HC Deb 23 July 1962 vol 663 cc931-4
8. Mr. W. Hamilton

asked the Minister of Power if he is yet in a position to make a statement on the financial reorganisation of the National Coal Board.

15. Mr. Eden

asked the Minister of Power whether his review of the National Coal Board's long-term prospects has now been completed; and whether he will make a statement.

16. Colonel Lancaster

asked the Minister of Power whether he has now agreed with the National Coal Board its financial target in accordance with the policy outlined in Command Paper No. 1337.

Mr. Wood

I have agreed with the Board that from 1963 its target should be to break even, after paying interest and making proper provision for depreciation. This will include £10 million a year to help cover the difference between depreciation at historic and replacement cost. This is a comparatively modest objective, but the industry has special difficulties, and its achievement will largely depend on the Board's maintaining the coal market around its present size. The targets will be reviewed each year in the light of events inside and outside the industry.

It will also depend on the application of the Board's policies for improving the health of the industry and adapting it to Changing circumstances. The Board aims to keep down costs and raise productivity by mechanisation and the concentration of working, by directing new investment mainly towards making existing capacity more profitable; and by closing pits with no prospect of covering their operating costs. As these pits close and the new or reconstructed pits are fully manned, a big redeployment of men will be necessary, mainly within the industry, and productivity should rise further. The Government endorse these policies, but recognise the social implications of the Board's closures policy. They are ready to play their part in encouraging new industries and helping to redeploy labour.

The Board and I have considered the question of capital reconstruction. The debts of the industry cannot be simply extinguished: they could only be transferred—to the taxpayer. Capital reconstruction is no substitute for vigorous efforts—

Mr. Nabarro

On a point of order, Mr. Speaker. Is it reasonable to hon. Members on both sides of the House who take the trouble to put down Parliamentary Questions in the hope of getting oral replies that Ministerial answers should be of such inordinate length? Could not this reply have taken the form of a statement by your leave at the end of Questions in reply to the three Questions on the Order Paper?

Mr. Speaker

That could have been done. But I endeavour to encourage brevity on the part of hon. Members asking Questions and Minister answering them.

Mr. Nabarro

This reply is not very brief.

Mr. Wood

I apologise for the length of this answer. I am trying to answer three Questions. I am sorry if I have incurred the wrath of my hon. Friend, but I thought that I would incur the wrath of other Members if I sought to answer these Questions in the form of a statement after Questions.

I was saying that capital reconstruction is no substitute for vigorous efforts to make the industry viable and competitive. Success in the Board's policies and the fructification of large investment in coalmining capacity over the past years should help secure a better relationship between capital and earnings. The Board and I have agreed that capital reconstruction is not appropriate in the midst of these developments.

Mr. Hamilton

Is the Minister aware that over the years the interest burden has been quite intolerable, that in fact operating profits have been substantial but have been wiped out because of these inordinate interest charges? When will the right hon. Gentleman and the Government wake up to the fact that unless and until this financial reconstruction takes place the Coal Board will for ever be in the kind of difficulties that it is in at the moment? Has the right hon. Gentleman consulted the Ministry of Transport to see whether a solution similar to the one that has been arrived at with British Railways could be applied equally to the coal mines?

Mr. Wood

The Government have certainly awakened to this fact, and we have been considering the matter with the National Coal Board. There is no disagreement between that Board and the Government, but we think this is not the appropriate time to make a capital reconstruction. It would be wrong to look at certain parts of the capital. The whole capital must be looked at. As I said in my answer, it is important to bring about a better relationship between the Board's whole capital and the earnings of that capital. That is what we are trying to do.

Mr. Eden

Can my right hon. Friend say for how long a period forward the closure of pits will continue, and, in the light of the statement made by the Lord Privy Seal at Luxembourg on 17th July, can he say to what extent our participation in a common European energy policy is likely to affect the Coal Board's hopes of breaking even?

Mr. Wood

As to the period during which closures will take place, I have no doubt that closures, which have always taken place as pits have become exhausted in the past, will continue as far ahead as we can see into the future as pits become exhausted.

So far as the European Coal and Steel Community is concerned, if we joined the Community it would certainly lead to greater freedom in coal trade between us and other members of the Community. It would also give us an opportunity to discuss with other members of the Community a common energy policy. It is too early for me to pronounce on the likely result of those discussions.

Mr. Nabarro

In view of the financial objective which my right hon. Friend has just explained, would he confirm that the assurances he gave me a few months ago, to the effect that the new investment of the National Coal Board at the rate of between £90 million and £100 million per annum would be found as to three-quarters from its own resources—[HON. MEMBERS: "This is too long."]—and the remainder from new borrowings?

Mr. Wood

I do not complain at the length of my hon. Friend's supplementary question. I think he has probably got the figures correct. I should like to check up and communicate with him.