§ Turning to energy, the electricity industry's investment will increase this year by £114 million. The gas industry is in a period of technological transformation, and its investment is up by £13 million. These developments are reflected in a large increase in Exchequer advances. Provided that these industries are achieving their agreed financial objectives, I regard these Exchequer advances as the equivalent in nationalised industry of the 485 increase in capital of profitable and expanding private industrial undertakings. In other words, they are a necessary part of economic growth.
§ The powers to make Exchequer advances to the gas and electricity industries expire at the end of August, and I shall be moving a special procedure Resolution to enable these powers to be renewed in the Finance Bill.
§ I turn now to coal, which provides about 70 per cent. of our energy supplies—and its share in the fuelling of British industry is even greater. Coal prices will be the main element in our fuel costs for many years to come. Last July, my right hon. Friend the Minister of Power announced the Coal Board's policies for reshaping the industry and making it competitive. The Committee will recall that for the five years up to 1962 the industry incurred losses and in 1961 we had to legislate to provide temporarily for deficit financing.
§ The new policies are proving effective. Last year, there was a record improvement in productivity, which increased by about 8 per cent., and a fall in total costs of production per ton. Proceeds per ton of coal sold are falling, partly as a result of the changing pattern of sales and partly as a result of more competitive selling which the new circumstances make possible. In 1962, the industry made a small profit, and Lord Robens tells me that this year it has a very good prospect of achieving its financial target.
§ Against this background I considered whether to reduce the duty on fuel oil. I have been pressed to remove this duty to lower industrial costs. I cannot consider this solely from a revenue point of view, but must take into account the widest long-term economic interests.
§ To remove the duty now would change the terms of competition against coal and in favour of oil. This would help certain industries, notably cement, steel and parts of the chemical industry, which are heavy users of fuel oil. The Coal Board would no doubt try to meet the extra competition and to compensate itself by raising other prices wherever it could do so commercially. And I am sure that we should have to accept the prospect that the industry would be pushed back into deficit, and that we should need to legislate again to give financial assistance. 486 The public would have to pay, either as consumer or as taxpayer. Even more seriously, the setback to the industry would inevitably undermine its growing confidence and threaten to disrupt the plan for redeployment of manpower and to frustrate the policies upon which we and the Board are relying for the future.
§ I have to decide whether the quick reductions in the costs of certain industries which would result from the removal of the duty would outweigh both the immediate damage to the coal industry and the risk of disrupting and even preventing the long-term recovery of the full competitive efficiency of the industry. The issue is not between a policy which reduces costs to industry and one that does not. If the duty is left unchanged this year, Lord Robens is confident that, with production costs continuing to fall, he will be able to make price reductions to certain sections of consumers during 1963.
§ My judgment is that the decisive consideration from the national point of view is that of the long-term competitive power of the coal industry. I have, therefore, decided that the time is not yet ripe to reduce the duty.