of nationalisation, the price of coal was kept well below market value; coal could have been sold at at least £1 a ton more than it was and, on this basis, as I have already stated, there could have been a considerable surplus. The industry was forced to bear the £70 million loss sustained on imported coal. It has borne the cost of subsidence—about £24 million—resulting from the mining operations of the private coal owners before nationalisation.
The industry has had to bear the heavy burden of compensation and interest payments and, again as I have stated, interest payments alone have amounted to £300 million since nationalisation. During the last three or four years, the industry has had to bear, without any Government assistance whatever—in contrast to the position in Western Germany, and in contrast to the position of many private industries in this country—the high costs of stocking, redundancy payments, and so forth.
It is as well, therefore, to get the Board's finances in perspective. The Board has been most unfairly treated. Its finances have been adversely affected by many unfair impositions. In particular, it has had to carry the very heavy burden of interest payments on 464 compensation and other capital liabilities. I ask the Minister at this stage to bear well in mind, when dealing with the fundamental problem of the Board's finances, the need to have proper regard—as I believe he will—to the unfair burdens it has so far had to bear.
Looking to the future, nobody believes that it is possible for the industry to continue in the form and size of previous years. There is bound to be trimming; there is bound to be the closing of pits. All I would ask here is that the closest consultation should always take place at all levels and that, as far as possible, bad mistakes should not be made during that consultation.
I would like to get this question of redundancy agreements and settlements clear in my mind. It is just no good the Government saying smugly that the social responsibility for displacement and redundancy is entirely a matter for the industry. The Coal Board cannot bear the burden that is cast upon it by redundancy and trimming. The Government should be responsible for men who are displaced. After all, if it be in the national interest that changes should take place and that the industry must be rationalised to meet national needs I submit that it is a national and Government responsibility to deal with the social consequences of those changes.
My right hon. Friend the Member for Llanelly (Mr. J. Griffiths) has mentioned the outpouring of men from the pits. I understand that the number of men involved since 1957 is 152,000. This is not rationalisation. It is not a planned rundown of certain sections of an industry. This is a torrent and, as my right hon. Friend has said, it could mean that all the plans and hopes that the Minister may have could count for nought simply because he would not have any men left.
This is an operation which must be conducted with great skill. Of course, there was a period in our industrial history when this was easy. The men were simply starved out. Five hundred thousand people left the South Wales coalfields for economic reasons. No one bothered about them, but the Government cannot now repeat that performance and I feel sure that hon. Gentlemen opposite would not wish to deal with this question of redundancy in 465 that way. I hope, therefore, that this whole question of social responsibility will receive the most careful consideration.
One of the things most disturbing, depressing and frustrating to people working in the nationalised industries is the sort of different treatment that is meted oat to them by the party opposite. The people in these industries have the feeling that because they work in the mines or in transport they are considered to be some sort of second-class citizen who can be taken aside and dealt with differently. I suggest to the Government that they should not attempt to treat the miners like second-class citizens, for such an attempt might prove dangerous.
During recent weeks we have had an example of the chairman of a nationalised board—and it was one of the cheapest little bits of politics we have witnessed for a long time—being chastised in his absence.
§ Mr. Gunter
Chastised, rebuked and humiliated. He did not have a chance to reply. It is an extraordinary thing that the chairman of a public board can be treated in such a way. But let me remind the Government that the pay pause has been broken by a few other people, too. It is very interesting to note that the chairman of Eastwoods Limited, the hon. Gentleman the Member for Ayr (Sir T. Moore), the cement manufacturers with exactly the same union, have agreed to break the pay pause on 29th January, 1962.
§ Mr. Gunter
I have not heard anything about the Prime Minister rebuking the hon. Member for Ayr in public. I do not know whether his pants have been taken down in any private place.
§ Mr. Gunter
On the contrary. I have been congratulating the hon. Member for Ayr on breaking the pay pause. The pay pause has also been broken by the silk and rayon industries, the brick, tile, and furniture trades, and others. But as soon as public enterprise comes into 466 it, it is attacked, representing a standard of conduct on the part of the party opposite that brings it into contempt with ordinary people.
§ Mr. Gunter
I hope that when these pay claims come to be discussed, as they will in the next few weeks or months, there will not be a directive of a general character. I hope that the negotiations can proceed and that the Chairman of the Coal Board will show his teeth and say that he intends to have no interference from the Government.
Let the claims be argued on their merits and let there be none of this appalling interference with the machinery of arbitration, interference which has represented the greatest disservice that the party opposite has ever done to the wellbeing of industrial relations in Britain for many years. We support the Bill and now we await the drama.
§ 4.45 p.m.
§ Mr. Gerald Nabarro (Kidderminster)
I find this an unwelcome and most unsatisfactory Bill. It is not necessary to dramatise any aspect of it. It is a further effort by a Conservative Minister to underwrite, indiscriminately, the losses of a nationalised board.
At regular intervals during the last few years Conservative Ministers of Fuel and Power—latterly Conservative Ministers of Power—have had to come to this House for more and more money to underwrite the continuing losses of this particular nationalised Board.
§ Mr. Nabarro
I will deal later with Government policy and answer some of the wild allegations that have been made by hon. Gentlemen opposite.
I might be forgiven a little innocent suspicion of the Financial Memorandum which is associated with the Bill if some scrutiny is directed to the last sentence of the second paragraph. The words—and it was most unwise of my right hon. Friend to have written them in and thereby increased my suspicion—are:The possibility that this deficit may increase during 1962 cannot be ruled out.Why should the deficit increase in 1962? I asked my right hon. Friend 467 last year—and his predecessors in earlier years—whether it was the policy of the Conservative Government to endeavour to conduct the affairs of this nationalised Board as a social welfare service or as a commercial enterprise. I have always received the answer from Conservative Ministers that it was their policy and purpose to conduct the National Coal Board as a commercial enterprise. A commercial enterprise cannot operate with continuous losses. Private enterprise in such circumstances, and individual firms or industries, would be made bankrupt.
§ Miss Jennie Lee (Cannock)
The hon. Gentleman must at least know that some of our largest private industries, instead of going bankrupt, have simply come to the Government and have got many millions of pounds of public funds.
§ Mr. Nabarro
I was not aware, for instance, that the Cunard Company was prepared to accept the £30 million that had been offered to it. The company refused it for good reasons, best known to itself. The essential difference between the hon. Lady and her hon. Friends and my hon. Friends and I—and we argued this with her before the television cameras during the 1959 General Election—is that we in Parliament are discussing the injection of taxpayers' money into the Coal Board in order to underwrite continuing losses on an indiscriminate scale.
I pointed out that the Cunard Company is a profit-earning, private company and is not nationalised. As I was saying that I thoroughly object to the inclusion of the words:The possibility that this deficit may increase during 1962 cannot be ruled out.I shall endeavour to circumscribe the actions and suggest a little restraint in the behaviour of my right hon. Friend in his financial generosity towards the Coal Board in this important context.
§ Mr. Nabarro
Perhaps the hon. Lady would debate that with me publicly, or on the Ministry of Agriculture Vote. It is not a matter which enters into the finances of the Coal Board.
§ Mr. Nabarro
The hon. Member for Barrow-in-Furness (Mr. Monslow) says that I have not got an answer. I have debated and argued this point ad nauseam. He is so rarely here that he probably has not listened to the arguments.
§ Mr. Monslow
If it is a question of attendance in this House, may I say that while the hon. Member is busy making his directors' fees I am in the House of Commons doing the work.
§ Mr. Nabarro
I expected the intervention to be rather longer and a little more intelligent.
My right hon. Friend rightly alluded to the fact that on the 20th of this month I asked him a supplementary question concerning the purpose of this Bill and he replied that it could not be regarded as anything but a short-term Measure and was not in any way designed to reform the structure of the Coal Board or to endeavour to impart to the Board long-term solvency. Today, my right hon. Friend repeated those words in a different form by saying, "This is in no wise a measure to put the coal industry on a profit-earning basis."
It would not be inappropriate to ask my right hon. Friend how long he expects the losses to continue? That is my first question to him. The second point which is even more important, is that the Conservative Party has recently celebrated the tenth anniversary of its accession to power in 1951. Ten years is a very long time—
§ Mr. Nabarro
I have stood in this market place, man and boy, throughout those ten years, listening to the pious intentions expressed by my right hon. Friends that, in due course, they will proceed with the appropriate reconstruction and reform of the nationalisation statutes. The Coal Industry Nationalisation, Act, 1947, was framed in entirely different economic and political circumstances. It has been the avowed intention—oft-repeated by Conservative Ministers—that they propose drastically to reform that Act.
469 Will it be within the lifetime of this Session, or of this Parliament? Has my right hon. Friend got a Bill on the stocks? Does he know where he is going with the Coal Board, or is he content supinely to rest upon the laurels of continuing and indiscriminate losses, underwritten at periodic intervals by the taxpayers? I hope that he or the Parliamentary Secretary will tell us, before we part with the Bill today, whether it is intended—I hope this Session—to introduce a Bill drastically to reform the Act of 1947 and to endeavour to restore solvency to this industry.
My right hon. Friend said in the course of his speech today that the reason for the Bill was that the Board was unable to meet its existing obligations. He gave a number of reasons, all of which I reject as unsatisfactory, in support of the money shortage of the Board. What he did not tell the House are a number of underlying factors which have made a direct contribution to this shortage of money and ought to have been mentioned in his speech today, notably the huge wastage in capital investment in Scotland and elsewhere during the last few years. I remember the approbation with which the plans of the colliery at Rothes, in Scotland, were received in this House, and the building of the satellite town of Glenrothes. The present scheme was launched by the Coal Board—
§ Mr. William Hamilton (Fife, West)
May I interrupt, since Rothes Colliery is in my constituency? The hon. Gentleman must get his facts right. The original of this colliery goes back to 1936, before the war. It was stopped during the war and was continued afterwards. The plans were made by the private Fife Coal Company.
§ Mr. Nabarro
My facts are exactly right. The burden of a large sum of public expenditure on the creation of what was lauded by the Coal Board in all its publications as "a hundred-year pit", the major new sinkings at Rothes, were financed from 1956 onwards, and 470 that may be confirmed in the Annual Reports and Accounts of the Board. What was then a hundred-year pit, with the pouring of nearly £20 million of capital into it, has now become a two-year pit, with the threat of the entire workings being closed down in the early future. The losses entailed on capital account are reputed to be approaching £20 million.
Will my right hon. Friend tell the House who has furnished that £20 million, surely on his authorisation? Will he say who has blundered? Why have these mistakes been made? Who is to be punished for the blunders? If my right hon. Friend believes that the Coal Board is to be run as a commercial enterprise, and if grave misjudgments have been made involving huge losses of public money, there should surely be some punishment entailed.
Would my right hon. Friend also tell the House what has become of the £10 million invested on a long-term basis in Nantgarw, in South Wales, and whether that is to prove more than just 20 per cent. productive of the original investment plans? These examples may be multiplied all over the country. They represent a shocking wastage of public funds, the taxpayers' money, all of which my right hon. Friend, in the terms of the Bill before the House, says complacently:The possibility that this deficit may increase during 1962 cannot be ruled out.",because he is evidently prepared indefinitely to condone dramatic and dreadful mistakes of this kind.
§ Mr. Michael Foot (Ebbw Vale)
I think that everybody knows that there are likely to be mistakes in sinking new pits. Would the hon. Gentleman recommend the course which was taken by the former coal owners—not to sink any in thirty years?
§ Mr. Nabarro
That is entirely false. There were large numbers of new sinkings during the 1930s. The economic circumstances of the day had a direct bearing on the amount of new development that went on. However, I do not intend to be sidetracked by cheap debating points. There are 47 representatives of the National Union of Mineworkers in this House and all of them sit on the 471 benches opposite. All of them are vociferous, and the criticism of the activities of their employers will be very welcome to many of the members of the National Union of Mineworkers.
A second factor which my right hon. Friend conveniently omitted to mention today in his financial survey is the fact that twelve months ago the Board was carrying a total of no less than 32 million tons of undistributed coal. During the last twelve months, the stock of undistributed coal has, fortunately and mercifully, been reduced by 10 million tons to 22 million tons. [HON. MEMBERS: "Wrong again"] It has been reduced by 10 million tons, which has had the effect of furnishing the Board with nearly £40 million of additional funds.
The Board has provided most of its capital investment moneys in the current year out of its own resources. I want to know from my right hon. Friend why this £40 million of stock realisation has not found its way into his statement of the accounts of the Board and his explanation of the need for the further money which he put to the House today.
§ Mr. Woodrow Wyatt (Bosworth)
Does the hon. Gentleman remember that, when we last debated the subject of undistributed stocks, I wagered £5 with him that they would go down? He accepted the wager, but he has never paid me.
§ Mr. Nabarro
I understand the hon. Gentleman's precarious position as the leader of the Leicestershire coal miners. They are not very fond of him after his Surtax pleas. He never made any wager with me in this House. If he had made a wager, and if I had lost, he would have received his £5, with interest, no doubt, to date. But, of course, it is a figment of his imagination that there was any such wager.
I turn now to the relationship between the Bill and the pay pause. My right hon. Friend the Minister of Power is the electricity pay award culprit. He breached the pay pause.
§ Mr. Nabarro
Hon. Members opposite may consider it a very good thing. My own view on the pay pause is that we should have a universal pay pause, or alternatively, have no pay pause at all. 472 I take the view that it should be applied in all sectors of the economy as far as is practicable and possible, and that there should not be discriminatory treatment meted out to one section of workers.
The Prime Minister administered a public rebuke to the chairman of the Electricity Council. It was intended, I fancy, to be a public rebuke. The chairman of the Electricity Council should have resigned. He was responsible for the blunder of not following Government policy.
§ Mr. Nabarro
It is my opinion. I should not expect it to tally with that of the hon. Gentleman. I am a Tory, and he is a Labourite.
Not only should the chairman of the Electricity Council, as the culprit in the nationalised boards, have resigned, but his ministerial parent, my right hon. Friend, should resign, for he is surely responsible for guiding the chairmen of State boards as to their acceptance or otherwise of Government policy.
I listened to my right hon. Friend as he mentioned—[An HON. MEMBER: "How long has he been up?"] If I am interrupted much more, I shall be up, as the hon. Gentleman calls it, for another half hour.
In his speech today, my right hon. Friend said that he had made the Government's view perfectly clear to Lord Robens. The Prime Minister said that the appropriate Ministers had made their views on the pay pause perfectly clear to the heads of all the State boards, yet notwithstanding that, the chairman of the Electricity Council conceded the pay advance. Therefore, what credence or reliability can be put on my right hon. Friend's words today?
I wish to probe a little further exactly what conversations my right hon. Friend has had with Lord Robens. I quote from the front page of the Daily Telegraph of 27th November:Mr. Wood, Minister of Power, has warned Lord Robens, chairman of the Coal Board, against infringing the wages pause by conceding an increase to the miners. Mr. Wood may repeat the warning publicly in the Commons on Wednesday, when a Bill to raise the Board's borrowing powers by £50 million is debated. The National Union of Mineworkers is seeking an extra £1 a week for 325,000 day-wage 473 men in the industry. Together with a number of subsidiary claims, mainly for shorter working hours, it would add about £20 million a year to the industry's costs.Mr. Wood is believed to have gone beyond the gentle hints about the Government's wishes customary in discussions between responsible Ministers and nationalised boards. He is understood to have said firmly that the Government could not countenance another major breach of the pause.Will my right hon. Friend be perfectly frank with the House? Has he had conversations with Lord Robens? What did he say to Lord Robens? What did Lord Robens say to him? Did Lord Robens give him the assurance that I am seeking, that there will be no part of this additional £50 million to be voted under the Bill devoted to any increases in miner's wages unrelated to increased productivity?
§ Mr. Nabarro
I can understand hon. Members opposite becoming irritated. [HON. MEMBERS: "Amused."] I can understand their being amused. They do not believe in the pay pause. I do. I want the pay pause to be effective, and I want my right hon. Friend to give the House a quite unequivocal undertaking today that no part of this £50 million will be devoted to additional miners' wages unrelated to increased productivity.
I am not alone in this matter, on the Conservative benches. At least 30 Conservative Members set down a Motion on the Order Paper yesterday under the heading "Economic Policy" strongly reaffirming the need for the pay pause and uniform application of it throughout our economy.
§ [That this House calls upon Her Majesty's Government to take whatever action is necessary to prevent a further breaching of the pay pause and to initiate any measure necessary to ensure that all incomes shall bear a fair share of the burden in order to maintain the strength of sterling, safeguard the interests of those living on fixed incomes and keep faith with those who have so far refrained, in the national interest, from taking precipitate action against the pay pause, realising that at this moment such a 474 policy is necessary to allow the long-term policies initiated by the Chancellor of the Exchequer to succeed.]
§ What I am saying to my right hon. Friend today is strictly in accordance with the wishes of a large number of my hon. Friends. If my right hon. Friend does not give me the assurance I seek, I shall put down an Amendment for the Committee stage to be taken on the Floor of the House next Monday, to insert words at an appropriate point in the Bill to the effect that no part of the additional borrowing powers under this Bill shall be applied to increased miners' wages unless related to increased productivity. I hope, therefore, that my right hon. Friend will consider it more judicious to give me assurances today and thereby prevent my having to press for them again on Monday next.
§ Mr. J. Griffiths
The hon. Member claims to be speaking not only for himself but for a large section of the Conservative Party. Do I gather that he is asking the Minister to disregard completely the whole of the negotiating and arbitration machinery which has been built up in the mining industry? Is that the hon. Member's message? Does he realise what it will mean?
§ Mr. Nabarro
I have covered four headings of my notes. The fifth heading is "Miners' wages: Arbitration".
What is not widely recognised among the general public is that there is virtually compulsory arbitration in respect of miners' wages. The miners' wage claim to which I have alluded will, if refused by the National Coal Board, be sent to arbitration. If an arbitration award is made for increased wages, I want to ask my right hon. Friend now, what is his policy?
§ Mr. Nabarro
I am about to do so. My right hon. Friends were faced with an arbitration award for the civil servants. They refused to honour it on account of the pay pause. The civil servants are one sector of public servants. What is to be the position in a nationalised industry if an arbitration award is made in favour of increased miners' wages? Will my right hon. Friend then say, "There is a pay pause. I cannot honour 475 this arbitration award because the moneys will be derived from the additional £50 million voted under the Coal Industry Act"?
If arbitration is to be honoured or otherwise, the treatment by the Government must be uniform. The Government have thrown out the arbitration award for the civil servants. It is better to tell the coal miners now that if their claim succeeds on arbitration it will be thrown out by the Ministry of Power. [HON. MEMBERS: "Oh."] It would be illogical to do otherwise. As I see it, we cannot have the Government honouring one form of arbitration award where public servants are involved and refusing to honour another. There should be uniformity. [Interruption.] It is not a question of my looking out. It is a question of the probity and sanctity of the pay pause.
It is not inappropriate, therefore, at this juncture to ask my right hon. Friend, when he replies to the debate, to be perfectly clear and to recall that the civil servants' arbitration award has been thrown out and dishonoured by the Government, if that is the appropriate term. I want to know, having regard to miners' arbitration, what will be the position if the arbitration award for increased miners' wages is made in the early part of next year.
Finally, a word about directions, to which the hon. Member for Southwark (Mr. Gunter) referred. I have disagreed with the Prime Minister already about this in exchanges at Question Time, because he takes the view, on the legal advice given to him by, I presume, the Attorney-General, that it would not be legal for the Minister of Power to give a direction to any one of the nationalised industries in respect of wage advances or otherwise.
I take the view that it would be illegal for a direction to be given in the matter of a specific claim or a specific award, but I do not believe that it would be illegal for my right hon. Friend the Minister, being the Ministerial parent of three large nationalised fuel and power industries—respectively coal, electricity and gas—to give a general direction to the heads of those boards to the effect that the economic and financial policy of the boards shall be strictly 476 in consonance with the economic and financial policy of Her Majesty's Government, including wage restraint.
That ought to have been done by the Chancellor of the Exchequer on 25th July. It was not done by the Chancellor of the Exchequer or by the responsible Ministers for the nationalised boards. That led Sir Robertson King into his blunder which breached the pay pause a fortnight ago. Had the Government been more specific in their directions to these State boards, that blunder would not have occurred.
§ Mr. Sydney Silverman (Nelson and Colne)
I am wondering whether the hon. Member is really serious in the proposal he has made. He wants the Government to give a direction to the nationalised boards that their policy shall be in accordance with the Government's economic policy, including wages. That means that the hon. Member wants the direction to cover other matters than the pay pause. In other words, he wants the nationalised industries to be run under the direct direction of the Government. Does he mean that?
§ Mr. Nabarro
The two major con-considerations in Government control of nationalised industries are, first, the control of investment, which this House already controls—although not accurately enough, in my judgment, but it does control it. The second is in the matter of the general economic policy of the boards, including wages. I believe that both of those matters are properly subjects for House of Commons control, and that this form of direction under the existing statutes, which, I believe, ought to have been given on 25th July last, is within the compass of the existing statutes and should properly be given by the appropriate Minister.
§ Mr. Silverman
Would not that be to reconstruct the whole system of the nationalised industries and, in particular, the Coal Board? Would it not remove from the Coal Board all independent discretion in the conduct of its policy if it had to make it, as it were, accord with the whole of the economic policy of the Government of the day, whatever it may be? Is the hon. Member serious in recommending that?
§ Mr. Nabarro
I do not think that the hon. Member could have been in the Chamber during the early part of my speech.
§ Mr. Nabarro
I apologise to the hon. Member. He should have heard me say that I do not like the Bill at all because it is only a palliative and does nothing to reform the structure of the main Act of 1947, which I want to see drastically reconstructed and reformed, including a reform in the sense that I have just indicated.
My final word to the Minister is in connection with coal prices. I apologise to my right hon. Friend for the length of my intervention in his speech. The increase in coal prices announced yesterday is singularly unfortunate. We have listened to Ministers of the Crown in their peregrinations around the country making speeches, exhorting private manufacturers to improve their competitiveness, to increase their efficiency, to match their needs of foreign markets and to stabilise their prices. Exhortation has been ladled out to them—the last refuge, I count it, of men who have few ideas upon policy.
I happen to be a private enterprise manufacturer, endeavouring to compete in the markets of the world, finding it exceedingly difficult, as many other British manufacturers are doing. At a time like this, when margins are narrow and competition is fierce everywhere—from the Japanese, Germans, French and Italians—my right hon. Friend chooses this moment to come to the House and say that he is raising the price of coal once again above its former inordinately high levels and, in the train of that increase in coal prices, he must surely recognise that there will be an increase in the price of gas, of electricity, of steel and manufacturers generally, of bricks, of cement and of nearly every ingredient, material and commodity that goes into British manufactured goods which are exported to the markets of the world.
I note that my right hon. Friend is foremost among Her Majesty's Ministers in his exhortations to private enterprise manufacturers to reduce their costs while he connives with the heads of State boards to increase manufacturers' costs, 478 thereby embarrassing as greatly as possible, and making it as difficult as he can for, private industry effectively to continue to compete in markets oversea. His policy today of raising coal prices further is calamitous. It is exactly the way to discourage manufacturers. He is running contrary to the policies of the Chancellor of the Exchequer.
The Minister of Power in my judgment, was the Ministerial parent responsible for the breach of the pay pause last week and the blunder of Sir Robertson King. He should not only have demanded the resignation of Sir Robertson King. He should himself have resigned on that account. Today, in allowing coal prices to rise again, the right hon. Gentleman should recognise that the disservice he does to the industry of Britain by his action should cause him in all conscience to leave his office at the earliest moment.
§ 5.21 p.m.
§ Mr. Joseph Slater (Sedgefield)
We have listened in this House over the years to speeches from those benches which have in no way assisted the great industry which we are considering under this present Bill, and I consider that the speech which has been made by the hon. Member for Kidderminster (Mr. Nabarro) was a most derogatory attack upon this industry and that in no way will it assist the industry at all.
In the debate on 23rd October, 1959, my hon. Friend the Member for Bedwellty (Mr. Finch) drew our attention to the millions of tons of coal which had been stocked in this country, and which resulted in a heavy loss to the industry. The demand for coal has been going down. The National Coal Board has been faced with a serious position for the future of the industry. Credit squeeze after credit squeeze by successive Tory Chancellors of the Exchequer have left their mark on the industry. Forms of restriction have been imposed upon the industry without any means of escape. I am afraid that unless a more positive approach is made greater restriction could be imposed upon this industry that would sap its life blood.
Looking back over the years of nationalisation, we see that much has happened to the finances of the industry. The cost of importing coal was a heavy burden to carry. Today we are considering a Bill under which £50 million 479 is involved, but I think that we ought not to forget that the cost of importing coal into this country left the Board with a bill of over £70 million to pay. I noticed that in all those forms of attack by the hon. Member for Kidderminster upon the Board he did not reflect upon these impositions and charges placed upon the Board by his own Government, which have restricted its form of operation and have interfered with its financial working. We have a liability placed upon the industry by an Act relating to mining subsidence, and the Act was a Government Bill, and that has cost the industry no less than £24 million. We had that new Mines Bill which imposed a further charge upon the industry, and that was a Measure which ought to have been carried into effect at a time when private enterprise was in charge of the industry.
Another important feature is this. I believe that if this industry had been allowed to operate as a commercial undertaking it would not have been faced with these deficits which compel it today to come to the Government for this extra £50 million. By the ordinary standards of commercial operation the Board would have been in a very favourable position of increasing prices, particularly of industrial coal. Competition was not there, in the same sense as we have it today, with oil. But the Board was not free. It was not a commercial undertaking in the sense that I have described. Its hands were tied, and it was not allowed to increase prices. In the interests of the economy, we were told, that could not be done. It was a great debt for this industry to pay.
On top of this, no credit was granted to the industry for facing this restriction by those who have always denigrated the industry but who were prepared to share in the benefits coming from the restrictionist policy placed upon the industry by the Government. I say to hon. Members opposite, think what it would have meant if the Board had been granted the same facilities as any commercial undertaking in those years, in the early years of nationalisation. Money would have poured in, and in all probability the danger from the oil industry would have been met on much more equal terms. Deprived of that opportunity in those days, the Board 480 today finds that its problems are increased.
Over the years, I, along with other hon. Members of the House, have tabled Questions to successive Ministers on compensation and interest payments. The cost of the Board's capital charges has been constantly rising. In 1947 interest charges were £15 million, but in 1957 they had risen to £26 million, and in 1960 they went up to no less than £40 million. The reason for the increase is the increased borrowings from the Minister for capital development. Taking all these forms of payment which have been made by the Board back to the Minister as interest payments, they amount to no less than £300 million since the vesting date of this great industry.
This money has got to be found. I fully realise that it is too late to complain about the terms which were fixed in regard to the fixed assets of this great industry at the time of nationalisation. The bargain was made; these commitments have got to be met; but when the industry is faced with the difficulties which it has at the moment, surely it is not too much to ask that the same consideration should be granted to this basic industry as has been shown to other industries.
Another important factor comes out when we consider the decision to fix a target of 240 million tons of coal and then to drop it down to 200 million tons. This imposed heavy financial commitments on the Board, for once the 240 million tons was fixed as its target the Board had to gear itself to that target, and dropping the target meant losses were bound to accrue. Therefore, the Government must accept their share of responsibility for this action, first because of their general economic policy, which resulted in holding back expansion, and which resulted in total energy requirements having to be recast from the original forecast, and secondly, because we have not as yet a fixed national fuel policy.
Anyone can say that the reason for the deficiencies is bad administration. We have had all that from the hon. Member for Kidderminster over the years, ever since he became secretary to the Tory fuel and power group in this House, and, no doubt, he will continue.
§ Mr. Slater
Anyone can say that the reason for the deficiency is bad administration. People are at liberty to say that—
§ Mr. Slater
—just as I say that just as in other industries the actions of the Government and the policies which they have been pursuing have had a derogatory effect, a depressing effect, so they have had upon the mining industry.
Some even go so far as to say that wages have assisted towards the deficit—and we have had it again from the hon. Member for Kidderminster—and that pressure ought to be brought to bear upon the National Coal Board to turn down the application made by the National Union of Mineworkers on behalf of its members for increased pay. I know the calibre of our people in the industry, and I know the leadership in the National Union of Mineworkers. I have no doubt that the union will seek to make its application on behalf of its members because it knows that its members are duty bound to receive every consideration for increased wages in view of the work which they are doing and the industry with which they are connected.
I think that the National Coal Board—of course, the hon. Member for Kidderminster would not agree with me—has just as good a case as the British Transport Commission for asking the Government to write off a large part of its capital liabilities. What a case the Chairman of the National Coal Board would be able to present regarding the industry were he allowed to draw comparisons! No one knows this better than the Government. But, leaving the issue of comparisons, I must say that it is rather difficult to understand why the Government have not yet come out with an imaginative fuel policy. Here we have an industry which is so shackled that it does not know whether to advance or retreat.
I want to ask the Minister why it is that coal, gas, electricity, atomic energy and hydro-electric power cannot be co-ordinated and placed on a national 482 basis. The answer seems to be "No. Let them compete with each other in their respective fields of operation." The more one thinks about this, at this time, the more fantastic it becomes. It is fantastic to think that at this time the country has to accept the challenge of our economic problems on this basis and that we can win the economic battle now going on by importing cheap oil and methane gas.
If this is the way that the Government want it to be and the way in which hon. Members opposite desire to have it, then why should we not have cheap food, why should we not have cheap meat, why should we not have cheap cotton? Why not import cheap goods of every kind and finish up on the basis that Shaw once described—"Earn our livelihood by exporting chocolate creams."
I ask the House to note that we have had a fuel policy under the present Government. First, their policy was to restrict exports at a time when they could have had premium prices for exports. Secondly, they applied to the National Union of Mineworkers for its members to work on Saturdays in order to meet the deficiency of coal within the general economy. They directed the electricity industry to convert from the consumption of coal to the consumption of oil in the generation of electricity, and for increased production from opencast mining and an increase in imported coal. This was done in recent years in a period of fuel scarcity within the economy.
The conditions of the mining industry in this country have turned a complete somersault, with the result that the industry is left holding the can due to Government policy. Can anyone doubt the reason for so much agitation regarding a fuel policy in view of the deficiencies which we are called upon to consider? Every representative from the various coalfields knows, or has some idea of, what is happening in his own area. In my own county of Durham we lost more than 5,000 men in 1960 compared with 1959. It takes no organising genius to recognise that if the losses in manpower continue at this rate we shall, by 1970 if not before, find the number employed in the Durham coalfield below the 60,000 mark. This is a very serious problem, not only for the coal industry in Durham but for every other industry 483 in Durham and for those dependent upon it.
There are talks of more closures next year. In that part of the county where I live, Ferryhill, there is a combined mine. It embraces three collieries with a manpower of between 2,000 and 3,000. Reports circulating through the district are to the effect that half of these men are to be paid off. Some may find work at neighbouring collieries and others, through force of circumstance, may accept a move into the Midlands. Many may be transferred towards the coast, with long-distance travel facing them. Others who are left may not because of their age be able to travel.
I ask the hon. Member for Kidderminster and his hon. Friends, who are supposed to be interested in the coal industry, to realise that when in an industry of such arduous employment people have to travel 20 to 30 miles a day each way in addition to doing a day's work down below they are very tired when they return home. It becomes nothing else but pit and bed for these people. This will lead indirectly to an extension of hours. Therefore, many of our people will leave the area and go to the coast. This is a very heavy cloud which has settled over the district and no one is happy about the situation.
It is not only my area which is affected but also that of my hon. Friend the Member for Bishop Auckland (Mr. Boyden). The reason for such action, one is led to believe, is the cost of production. A great deal of money has been spent there in recent years on modernisation. A new skip winder was put in, which no doubt cost a lot of money. I have no doubt that the National Union of Mineworkers, along with the Divisional Coal Board, will do all possible to soften the blow. I know the feelings of the people who are affected. I ought to, for I have lived with them for the greater part of my life and have worked in the industry, which is something that the hon. Member for Kidderminster cannot say.
§ Mr. Slater
That is quite true; it is quite understandable. While the hon. Gentleman was marching up and down 484 on the barrack square as a regimental sergeant major I was seeking to produce from mother earth something with which to improve the economy of the country.
§ Mr. Nabarro
As a long-service Regular soldier I never achieved a higher rank than that of sergeant.
§ Mr. Nabarro
My hon. Friend says, "Jolly good". I would much rather have been an R.S.M., but do not let the hon. Gentleman attribute to me a rank that I never held. I am very sorry that I did not work in the pits.
§ Mr. Slater
I am sorry, Mr. Deputy-Speaker, that I digressed in the way I did, but I just want to tell the hon. Member for Kidderminster that I am not going to say, "Kiss me sergeant".
Coal is a major part of the foundation of our economy and, indeed, of our civilisation. It will remain so for many years to come. The industry is becoming steadily more efficient and its reconstruction is proceeding apace. I believe that the miners have responded admirably to the changing conditions in recent years. If it is true that a new industrial revolution is in progress, then it has been made possible by the availability of indigenous fuel, and that fuel will be essential to its success in the years that lie ahead. But it is disturbing to hear rumours to the effect that I.C.I., which is in my constituency, and the Consett Iron and Steel Company are going over to oil. I.C.I. has been a good customer of the National Coal Board in Durham. It is bound to affect us in Durham if this should be the case. I therefore hope that these companies will have second thoughts.
It should be understood that there is nothing that oil can do which coal cannot do, and when local firms move towards the use of oil as against coal it only highlights the need for a national fuel policy. We need a plan not just for the sake of planning but because it is vital to our prosperity as a nation, and it is particularly vital to counties like Durham.
The mining industry is capable of meeting the challenge of the future if it 485 is given the chance to do so. As one who has always supported the nationalisation of this great industry but has been prepared to criticise the National Coal Board when its annual reports are being considered by the House, I say that if it were possible to transfer our people from this industry to a more sheltered industry I should be delighted to see that happen. It is only those who have had experience of the industry who realise what is involved in following this grade of employment, with all its dangers and bad conditions. But as long as it is an integral part of the industrial sector upon which the economy of the country is based, the Government must take another look at it with the object of giving greater assistance towards its economic future.
§ 5.42 p.m.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
The hon. Member for Sedgefield (Mr. Slater) used the familiar argument that it is unfair that the Coal Board should have to pay interest, but what the Coal Board is experiencing surely is competition from other forms of energy, notably oil, which has to pay very much higher sums in interest to share-holders. That is not a fair argument to use.
The hon. Member also spoke, as do most hon. Members opposite, about a fuel plan and policy, basing his argument on the fact that a drop from 240 million tons to 200 million tons for the Coal Board did some damage. The hon. Member should be aware that the alternative of sticking to a target of 240 million tons would have been much more dangerous and might even have been fatal to our fuel policy in the future. It is the trouble with planning, most clearly illustrated in the coal industry, that it is not possible to set targets for the future accurately enough to make these sorts of plans with any sense at all.
We are dealing today with a Bill to lend a further £50 million to the Coal Board, and I should like to express the pious hope that some day some of it will be repaid. It is worth asking at this stage, perhaps, why we have incurred a total running deficit of £78 million on revenue account and at the same time we are having to raise the price of coal by about 486 £14 million in a full year. Hon. Members opposite are quite right when they say that the Coal Board was restricted in the prosperous years from 1947 to 1957. The Board's pricing policy was kept on the low side and it was asked to pay the difference between the price of imported coal and home-produced coal. In other words, the Board was not run as a commercial enterprise. It was run for the benefit of the consumers.
Since 1957 it has been in the alternative position. It has been on a buyers' market and not a sellers' market, and it has been protected by the Government and encouraged to produce more coal than might be economically necessary. The Board is still being run not as a commercial enterprise but for the benefit of miners in areas where unemployment might well result otherwise. I am not necessarily criticising either of these decisions, for the prosperous years or for the difficult years, but I say that this is the reason why we have to face this big deficit. It is not entirely due to commercial loss but very much due to Government policy.
In the Scottish Division, since the vesting date of 1947, we have lost £70 million, leaving out altogether the question of interest payments. In the Northern and Central Division we have lost £17 million, in Durham £26 million and in the North-West £23 million. These are losses in the uneconomic pit areas. If Government policy had not of late sought to protect the coal industry some of these uneconomic pits and unprofitable areas could have been allowed to cease production. It is the marginal price of coal which is high in these areas that has forced up the average price of coal over the whole country. If it had not been for this Government policy we could have brought down the price of coal marginally and perhaps the Coal Board could have been more competitive against oil.
The Government were wrong not to allow coal imports for the Steel Company of Wales when it found a cheaper source in America, and wrong also when it placed a heavy tax on fuel oil in this year's Budget. These forms of protection for the coal industry have made it more difficult for the industry by forcing 487 is to produce at the upper end of its production at higher marginal cost and, therefore, at a higher average cost as well.
It is very fashionable to bemoan the wastage of manpower in the pits, but I should like to put one point on the credit side. In 1960, 50,000 men left the coalfields. So far this year about 20,000 more men have gone. These men have gone to other industries and other productive forms of employment which are in great need of men. This is a labour-hungry State at present, and the more men who can be transferred to other, cleaner and more attractive industries the better in the interest of the nation as a whole and of the men.
But we have a local employment problem here, because the uneconomic areas in the North of England, in Scotland and, though perhaps to a lesser extent in South Wales, have in the main tended to coincide with areas which are naturally suffering from under-employment in the economy, where the areas which are prosperous, in the Midlands and Yorkshire, where coal can be won cheaply and there are good seams are the areas of high employment in the country generally. One of the difficulties which we have to face is that by the accident of history the cheap coal happens to lie in areas of full employment and the expensive coal in areas of low employment.
After the pay pause is ended, we might have to consider how best to get over this problem. I know that there is very strong feeling about the question of regional differentials—to a pure economist sitting in an ivory tower. This solution would spring to mind. In the last debate on the industry, my right hon. Friend said:The Chairman and I have, on several occasions—in particular, I have in answer to Questions in the House—denied any intention to return to district wage agreement"—[OFFICIAL REPORT, 24th October, 1961; Vol. 646, c. 760.]That is pretty categorical. I wish it had not been too categorical, because we must change our attitude and there may well be some case in the future for having wages which will attract men to the over-employed areas of the country.
§ Mr. Warbey
The hon. Gentleman will have noticed that the Minister was not so categorical today. I gave him the opportunity, when I intervened in his 488 speech, to reaffirm the policy of opposition to district wage agreements, but he did not take it.
§ Mr. Ridley
I think that the hon. Member's actual words, when he made his intervention, were that this was the logical conclusion of the state we have got into. I see that he agrees.
§ Mr. Warbey
The hon. Gentleman must not traduce me in that way. I said that this could be seen as the logical conclusion of the policy now introduced of setting one division against another in price competition, and that if this were being done with regard to prices in the Scottish and North-Western areas, the logical next step would be to set one area against another in wage levels.
§ Mr. Ridley
I do not believe that to have wage differentials for different regions at all follows from different prices for different regions. I do not think that this is something we should altogether regret. I shall not be stronger on the matter than that in what I say. I hope that my right hon. Friend will not close his mind to it.
One point has not been mentioned for some time in our debates. Last year the National Coal Board built a total of 389 houses. Surely, if the Board wishes to solve its labour problem and take miners from uneconomic areas to the Midlands—skilled men who do not want to leave because they have the pit traditions in their bones—and also if it wants to attract new recruits in those regions where there is difficulty in recruiting labour, a bold housing policy would help. In the circumstances, 389 houses do not constitute a very big contribution.
§ Mr. Ridley
There is no such subsidy element in my suggestion, although some subsidy would be attracted, perhaps from the local authorities or from the Government, and to that extent I see the hon. Lady's point. But firms in private enterprise do this. There is nothing wrong in making provision for housing one's workers, and it would not be in any way more than capital investment by the 489 Board. Indeed, it might be a better capital investment than some which the Board has made.
I turn now to the pay pause. There is no doubt that it has been breached in the electrical supply industry. I fully agree that this is not the time or the place to debate this, and I take my right hon. Friend's point in that he has no direct control over the chairmen of the nationalised boards. With Members opposite, I think that in the long run it would be a bad thing if the Minister had direct power to alter the day-to-day administrative decisions of these industries, but if the chairman of a nationalised industry disregards the national interest, what then?
It happened in the electricity supply industry. The chairman went directly against the clearly expressed wishes of the Government, and nothing happened. But electricity supply is a monopoly industry and I admit it is able to force up its prices—I believe that it has done—and the consumer can be made to pay. But the mining industry is not a monopoly industry and not one which has spare money in the bank or which can raise its prices without extreme difficulty. It is an industry with an overdraft, over employment and over production.
I hope that the following figures might be of interest. They concern earnings in the industry. Since 1947, as far as I can make out, the price of coal has gone up by 130 per cent., the earnings of the average employee of the Board by 130 per cent., and the cost of living by 78 per cent. I think it is clear that the increased productivity and all the increases coming from new capital investment have been meted out in full measure to the miners. I do not grudge it to them.
It seems to me that in the future it may well be necessary for Lord Robens to manipulate wages in such a way as to keep his industry in the clear. But I think that it is in the national interest that the pay pause should be upheld. If the Coal Board needs this money, and my right hon. Friend has to come to the House to get it, then we, as the custodians of the taxpayers' money, who have to explain to our constituents why it is necessary to tax them, should have some control over this situation at the present time. I think that it is helping my right hon. Friend, in accord with his policy, that in this Bill 490 we should make sure that for the duration of the pay pause we have control over where the money is spent.
There are mainly two ways in which increases in wages have been justified. The right hon. Gentleman the Leader of the Opposition, during Questions on the electricity supply award to the Prime Minister last week said this:Is it not a fact that there is a serious shortage of labour in the electricity supply industry? How can the Prime Minister divorce this from a wage negotiation?"—[OFFICIAL REPORT, 21st November, 1961; Vol. 649, c. 1152.]That is the supply and demand argument—the fact that, where there is a shortage of labour more money will inevitably have to be paid.
Secondly, there is the argument of comparability—the idea begotten by Guillebaud out of fear of a railway strike a few years ago.
§ Mr. Gunter
The Guillebaud exercise was not attempted following the threat of a railway strike but was entered into following a settlement.
§ Mr. Ridley
However that might be, the principle of comparability is the reason used to push up a wage when one can find no argument in supply and demand.
From whichever angle we look at the coal industry, neither of these arguments can be applied. There is no shortage of coal or of manpower, and on the comparability basis miners are very near the head of the league table. As my hon. Friend the Member for Kidderminster said, there is a need to re-examine the function of the Coal Board. I do not think that it is the fault of the Board that it has got into deficit and is coming to this House for money. It seems to me that its function has never been resolved by the Government. It has never been decided whether it should operate as a social institution with commercial duties as well, or as a purely commercial concern.
I have demonstrated that both before 1957 and since that date it has been forced to dilute its commercial activity with social considerations. The Report of the Select Committee was referred to by the hon. Member for Southwark (Mr. Gunter). That Report suggested that the social implications should be winkled 491 out and paid for separately, so that the House could debate them, know what they cost, and measure their value. If that is to be done in the case of the railways I congratulate my right hon. Friend the Minister of Transport, but there is no real sign in the whole of the Transport Bill that the Government have been able to come to a conclusion as to the degree of commercial activity desired. This problem must be solved in the coal industry, and until it is solved we will not be able to get the industry on its feet financially or in any other way.
§ 6.2 p.m.
§ Mr. David Griffiths (Rother Valley)
I do not want to follow the remarks of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) except to refer to one or two of his points. It is apparent that he knows very little about the industry, either from the point of view of administration or of coal getting. He has said that the industry cannot plan ahead, but no industry in the world needs longer-sighted planning than our mining industry. One of the Coal Board's difficulties is that the Government plan which was put forward in 1956 never materialised. That had very grave effects on the industry, and increased tonnage costs.
The second item in the hon. Member's speech to which I wish to refer is the subject of housing. Surely it is not going to be a moral or financial obligation of the Coal Board to rehouse its men. I understood the hon. Member to say that the Board built only 300 houses in the last year. I do not know about last year, but I know some districts in which more than 300 houses have been built.
§ Mr. Ridley
I said that the figure of 389 houses would be found in the annual report for last year.
§ Mr. Griffiths
I said that I did not know about last year, but I know that in recent years hundreds of houses have gone up in various districts. However, that is a responsibility of the Government and not of the Coal Board.
§ Mr. Griffiths
Even so, I do not think that it is reasonable to place that obligation upon it. It has so many obligations already which are unwarranted, and to impose any more is totally unjust.
The third matter I want to take up with the hon. Member concerns district agreements. Although he does not know anything about the industry, it is clear that he has been tutored very well. He has probably taken note of a speech made by his hon. and gallant Friend the Member for South Fylde (Colonel Lancaster)—an ex-coal owner of the pre-1947 days. I am sorry that the hon. and gallant Gentleman is not in his place, but I have made this point to him in private on many occasions. We are great friends, although we sit on opposite sides of the House and disagree about practice and administration in the coal industry.
The hon. Member for Cirencester and Tewkesbury or any other hon. Member opposite should not attempt to pull the wool over our eyes by saying that he does not want to come back to district agreements. The hon. Member says that he wants to break down the national structure. If that were done I suggest that there would be a rude awakening in the industry. It would be a very retrograde step, which would do a great deal of harm.
I now want to deal with the remarks of the hon. Member for Kidderminster (Mr. Nabarro). I listened to him for over half an hour without interjecting, which is most unusual for me when he is speaking about the coal industry. I was left with very mixed feelings about the hon. Member. I did not know whether to regard him as a good exhibitionist, a good clown, or a good little Hitler. I agree that there have been huge wastages in the coal industry, but I suggest that when the hon. Member for Kidderminster or any other hon. Member comes across instances of wastage he should take them to the proper people so that they can be remedied. He should not attempt to make capital out of a mistake.
Is the hon. Member for Kidderminster saying that private coal owners never made any great mistakes? The project that he quoted, which was undertaken in Scotland, was in the blueprint stage 493 years before the Coal Board took it over. They were left with it, unfortunately, when it had just become an effective proposition. The geologists and various other experts who dealt with the matter probably made a mistake, as they have done from time to time under private enterprise. The question is: who has blundered? It is obvious that it is the office boy and not the general manager. The office boy always "gets it in the neck", as does the under-manager. The manager and the area agent never do so.
I wish that the hon. Member for Kidderminster had a little experience of the mines. If he had, he would have a little more appreciation of the work done by miners and mining managers. They have to carry out a difficult and arduous task. The hon. Member was wrong when he said that losses were continually being written off. I should like to know when the losses of the Board have been written off. Surely no loss has been written off. I am sure that the hon. Member for Kidderminster has read the 1947 Act, which states that the industry must pay its way—and it will pay its way in the very near future, given the assistance which is warranted. The Government are responsible for the Board's parlous state.
One or two other matters are relevant to this subject. I may be repeating history, but I think that we should consider the relevant facts and not attempt to paint a picture. The industry is much maligned, not only by hon. Members opposite but also by a considerable proportion of the general public and even—I am sorry to say—by some hon. Members who are closely attached to the industry but who will not face the realities of the situation.
This is something about which the general public in the main are not clear. It is always regarded as the responsibility of the Coal Board or the miners, but never that of the Government. Yet the Government have always been the policy makers and the price fixers, and not the Board. It should be emphasised that if the Board had had the opportunity to sell the coal that it wanted to between 1947 and 1956, it would have shown a credit balance of £2,000 million. What a contrast with the present situation when the Board is taking powers to borrow £50 million and is showing a 494 deficit of £77 million on the last year's operation. I emphasise that the responsibility is that of the Government and not that of the miners or the Board.
The Minister knows the mining industry, for he was born in it—although he is a right hon. Gentleman—and he also knows the social consequences which are likely to arise. I appeal to hon. Members opposite to bear in mind the social circumstances and the responsibilities involved. The deficit has arisen principally during the time that the Conservative Government have been in office—and that has been in spite of Government assistance, too. Surely there is a moral obligation upon the Government in this respect. They have assisted the British Transport Commission, and they have also assisted, to the tune of £30 million, the textile industry, which is under private enterprise. Is not the mining industry a public service?
I urge hon. Members opposite to appreciate, not only the effect of the social conditions, but the manpower implications, especially with regard to moving men from one area to another. This has demoralising effects. Also, it will result in derelict districts. I live in a prolific coalfield and the problem does not worry me, but I appreciate that as a public man I must be anxious about areas in Durham, Northumberland, Cumberland, Wales and Scotland where there will be poverty, domestic unrest and moral and social implications, the responsibility for which should be borne by the Government and not the Board.
The gas fiends and experts on the other side of the Chamber definitely have a bias against coal—
§ Mr. Griffiths
I am sorry; I cannot give way. Perhaps the hon. Gentleman is rather thin-skinned, judging by the way he jumps at this. He says that he has no bias against coal, but all the time he is arguing against the mining industry.
§ Mr. Griffiths
I cannot give way. I have promised my hon. Friends not to be long. The hon. Member will have 495 an opportunity to catch Mr. Speaker's eye later.
I appreciate the wages situation in the gas industry, and I appreciate the position of men in the oil industry who have commercial, vested interests. We can expect them to fight. But I am fighting for the welfare of very honest mortals for whom we want a better standard of living. I have in mind, too, the workers who are procuring the oil for the companies in which hon. Members opposite have shares. I should like the workers in the Sahara and other parts of the world to have a standard of living similar to that of our people. Then, hon. Members opposite would not be receiving the imposing profits which they are getting today, and coal would be able to compete on a more equitable basis with oil.
I have some regard for the Minister, for I have known his family for many years, but I must point out to him that there is another matter about which I have grave misgivings. It is true that what we have to do is to reduce production costs, but my experience over many years in mining is that the first target in reducing costs is wages. In this respect, I have a warning for the Minister and the Parliamentary Secretary. The Parliamentary Secretary, a former mining engineer, knows full well that it would be dangerous to do such a thing.
Let us look at it in its proper perspective. What is to be alleged about increased costs? I saw hon. Gentlemen opposite jump this afternoon when it was said that the increase in wage costs has been a fraction of 1 per cent. in four years. It has been much greater in respect of machinery, and so on. I urge hon. Members to leave wages out of this. They should put wages in their proper perspective, and deal with them in the manner in which they ought to be dealt with.
I urge the Minister to be very careful about the veto which has been referred to. Would any right hon. or hon. Gentleman on either side of the House like to go underground for £10 a week? Indeed, some miners are not even taking £10 a week home after the statutory deductions have been made. The Government have a moral obligation to appre- 496 ciate this situation and to meet it, and I think that they will meet it, because the National Union of Mineworkers, whatever may be said about its officials, has a cause which cannot be termed unjust.
Reference has been made to payment by results of productivity. If we had payment by results here, many hon. Members opposite would have to accept a decrease in income instead of an increase.
However, the overall picture is reassuring. It is true that we have pits in Scotland, Wales and other coalfields which are losing huge sums of money and where the productivity is very low, but the overall output has risen by 6 per cent. This is no laughing matter; it is something which should be appreciated. It is worthy of commendation, and surely it merits increased remuneration.
I welcome the Bill. I believe that some streamlining of the Coal Board may be required—but I must emphasise that that goes for a number of private industries as well. It may be that there are more officials than are required. But it is not our boys who have the jobs. It is the friends of hon. Members opposite who have them. I believe that this matter should be examined, and if it is found that two people can do the work that is now being done by three, some other gainful employment should be found for that third person. I am sure that this is a practical suggestion if ways and means can be found to implement it.
There is much more that I should like to have said. I think of the impositions which have been placed on the Coal Board. I would instance subsidence alone. I shall not talk about the figure of £300 million. I have referred to the £2,000 million which the Board could have obtained. Also, I shall not talk about the £70 million, nor about the huge sums being paid in interest. Nevertheless, I believe that more can be done to assist the industry.
The Prime Minister spoke last Monday in Sheffield. He was talking to some "right boys" there. I have a newspaper report of what he said. I have some misgivings sometimes about some of the Sheffield Press—I do not know about the others—but the Prime Minister is 497 reported as having said that all nationalised industries, especially those "in the red"—the coal mining industry is "in the red"—will come under severe pressure and will have to toe the line. I reply, as a politician, though one by mistake—I am a miner by birth and tradition—that the miners have always toed the line, both in war time and in peace, when the country has needed indigenous fuel.
The miners are the backbone of the country, and I stand by them every time. They have always given the country a square deal, and if they are given one they will continue to do so. If the Government were half as earnest as the Board, the National Union of Mineworkers and miners are, the industry would have been in a much better position today than it is.
§ 6.20 p.m.
§ Mr. Julian Ridsdale (Harwich)
We have heard in the course of the debate the figure of 240 million tons since 1956 mentioned quite often by hon. Members opposite. I would comment that it shows the danger of Government planning and how wrong Government planning can go when we consider that we have had to lower the figure such a lot since then.
We have heard some very human if hard-hitting speeches from hon. Members opposite. They have talked, particularly the hon. Member for Southwark (Mr. Gunter), about the fear of redundancy and rationalisation in the coal mining industry. The hon. Gentleman went on to say—I think quite rightly—that social responsibilities require special consideration from the Government and of hon. Members on this side of the House. I certainly agreed with him that social responsibilities should have special consideration. But in speaking about social responsibility, I would say that it works both ways. Some two or three years ago, in order to see how it was working both ways, I invited the general secretary of the National Union of Mineworkers, Mr. Arthur Horner, to my division to stay and to talk to us about coal mining problems and see how they were working socially both ways. He spoke about the very human problems that obtained in the mining industry in the 'thirties—but he told me after his visit he understood very well the hardship being caused on retired people by 498 the high price of coal, gas and other fuels as indeed does an hon. Member opposite whose mother lives in my constituency. That is why I made my comment on the social responsibility working both ways. It was not that I wanted to score a debating point but to make the point that we are in this crisis together and that it is not simply a question of hon. Members on one side of the House bandying words with hon. Members on the other side.
I represent an agricultural constituency and, indeed, a seaport constituency, and it may be asked why I am speaking in this debate. I want to speak for only a few minutes because my knowledge of the coal mining industry is not very great. I would, however, remind the House that my constituents are great users of coal which is still the cheapest form of heating far them. Many of them are retired and dependent upon stability of prices. It is about obtaining stability in prices that I want to speak. I want to do all I can while there is still time to try to get our country to become more competitive without devaluation.
I was particularly struck when I looked at the comparable figures of wage rates in the mining industry in this country with those in West Germany, France and Belgium. I have only the comparisons for 1959, but I note that the United Kingdom daily wage rate in 1959 was £3 8s., in Germany £2 1s., in France £1 15s. and in Belgium £2 7s. The export price in 1961 for the United Kingdom was £4 10s. per long ton for the best type of coal, in West Germany £5 15s. and in France £5. There is not a lot of margin in our price.
§ Mr. Ridsdale
I know that it is cheaper, but I am saying that at present there is not a lot of margin in price concerning our export trade.
§ Mr. Griffiths
That is one of my arguments. The logic of the argument is that not only are we selling coal internally at a much lower price than abroad but we are also selling it for export much cheaper than are foreign countries.
§ Mr. Ridsdale
I can see the force of the hon. Gentleman's argument. What I want him to see is the force of my argument when I say that, while we 499 recognise our responsibility to the coal mining industry because of what it did in the war years and after the war in keeping prices down, we must in the present situation of the country watch our costs very carefully. If we do not, we shall be bringing great hardship to many sections of the community, but the people in industry will not have to bear that hardship nearly as much as those who have fixed incomes or who are retired. That is why I support the pay pause, although I know that in itself it is not a sufficient policy.
We have got to the stage where we have to consider our present economic position realistically. That is why I am most anxious to ensure that the money which is being voted to the coal industry tonight should not be used, during the period of the pay pause, to finance further wage increases ahead of increased productivity and so cause another round of wage inflation and the end of price stability. At this stage in our economic outlook price stability is vital.
§ Mr. Ridsdale
I have spoken in economic debates many times and if the hon. Gentleman reads those speeches he will be able to see my views of the policies pursued by the Government, and the warnings I have given.
Because we have felt seriously about the present economic situation, many of my hon. Friends and I put on the Order Paper the Motion mentioned by my hon. Friend the Member for Kidderminster (Mr. Nabarro). I will read the Motion, because it says how we feel about this issue. It says:That this House calls upon Her Majesty's Government to take whatever action is necessary to prevent a further breaching of the pay pause and to initiate any measure necessary to ensure that all incomes shall bear a fair share of the burden in order to maintain the strength of sterling, safeguard the interests of those living on fixed incomes and keep faith with those who have so far refrained, in the national interest, from taking precipitate action against the pay pause, realising that at this moment such a policy is necessary to allow the long-term policies initiated by the Chancellor of the Exchequer to succeed.500 The Motion means exactly what it says, especially in its reference in taking whatever action is necessary to prevent a further breaching of the pay pause. Many people, feeling strongly about the consequences of our policy and the consequences of failure to take action, were greatly shocked by the recent breach in the pay pause by the electricity industry. After that example it has become impossible for me to vote for this money being granted to the coal industry without mentioning the matter, or without urging that the money should not be used to finance wage increases ahead of productivity during the period of the pay pause.
§ Mr. David Ginsburg (Dewsbury)
About an hour ago, the Minister said that there had been a considerable increase in productivity in the mines and a vast increase in the last six weeks. Some time ago, the Parliamentary Secretary said that output per manshift had reached the figure which "Plan for Coal" envisaged for 1965. Would the hon. Member care to comment on that?
§ Mr. Ridsdale
I particularly noticed what my right hon. Friend said about the recent 6 per cent. rise in production. I welcome that, but I also heard him talk about the cost of production. He said that during the year productivity had increased by only 2½ per cent. and that the rise did not offset other increases in costs.
I sincerely believe that at this moment the pay pause is the only economic course we can follow if we are not to have widespread unemployment. Both sides of the House believe in full employment. There is a danger of widespread unemployment only if we cannot compete in world markets. Even without the pay pause, costs in the coal industry have been rising.
I am sure that in their hearts most people realise that if we cannot check rising costs, instead of stable employment we shall have more redundancies and more pit closures, making it more difficult for our steel and other industries to compete in world markets. I do not want the pay pause to last a minute longer than is necessary. I want what all hon. Members want—a mining industry based on really efficient productive units, with the wages and salaries 501 of the men in those units fair and certain and expanding.
In the long run, it is no good trying to bolster up an uneconomic industry, bearing in mind the world competition which we have to face. If the price of coal is too high to compete with the coal industries of other countries, year after year we shall hear talk of subsidies and protection against oil. We have to rationalise the mining industry to make it so efficient that it can compete in world markets.
§ Mr. Ridsdale
I say that about all our industries. We have to see that they are competitive, for only if we are competitive shall we be able to earn our living in the world. We can have prosperity only through competition. If coal is produced as economically as possible, we can afford higher wages, and the necessity for the pay pause, which I dislike, will have gone and the Chancellor of the Exchequer will be able to get on with his long-term policies of seeing that all sections in the community gain from the country's increasing productivity.
Above all, I want to ensure that the pay pause succeeds now. That is why I hope to get even more of a guarantee than the Minister has given up to now that this sum which we are granting to the mining industry, necessary as it is, will not be used to finance further wage increases, without increases in productivity during the pay pause.
§ 6.38 p.m.
§ Mr. Michael Foot (Ebbw Vale)
The hon. Member for Harwich (Mr. Ridsdale), at the beginning of his speech, struck a note slightly different from that of other hon. Members opposite, and it was welcome, but later he concentrated almost entirely on the pay pause. All hon. Members opposite who have spoken, including the Minister himself, have seemed to regard the maintenance of the pay pause as the main issue under discussion. Judging from their speeches, the Bill might almost be called a pay pause Bill.
Some of the hon. Members who have signed the Motion which has been mentioned ought to be a little more careful. What they have sought to urge on the 502 Government is that the Government should ensure that not a single penny of this money being voted by the House goes to the miners. That is what their speeches have meant. If the Government gave a guarantee that not a single penny of this money would get into the pockets of the miners, all hon. Members opposite would be satisfied.
That is a mean state of affairs, because one can make many comparisons, especially as the Motion which the hon. Member for Harwich mentioned refers to justice among the different sections of the community. Hon. Members opposite might have had the delicacy to leave that out of their Motion. They might have said, "We want a straight ban on increased wages", without bringing in the hypocrisy of saying that they wanted the nation's wealth to be shared more fairly.
I do not think that hon. Members are paid sufficiently well, but every hon. Member who has an income in addition to that which he receives as a Member of Parliament is getting great reliefs from the Government. I can guarantee that almost every hon. Member who has signed the Motion referred to by the hon. Gentleman is getting Surtax relief under the Government's proposals.
§ Mr. Foot
The hon. Gentleman may be the only exception. I guarantee that every other hon. Member who signed that Motion saying that nothing extra must he paid to the miners and that the pay pause must be maintained absolutely is this year getting £100, £200, or £300 tax relief under the Surtax arrangements. In those circumstances, it is hypocritical of them to say that their main interest at this time is to make sure that the pay pause is maintained and, in particular, that not a single penny extra goes to the miners.
Even more serious is the Minister's reference to the matter. I should have thought that his reference to this would have satisfied hon. Gentlemen opposite who are so insistent about the pay pause, and I should have thought that this was the first time in our history that the answer to a wage claim which has hardly yet been put in has been given in the House of Commons—even before it has been examined by the Board concerned. The right hon. Gentleman made it as 503 clear as he could that, in effect, instructions had been given to the Coal Board that it must not accede to any wage increase.
The Minister says, of course, that it was not an instruction and that he spoke to the Chairman of the Board as his banker and adviser. Why did not the Minister speak merely as an adviser? What has a banker got to do with it? The answer is that, with the usual delicacy to which hon. Gentlemen opposite resort, he was saying, in effect, "If the National Coal Board does not obey our pay pause we shall see whether we have some way of putting the screw on." That was the purpose of mentioning that advice had been given to the Chairman of the National Coal Board. The advice was given not by its adviser but by its banker.
The Minister has a very good reputation in this House. Everybody knows that he is a nice chap. He is probably the most agreeable and inoffensive Minister on the Front Bench. I do not mean that as an excessive compliment. That is about right. He always behaves with perfect courtesy, and therefore has a great reputation, but very often Ministers with those qualities are selected by Tory Prime Ministers to do the dirtiest kind of work. But in any case, however much we admire the manners of the right hon. Gentleman, I am concerned about what we must all necessarily be concerned about, his wisdom.
As regards his wisdom and his knowledge of the coal industry, there is no reason why anybody in the House should pay attention to what he says, because even in the short time that I have been back in the House—it is just over a year now—I have seen the Minister and his Department become dumbfounded by events in the industry. I have heard what they have said to the House completely overturned by events, and I will prove it.
During the coal industry debate the other day, the Minister said on a number of occasions that the manpower situation was very serious. He described it as a "very serious situation". Later he said:The question of manpower is serious. Today, throughout Britain, there are 20,000 less miners in the industry than there were in January last.504 He continued:… the shortage of men is undoubtedly serious …"—[OFFICIAL REPORT, 24th October, 1961; Vol. 646, c. 760–2.]Nobody dissents from that statement, but when did the right hon. Gentleman discover it?
During the debate last February on this industry, all my hon. Friends who spoke said that the manpower situation in the industry was very serious. Every one of my hon. Friends made that the central point of his case against the Government. What was the Government's reply then? Did the Parliamentary Secretary, when replying to the debate, say that the manpower situation was extremely serious? He did not. Indeed, he said the very opposite. He pooh-poohed the whole suggestion. He said:We have now reached a period of stability. … All I ask hon. Gentlemen to do is to look at the circumstances of today and ask whether the anxieties which have been expressed have any foundation in reality. We have heard ominous phrases used, for instance by the hon. Member for Ebbw Vale (Mr. M. Foot), about alarm and growing concern in the coal fields. I could have understood that three or even two years ago, but I do not believe it today.He went on to say:By their speeches today hon. Members opposite have shown that time and events have passed them by."—[OFFICIAL REPORT, 20th February, 1961; Vol. 635, c. 150–1.]He then used such phrases as "manpower losses had been checked", "contraction has ended", "profit is being earned", "leave the past behind", and so on. I could go on quoting streams of similar phrases.
That was the Parliamentary Secretary's answer in February. It is a significant contrast with what was said a week or two ago. I am not quoting these contradictions merely to show that the Government have contradicted themselves. That would hardly be a novelty. It would not be worth doing. I am quoting them to show that in February, only a few months ago, the Ministry of Power had a complete misunderstanding of the situation in the coal industry.
The answers given then showed that the Ministry had a total lack of understanding of what was happening, because what the Parliamentary Secretary and the Minister were arguing was, "We know that there was a great crisis in the coal industry in 1957, 1958, 1959 and 1960, but now it has come to an end. 505 We have come to the end of that period. We can look forward to a different kind of future." That was the burden of the Parliamentary Secretary's speech, but what he said was obviously not the case. The manpower crisis has deepened, and so has the financial crisis of the industry. I therefore do not believe that any hon. Member can contradict me when I say that the Ministry showed a total lack of understanding of the position. Nobody can deny that from the facts.
That is important because if one took the view at the beginning of the year that the crisis in the coal industry had come to an end, that we were over the hump, that the difficulties were over, one did not have to take any special measures to deal with it, and the Government did not take any. But if one took the view taken by my hon. Friends, and the view pressed on the Government by the National Union of Mineworkers, that the crisis was continuing, one might have had a different approach from the Ministry.
My first allegation, therefore, is that the Government completely failed to understand what was happening in the industry and did not realise that the crisis was far deeper than they chose to pretend last February. Let us look at this continuing crisis which, contrary to what the Parliamentary Secretary said last February, shows no real sign of being checked. Let us look at this crisis which has gone on for four or five years. This is my answer to most of those hon. Gentlemen opposite who have spoken and who, as far as I can see, merely put the classic case for laissez faire. All they have to say about the coal industry is "let the market decide".
What would have been the position in this industry during the past four or five years if it had not been brought into public ownership? From 1957 and 1958 the home demand for coal started to decline. Had the industry been in private hands, we should have had a catastrophic series of pit closures—it has been bad enough as it is—but had the industry been in private hands and, suddenly the tap of prosperity, so-called, had been turned off, we should have had pits closed down right and left. There would have been a crisis which would have shaken the whole country.
506 According to the market theories advanced by hon. Members opposite, that would have been the right thing to do. That is why we do not believe all these theories; because if we apply them to a real situation they do not work. If the industry had been in private hands, not merely would we have had a series of closures but there would have been no stocking of coal because that would not have been profitable. Then later, as a result of the closures, there would have been a serious coal shortage. That is what would have happened under private ownership.
The other alternative has been mentioned already—it is the most likely alternative—that the private coal owners, had they been confronted with the situation with which the National Coal Board was faced in 1958 and 1959, would have gone to the Government and said, "You cannot leave us to bear the brunt of this crisis. You will have to pay us some money. We are not going to pay for stocks. If you want stocks, you will have to pay." If the Government had wanted to import coal, the private coal owners would have said, "If you want to import coal, you go ahead and do it, but do not ask us to do it."
In the same way we can cover all the demands of the National Union of Mineworkers, which are rightly made in this situation, by saying that the burden has been unfairly placed on the coal industry. All these arguments would have been used by private owners had they had to deal with such a situation. Fortunately for the nation—we can never thank our lucky stars sufficiently—the coal crisis which the nation has had to face in the past four or five years occurred when we had a nationalised industry. Do not let us make a mistake about it, the crisis has been tremendous, far bigger than any crisis with which any other industry has been confronted during the same period. It is bigger than the crisis which faced the cotton industry. If we take the figures of declining production and demand, there has been a major crisis.
Thank heaven that we had a nationalised industry to deal with that crisis. Had the industry been privately-owned the country would have been in a desperate plight. One of the things which makes me so angry in this debate, 507 is that here we have a little Bill presented which makes it appear that the coal industry is some sort of industrial delinquent which has to have money doled out to it. So far from the industry having to apologise for what has happened, the country has survived this crisis only because the industry was in 'public hands. Otherwise the situation would have been that a huge amount of money would have had to be given to private owners or the industry would have collapsed altogether. The country has been saved owing to the technical application of the principles of public ownership in the coal industry. But that is not sufficient.
The difficulties of the industry arise because the Government, sheltering themselves behind the fact that the nationalised coal industry saved them from embarrassment, have not had the intelligence or the wisdom to apply the same principles over a wider field. I do not wish to misrepresent the policy of the Government in any respect, but it was given by the Parliamentary Secretary in what I think is a choice and a classic phrase. As recently as 24th October he described the Government's coal policy, or fuel policy, in this way. We must remember that there was a crisis in the coal industry, and a manpower crisis, and, by reason of the fact that this Bill has been produced, there was also a financial crisis. But this is what was said by the Parliamentary Secretary:Our policy is so simple that hon. Members opposite do not notice it working. It is free competition between the fuel industries and freedom of choice for the consumer. That is the whole policy succinctly stated, and it works. It works effectively.So the present situation in the coal industry and in the fuel industry is something which, to some extent, the Government have produced on purpose. This is something which is much more damaging to them than any attack upon them that I would dare to make in my diffident way. I think that they are fools, but they say that they are knaves. They have done this on purpose. This is the result they wanted. They wanted such confusion in the coal industry that they would increase the number of people wishing to leave the pits, over and above those who might have to leave in any case. They wanted confusion whereby 508 nobody knows from one day to another what is the amount which they are supposed to be producing. This is the policy deliberately created, and the Parliamentary Secretary says he thinks that it is working efficiently.
Later, when asked whether he was in favour of the co-ordination of fuel policy—I have heard the Minister say on a number of occasions that he would still carry out co-ordination—the Parliamentary Secretary said:It is free competition between the fuel industries and freedom of choice for the consumer … we believe that competition should direct the size of any industry; that that should be determined by its competitive ability and by nothing else."—[OFFICIAL REPORT, 24th October, 1961; Vol. 646, c. 827–8.]What is the use of the Minister carrying out co-ordination? What is the use of having co-ordination if that is the policy? It is nothing to do with the Minister; it is decided by the market. There is no point in the Minister trying to co-ordinate a fuel policy, when he comes to the House of Commons and says, "It is nothing to do with me. If some consumers of particular fuels like to consume more than we want, that is freedom of choice for the consumer." One of the troubles about freedom of choice for the consumer is that we may get it one year, but in the next year, when the pits have closed, there will be no coal and there will be no free choice. Therefore, the policy of consumer choice does not work This matter has to be planned.
What is the correct figure for the coal industry? That is a difficult problem no doubt, but somebody ought to decide it. At present it it not decided. There is no attempt to discover what it should be. It is just left to the consumer. But it cannot be done in that way, because such disillusionment will be bred and such concern about its future will be created that people will not stay in the industry. We told the Minister that that would happen, but he did not believe it. People who know much more about the industry than I told him that it would happen. Why does not the right hon. Gentleman listen now? What does he propose to do about it?
It may be a sentimental thought, but it happens to be the fact. One of the most precious assets of this country is that a certain number of its citizens, practically 509 all of them from mining families, are prepared to work in the pits. What are the Government proposing to do about protecting that asset? According to the Minister's own declaration they do not give a fig about protecting it. All is to be left to consumer choice.
For some years now, and for another purpose, I have been studying the history of the mining industry of this country. One can see that the same thing has happened year after year and decade after decade. The miners and the miners' union have put forward policies. That is not because they were out to protect a vested interest. They were, of course, concerned to protect their members. But there was something more. We may go back to the days of the Sankey Commission's Report or during the time of the last war. On both of those occasions, when major policies were presented by the miners they were not policies presented in the interests of the miners alone but in the interests of the nation. The fuel policy urged by the miners on the Government did not represent a situation in which they were saying, "We want to keep people in the mining industry." The miners' union is perfectly prepared to see the number of people in the industry reduced if it is done on a proper basis.
The main reason why the miners have presented their case to the Government is they say the Government have misunderstood entirely and have miscalculated what is the amount of coal the nation will need in future. Certainly the Government have misunderstood and miscalculated the number of miners they would need, and it is high time that they took advice from people who know much more about the industry than Ministers have proved in recent months that they know.
The trouble with the coal industry, as with so many industries in this country—it applies to the whole collapse of our economic policy—is that, instead of having a plan for the nation and thinking in terms of real goods and real expansion, most of the affairs of the country are run by a bunch of blinkered bankers or myopic accountants who think that if they get the books right the nation will be all right. All the policies carried out and advocated by hon. Members opposite, including in 510 particular the hon. Member for Kidderminster (Mr. Nabarro), who no doubt would have very good accounts in this House, would wreck one industry after another.
We went through this in the 'twenties and the 'thirties. Have we got to go back to it again? People say that we in the Labour Party always refer to those years, but what has been happening progressively over recent years, and one of the reasons why the nation is in a greater economic crisis than before, is that the moneylenders have had their authority over the economy restored. They are screwing out of the coal industry much more than will be afforded it under this Bill.
I do not expect that the Government will change, for anyhow they do not believe in planning. Only events will teach them, but I hope and pray that one of the events through which we do not have to live again in order to teach the Government will be another collapse of the coal industry. One of the greatest achievements of this country since the war, done in the teeth of terrible difficulties, was to rebuild the coal industry after 1945. If the Government allow it to collapse again they will not be able to rebuild it again.
§ 7.2 p.m.
§ Mr. T. H. H. Skeet (Willesden, East)
It is always a very good thing to listen to the hon. Member for Ebbw Vale (Mr. M. Foot), but, while he might recognise that there is a crisis in the mining industry—which I, also, fully appreciate—I do not think that he realises that there is a crisis in the country.
§ Mr. John Rankin (Glasgow, Govan)
What does the hon. Member think that my hon. Friend has been saying? [Laughter.]
§ Mr. Skeet
Hon. Members may laugh. But I think that it is a little more serious, because we can recollect that in September, 1949, because of the irresponsibility of the Labour Government, the £ was devalued. Going along the course which has been recommended and also agitated for by hon. Members opposite, that the wage and salary pause should be breached, would lead us straight down the road to devaluation.
My right hon. Friend the Minister spoke about the Government having a 511 dual capacity as banker as well as adviser. Those were, in fact, the remarks of the Prime Minister in his recent speech in Sheffield. Hon. Members must recognise that we are looking at the coal industry this afternoon not in the capacity of politicians, but, I hope, in the capacity of statesmen, trying to discover what is the best policy available.
The hon. Member for Ebbw Vale asked why we should not have a fuel policy and asked my right hon. Friend to nominate a figure. If hon. Members opposite recommend that we should have a national fuel policy, let them be consistent, and, if we are to go into the European Coal and Steel Community, recommend in the wider context of Europe that we should have a European fuel policy.
Approached from that point of view, of course, further difficulty will arise. It is not simply a question of competition between fuels here, but we have the impact of Russian oil on the peripheral States. We also have the preference of the Italians for the importation of American coal. We also have the preference of the French for Saharan oil and natural gas. In addition, we have the special position of the associated territories of the Netherlands, Antilles, which will have a right to send some of their products to Europe from time to time. These are the implications I put forward to right hon. and hon. Members, who should be consistent in their policy of recommending not simply a fuel policy for the United Kingdom, but also a wider fuel policy in the context of Europe. Let them recognise that.
The hon. Member for Ebbw Vale also said that it was a very good thing that we had a public corporation looking after the industry in the United Kingdom. Does he imagine that only a public corporation could manage it? Look at Europe and the United States, where private enterprise manages these matters. We are not dealing with private interests in the United Kingdom because we have a nationalised corporation. My right hon. Friend is trying to operate the industry commercially.
This would seem to be the problem. In 1956, we had a production of 222 512 million tons and we had a servicing charge, or interest charge, of approximately £21 million per year. Last year, we had a production of 194 million tons and the servicing charge went up to £41 million. It is increasing at the rate of approximately £5 million a year. My right hon. Friend is looking at certain divisions in Scotland and Wales. If we look at the overall picture of production, we find that 45 per cent. of output comes from what is known as the better areas, Divisions 4 and 6, namely, Yorkshire, Nottinghamshire, Derbyshire, and so on, and 20 per cent. comes from the unfavourable areas in Scotland and Wales.
If we look at Schedule 10 of the accounts we find that the favoured areas provide over 90 per cent. of the profits and the more difficult ones provide at least 72 per cent. of the losses. Therefore, my right hon. Friend has to decide how to make this industry commercially sound so that it can stand on its own feet. Hon. Members know what the answer is. We have substantially to reduce the Scottish industry. We have to go through an accelerated redeployment of labour.
§ Mr. Skeet
The hon. Member may say that we are doing that. For this purpose, I should not be averse to granting a subsidy to enable the Coal Board to build more houses if that were essential, but by raising the prices of Scottish coal my hon. Friend must recognise the implication of his policy. He is encouraging the local industrialists to convert to oil.
Industrialists will find it unprofitable to use coal and, therefore, will convert to oil. The whole weight of the Coal Board's resources should be thrust into the profitable areas, say, Divisions 4 and 6. The whole industry should be reduced in size to the point at which it can be aggressively successful in the marketing of fuel. That is not done by maintaining 200 million tons production or 200 million tons productive capacity.
§ Mr. J. Hill
Having done that, how would the hon. Member run the fuel industry in Scotland? What would be done with the men unemployed in that industry?
§ Mr. Skeet
I realise the important social implications of the matter. I have made successive attacks from this side of the House on the policy which has been adopted by the Government and I am on record as saying that a round figure for the industry of 170 million tons to 180 million tons might be appropriate. I have also said in this Chamber that we have to accelerate redeployment and money allocated for that purpose is very wisely spent.
There is bound to be redeployment if many of the industries in Scotland appreciate the value of turning to oil. Will there be even larger losses in Scotland that will have to be covered? After all, the loss in Scotland according to the accounts is 11s. 11d. a ton. It is not quite as bad in Wales—I believe that it is about 5s. 8d. a ton—but I would not be surprised to hear that it is even higher at the moment.
We are faced, on the other side of the picture, with the situation following the last Budget, when industrialists found that they had to pay an additional price for their fuel oil. Then came the operation of the regulator. My right hon. Friend has been able to keep the price of coal stable from September, 1960, and he says that the price which he announced today is not in the nature of a general increase. But that is not the way it will be construed in the country, for people will consider it to be a movement upwards in the price of coal. After all, where is the stability of prices when one considers what happened in 1957, 1960 and 1961?
We should be very careful not to go too far back into the history of this matter. I listened with interest to the arguments adduced by the hon. Member for Southwark (Mr. Gunter), who considered that if an industry is doing something in the public interest it should receive some form of subsidy or compensation. The answer to that has already been provided by Mr. S. W. G. Ford, president of the National Union of Mineworkers. Mr. Ford, as reported in The Times on 3rd July, 1961, said:Since nationalisation … about 20 million tons of coal had been lost through unofficial action. Over the same period the Board had to import 26,500,000 tons. Had the 20 million tons lost been available to the industry the Board could have avoided a very substantial part of the loss of £74 million on imported coal. Had the 20 million tons been available 514 at the right time the immediate saving would have been about £50 million but the extra proceeds which would have been obtained by the sale of this extra tonnage would have raised the figure to about the £78 million mentioned.Mr. Ford says that if the Coal Board and the people running the business had run it in a proper way, and if there had not been any unofficial stoppages, there would not have been a deficit now.
Hon. Members have spent a considerable time discussing the past, but we must be careful about doing this, especially when the Transport Bill is before us and when it has become necessary to write off substantial losses. We do not want to do that in the case of the Coal Board. Let me say to my right hon. Friend that it is necessary for the wage pause to continue. I hope that he will give an assurance that the moneys he is advancing will not be utilised at any time for this purpose. This is a deficit industry and we must regard it as such. We must also realise that the wage pause will not go on interminably. It will come to an end. [HON. MEMBERS: "When?"] That is up to the Chancellor of the Exchequer, probably next year. It is for the Chancellor to consider the international situation and the strength of our currency and decree accordingly.
My right hon. Friend has said that the productive capacity of the mines should be 200 million tons. But productive capacity could mean, in real terms, operating at about three-quarters of that rate. We must be careful about this, because if it is said that the annual production should be 200 million tons—and that is a lot different from saying that the productive capacity should be that amount—we must also consider whether the market will "wear it". The Parliamentary Secretary has stated that the share of any fuel will be determined by its competitive ability, and it is right that it should be. That, of course, is the Government's policy. We must also consider whether that figure is sustainable on the present run-down of manpower, particularly when there is a surplus of fuel available and in the light of competition, from abroad.
Thus, I ask whether it might be wiser to resort to the cheaper fuels that are available, especially when one considers that costs in Europe are substantially 515 less than our own is it wise to support an uneconomic industry by doing what my right hon. Friend has done—by pushing up Scottish costs—or is not it a little wiser to allow the consumer to have a greater freedom of choice? I dare say that the Chairman of the Coal Board will put forward the proposition that increased mechanisation will enable the industry to maintain a 200 million tons a year productive capacity. But along with that must go increases in servicing charges. Interest charges have been pushed up, as I have said, from £21 million to £41 million, and higher. They will go up to a point where the industry just will not be able to carry them.
Would it not be better, therefore, to consider this whole matter in the light of possible developments? I was encouraged to find that my right hon. Friend mentioned that he is having a review of the future position of the whole industry in the United Kingdom. I also congratulate him on the proposal to import methane gas into the United Kingdom to alleviate some of the difficulties in another industry.
In a publication entitled "World Petroleum Industry", by the Chase-Manhattan Bank, it is stated—and this applies to the free world outside the United States and Canada and, of course, excludes the Soviet Union—just what the pattern is likely to be. It estimates the changed pattern of energy in the 1960s and 1970s. Oil, as a percentage of the total, is 41 per cent. in 1960 and by 1970 it will be 49 per cent.; coal 44 per cent. in 1960, will decline to 31 per cent. in 1970; natural gas will rise from 3 per cent. in 1960 to 8 per cent. in 1970.
That represents the estimated trend throughout the world and it is symptomatic that coal has been falling. There have been a number of illustrations of this on the Continent and I urge hon. Members to take extremely careful note of the changing pattern of fuel supplies. One further illustration of this is contained in the survey on the growth of fuel supply in the free world. It states that the growth of natural gas is expected to rise by 6.9 per cent., water and nuclear power by 4.6 per cent., oil by 4.5 per cent. and coal by as low as 1.1 per cent. during the next decade.
516 The Minister must, therefore, divide his policy between short-term and long-term plans and it is a fair observation to make that the plans so far have miscarried. These plans must be correct. We may have a pipeline from Europe to Britain carrying methane and we must also remember that the chief use of natural gas in France is for electricity power production. The production of electric power in the United Kingdom provides the largest market for coal. We also discover that, faced with the threat of increased prices, the steel makers are thinking again about fuel oil injection in blast furnaces and other technological improvements. We have also found it necessary to import natural gas and all these are impinging on the corner of the market which coal has filled.
I am not saying that any of these developments are wrong. After all, it is the course of progress, but I urge my right hon. Friend to devise his policies carefully between the short and long term, for, while the short term may take him over the next two or three years, if the long-term plans are wrong the result may be considerable misery in the coal mining areas. That is one of the things which I wish to avoid.
I do not envy any man who has spent many years in the pits. It must have been an exceedingly hard experience. While we have an area of full employment, when it is possible to redeploy, we should take the opportunity. Before we become too closely enmeshed in the pattern of Europe, the clearest lines of action should be laid down today.
§ 7.20 p.m.
§ Mr. John Timmons (Bothwell)
I hope the hon. Member for Willesden, East (Mr. Skeet) will excuse me if I do not follow him. I want to confine myself to the situation in the Scottish coalfields.
In an earlier debate, I stated that when the Scottish Division of the National Coal Board was set up in Scotland it was only a transfer of the Fife Coal Company from Cowdenbeath to Edinburgh. As time has progressed I have become more convinced than ever that that was so. During the war years Sir Charles Reid of the Fife Coal Company had a big job at the Ministry in Scotland and at that time he pursued a policy of writing off Lanarkshire. He closed pits in Lanarkshire, not to meet the nation's 517 coal needs but in order to provide manpower for the Fife Coal Company which was short of manpower at that time. That policy has been pursued since the setting up of the Coal Board in Scotland.
I want to deal with the situation as I see it. A large number of mines are listed for closure during the next year. Up till now, since nationalisation, a total of 128 pits have been closed, 50 of them since 1958. But the Board is not stopping at that. We raise no objections to the closure of pits whose coal reserves are exhausted or which are hopelessly uneconomic, but what has been occurring has left Lanarkshire almost without a pit. There are very few left. The last few pits in my constituency are listed for closure next year.
This has been going on for a considerable time. In fact, during the war years while Sir Charles Reid was pursuing that policy I prepared a memorandum which I later sent to the Minister, Mr. Geoffrey Lloyd, and to Sir Hubert Houldsworth, the Chairman of the National Coal Board. The reply that I got from both of them was that this memorandum was far too technical for them and that they left the matter in the hands of the Coal Board. But the Press had a copy of that memorandum. On 16th February, 1954, I had a letter from the convenor of Lanarkshire County Council, Major Monteith, who said:Just a line to say how interested I was to read the report of your memorandum in today's Scotsman. How right you are as regards the Fife obsession. I shall never forget going to London with the county clerk when the closing of Lanarkshire pits was first mooted, and there we met the Coal Board and a great gentleman from Fife who in reply to our representations said they were not in the least interested in the domestic difficulties they might be leaving behind in Lanarkshire, this was a question for the Department of Health primarily. They were not in the least interested whether it cost an extra 10s. a ton or more to bring coal from Fife to the Clyde. That was a matter for the Ministry of Transport. All they were interested in was to get cheaper coal to the surface, and anyway Lanarkshire miners were giving a lot of trouble.Families had to go from Lanarkshire to Fife, Rothes and Ayrshire. They went to areas where there were plentiful supplies of coal, 115 square miles of it, proved by bores which the Coal Board put down to be among the finest coking coals in the British coalfields. About 518 £60,000 went into those bores, and then they were abandoned. There was no attempt to develop them after proving that the coking coals were there. They concentrated on Fife and put down new sinkings, at Rothes, Glen Ochil, Bowhill and elsewhere. If any proof were needed of the sorry state of the coal industry in Scotland, it is available in the stark reality of the Coal Board's admission of failure in the light of the new sinkings.
Many of the old workings taken over by the Board were obsolete and outdated and they never would have been a success under any management. But new collieries are in a different category. One would expect that when the Board set out to sink a new pit, there were prospects and that the Board had already proved it, so that any expenditure arising from sinking the pit would be recouped.
There is some justification for the National Union of Miners demanding a public inquiry into the administration of the Scottish Division of the Coal Board and into its financial transactions. For years it has been obvious to those who have taken the trouble to study the development progress reports, as distinct from official statements of unfounded optimism, that a crisis, technical as well as financial, was imminent in the Scottish coalfields. There is Glen Ochil and there is the possibility of Rothes going the same way next year. Also there are warnings at Bowhill where a great amount of money has been spent.
The Coal Board was only pretending that it was making great efforts. It has proved itself a failure. The bare truth is coming out now, and it is most unpalatable to the people who were not prepared to face it but who went on with the Fife complex, believing in the new eldorado in Fife. They have spent an enormous amount of money at Glen Rothes, Bowhill and Glen Ochil.
Reading the official admissions of failure, one is led to believe that alone among the new projects the three I have named have failed to come up to expectations. This is only half the truth. The majority of the new sinkings have, until now, been disappointing. There are others I could name—Kenneil, Barony, Aitken, Lindsay, Kingshill and many others the names of which I have here—where all the new sinkings and new developments, in spite of millions of 519 pounds spent upon them, have been a failure. Meadow Hill, for instance, in Midlothian, closed in 1960 after working for only one year. There is Headington in Clackmannanshire which closed after four years' working. Again after millions of pounds poured into them, the outcome is absolute failure. The greatest and most tragic failures of the Scottish Division of the National Coal Board have been in their new sinkings which closed because they were nearly all white elephants. None of the pits to which I have referred, quite apart from others I could name, ever reached the national productivity level after all the millions which were spent on them in a very liberal infusion of capital.
Glen Ochil set off with a flourish and a flurry. It was to be among drift mines a sort of exhibition mine for the other coalfields of Britain. Sod was cut there on 3rd February, 1952. It was to be a showpiece among surface mines and the drift was to be a long drift. The output was to be 3,000 tons per day for 40 years. There had to be 1,000 tons in production daily by the end of 1955, and by 1959 daily output had to be 3,000 tons. Mr. Parker, the Chairman of the Scottish Division of the National Coal Board, in announcing the death knell of Glen Ochil, said that output could seldom have been about 800 tons. What he did not say was that productivity at this mine, which had everything but coal, was only half the national average.
Enormous amounts of money were spent at Glen Ochil, Rothes and Bowhill, and they are on the list for closure early next year. I went to Rothes one weekend not long ago and met there a number of practical miners at the pit. They had been working down in the pit. Strange to say, those practical miners told me that it was a white elephant and never would recoup for itself the enormous amount of money which had been spent.
I could go on until tomorrow recounting all the tragic failures of the Coal Board in Scotland in spite of the money which has been put into them. Every one of its ventures has been a failure. No wonder that the Scottish miners are asking for a public inquiry. They have every right to ask for it.
Recruitment to the mining industry is another serious matter. Out of many 520 young men I know I can pick ten who particularly illustrate the problem. They are good practical young miners who have devoted their time to advancing themselves in technical knowledge. Eight of these lads are teaching today, yet each has the Higher National Certificate in Mining Engineering, a colliery manager's certificate and the Diploma of the Royal College of Science and Technology. Although they are all brilliant young men, there is absolutely no future for them in the mining industry. This could not happen in any of the big engineering firms today. If a big engineering firm gave its boys time off for day classes to equip themselves, it would hold on to them and do everything possible to place them at the end of their training.
I have a particular case in mind, a young man working at the coal face in a Lanarkshire pit who is an Associate Member of the Institute of Mining Engineers. He holds his colliery manager's ticket and he holds the Diploma in Mining Engineering of the Royal College of Science and Technology. He is one of, I think, only two in all Scotland to hold a mine rescue certificate. This young man applied for a deputy superintendent's job at the rescue station. One would expect him to get it, with his qualifications, but he did not. The person who got the job had no qualifications whatever.
A young constituent of mine left school at the time when the Coal Board was publishing posters advertising for recruits in the industry and saying what good prospects there were. This young man left school with four Highers and three Lowers in the Scottish leaving certificate and he joined the mining industry. Apart from the practical experience he gained at work, he took his Higher National Certificate in Mining Engineering, his Diploma of the Royal College of Science and Technology and his colliery manager's ticket. Where is he today? There are no prospects for him. When he applied for a job as a ventilating officer he was turned down.
These things are going on all the time. Those are the circumstances confronting young men who have been prepared to devote their lives to the industry. The last lad I referred to went to Glasgow University in October. When 521 I asked him what he was doing, he said he was taking an M.A. degree. He said he was leaving the mining industry because the prospects for young men were absolutely nil.
Much has been said about the Coal Board today. I know very well that the Coal Board took on a tremendous task when it took over an industry which was completely out of date. Output at the time was down to about 145 million tons. The Coal Board took over great burdens, yet, in tackling its enormous task, it met the situation and raised output in order to satisfy the needs of the country when we were badly in need of coal to build up our economy. At the same time, however, the Coal Board was burdened with enormous financial loads.
Vesting date was January, 1947. In August of that year, several of us in areas where pits were being closed were invited to the North British Hotel in Edinburgh. We were treated very nicely by the Coal Board and given lunch. At that meeting, the Coal Board distributed foolscap sheets listing all the pits which it intended to close within the next six to twelve months. Three pits in my area were among the first to go and another two were to go within the year. The reasons given for the closures were that the coal reserves had been exhausted or that the pits were hopelessly uneconomic. What gets me is that we are still paying compensation to former coal owners for pits whose coal reserves were exhausted and which were hopelessly uneconomic. This is one aspect which requires to be reviewed in dealing with the finances of the coal industry.
I noticed only last week that although two other pits are due for closure in the spring, £60,000 is being spent on new capital development. I am sure that the National Coal Board does not know what is going on. The National Union of Mineworkers knows what is going on and has asked for a public inquiry. A very strong case can be, and has been, made for a public inquiry into the operation and the mismanagement of the Divisional Coal Board in Scotland.
§ 7.41 p.m.
§ Mr. Donald Box (Cardiff, North)
I do not intend to follow the hon. Member for Bothwell (Mr. Timmons) into the realms of the dim and distant past nor to follow 522 him into the Scottish coalfields, about which, obviously, he has a specialist knowledge that I shall never possess. I hope, however, in the later stages of my speech to be able to say something about pit closures, to which the hon. Member has referred.
The Bill that is before us is intended to deal with the National Coal Board's accumulated deficit on revenue account. I was interested in the explanation by my right hon. Friend the Minister in the earlier part of the debate that the difference between the amount authorised by Parliament and the extra borowings required by the Coal Board is normally bridged by resort to borrowings from the joint stock banks.
My experience of bankers is that if there is one thing they like better than a well secured overdraft, it is a well secured bridging operation. I wonder, therefore, why they decided on this occasion to refuse these facilities to the Coal Board. I realise that there was difficulty about credit at the time, but this ought to have been able to be overcome. I wonder whether in some way this is a reflection on the financial stability of the Board or whether, on the other hand, it was simply a subtle reminder to the Government that if they decreed that there should be a credit squeeze, then, however indirectly, they would suffer too.
While I have no objection to the Bill as such, it must be, and is, generally recognised as only an expedient. Like other hon. Members, I look forward to seeing the conclusions of the working party which, I believe, is already working out the financial objectives of the Board over the next five years on the lines of the suggestions made by Cooper Bros., the well-known chartered accountants.
The coal industry is crying out for a comprehensive financial reconstruction. Unlike certain of my hon. Friends, I am not afraid if Measures are put before Parliament rather on the lines of last week's Transport Bill, provided that they give a real solution to the problem. Although the sums with which we are dealing today are comparatively small when taken in relation to the huge sums involved in the finance of this industry, no reference whatever has been made to the rate of interest which has been 523 charged on temporary borrowings in the past or to what rate of interest will be charged on future borrowings.
I mention that because there seems to be an idea, which has not been mentioned by any Front Bench Opposition speakers in the debate but which has been mentioned by right hon. and hon. Members opposite outside this House, that the current high Bank Rate is largely responsible for the financial difficulties in which the Coal Board finds itself. I should like to quote from a speech made by the right hon. Member for Caerphilly (Mr. Ness Edwards), who, I am sorry, is not in his place. I notified him that I wished to refer to him in the debate. According to Saturday's Western Mail, the right hon. Gentleman said in his constituency last weekend:Plagued as it was by the vagaries of nature and shifting targets, encouraged to plan for maximum output on a capital investment programme based upon a 4 per cent. Bank Rate only to find the target cut and the Bank Rate pushed up to 7 per cent., how could any industry fail to make major miscalculations?On this occasion, the only miscalculations are those of the right hon. Member for Caerphilly. Apart from the fact that the Bank Rate is now 6 per cent. and not 7 per cent., if the right hon. Gentleman referred to pages 22 and 23 of Volume 2 of the Report and Accounts of the National Coal Board he would see that at 31st December, 1960, the total capital liabilities of the Board approached the colossal sum of £1,000 million.
Of that very large sum, no less than two-thirds was funded at just over 4¾ per cent. and the remaining one-third at a fraction over 3½ per cent. That gives an overall average for the £1,000 million of just over 4¼ per cent. I suggest that there are many large industries which would be highly delighted if they could arrange their long-term finance on such a scale and at such a reasonable rate of interest.
§ Mr. Warbey
As my right hon. Friend the Member for Caerphilly (Mr. Ness Edwards) is not present to reply, may I call the hon. Member's attention to two small points which he has not noted on pages 22 and 23? The first is that the rate of interest on the latest loans is 6⅛ per cent. The second is that the rate of interest on the first loan under 524 the Labour Government in 1947 was 2½ per cent. If the whole of the liabilities of the Coal Board were funded at 2½ per cent. interest, the saving on interest payments would be equivalent to about one-half of what has to be paid at present.
§ Mr. Box
The fact remains that the average is just over 4¼ per cent. on the whole of the sum, whatever the hon. Member likes to say. Those are the facts which are given in the Coal Board's Report.
The Financial Memorandum accompanying the Bill repeats the information given by my right hon. Friend the Minister that he expected a deficit in 1961. This information, as we have already heard, has been supplemented by the fact that we might expect the deficit to increase in 1962. After the price increase of 7s. a ton granted in September last year this is depressing news, ignoring the price increases announced yesterday. It is astonishing, too, when viewed against the background of Lord Robens's rather optimistic remarks as recently as July. At a Press Conference introducing the 1960 Accounts he had this to say:I hope that this year we shall slash the deficit by half and have a clean slate by 1962.Far from slashing the deficit by half or having a clean slate by 1962, I am afraid that we are likely to have a bigger and bigger deficit.
Are we to assume that a sudden deterioration took place in the finances of the Board in the period which elapsed between the Chairman's rather optimistic statement in July and the Minister's gloomy one on 24th October? Or are we to construe the Chairman's remarks as just one more of his less responsible statements for which, I fear, he is rapidly acquiring a reputation? I hope that my hon. Friend the Parliamentary Secretary will clarify the position, because I think it looks on the surface as though there has been a rather alarming financial deterioration, for, on my workings, the increase of 7s. a ton, an average based on the 1960 output which fell not far short of 200 million tons, should have provided additional revenue of some £70 million.
If my arithmetic is right this should not only have covered a deficit 525 equivalent to last year's figure of £40 million but should also have given us a fairly handsome surplus of £30 million into the bargain. Is the Minister now telling us that the deficit for the current year is likely to exceed £40 million despite this 7s. a ton increase? If so how can the Minister possibly subscribe, as he appears to have done today, to the Chairman's forecast made as recently as 22nd October that no general increase in the price of coal is expected during the next four years?
It is, think, inevitable that to a very great extent general policy should be dictated by financial policy. After all, financial stringency decides what the Board can and cannot do, and this, I think, is reflected in the pending closures of uneconomic and worked out pits about which we have heard in both Scotland and South Wales. We have heard a little about it today, and I dare say that we shall hear a great deal more about it in the future.
These are undoubtedly the hard and painful decisions to which my right hon. Friend referred during the recent coal debate, but if anyone doubts their necessity, if he will get hold of last year's Accounts again and have a look at them, he will realise that these hard and painful decisions are essential. As my hon. Friend the Member for Willesden, East (Mr. Skeet) mentioned, a glance at the Accounts will show that of all the Board's nine areas throughout the country only two, the North-Eastern Area and the East Midlands Area, are making a profit. Admittedly, the West Midlands Area is breaking about even, but, even so, it means that, more or less, these two areas are carrying the six which are making considerable losses. The extent of this burden is demonstrated when one realises that the variation ranges from a profit of £2 5s. a ton on our most profitable pit to a loss of £6 10s. a ton on our biggest loss making pit.
It is fairly obvious, therefore, that pretty drastic measures are required if we are to restore the balance, but I hope that any closures which occur in the future will be confined to uneconomic and worked out pits. My reason for saying that is that I see in a recent edition of Coal News a denial of some rumours that there is to be the closure of Lea Hall which, I believe, is one of 526 the show pits of the Midlands. In the same way, in South Wales we are still anxiously awaiting official news regarding Nantgarw colliery. I saw a reference in one of the local papers earlier this week in which Lord Robens is quoted as saying:I am unaware of any proposal to close Nantgarw.I have written to him for fuller information, and I hope that in due course we shall have a more categorical statement on this than that.
It is fairly obvious that more closures will be necessary in future because of financial stringency, but I wish that the Board could be more definite in stating its intentions regarding closures in the future, for it seems to me that under current conditions rumours are bound to thrive, and I think the time has come for the Board to define a more definite policy as to what closures it plans in the future.
We have heard some reference this afternoon to the manpower problem, and certainly it is an increasing problem in many parts of the country. Many things have been blamed. One interesting aspect of the situation I noticed when I read a report the other day was that, following the unofficial strike in Yorkshire earlier this year, no fewer than a thousand men had left the industry.
In various debates we have heard a great deal of dramatic and emotional humbug from hon. and right hon. Members opposite on the question of immigration. Personally, I am against mass immigration, but I wonder whether this could not provide some solution of the manpower problem. I wonder whether any right hon. or hon. Members opposite who represent mining constituencies would say that they would welcome immigration to their areas to help out this difficult manpower problem. I had the opportunity of posing this question to Will Whitehead, the Communist mining leader in Wales, the other day. I must say he did not seem over-anxious to carry out my suggestion.
However, whether it is a manpower shortage or a shortage of machines, it emphasises the need for more and more mechanisation in the mines and fewer and fewer unofficial strikes if we are 527 ever to get the coal industry out of the red. I am glad to see that progress has been made in mechanisation of the mines in 1961—it was referred to by my right hon. Friend in his opening speech—by the installation of some 400 power-loading machines, bringing the national total, I believe, to about 1,600 machines. Nearly 50 per cent. of the coal output of this country will be power-loaded by the end of this year.
On the dismal side we have, of course, the fact that unofficial strikes and voluntary absenteeism last year cost the industry about £40 million. Just how important this £40 million is to the industry is shown by the fact that it was sufficient to pay an increase of 10s. per week to every worker in the industry. A sad state of affairs for an industry which prides itself on having the finest conciliation machinery of any in the country.
Another burden on the industry which could well bear closer examination is the question of concessionary coal. This was recently stated by the Board to be work £42 7s. a year to householders—working for the Board, of course—and £28 2s. a year to sub-tenants. If the Board is unable to supply in kind it gives cash in lieu. I was interested to see that in most cases these cash payments were made free of tax. I think most people are aware that concessionary coal is given to a wide range of N.C.B. employees, but I doubt if they realise to what extent it goes, for in a year it amounts to 4 million tons worth £20 million. That £20 million, of course, amounted roughly to one-half of last year's deficit of the Board. That, of course, values the coal at £5 a ton whereas most of us know from personal experience that it is nearer £10 a ton retail today.
§ Mr. J. Griffiths
Is the hon. Member proposing that the coal concession should be abolished? Has he any idea what that would involve? Does he know that this concession existed long 528 before the Board was set up, and, indeed, has existed ever since mining began? If it were done away with, every price list in the country and every wage agreement throughout all the hundreds of pits would have to be revised. Does the hon. Member understand the problem before he puts forward this solution?
§ Mr. Box
No, I have given way twice.
There are other ways in which the industry has endeavoured to reduce the deficit. There was the voluntary Saturday shift. I am afraid that that was rather a flop. I am disappointed, because Lord Robens might reasonably have expected a greater response from the industry in his attempts to get a voluntary Saturday shift or so many shifts between now and March.
There is a national drive to increase sales, carried out very effectively in the newspapers and on television. I hope that in pursuing its national sales campaign the Coal Board will not confuse the public. I mean by that that it will not press people to buy items when it is already finding difficulty in meeting existing demands. I hope also that the Board will not encourage the sale of products from high cost areas because that would obviously increase its already heavy losses.
The galling thing is that over the next few weeks the Chairman of the Coal Board will witness a rate of productivity, which is now rising and will rise stilt further, which would remove any need 529 for this sort of appeal and probably would give him a handsome surplus into the bargain if it were maintained. This, of course, is because of the incentive of the extra money required in the next few weeks by the miner, his wife and his family for Christmas.
Somehow or other we must produce a similar incentive and produce similar results all the year round. This is the challenge which the Board now faces. If we can do that we can produce a new era not only for the miner and the mining industry but for the general public as well. As an interim measure, therefore, I support the Bill and hope that it will have a Second Reading. But I do so in the hope that proposals for longer term financial arrangements and possibly wider issues will be placed before Parliament before very long.
§ 8.4 p.m.
§ Miss Jennie Lee (Cannock)
I have heard every speech made so far in the debate and by now the House has taken on a rather ghostly and defeatist atmosphere. I do not think that anyone can be happy about either the present situation in the coal industry or its immediate prospects. A little earlier in the day I might have been even more alarmed by some of the remarks just made by the hon. Member for Cardiff, North (Mr. Box). After all these years and all the debates in the House, with very many Members of it having an intimate knowledge of the social life of the pits, of the psychology of the miners and of their technical problems, the most appalling blunders continue to be made.
I am sure than when the hon. Member for Cardiff, North talked about the possibility of immigrant labour helping to ease the present shortage of manpower in the industry he thought that he was making a perfectly sensible and practical contribution. But if he knew miners at all he would realise that the idea that people from another country should be brought into the mining communities, against a background of mining as a sub-standard job which the British working man does not want to do, is utterly appalling. I am completely opposed to the Commonwealth Immigrants Bill. I hope that, against all the folly and blindness of the Government on these issues, we can still 530 keep this country as the Mother Country and can destroy that Bill.
I want members of the Commonwealth to come into this country freely and choose their jobs over a wide diversity of trades, professions and industries. I do not want them to be brought specifically into an industry like mining, because I know exactly what happens. The drift of British miners away from the coal mines is accelerated. I am sure that anyone who has any knowledge of the psychology of the miners will agree with me.
The Government and their supporters have made clear that they want to see the pay pause stringently applied to the mining industry. They want to see coal marketed at the lowest possible price, but what is becoming more and more obvious is that though hon. Members opposite want to reach that kind of destination they have no clue whatsoever how it can be reached. I cannot understand how they come to have the flaw in their logic which makes them believe that it is possible to have one morality for the miners, another for some other workers, and yet another for the dividend drawer and the employer. Yesterday, in a wider debate, the point was brought home again and again that when we are dealing with the private sector of industry our values are different from our values when we are dealing with the public sector.
Why should we expect the working miner and the National Union of Mineworkers to accept a pay pause when they see that it is one law for the miner, another for some workers, and certainly another for those who draw dividends? As my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) pointed out earlier, it is not a year since the Chancellor of the Exchequer, by making changes in the incidence of Surtax, returned money into the pockets of those who have a high level of income. Why does the House not attend to these elementary economic and sociological facts?
I want one nation and I cannot see Great Britain solving its current problems unless we have one nation. But everything we do at the moment is exacerbating the difference between us. I am not telling the Chancellor anything that he does not know already when I 531 say that he will have a "sticky" situation to deal with when it comes to the problem of miners' wages.
It may be quite easy for Lord Robens and the Minister to get together. The Minister might even be able to persuade Lord Robens, although I am not in a position to say "Yes" or "No" to that proposition. But I cannot see the Minister finding the mining community in an agreeable and co-operative mood against the general background of wages and social conditions.
Indeed, another underlying fancy which the Government have clung to year after year is that it is possible to solve the problems of the mining industry in isolation. The only type of Government that can contribute substantially to solving the problems of mining is a Government that knows how to tackle the general economic problems of the country. Of course the Government want the wage pause and cheaper coal. Let us take, first, the problem of cheaper coal.
There might be a case for saying that the price of coal is a factor in the price of steel, of exports and the rest, and that, therefore, we want it to be kept at as low a rate as possible. But if the Government take that point of view they have then to accept the fact that we have a social price for coal, and not a market price following the current market and jumping from one place to another. We have never had a clear answer. Do the Government want coal sold at a social price or at a competitive price?
Again and again from this side of the House it has been made clear that, in the early post-war years, coal was sold at a social price much lower than the competitive price would have been. That gives the miners a claim on all of us. Long before we were talking about the pay pause, the miners had reason to know about the price pause, for a price control was imposed on their commodity when it was not imposed on any other commodities.
Why should hon. Members opposite cling to the delusion that, in their term of office in the last few years, they can at one and the same time denationalise steel and then come here, as the hon. Member for Kidderminster (Mr. 532 Nabarro) and others have come today, to say, "We have to keep down the price of steel, and to do that we must keep down the price of coal"? It happens that, although we were producing less steel last year, and although the demand for British steel has fallen, higher profits have been made on steel. There has been an increase of £38 million in the price of steel, and the miners know about it.
If we compare last year with the year before, we find that steel profits have risen to well over £200 million. If hon. Members ask me what is the relevance of this to the facts, then they do not know the country we are living in. They cannot possibly have the huge profits from steel being poured into private pockets and then say to the miners that it is very important that their coal should be sold at the cheapest possible rate so as to make the highest possible profit for steel. They can have one situation or the other, but not both.
Therefore, as I see it, the logic of fixing a social price for coal is to fix a social price for steel as well. This is a small, compact island, struggling for its very existence in a world where not only the Communist countries but very many other capitalist countries as well—very notably France these days—have a large measure of controlled economy, which means that we cannot say that this is simply the Communist way out. Yet we somehow think that we can run away from the logic of that situation.
I know that some hon. Members opposite have been brought rather closer to our point of view. There is not now so much sneering when we talk of economic planning. One can even talk about the "commanding heights of the economy" being brought under proper ownership, control and balance without hon. Members opposite having an entirely closed mind on the subject. But when are the Government going to act?
My constituency is in the Midlands. I am privileged to represent miners in part of an expanding coalfield. They like to work hard and to play hard. Many of them like to go to Blackpool, occasionally, to see the bright lights. One of the attractions is the "big dipper." The children and the older ones like the excitement of going up 533 one moment and down the next. That is fine on a day by the sea, but what the miners profoundly dislike is the "big dipper" principle being introduced into their daily life and daily work.
The miner, by tradition and by history, and by all the things that have made his character, is not a man who expects to be excessively affluent. He wants all he can get, like any other worker. He wants a good wage. But he wants, very profoundly, serenity. He wants to know what is to happen to him. It may be that the very grimness of his working conditions makes him especially attached to his fireside, to his home, his pals, his church or chapel, his club, his fur and feathers society or his pigeon society, and keen on his football and his other sports.
Anyone who knows the miner's life knows that he is willing to tackle the hard, arduous jobs in coal mining, provided that, when he leaves the pit, he has a genial social environment. One of the first elements in such an environment is that he should have some security, some serenity. I have been distressed when men at the very height of their power, in a prosperous expanding coalfield like the West Midlands, have come to me—and this has happened more than once—and have said, "Should we get out?"
They are not asking that because they are short of jobs—they have jobs and money—but because they want to know what is to happen to them. If that can be the psychology in an expanding coalfield, what is the psychology when one goes to parts of Scotland and Wales? I am not putting up a Luddite argument. It is nonsense to carry on pits once their economic life is clearly over. It is not such a luxury, and never has been, to work in a pit. Many older miners complain more about the noise of the coal cutting machinery than they ever complained about the hard physical labour of their younger days.
What is a national problem, and what comes back again and again to this issue of whether we are prepared to plan the economy as a whole, is this: when a pit comes to the end of its economic life, is it necessary that the mining village should also come to the end of its life? Here is where it is essential that we should have a Government who are not 534 just a meeting point of the pressures of big business, looking after the coal owner, the money lender and the land owner. Here is where it is absolutely essential that we should have a Government who can look at our country, its peoples and its resources as a whole.
Nothing could do greater harm than to expect men and women in middle age and later, who have grown up in a certain community and who have had compensations for their hard work in the warmth of social life with their neighbours in that community, to uproot themselves and start again in another part of the country. I will not say that they should stay there and should not be taken to another part of the country if it is absolutely essential. But what sense is there in the present situation, where not only in London but in all the surrounding areas there are thousands of small new industries cropping up, but where we cannot get out of London or into it, with all its subways and railways? Villages that I knew and that we all knew, which used to be 20 or 30 miles from London not so long ago—real villages—are now London suburbs.
What is happening in places like that? Coal miners come there from other areas and they think that it is splendid. They are coming to a better place, earning a better wage and doing a cleaner job, but what do they find? They discover that it is impossible to obtain a home. The schools are overcrowded and the hospitals are overcrowded. Social amenities are far below standard. Until they experience it the miners simply do not believe that rents can be so high. To obtain an unfurnished house is out of the question, and to get a furnished one costs the earth—and if they have children they are not wanted. If they think of buying a house for themselves they once again come up against the problem of high land values and high interest rates.
Would it not clearly be more sensible, when we have an established community with homes and schools and community centres in which people are used to working together, to plan the country in the interests of its people and not in the interests of a handful of money lenders and financiers? What sense is there in not planning in that way? How can any hon. Member opposite justify what has been done in Britain in the last ten years, 535 during which time the party opposite has had power?
We are discussing today something much more than the £50 million which is mentioned in the Bill. That is "chicken feed". It does not begin to deal with the problems of the mining industry. I hope that the Government will at least set their face against those hon. Members in their own ranks who think that they can get a pay pause on the cheap—they cannot—who think that they can get coal on the cheap—they cannot—and who are now once again bringing pressure to bear in support of district agreements. If they want finally to break both the temper and the heart of mining communities let them try to bring forward once again the proposition of pitting one district against another.
There are some things which are difficult to say because they are so obvious. Why cannot hon. Members opposite realise that we must have for Britain a policy which takes account of all views—a policy for coal, gas, electricity and nuclear power, besides steel and transport? If we had a national plan which offered some serenity to the coal industry, and in which we said, "Here is what we want you to contribute over the next five or ten years. You have your mining community. We are going to plan our industries so that if your pit has come to the end of its economic life we shall not be taken by surprise; we know that it will happen. We will take the necessary steps to see that new industries are built up in your district", we should be in a much better position.
I talk without any real conviction that hon. Members opposite will listen to what I am trying to say. I heard one hon. Member opposite ask why the Coal Board did not build more houses. One year when the Board did build houses it was nagged and jeered at because of the additional cost of its social services. I have never been in favour of the Board building houses. I do not believe in ghettoes, or in men being segregated according to the jobs they are doing. I believe in a vital mining community in which a miner, when he comes out of the pit, is part of the community—a community in which there is a diversity of interest. I believe in a community in which a home can be provided for him 536 either by his own purchase, if he can afford it, or by way of the normal practice of renting it.
An hon. Member opposite discovered that only 389 houses were built by the Board last year. Of course, that was because the Board is up against the same problem as that which faces local authorities. It cannot afford to pay the land prices or the interest rates. I cannot afford to be told, at one moment, that it should do one thing and then, at the next moment, to be sneered at for doing it. So, once again, we return to the problem of housing yesterday the criticism was expressed that too much was made of this problem.
I end as I begun. I have repeated myself, but some things must be repeated. Some things should be said again and again and again, until their basic logic and common sense is understood. This is a precious island for all of us. This is our home. We want it to be a good, warm hospitable home. I want the whole nation to have the qualities that go to make a good miner's fireside—and, incidentally, anybody who tries to take away the miner's concessionary coal will be in awful trouble. He will never know what has struck him. This is one luxury that the miner insists on. He does not expect a big expense account. He does not expect a Rolls-Royce or even a Morris Minor to take him to his job.
This is a little "racket", if hon. Members like to put it that way. This is something that the miner believes in, and he will hold on to it. Having dug the coal he expects a big, piled up, warm fire when he comes home—and he is entitled to it. One day, perhaps, the same warmth and comradeship that we get in the mining village may exist throughout the whole country. Unless we get it I do not know what will happen to us.
It is too late for me to talk about the Common Market. I merely express the hope that we keep out of it. I regard it as an escape hatch—as a short-term way of solving our problems; but it is irrelevant to the debate. Whatever we do, however, we must put our own house in order, and only the House of Commons can do that. No single industry or employer can do the job for us. I am deeply anxious and distressed, because 537 I believe that through the policies of Her Majesty's Government the House of Commons is at present falling very far short of its duties and the job that needs to be done.
§ 8.28 p.m.
§ Mr. John McKay (Wallsend)
I have listened to the whole debate, and it has been interesting to hear the varied views expressed about the problem of the coal industry.
I have listened on many occasions to the hon. Member for Kidderminster (Mr. Nabarro), and sometimes I have admired his knowledge of the subject and his method of presentation, but as time goes on he seems to me to deteriorate. Whatever his views may be about the industry, he is losing weight in the House because of his attitude.
The hon. Member said that if the price of coal rises the effect is felt throughout the nation's industry, and that, therefore it is absolutely necessary for us to be very careful not to do anything which would tend towards that happening. That may be so, but when we have the British Iron and Steel Federation and the Federation of British Industries pointing out that a large part of the financial needs of the National Coal Board arises from social considerations and saying that this burden should be borne by the Government, and a Select Committee coming to the same conclusion, one would think that anyone commenting upon the industry would be rather careful about the viewpoint that he adopted.
What is the position about the industry's finances? How is it that today we are paying the equivalent of 4s. 6d. per ton in interest? There has been a controversy about the percentage. I am not bothered so much about that as the cost per ton, because that gives a much clearer idea of the position. Over the first six months of 1961, the cost per ton in this respect was 4s. 6d. I should have thought that the hon. Member for Kidderminster would have grasped that fact and suggested that in that connection something could have been done to aid the industry in its cost of production.
The history of the coal trade since 1947 shows that the industry has to some extent been acting as a welfare society for the country at large. After all, when businessmen want to set up an enterprise and 538 require millions of pounds for the purpose, they will take up the loan only if they are given a good deal of freedom in the use of the money. Therein lies one of the difficulties of the coal trade. The National Coal Board took over one of the biggest industries in the country, and it required a tremendous amount of capital not only for modernising it but for renovating it and bringing back into operation the machinery then in the pits.
We have the remarkable position that we have here an industry which has been making a profit every year since 1948—about £201 million if one leaves interest payments on one side. In other words, it has proved its ability to produce the goods, and it would have produced them at a profit if it had not been handicapped from the beginning by financial considerations which could not be avoided.
Consider some of the events. For years the country cried out for mare coal. The supply was insufficient, and the country had to look elsewhere for fuel. Because of this demand, the Board had to continue operating uneconomic pits, and at the same time it had to continue with its modernisation plans and also prepare the way, by capitalisation, for new shafts and new machinery. In doing this, it faced tremendous difficulties.
Had the Board been able, like capitalist organisations, to demand the price that the market could bear, had it had freedom to carry on the industry as it wished, the result would have been far different. The fact that it had not was one of the outstanding misfortunes of the Board. It was a misfortune in some senses. From the national point of view, it was just the opposite, it being essential for the work of the industry to be carried on to meet the nation's need.
What were the needs of the nation in respect of coal? One of the primary needs was to keep the price to the lowest possible level, to meet the viewpoint of the hon. Member for Kidderminster. He seems to be anxious, in all his debating points, to look after the interests of other industries. He may be speaking about the coal industry, but he is not considering the difficulties which existed for the coal industry at the time. He is not considering the demands which the nation made upon the industry in respect of prices. He is not considering the difficult pits which the coal industry had 539 to continue in operation. His chief worry as a director of industry is the selfish one of, "Get coal as cheaply as you can."
That was not the national point of view. The national point of view was that the need for coal was so great that orders were given to get the coal wherever we could, regardless of cost. That had to be done. That is why the industry has paid £300 million in interest. The point is that the conditions in the industry, the needs of the nation, and the great need for modernising the industry throughout have forced the Coal Board to demand this enormous amount of money which has always been available because the industry is in a unique position.
This is not an industry in which one can build a factory, install machines and begin operations on a business basis with a clear idea of what one's prices and required profits are to be. That cannot be done in the coal industry. Anyone who knows about the conditions of the pits knows that with all the money in the world some of them would still take a long time to bring up to the required standard of efficiency.
This is a major problem for the industry. It is not merely a question of its present profit of £15 million a year, but of what is to be done in the near future to put the industry on to an ordinary business basis. If that can be done, even though it may at first result in increased expenditure and possibly more Government loans, if this great liability can be written off, this financial burden of 4s. 6d. a ton in interest rates which the industry has to bear, the criticisms of those who think like the hon. Member for Kidderminster could be met.
Let us write off that debt, not for the sake of the Coal Board, but for the sake of the nation. Let us put this industry, one of the greatest and most important in the country, on to a financially sound and businesslike basis. Despite all the difficulties, the Board has been able to make a profit of £15 million a year. If the burden of interest rates could be removed, not only would the Board be helped, but permanent security would be given to mineworkers and other industries would also benefit. The Coal Board is not out to make a large profit 540 over and above what it requires for carrying on the industry, progressing with modernisation and keeping the industry up-to-date. After that, it would reduce prices to the lowest level possible.
Of course that is unusual, but the Coal Board is in an unusual situation. It took over an industry which was in a more difficult position than that of any other. This is a tremendous undertaking and my suggestion proposes a drastic change. But the country already helps other industries. For example, the farmers have subsidies and have received tremendous financial support for many years. What is that for? It is to keep the price down to help the nation. They receive hundreds of millions of pounds by way of subsidy.
Again, £30 million was given to the cotton industry, and, according to my information, £404 million was provided last year by way of investment and initial allowances. These are tremendous sums of money and were given to industries which were not in tremendous difficulties. They did not have the tremendous financial liabilities which the National Coal Board has.
We ought to consider seriously how, for the sake of the nation and the industry itself, we can put it on a sound financial basis to enable it to meet the nation's demand for coal. It has taken many years of struggle to bring the mining industry to a fairly satisfactory state of efficiency. This shows that it is in a healthy condition and that it has been managed well not only from a national point of view but from the point of view of the people who work in it. The National Coal Board has met its obligations and watched over the social needs of the people by keeping down prices as much as possible.
It is acknowledged that the import of coal from America cost the National Coal Board £70 million. Can anyone imagine a private industry agreeing to import a commodity which it manufactures itself and in addition paying £70 million for it? No businessman would consider such a proposition. He is concerned merely with making his millions.
The Conservative Party is always shouting about free enterprise, but while free enterprise is allowed in private industry it is not allowed in the 541 nationalised industries. Prices were kept down and, as a result, the industry is now faced with these financial difficulties. Had the Coal Board been free to obtain the price it could demand in the open market, it could have obtained £2,000 million in ten years. But, because of the advice of the Government, it was not able to take advantage of prevailing market conditions. Nevertheless it was doing all these things for the sake of the nation. But because the industry had no freedom, it could not demand the price which might have been obtained for its products, and so it got into financial difficulties.
All these things have created for the Coal Board, and for the industry generally, a situation which calls for a national investigation, so that we may ascertain what can be done to free the industry from its present difficulties; obtain coal at cheaper prices and help to face the competition which will come from the Common Market.
§ 8.50 p.m.
§ Mr. William Warbey (Ashfield)
I count myself fortunate in being the third hon. Member in succession to be called from this side of the House. But I consider it a tragic commentary on the lack of interest shown by hon. Members opposite in this great national industry that there is no one from the benches opposite who is prepared to take part in the debate.
From speeches which we heard earlier from the other side of the House, it is clear that the sole interest of hon. Members opposite is, first, that the industry should continue for a time to supply some coal cheaply to other industries not yet ready to turn over to oil, and, secondly, that it should not be a burden on the Surtax payers. Apart from that, hon. Members opposite are not concerned. They are not concerned with the social implications of the industry; with the service which it renders to the nation, or with the contribution it makes to our balance of payments and to the political and strategic interests of the country. Above all, they are not concerned with the social welfare and well-being of the men who work in this great industry, or their families.
On the basis of this Bill hon. Members opposite regard the problems of the industry solely from the point of view 542 of finance and as a commercial question. That has also been the approach of the Government. They say that the coal industry is in deficit and so they will help it out temporarily, provided that it is prepared to take action which will ensure that in the future the industry is run as a commercial proposition, with little or no regard to the general national well-being and the social interests of the workers.
What do the Government propose? First, to impose further interest burdens on the Coal Board. We have not been told what will be the rate of interest on loans to be made under the provisions in the Bill. But we know that recent loans have carried rates of interest as high as 6⅛ per cent. What a remarkable contrast with the first loan made under a Labour Government, in 1920, when the rate was only 2½ per cent. If all the loans made to the Coal Board and all its liabilities, carried an interest rate of only 2½ per cent., the Board would not be "in the red" today. It would be showing a surplus, because the accumulated profits would more than exceed the payments which it has to make in interest charges under the rising interest rates imposed by a Tory Government.
Secondly, the Government have imposed a pay pause on the industry, to keep down the cost of production. I think that that was the phrase which the Minister used. Thirdly, they propose that the industry shall be exposed to further competition from oil and from natural gas, again, presumably, to force down prices. Fourthly, the Government now introduce, or apparently propose to support, a new system by which considerably higher prices are charged for coal produced in some divisions; so far in the high-cost divisions, namely, Scotland and the North-West. I should like to know a little more about the significance of this proposal. It appears to me that this is the beginning of a process of setting one division in competition with another, a competition which would have the effect of gradually extinguishing the high-cost divisions in conformity with the Government's declared policy of no longer allowing the high-cost areas to be a burden on the low-cost areas. If this is to be the 543 policy in future, what is to be its effect on wages?
I suggested in an earlier intervention that this might well be the beginning of a process which will lead back to the bad old days of district wage agreements. What are the miners to think of the various propositions which are now put forward to them by the Government? First, they are told that there is to be a pay pause. Secondly, future wage increases must be related to increases in productivity. Thirdly, the high-cost areas must not be a burden on the profitable areas, and, fourthly, there must be differential prices according to cost of production in the division.
Add all these things together, and do they not come to this? The men are being put—perhaps even provoked—into a position in which they will be told, "You cannot have an increase in Scotland because there has not been an increase in productivity in Scotland because the Scottish coalfields are being run at a loss, but you can have an increase in the East Midlands because there productivity is high and the coalfield is profitable".
I warn the Minister that if he is beginning to think in those terms he had better have another thought. I should like to have from the Parliamentary Secretary tonight the kind of emphatic repudiation we had in the previous debate on the coal industry, that such a retrograde step would ever be contemplated by the Government. I hope that he will be able to repeat it. I can assure him that if the Government are thinking that in this way they can set forward a process of setting one group of workers against another, and allowing one group of workers to suffer through the accidents of geography and geology while others enjoy a better standard of living because they are in a more fortunate place, the Government will come up against trouble.
I happen to live in an area which would benefit if this kind of thing were to happen, but I can assure the right hon. Gentleman that the coal miners in the Ashfield constituency and the Nottinghamshire coalfield know what Spencerism has meant in the past. They know what it has meant in the destruction of working-class solidarity and the 544 weakening of the whole trade union labour movement. They have turned their backs on that and do not mean to return to it in future even for the sake of personal gain which might come from it. I hope we shall have this most emphatically repudiated before the end of the debate.
The way to overcome these financial problems of the coal industry is not difficult. Remove the colossal interest burden and wipe out the interest payments by a capital levy on those who have made vast capital gains over the last ten years. Reduce the interest rates on the remaining loans to a reasonable level of 2½ per cent. and wipe out any interest on the loans proposed by this Bill, because they are only a payment due to the Coal Board in return for its past services to the nation. If we do that we shall have no difficulty about the future.
§ 9.0 p.m.
§ Mr. Thomas Fraser (Hamilton)
The whole purpose of the short and simple Bill we have been discussing today is contained in the one sentence:… to empower the Minister to advance, up to the end of 1962, not more than £50 million towards financing the Board's accumulated deficit.There has been no serious criticism of the purpose of the Bill and I should imagine that by this time the Minister will be firmly convinced that it will receive an opposed Second Reading. However, the House has properly taken the opportunity to consider the affairs of the mining industry and why there has been a deficit accumulating over the years which has necessitated, at this time, the introduction of the Bill.
In his opening speech the Minister made it clear that the reason for the announcement yesterday of the proposals to increase certain coal prices was that hon. Members would be having a debate today. I think the Minister is now in the position where he must await the representations that might come to him from the Industrial Coal Industry Consumers' Council and then he may either approve or not approve the Coal Board's proposals.
My hon. Friend the Member for Ash-field (Mr. Warbey) said many things about the probable effects and consequences of these proposals. His remarks 545 greatly pleased me. I was delighted that he said what he did about the dangers of returning to district agreements, since my hon. Friend represents one of the districts which would be likely to do rather well out of any war being waged between the divisions of the National Coal Board. But I happen to come from a division which would come worse out of any renewal of the old conflicts between different districts or divisions in the British coalfields. In the statement issued by the Coal Board yesterday, I find these words:The effect of increasing the prices of Scottish and North-Western Divisions' coals will be to bring the proceeds of these coalfields more into line with their cost of production. This is in conformity with the Board's long-term policy.This could mean that sooner or later—and perhaps sooner—efforts would be made to restrain the miners in those two divisions when increased wages are being sought, while granting increases elsewhere. Or it could mean that the Minister and the National Coal Board would be perfectly happy to lose the markets for the coals produced in those divisions and then to proceed with large-scale closures. I wonder if the Parliamentary Secretary, in his reply, could say what the Government understand to be the Board's long-term policy here referred to.
It seems that the policy is more calculated to bring about a rundown in manpower rather than to affect wages, because the following paragraph in the document reads:If the alternative course of a general increase in the prices of all coals were followed, this would mean higher prices for coals got cheaply and efficiently in the Midlands and Yorkshire, possibly leading to a loss of markets for these coals.So the Coal Board was determined not to have a general increase because to do so would have meant a loss of markets for the coals which are the cheapest at the present time. I think the Minister will not deny that these are the cheapest coals, and that the Coal Board was not willing to have a general increase because it would have led to a loss of markets for the cheapest coals. These two divisions where there has been this further selective increase are the divisions which at present have the dearest coals. This policy set out in yesterday's 546 statement must be calculated to lose markets. The purpose of this price increase announced yesterday must be to lose markets for coals produced in the Scottish and North-Western Divisions.
This is a policy matter upon which Her Majesty's Ministers ought to declare themselves, for I think it is a serious business. This is writing off Scotland and the North-West. That is how it seems to me, and I think the Minister is obliged, before we conclude our discussion this evening, to tell us how he sees it and whether he has construed this document as I have done.
The Minister went on in the course of his speech to tell us that he appreciated that there was an application for a wages increase made by the National Union of Mineworkers to the National Coal Board and that he had communicated to Lord Robens the Government's pay pause policy. I think it was very proper that the Minister should do that, and I do not think that any of us would quarrel with anything that he said in this regard this afternoon. But, as he knows full well, he was followed a little later by some of his more irresponsible hon. Friends who demanded that he should instruct Lord Robens that in no circumstances was there to be any wages increase so long as the pay pause continued.
The hon. Member for Kidderminster (Mr. Nabarro) talked about the sanctity of the pay pause and said that even if this goes to arbitration and arising out of arbitration there is an award in favour of a wage increase, the Minister should say today that this would not be honoured. He asked that this award should be dishonoured as other awards have been dishonoured by the Government. I hope the Parliamentary Secretary will reply to this proposition put by his hon. Friend the Member for Kidderminster and say that he will give no such instruction to Lord Robens and his colleagues at the National Coal Board.
In any case, I was somewhat relieved to be informed that some remarks of Lord Robens were quoted on the tape a little while ago and I went along to check it for myself. I will give to the House what appeared on the tape at 8.24 p.m. Lord Robens, having been told about the Minister's statement, was 547 asked what the position was and he is reported as having said:I have certainly been advised of, and thoroughly understand, the Government's views with regard to the pay pause—as does every employer and trade union leader. I have received no instructions from the Minister or the Government in connection with the present wage negotiations with the miners. If in fact I had been instructed as to my course of action, then I would have had to inform the union accordingly, and I have no doubt that they would then want to transfer their negotiations to the Government.And quite right, too. That must be the position, and I hope the Parliamentary Secretary will assure us that that is the position, that the National Union of Mineworkers will sit down with the National Coal Board to discuss this wages application, and will be able to discuss this matter freely and frankly with the National Coal Board, at the end of the day, reaching its decision, bearing in mind all the relevant considerations including what the Minister has said about the pay pause. But, equally, I hope that account will be taken of the situation in the mining industry, the loss of manpower and all the rest.
§ Mr. Fraser
Yes, and the sanctity of agreements. I hope that all those things will be taken into account in the free and frank negotiations which, I hope, will proceed between the National Union of Mineworkers and the National Coal Board.
A good deal has been said about whether there is anything in the Opposition's argument with regard to the quite unjustifiable burdens which the Coal Board has had to carry. I think that no one can in honesty deny that the deficit which has been accumulated by the Coal Board is the direct responsibility of the Government. All Governments since vesting date on 1st January, 1947, have some responsibility for it. There has been price control. Undoubtedly, during the first ten years of nationalisation, if Governments had not controlled the price of coal and kept it down far below what the market price was and what the European price was, and if the Coal Board had been free like manufacturers generally to take the market price for its products, it would, of course, have accumulated a huge surplus. It was not so allowed.
548 Government policy has determined the income of the National Coal Board, but Government policy did not determine its expenditure. Expenditure kept rising faster than income, and, of course, a deficit accumulated. I have no doubt that any impartial body looking at the matter would say that the Government had a responsibility there which it ought to face.
The second point made by my hon. Friend the Member for Southwark (Mr. Gunter) in the excellent speech with which he opened our debate related to the losses on imported coal. Is there anyone in the House who could claim for a minute that any private industry in this country could have been invited, let alone compelled, to incur a loss in accepting a commodity brought in from overseas at the direction of the Government to supply a third party in this country? The National Coal Board did not want this coal. Industry wanted it. The Government said that it had to be imported. Since the National Coal Board was given certain powers under the 1946 Act and it had to assume responsibility for supplying this coal to the consumers, it imported coal from overseas.
For the privilege of handling the coal, the Coal Board had to rob itself of, for a long period, about £3 a ton. Over the period, it cost the National Coal Board £70 million to enable industry in this country to have the benefit of coal supplies brought in from overseas at a time when our prices were very much lower than coal prices in other countries. This, surely, is a responsibility which should be assumed by the taxpayer, not by the National Coal Board and not by the miners.
Some of my hon. Friends would say that it was a burden placed on the miners and that it ought not to be placed on them. Equally, it ought not to be placed on the consumers of coal. It ought not to be placed on the consumers of coal now, yet these price increases are to deal with the deficit. It is a responsibility which ought to have been assumed, and ought still to be assumed, by the Government, by the taxpayers.
Can the Parliamentary Secretary give any reason why this should not be so? It is no reason to say that the Coal 549 Board made certain profits from its exports. That is no answer to the National Coal Board being compelled to incur losses by imports which the Board did not want. The imports were not for the Board.
The burden of subsidence has been imposed upon the Board for subsidence occasioned by coal workings under private enterprise. Could any right hon. or hon. Member, in any part of the House, imagine any private enterprise industry being required by statute to carry a burden of compensation for something done by its predecessors? That is what has happened here.
In reply to the hon. Member for Kidderminster (Mr. Nabarro), who did not know that any sector of private enterprise had been given subsidies, let me start with the thin edge of the wedge. The present Government are doing their utmost to encourage industrialists to go to certain parts of the country. The local authorities are encouraged to provide houses for them. The Minister of Housing and Local Government, or the Secretary of State for Scotland, gives an increased subsidy to local authorities to provide houses for the industrial workers who work for the industrialists who come into their areas. When, however, the new industrialist happens to be the Coal Board, which puts down a new pit and brings in miners from other places, the Board is expected to assist the local authority to provide houses for the transferred miners.
No Government would ask private enterprise to make such a contribution, let alone compel it to do so, but the Government compel the Coal Board to make this contribution towards the housing of its workers. This, surely, is a burden for the taxpayer and not for the Coal Board.
§ The Parliamentary Secretary to the Ministry of Power (Mr. J. C. George)
§ Mr. Fraser
The Parliamentary Secretary shakes his head, but he knows full well that in 1946 the Labour Government, of which I was privileged to be a junior member, gave to the Scottish Special Housing Association the job of building 10,500 houses for transferred miners in the developing coal areas. By 550 1952, that programme was completed. Then, the Government said that the Scottish Special Housing Association would no longer do the job and that it would now be done by the local authorities with a contribution from the Coal Board. That was a Government decision. These financial burdens which have been put upon this public industry have caused it to accumulate a deficit. They are burdens that would never have been put on any other industry.
If hon. Members opposite do not know about subventions from public funds to other private enterprise industries, let me recall that in 1947, when we wanted to get more food from our farms, we increased the global income of agriculture by no less than £40 million a year to provide for the landowners and the farmers the cost of the capital equipment which, the Government believed, was necessary to get us our increased food production. It was the Government's plan to get increased food production for the nation. It was to be done by the farmers and the landowners, who had to provide the capital equipment, so we increased the money paid to the industry by £40 million a year to enable them to carry out the capital re-equipment of the industry.
The £40 million was supposed to go on for four years, making a total of £160 million. The House should be aware that at the end of the four years the £40 million was not discontinued. It was not just £160 million which was given for the re-equipment of agriculture. There was no industry in the country which had more need of re-equipment than the mining industry. How much have the taxpayers been invited to find by way of subsidy for the re-equipment of the mining industry? Nothing at all. We have the example of the cotton industry, the re-equipment of which was expected to cost £30 million—but not, like this £50 million, by way of loan at some 6 per cent. rate of interest. Not at all. It was £30 million by way of gift—
§ Mr. Fraser
—to a private industry. Millions of pounds have gone to the aircraft industry, and, of course, there are many other industries I could mention if there were time.
551 As my hon. Friend the Member for Southwark said, it is not only we who make this plea. The Select Committee on Nationalised Industries, dealing with transport, enunciated the principle about the Government assuming responsibility for costs put upon nationalised industry by reason of Government policy. If it was Government policy which caused losses to be incurred, or caused a burden then the Government should make the taxpayers foot the bill. As my hon. Friend said, this principle has since been supported by many people outside who, I think, are a little more friendly disposed to the party opposite than they are to us on this side.
§ Mr. Fraser
The National Union of Manufacturers and the Iron and Steel Federation have supported this principle. I should think that it is a principle. One either accepts it or rejects it. I should like the Parliamentary Secretary to tell us tonight whether the Government accept this principle, and, if they do, whether we shall see shortly another Bill dealing with the mining industry, and one not just for wiping out this accumulated deficit but providing for the Government to face their responsibilities for the losses which have been incurred by the National Coal Board, a Bill which will result in the Board's having a very considerable surplus.
The Minister has made clear that there has been an encouraging increase in productivity in the industry. Output per man-shift has gone up steadily over the years and has gone up quite rapidly in recent times; we have produced more coal in the last four weeks than we did in the comparable four weeks last year, and with something like 24,000 fewer men in the pit.
In the last few years there has been a loss of about 152,000 men in the mining industry. If they were all going into other industries where there was a need for them, and in the communities in which they live, we should all be very happy about it. None of us on this side of the House, particularly those of us who have spent a good bit of our lives in the pits underground, thinks that this is the best way to earn a living. We think that there are far better ways of 552 earning a living than going down into the bowels of the earth.
But there is something more to this than just getting a job somewhere. We have found over the years that communities have been left derelict as a result of the closures which have taken place. This is happening again in Scotland. In Scotland we are to have another 16 pits closed next year. There has been nothing like this in any other part of the British coalfield. Another 5,000 men will be displaced. I know that Ministers say, "But they are all going to be found jobs, at least, all the underground workers are going to be found jobs elsewhere."
The Parliamentary Secretary knows full well that many of these pits are in parts of Scotland where we have been shedding population rapidly in recent years and where we have communities which are falling into a state of dereliction, if not actual decay. This position is being worsened by what is happening now. That is why we say, as some of us have said in a Motion which we have put on the Notice Paper, that these closures should not be allowed till the Government have made proper inquiry about the social and economic questions. Let them set up a Committee and let them consider whether or not these closures should take place where there is still coal, as there is in most cases, after we have had a report from a committee of inquiry into the social and economic consequences.
I feel deeply about this because all round my constituency and the part of Lanarkshire in which I live there are towns and villages of from 2,000 to 12,000 or 14,000 population which even up to the war were wholly dependent on the mines around which the houses were built. I have seen the mines close down and no other industry coming in. And it is not as if the workers previously in the mines had to go two, five or eight miles to get a job. My constituents get on a bus at 5 o'clock in the morning to start work 40 miles away at 7 o'clock. It takes them two hours to get to work and two hours to get home in the evenings. What prospect do hon. Members think young people will see in such communities in South Lanarkshire?
A pit has been closed in the village of Colburn. Two years ago there was a 553 colliery over the hill at Douglas, three miles away. Only two collieries are left in this part of Lanarkshire now and they are both in danger. When they close there will be a large number of villages of 3,000, 5,000 or 6,000 population without any employment. The men there will not get work within six miles of where they live. There is no work of any kind. They will have to get on the buses and travel 20, 30 or 40 miles to their jobs until they have housing in other areas, and then the present communities will decay.
These communities contain many houses built in recent years for miners who were transferred from the centre of Lanarkshire to South Lanarkshire. A little while ago houses built only two years ago were being advertised to let in the newspapers, because they happen to be in Douglas where there is no employment. The Parliamentary Secretary knows enough about this to know that heed must be taken of the social and economic consequences of what is happening in the mining community. With the new price proposals made yesterday, it is clear that it is the intention that the 16 closures to come in Scotland next year will be the forerunners of other closures.
In this situation I beg the Parliamentary Secretary to say tonight that before any of these closures take place the Minister with his right hon. Friends—because this is not only the responsibility of the Minister of Power but also of the Secretary of State for Scotland, the President of the Board of Trade and, indeed, the whole Government—will see that an independent committee of inquiry is set up to look into the social and economic consequences of closures in Scotland and that those closures do not take effect until a report from the committee has been received and considered.
§ 9.30 p.m.
§ The Parliamentary Secretary to the Ministry of Power (Mr. J. C. George)
I listened with intense interest and a great deal of sympathy to what the hon. Member for Hamilton (Mr. T. Fraser) said in closing the debate from his side of the House. Several points should be dealt with right away, because they reveal real anxiety in the minds of hon. Members on both sides. The hon. Member for Hamilton raised the question of the 554 danger of district wage agreements again taking their place in coal mining areas. The hon. Member for Ashfield (Mr. Warbey) and one of my hon. Friends felt that there might also be the danger of this in the Board's new price policy.
Of course, this price policy is not a new policy. This has been the policy of the National Coal Board from the very beginning, as explained in the "Plan for Coal," which was accepted by the Labour Government in 1950. On page 33 of this document it was stated:By pricing each main type of coal in each market zone as nearly as possible in accordance with the costs of production and transport, the Board will be calling upon each group of consumers to defray the true costs to which their consumption gives rise. Internal subsidies from one coalfield to another will be reduced to the greatest possible extent.Perhaps there has been delay in putting that policy into full effect, but there have been reasons for that. I quoted that extract to establish that it is not a new policy. This was the intention of the Coal Board from 1950 onwards. On numerous occasions, particularly in the last year or two, the Chairman of the Board and the Minister have made it clear, so as to remove any doubts or fears, that neither would be a party to the restoration of district wage negotiations. I repeat that assurance tonight. It does not follow at all that, because prices are equated in districts to the cost of production, there is the following danger of district wage agreements. I hope sincerely that what I have said removes the fears from the minds of hon. Members.
The hon. Member for Hamilton also implied that this policy, which I have shown is not new, was designed to bring about large-scale closures in Scotland, and he questioned the soundness of the alternative, mentioned by my right hon. Friend, of a general price increase. He seemed to question the argument which was quite clearly put by my right hon. Friend, that it was tolerable for a long time to subsidise a losing district from a gaining district so long as competition was not as fierce as it has become, but the result of that policy has been to raise the prices in the Midlands where coal is produced cheaply—though not so cheaply as the hon. Member seemed to indicate. In such areas prices have been forced up by general price increases until those areas where coal can be produced cheaply is losing out to oil.
555 The commanding reason for no general price increase was the danger of losing more custom in an area where we desperately want to expand production. That situation pushed the Board back on to the question of letting prices rise only where heavy losses were made. I would be the last to say that this might not lead to loss of trade in these areas, but let me again make it clear that this is not a new policy. This is what the Board said about what it had been doing in the first three years of nationalisation:The profits of the low-cost areas were made to cover the losses of the high-cost areas. As an emergency measure, this internal subsidisation had to be accepted. It is none the less undesirable as a permanent method of dealing with wide differences in production costs. In the long run, planned reorganisation of the coalfields should make them all self supporting, or nearly so.That is the policy which is now being put into practice. I do not deny that there may be some consequences, but there is no evil intent. The policy was clearly enunciated and accepted by the hon. Member's Government of the day.
§ Miss Margaret Herbison (Lanarkshire, North)
Does not the Minister realise that the explanation that he has just given has strengthened the fears expressed by my hon. Friend that the result of those increases in the price of Scottish coal will inevitably lead to more closures of Scottish pits?
§ Mr. George
I had intended to answer that point later, but I will do so now. The Government accept the responsibility for creating a reasonable degree of prosperity in Scotland, but we do not believe that the way to achieve that is to sell coal at artificially low prices—to induce a demand for something which can be produced only at a loss. Nor do we think that the way to achieve prosperity in Scotland is to keep uneconomic mines in production. The way to achieve prosperity—and I know that this is the hon. Lady's own idea—is to bring viable industries to Scotland.
§ Mr. George
That is the responsibility of the Minister of Labour and the President of the Board of Trade, and they 556 are vigorously working upon that programme at the moment.
§ Mr. T. Fraser
How does the hon. Member think that by increasing the price of coal in Scotland by 10s. more per ton than it is to be increased in the Midlands he will find it easier to get industry to move from the Midlands to Scotland?
§ Mr. George
The idea is abroad that this is a serious attack upon Scottish industry, but if we work out the cost of this increase to Scotland—and it amounts to about £7 million—we find that in terms of industrial costs it will be about ½ per cent. I cannot imagine that this increase will drive anybody immediately to oil, or will prevent anybody from coming to Scotland if he intends to do so.
I want to deal with a very important issue which has been raised several times today and which the hon. Member for Hamilton asked me to deal with specially. There has been a demand for a directive to be issued to the Chairman of the Coal Board. Some hon. Members have said that if that is not done we should not pass the Bill. My hon. Friend the Member for Kidderminster (Mr. Nabarro) demanded to know whether or not my right hon. Friend thought that he had the power to issue a directive of a general character.
§ Mr. George
The issue does not arise, for the simple reason that my right hon. Friend has no intention of issuing a directive to the Coal Board on this issue. Whether or not he has the power, he has no intention of doing so. It is an academic question. Confidence between the chairmen of the nationalised industries and the Minister of Power is essential, and directives can only poison the atmosphere. My right hon. Friend is quite satisfied that the Chairman of the Coal Board will take all the circumstances into consideration in his full and free negotiations with the miners' unions—and I purposely use those words.
As for my right hon. Friend binding himself to a certain course in the event 557 of the wages issue going to arbitration, my right hon. Friend will not prejudge the issue to any extent. The question of what he would or would not do is not an issue today, and it may never arise.
§ Mr. Gunter
Do I understand that if the Chairman of the National Coal Board views this matter most dispassionately and judges it on its merits, and then comes to a certain conclusion, he will be humiliated by the Government Front Bench?
§ Mr. George
That, again, is a hypothetical question. I have tried clearly to point out that my right hon. Friend has entire confidence in the Chairman of the Board, which is essential for the conduct of the business of this great industry.
The hon. Member for Hamilton quoted something which he had read on the tape, which is helpful in this context. Lord Robens said, apparently, that he had been advised on the issue, but had had no instructions; that if he were given instructions he would feel obliged to tell the unions; and that he thought that they would then transfer their claim to the Government. We agree that that would be the course of events. That is all the more reason why this confidence which I say is so essential should not be destroyed by the giving of directions. Confidence and trust should reign.
§ Mr. George
I leave the remainder of the questions until later and turn to some of the other issues raised in the debate.
My hon. Friend the Member for Harwich (Mr. Ridsdale), in a most thoughtful and courageous speech, although somewhat along the wrong lines, said that we are in this crisis together. Frankly, I do not agree that there is a crisis; but we are certainly all in this together.
§ Mr. George
The issue before us is to make a success of this great industry—the greatest in the world under a single 558 control; and its success is not helped by angry debates or bitter criticism in the House.
§ Mr. George
I am speaking to those who care to accept it. I and the Government accept responsibility for making the industry successful. We have had it for ten years now, as my hon. Friend said, and it is our job to make it successful. All our efforts are directed to that end. We have made a great deal of progress in that time. Only those who know the industry and the coalfields realise what a tremendous amount of planning, energy, thought and work has been devoted to bringing the industry from where it was in 1945 to where it is today. Allegations of a very serious character, lightly thrown about, do not help to give those who have carried out this planning and technical task any degree of confidence in themselves.
Also, the bringing of rumours to the House about closures does a great deal to destroy confidence at a time when confidence needs to be increased. We have heard rumours about Nantgarw and other collieries. Only last week the Board had to take specific action to kill dangerous rumours which had caused great alarm in the Lea Hall area. I would ask my hon. Friends and others to confirm that there really is danger before they add their voices to the rumours which have given rise to great anxiety.
My hon. Friend the Member for Cardiff, North (Mr. Box) said that he had approached Lord Robens who had said that he was unaware of a move to close Nantgarw.
My hon. Friend seemed to suspect that that was not the full truth. If Lord Robens is unaware of any move to close Nantgarw, then that must be the position and there is no need to spread any rumour or raise any alarm about it. My hon. Friend has had the assurance, and, therefore, that is the position.
§ Mr. George
My hon. Friend did not make it as clear as that in his speech. I accept that what he says is so, but I took it from what he said during his speech that he had had an assurance from Lord Robens that he was unaware of any such move.
I turn to another serious issue again raised by my hon. Friend the Member for Kidderminster, who made some wild and sweeping allegations. He accused the Coal Board of incurring shocking waste.
§ Mr. George
He quoted one or two instances and said that they could be repeated throughout the coalfields. These are serious allegations. I will deal with the two that he mentioned specifically. I cannot deal with the others which he said were repeated throughout the coalfields, because, frankly, they do not exist.
The hon. Member for Bothwell (Mr. Timmons) was very right to raise the issue of two Scottish pits and to say that he felt anxious about them, but he, also, should have been a little more restrained in what he said. He said that every venture by the Scottish Division of the Coal Board was a failure. This is palpably untrue. To say this only damages the industry which he tries to protect. I regret that the hon. Member is not now in his place.
I will deal with the issue of the two collieries affected—Glenochil, in Clackmannanshire, and Rothes, in Fife. It is quite true that these collieries turned out to be bitter disappointments. Anyone with technical knowledge of mining and with past experience of the industry knows that there have been failures in the industry throughout the years. The coal industry is full of risks. A gigantic scheme of development was undertaken in 1947 and has been going on right up to the present date. It would be a miracle if the whole of that were completely successful. Of course, it will not be. As time goes on we shall find other cases not showing the results expected; but that is coal mining.
I will deal with the Glenochil Colliery first, the one to be closed in 560 May, 1962. This has been a case where skilled mining engineers, the best that could be obtained in Scotland, planned this colliery, a surface mine, to win what they thought would be 37,000,000 tons of good household coal. In the event, when they went underground, they encountered what they expected to encounter—old workings. They found, however, that these old workings were in a condition far worse than expected. The conditions were such that they could not mine this vast area of excellent quality coal economically.
The Board was also challenged at the beginning by the county council. An inquiry was held and it was forced to work some seams to 40 per cent. extraction. That has been found to be completely uneconomic, but the Board was bound to work under the Order of the Secretary of State for Scotland. Other seams have been found to be less favourable to operate and more costly to work than was expected. The result is that this colliery is a failure and will be closed and 900 men may be out of work by next May. However, to give what comfort it will, this is what was said by the Deputy-Chairman of the Board, a man responsible for putting these men in their jobs:I am quite confident that we will again succeed"—for they have succeeded many times—in finding alternative work for all the underground men. A substantial proportion of the surface workers affected in the future will also be found jobs.That shows that there has been trouble about finding jobs for the surface workers, but the Board is confident that by the time the redundancy period of 41 weeks is over, most, if not all, of the men concerned will be in employment.
§ Mr. J. Hill
Is it not true that the Coal Board knew perfectly well before it started Glenochil that it would be restricted to a 40 per cent. extraction?
§ Mr. George
I do not dispute that. I happened to be a witness at the inquiry when that condition was made. The Board readily accepted the Order of the Secretary of State for Scotland to work at 40 per cent. extraction, but, in practice, it was found that the seams did not permit economic operation at this level of extraction.
561 The other and much greater disappointment was the Rothes Colliery, in Fife. This was a very important development and was expected to provide much of the prosperity of Scottish coalfields for many years.
§ Mr. D. Griffiths
Is it not true that it would have been just as possible for this misadventure to have occurred under private enterprise as under the Coal Board?
§ Mr. George
The Rothes Colliery was planned by private enterprise, but there was plenty of time after the industry was nationalised for the scheme to be abandoned or transferred to a shaft elsewhere. In fact, again with the best advice available, this site was selected and the shaft went down. There were then found some of the most horrible geological conditions which have ever been encountered in coalfields in Scotland. There were wash-outs, water in the shafts, uncertain gradients, excessive small faultings, whin intrusions, burnt coal—all in one colliery. The trouble was so serious that the Coal Board reported:Sixteen coal faces have been opened on this horizon since we started actual production in 1957 and 14 of these have had to be abandoned because of abnormal difficulties.Only one horizon, instead of three, was developed, because water conditions in the shaft were so terrible that they could not be overcome. A thorough examination of the prospects of this colliery is now being made to see what expense should be incurred in the driving of new roads to a depth to catch other areas of coal. Whether the colliery is capable of proceeding I do not know, but at least it is being reappraised.
§ Mr. George
I cannot give any date, but I know that they will not be long delayed. The reappraisal is being undertaken now.
Those are the two great disappointments which have occurred in Scotland, but, because things have gone wrong, it is not right to suggest that somebody should be punished, or a scapegoat found. Nobody deliberately sets out to plan a failure and no mining engineer is responsible for bad geological conditions which are discovered underground. 562 Let us take our losses when we meet them with courage, believing that the men who planned the job did their very best.
The hon. Member for Southwark (Mr. Gunter) raised a number of important issues. He said that the first target of 240 million tons was set by the Government. That target was set not by the Government but by the Coal Board and is worked out in detail in "Plan for Coal". Irrespective of whether it was the Government or the Coal Board, the change of the target to 215 million or 225 million occurred in plenty of time to permit any new development to be reconsidered. It did not interfere with the long-term planning. Undoubtedly, coal forecasts were wrong, but so were all the other fuel forecasts throughout the whole of Europe at the time, so that we were not alone in failing to see the future with great clarity.
The hon. Gentleman then raised issues of great importance. Many of them will be discussed when the targets are being drawn up for the Coal Board. He raised the old hoary one about markets for coal, and another hon. Gentleman said that had the Board been allowed to exploit the market £2,000 million more would have gone into the "kitty." Exploiters pay for it in the end, and the undoubted consequences of exploiting the market would have been to bring in oil as a serious competitor years before it came in.
Hon. Gentlemen opposite, in their propaganda for nationalisation, had given the impression that the mere act of nationalisation would make coal cheap, and the country therefore expected to get coal cheap. People did not expect, nor did hon. Gentlemen opposite tell them, that they were nationalising the coal industry so that they could exploit the market whenever they had an opportunity to do so. They led the country to believe—and this is part of the handicap today—that, somehow or other, coal, electricity, and gas would all be cheaper under nationalisation.
I turn now to stocking costs. The hon. Gentleman talked about the injustice of the Coal Board being compelled to pay its own stocking costs. It may perhaps be that there will be some terminal losses which will be discussed when targets are being worked out, but the decision 563 to stock coal was taken by the Board and done for the specific purpose of retaining its capacity ready for a surge forward in demand again.
§ Mr. George
It is part of the Board's responsibility to look after the welfare of its workers, and it was discharging this responsibility.
The burden of interest rates has been referred to over the years. It is said that the interest should somehow or other disappear, or be reduced, because it is an unjust burden on this industry. It was the Act passed by the Government of hon. Gentlemen opposite which put the interest burden on this industry. We are still operating under that Act, and it would be wrong to make it too easy to obtain money on too easy terms. If money is to be of real value, and the advancing of that money is to be appreciated, it must bear its proper charge, and that is what has happened. The industry has been asked to pay a proper price for the money borrowed from the Government.
Reference was made to what is regarded as the unjust burden of subsidence. It is strange that only a short time ago the decision to make the Coal Board responsible for subsidence was passed unopposed in the House. It was acceptable to both sides. It was a nationalised industry; it was a monopoly; and, therefore, it was right that it should bear the cost of subsidence. I repeat that the Bill was unopposed.
Perhaps I might answer one more question asked by my hon. Friend the Member for Kidderminster. He said three things. He asked my right hon. Friend how long the losses were to continue; that my right hon. Friend was supinely content to see the losses continue; and asked when he would act to restore the position. Then he damned my right hon. 564 Friend for raising coal prices. There are three ways of handling deficits, either by increasing productivity, cutting costs, or using the price mechanism. It is right to use the price mechanism where it can be used. My right hon. Friend cannot be denied the right to use any available way to achieve the object which my hon. Friend said he was taking far too long to achieve.
I end on one note. This industry is far too important to be discussed in anger, or in bitterness. It is a great industry, and I hope that both sides of the House will join together to make it a success.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Chichester-Clark.]
§ Committee Tomorrow.