HC Deb 01 July 1965 vol 715 cc838-42
The Minister of Power (Mr. Frederick Lee)

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

I am, with the assistance of my Energy Advisory Council, making good progress in the formulation of a national fuel policy. Meanwhile, the Government are satisfied that the coal industry is substantially over-capitalised and that the burden of its debt must be reduced to correspond with the realities of the situation and the prospects.

The coal market has contracted by about 30 million tons in the last eight years. Many uneconomic pits have been closed and discussions in the Energy Advisory Council suggest that some further contraction may be unavoidable in the years ahead. I reckon that these developments affect in all about £400 million of the Board's capital debt.

The Government propose that this amount of the Board's debt to the Exchequer should be written off. This will make a major contribution towards finding a basis for a healthy and viable coal industry capable of providing funds for further colliery investment from its own earnings.

In addition, the Government are prepared to enter into discussions with the industry for a scheme to provide special funds to speed the disappearance of uneconomic collieries. The funds would be available to accelerate the provision of alternative industrial development in the areas mainly affected and also to assist the industry in meeting the social and human costs arising from this programme.

I will, when the necessary consultations are completed, lay a White Paper before the House explaining Government policies for coal in the context of national fuel policy and our proposal for legislation on coal later this year.

Mr. Peyton

Would not the Minister agree that this would appear to indicate that the Government's acceptance of the need to transfer such an immense burden to the shoulders of the taxpayer indicates that they hold a very gloomy view about the future propects of this industry? Will he take an early opportunity to give us more details of what the statement describes as the realities of the situation and the prospects"? In particular, what further shrinkage in coal demand does the right hon. Gentleman anticipate? Would it not have been right that this announcement should have been preceded by an agreement with the National Coal Board as to its obligations and a detailed programme of closure?

I take it that before any action is taken on the Minister's present proposals legislation is absolutely necessary. I want to make it quite clear that the Opposition reserve their position absolutely. My immediate response to these proposals is one of the greatest possible suspicion. Here is a major hand-out to the coal mining industry without there being any clear understanding of what the industry is to do in return. It seems to me that this policy bears all the marks of an egg which has been hatched by the dodo.

Mr. Lee

It may well be that the hon. Gentleman's last point was right and that the dodo was the last Tory Government. He will remember that the Opposition were asking the coal industry to invest for a production of about 240 million tons. which was falsified by events. He suggested that we should take a gloomy view of this because we are writing off dead capital. This is a common proceeding in any private industry in the world. If people who are in a position to know the capital position of the Coal Board all agree that there is much capital which must be written off, I fail to see why he or I should take a gloomy view of it.

Legislation will be necessary to give legal effect to what I have announced. That legislation, which is essential before the end of the year, will be in respect of the Board's borrowing powers.

The hon. Gentleman asked about consultation with the Coal Board. We have been in the closest consultation with the Board. We are aware of its future planning, and we believe that this provision will enable it to make the necessary closures in certain areas. We are making provision for my right hon. Friend the President of the Board of Trade to expedite the bringing of new industries to those areas so that there is no fall in employment.

Mr. Ness Edwards

Is my right hon. Friend aware that this is the best news for the mining industry that we have heard for many years? It will give new heart to those engaged in the industry and will help to stop the manpower drift now taking place which threatens the industry and the economic basis of this country.

Is he further aware that the elimination of the capital burden which the Board has had to bear in paying for pits which proved to be white elephants to the colliery owners will be extremely welcome among the miners?

Can my right hon. Friend say, where uneconomic pits are being abandoned, what machinery is being made available to provide alternative employment for those who will become redundant and for maintaining the viability of the mining areas affected?

Mr. Lee

In my statement I referred to discussions with the industry. We will discuss with the National Coal Board and the National Union of Mineworkers the provision which is necessary wherever there is a big closure programme. My right hon. Friend's point about men leaving the industry is also extremely important. People are leaving the industry in areas where there are profitable pits. This is of great importance.

I assure the industry that for as far ahead as we can see there will be a need for a very large coal industry upon which we shall rely for the main base of our power. Therefore, we want to see an expansion in areas where there are lucrative pits. The Measures which we propose constitute one of the best ways we can conceive of ensuring that we have a healthy industry.

Mr. Kershaw

Is the Minister aware that his reference to a national fuel policy in the context of this statement makes one believe that what he means is a guaranteed position for coal regardless of the economic position of this country? Will he do what he can to dispel that belief?

Mr. Lee

Hon. Members opposite always become the victims of their own propaganda. They have been saying that for so long that when I make a statement of this kind, pointing to an increased closure programme, they still believe that we are trying to find a special place for coal which would not be economically useful for Britain. What I said was that we believe that for many years ahead the base of our power programme must and will be the coal industry.

Dr. Bray

Is my right hon. Friend aware that his statement will be welcomed not only in the coal industry, but in other energy industries which are anxious to find a realistic basis for future planning? Can he give an assurance that the undoubtedly high social costs of redevelopment in mining areas will be clearly stated and given to the heads of the other fuel industries so that they can be taken into account in their planning?

Mr. Lee

Yes. That is why I have referred to the need for the Board of Trade and the Departments responsible for economic matters to come in on this to ensure that there is a programme of development in these areas to enable people not needed in the coal industry to play a very big part in new and expanding industries.

Mr. Ronald Bell

What will be the approximate annual cost to the Exchequer of the Minister's proposals?

Mr. Lee

There could be a transfer from the Coal Board to the Exchequer of about £32 million.

Mr. George Y. Mackie

Could the Minister say what he means by saying that the Government's proposal will make a major contribution towards finding a basis for a healthy and viable coal industry capable of raising its own funds? Does he mean that only the profits of the coal industry will be ploughed back into new collieries or developments, or that it will raise funds on the market?

Mr. Lee

It means that once we have the capital structure right we will expect the Coal Board to finance most of its new ventures.

Mr. Iorwerth Thomas

Is my right hon. Friend aware that he is the first Minister of Power to talk the language of a Minister of Agriculture? Has he noted the resentment and criticism which has been voiced following his announcement? While the Opposition today resent this payment of £400 million, they never demurred in the past 13 years about the payment of £5,000 million to agriculture, which, in fact, they welcomed with a great deal of political enthusiasm.

Mr. Lee

I am obliged to my hon. Friend, but I do not consider that that is the full effect of what I have done. I do not agree that I am doling out subsidies to the coal industry. What I am doing is making a proper and fair reassessment of its capital debt, and that is what it is intended to do.

Several Hon. Members

rose—

Mr. Speaker

We cannot debate this without a Question before the House.