HC Deb 12 April 1965 vol 710 cc955-60
The Minister of Power (Mr. Frederick Lee)

With your permission, Mr. Speaker, I wish to make a statement.

The National Coal Board has been successful in maintaining the level of sales and price stability in the past three or four years and, in this period, the coal industry has absorbed a substantial part of increased costs by increased productivity and efficiency. Nevertheless, total costs per ton have been increasing of late, in many instances for reasons beyond the control of the Board. To assist the industry the Government have informed the Board that for the time being it is relieved of the obligation to make a contribution of £10 million towards replacement costs; and urgent consideration is being given to the question of capital reconstruction of the industry, the Board's future borrowings and the revenue position. The Government intend to introduce legislation before the end of the year to give effect to the decisions taken. The legislation will cover the Minister's powers of deficit financing if necessary with retrospective effect.

Meanwhile, the Government have agreed on a number of short-term measures which, taken together, should help to maintain the coal industry's market in 1965–66 at a level of between 4 and 7 million tons higher than it would otherwise be. Thus, the Central Electricity Generating Board has agreed to give a preference to coal and consideration is being given to what further steps could reasonably and practicably be taken towards increasing coal use in 1965–66. The Gas Council and the Gas Boards are considering to what extent it will be possible to increase their consumption of coal in that year, although the scope for this is limited. We are introducing measures to promote the use of coal in public buildings, and I am circulating details in the OFFICIAL REPORT. Finally, the National Coal Board, for its part, will intensify its efforts to export coal this year and next.

In the longer-term, the coal industry will be fitted into our national fuel policy and our national plan on the lines indicated in the House on 21st January.

Mr. Peyton

The right hon. Gentleman has made a somewhat vague statement which would appear at first sight to indicate that the road is now open to very extensive subsidies being granted to the coal industry. May I ask him three questions.

First, does not the Minister consider that it would put the general situation in perspective if he would remind the House that the coal industry is already receiving a very wide measure of protection as a result of the ban on the import of American coal and the tax on fuel oil?

Secondly, would the right hon. Gentleman agree that the short-term measures which he has announced at least imply that the gas and electricity industries are both being asked to act against their own better commercial judgment and that, if this is the case, their action is bound to be against the interests of the taxpayer and the domestic customer and, perhaps even more important, the industrial customer, whose fuel costs will be further increased?

Thirdly, what has happened that the National Coal Board should be acquitted from honouring this agreement which it recently made with the last Government to make a very modest contribution of £10 million towards its replacement costs?

I hope the Minister will realise that we regard this statement with a good deal of suspicion. Coming from a Government which boasts about modernisation, we regard it as an indication of their really backward-looking policies.

Mr. Lee

I do not accept that this is a subsidy to the coal industry. [HON. MEMBERS: "What is it?''] It is true that the electricity industry is, in the main, the industry which is reaching agreement with the coal industry, which will afford welcome temporary assistance to the coal industry, but I ask the House to realise that for many years ahead the electricity industry will depend in ever-increasing measure upon the coal industry and that it is very much in the interests of the electricity industry that the coal industry should be helped during this period.

As to replacement costs, we feel that because of the temporary difficulties which the coal industry now has to face it is right and proper that we should, as a temporary measure, agree not to ask the coal industry to find this £10 million.

It is the case that there is protection from oil. Again, I ask hon. Members to realise that the coal industry gives us our only indigenous fuel. If hon. Members opposite are as concerned about the balance of payments as they said they were last week, they should very much welcome this statement.

Mr. Ness Edwards

Whilst welcoming my right hon. Friend's statement that at last we are to get co-operation between our three fuel-producing industries to protect the £1,000 million which we have invested in the mining industry, may I ask him to bear in mind the great contribution that the mining industry can still make to keep our balance of payments in its proper position?

Mr. Lee

I am in full agreement with my right hon. Friend. Too often the impression is given that we are merely trying to assist an old industry which have no future. The coal industry is one of our most highly modernised industries. It has increased productivity at a fantastic pace over the last three or four years. Indeed, if private industry had done half as well, the N.E.D.C. target figure would have been surpassed. Within the next few weeks, the first fully automated pit in Britain will be opened and right hon. Gentlemen opposite can go and look at what is happening there instead of making criticisms here.

Mr. Kershaw

If the coal industry is so extremely able to look after itself, why does it need this extra protection? Does the Minister adhere to the principle that it is to the benefit of the country that the customer should be allowed to choose the fuel at the cheapest price which suits him best?

Mr. Lee

The coal industry is in the position that if it increases industrial productivity by less than 6 per cent. per annum, it will be in trouble. I do not know of any other industry in Britain which is in that position. But it is also the case, as I have tried to point out, that for the future, as far as we can see ahead, the coal industry will form the base load of our fuel supplies in Britain. It is, therefore, right and proper that we should safeguard this invaluable asset until the industry is even more modernised, by which time I am fairly sure that it will be able to hold its own in competition with all other fuels.

Mr. Shinwell

Is my right hon. Friend aware that we on this side unanimously welcome his statement in connection with the National Coal Board? This is the first time for many years that any encouragement has been given to the Coal Board. [Interruption.] Is my right hon. Friend also aware that we welcome in particular the efforts now being made by the National Coal Board to export coal and that the proposal which he has now made, which is supported unanimously on this side of the House, fits very well into the pattern of a national fuel policy?

Mr. Lee

I agree with my right hon. Friend.

Mr. Geoffrey Lloyd

Is the Minister aware that, unfortunately, coal from America can at present be delivered to British ports at a price which is cheaper than that at which the National Coal Board can produce it? Can the right hon. Gentleman state the principles which have led the Cabinet to protect the British coal industry to the tune of some tens of millions of pounds from the taxpayer and from consumers while, on the other hand, they have so ruthlessly sold out the aircraft industry?

Mr. Lee

I am sure that the right hon. Gentleman agreed with the measures taken by the last Government to protect the coal industry against oil. I have already said in reply to one of his hon. Friends that in this context one has to look closely at the balance of payments. Had we agreed to permit large imports of American coal when freight rates are depresseed and the Americans can therefore get their coal into this country fairly cheaply, that would have had a detrimental effect upon our coal industry, upon the British economy and upon the balance of payments. I am glad that the right hon. Gentleman has mentioned American coal, because he will recall very well that when American coal was forced upon the N.C.B., it cost the Board about £70 million.

Mr. David Griffiths

Is my right hon. Friend aware that the £10 million of which the Government are relieving the coal industry is a £10 million imposition that was placed upon the Coal Board by the former Minister of Power?

Mr. Wingfield Digby

Will the Minister give the House an undertaking that this new policy will not be allowed to delay the second nuclear power programme?

Mr. Lee

Yes, Sir.

Mr. George Y. Mackie

Is the Minister aware that this is a most unfortunate time to make this statement, when the Government are asking for, and I believe that the public are willing to make, sacrifices because of the state of the national economy? When the workers on the TSR2 project are to be declared redundant in the cause of the national efficiency, and when farmers are being asked to bear an extra £19 million of costs, does not the Minister agree that this is bound to create the suspicion that the Government care more for the coal lobby than for industrial efficiency?

Mr. Lee

I am relieved that the hon. Member did not think it was an unfortunate time because of the Farm Price Review. I wondered whether he was lobbying for the farmers. Comparisons have been made with the aircraft industry. I should say that to eliminate a project which would cost £750 million is very much in the national interest, just as the support which we are now giving to the coal industry is also in the national interest.

Several Hon. Members rose——

Mr. Speaker

Order. We cannot debate this subject now without trespassing on other business.

Following are the details of the scheme for public buildings: The Government are agreed on a new procedure for governing the choice between coal or oil for new and replacement plant in public buildings. Where the decision rests with Government Departments themselves, the decision will favour solid fuel in all cases where the cost difference does not exceed 5 per cent., unless there are very cogent reasons to the contrary (including in the case of hospitals factors affecting health and amenity). 2. The new procedure will be as follows:

  1. (1) the responsible authorities will inform the National Coal Board of all proposals to instal new steam raising or heating plant, providing full details of the requirements and giving them an opportunity to quote for the business;
  2. (2) estimates of the capital and running costs of solid fuel installations will be discussed fully with National Coal Board engineers;
  3. (3) in coal mining areas, where solid fuel should be in a strong competitive position, a proposal to use oil will receive special scrutiny.
3. The Postmaster General has agreed to accept the above criteria on behalf of the Post Office. The Government are not responsible for decisions affecting local authority buildings in general, but the Ministers concerned are taking steps to draw Government policy to the attention of local authorities and similar bodies. 4. Current policy will be re-examined in the light of the general review I am conducting of the coal industry's prospects in the context of a co-ordinated policy for fuel, and I shall have regard to balance of payments and other relevant considerations in the course of this review.