COAL INDUSTRY (OUTPUT AND MANPOWER) (Hansard, 20 May 1966)

§ Mr. James Dickens (Lewisham, West)

I am glad to have the opportunity this afternoon of drawing attention to the serious crisis in the coal industry affecting output and manpower. Before I do so, however, may I make three brief remarks?

First, I am very glad to see my right hon. Friend the Minister of Power and my hon. Friend the Parliamentary Secretary on the Front Bench to hear this short debate. This, I think, is an indication of the seriousness which they attach to the present situation in the coal mining industry, and it is also, I am sure, an indication of their determination to get to grips with this serious problem.

Secondly, I wish to refer briefly to my credentials in raising this matter. They are, quite simply, that I have served on the National Coal Board, mostly in the manpower branch, over a period of almost nine years.

Thirdly, I want to pay tribute to the action taken by the Labour Government since October, 1964, to help the coal industry. I fully recognise that in a very difficult economic climate the Labour Government took a great number of steps which have materially assisted the coal industry in this country, but I feel that the central element in the energy policy in this country over the past 18 months has been the failure of the Government to accept the National Coal Board's request that the base load of approximately 200 million tons of coal in terms of demand and Coal Board output should be agreed. This was not done. This request to hold this level at 200 million tons out of a total energy market of 285 million tons in 1964—an energy market which will rise, according to the National Plan, to 330 million tons of coal equivalent by 1970 and 450 million tons by 1980—was a very modest request because it left the required increase necessary to meet future energy demand to nuclear energy, to imported fuels and to national gas.

I will not reiterate the case for the 200 million ton target for demand and output. 1842 The Minister is, I think, well aware of that. But these arguments were in essence disregarded, and we are now faced with the consequences of that decision. These consequences will be serious and far reaching, and I want briefly to outline what is happening in the coal industry and to invite the Minister to comment on what has happened.

The first point is this. The National Coal Board will not meet its revised target under the National Plan, either in the short term in 1966–68, or in the long term up to 1970. That target, the House will recall, was fixed at 175 million tons of coal for home demand by 1970–71, with a balance of 5 million for export. In 1965–66 deep-mined output of coal in this country fell to 175 million tons. I should say here that the National Plan target for deep-mined output of 173 million tons in 1970 is only a little way short of this.

The present trends in the coal industry are so serious that in the year ending 31st March, 1967, the Board will be very lucky to achieve 160 million tons deep-mined output. If these trends continue until 1970–71 the figure will fall to about 120 million tons. I want briefly to look at some of the causes of this dramatic reduction in coal output and some of the consequences for the national economy.

There is a problem only if one accepts the National Plan as a basis for discussion. If one does not accept it, there is no problem. If we simply want to run down the coal industry, the present trends are clear enough. But I am working on the assumption that the Government and the Ministers concerned still accept the National Plan figures, are still working towards them and still want to implement them. This means that the coal industry faces a short-term crisis this year and next year and a longer-term crisis up to 1970–71. This will result in two things: first, in further grave financial problems for the Board; secondly, in a substantial increase in the import of fuel over the period, and this may involve the import of coal in the current year to meet the winter requirements of 1966–67.

The crisis in manpower can be briefly stated. Manpower is falling at a rate which cannot be, and is not now being, covered by increased productivity. It is causing a fall in production and also a 1843 flattening out in the level of productivity. In 1965–66 manpower fell by 7.2 per cent., and productivity per man year rose by only 2.1 per cent.; hence, a fall in output over the year of just over 5 per cent.

The fall in manpower is dramatic and alarming. As at 7th May, 1966, the manpower on colliery books was 431,186, compared with 472,696 on 8th May, 1965. This means that over the most recent 12 month period we have had a reduction in total manpower of 41,500. If this trend continues the manpower on colliery books will fall to 250,000 men in 1970–71—not 330,000–340,000 as envisaged in the National Plan. This annual rate of rundown of 41,500 is very much higher than the 29,000 per annum forecast in the National Plan.

To fall into line with the manpower target of 330,000 men for 1970–71, the current rate of manpower rundown would have to be reduced to rather more than half its present level. This is unrealistic. Indeed, there is every likelihood that the present trend will continue and will not improve. Thus, the manpower levels forecast in the National Plan are now seriously out of date and must be revised to take account of the real situation existing today.

The present situation has been created by the failure of the Government to agree on the figure of 200 million tons of output to meet demand, and the consequence of this, the accelerated colliery closure programme, and the low morale in the industry created by this. It is assumed in the National Plan that productivity will rise by about 6 per cent. per annum between 1964 and 1970 compared with 5.3 per cent. per annum between 1960 and 1964. As I say, in the most recent year, it rose by only 2.1 per cent. There are various reasons for this, and perhaps we can look at some of them.

First, it is partly due to increased involuntary absence which is associated with an ageing labour force. I hope that we can dispense with the argument that the increase in absenteeism in the mining industry is in some ways associated with the increase in National Insurance benefits. On the contrary, this is related particularly to the remarkable increase in the average age of the labour force in the recent past, rising from 39 in 1959 1844 to 44 in 1964. This takes a heavy toll in terms of absence.

These factors have resulted in an overall increase in productivity of only 3.8 per cent. in 1965–66. Even if absence can be stabilised, output per man year will be only 460 tons in 1970–71 compared with the 530 tons expected in the National Plan. If these trends continue, deep-mined output in 1970 should be about 120 million tons, which is 53 million tons lower than the National Plan target.

Even if current trends improve, there will still be a serious situation. But those trends show now sign of improvement. The immediate situation is very serious. In 1965–66, deep-mined output fell by 5.1 per cent. and on the basis of current figures will fall below 165 million tons in 1966–67.

The trends are getting worse. For example, in the week ending 2nd October, 1965, the increase in average output per man shift overall was 4.6 per cent. compared with the equivalent week in 1964. In the week ending 23rd April, 1966, the increase was only 2.3 per cent. compared with the equivalent week in 1965. The reduction in average manpower per week, comparing one year with another, showed a fall of 6.9 per cent. as at 2nd October, 1965, and of 8.4 per cent. at 23rd April, 1966.

The most significant percentage reduction is in the total output. As at 2nd October, 1965, it had fallen 3.6 per cent. compared with the equivalent week in 1964. As at 23rd April, 1966, it had fallen by 7.1 per cent. compared with the equivalent period of 1965. Thus, the trends are worsening in terms of productivity, manpower rundown and output.

If we assume that deep-mined output will only amount to 161 million tons, with another 9 million tons of opencast output, this means that, in 1966–67, global output will be about 170 million tons to meet a consumption requirement of 178.5 million tons. This assumption is confirmed in the Prices and Incomes Board's Report No. 12, Command Paper No. 2919.

A deficiency of 8½ million tons this year is a serious situation and I advise my right hon. Friend to take a very careful look at the present stock position. Altogether, about 18½ million tons of 1845 coal is in stock but some of it has been in stock for the better part of eight years and I question whether all the coal is saleable. My right hon. Friend would be well advised to mount a major exercise, in conjunction with the N.C.B., to ascertain the saleable stock held by the Board. I believe that it will amount to nothing like 18½ million tons.

There will be shortages of various sorts and sizes of coal next year, especially in house coal and perhaps in coking coal. If one has to postulate the position in which one met such a deficiency between output and demand in the current year, it would mean importing the equivalent of 8½ million tons of coal and oil and the cost to the balance of payments would be an additional £42 million.

If the present trends continue, by 1967–68 the deficiency will not be 8½ million tons but 14 million tons and the cost of that will be not £42 million but £70 million to our balance of payments. Thus, if the trends continue, over the five years up to 1970–71—that is, if we have to import the equivalent of about 50 million tons of coal; in terms of imported coal and fuel oil—it will mean an increased cost to our balance of payments of about £250 million per annum.

Other factors will complicate the picture, not only in the immediate future but in the long-term. Firstly, there are the effects of the accelerated colliery closure programme, apart from the effects of closure announcements. I think that the intake of men into the industry will continue to be seriously affected, particularly in the period up to 1968.

There is, secondly, the indirect effect of the closure programme in reducing areas of recruitment to the National Coal Board and weakening confidence in the mining industry as a source of employment. This is having a particularly marked effect in Yorkshire and the Midlands, the National Coal Board's strongest areas.

The third is the effect of the administrative re-organisation of the National Coal Board, which is currently under way. Whatever its eventual effects, the immediate one is a further demoralisation in the industry, and this is bound to add to its difficulties.

The fourth is the effect of the introduction of the day wage agreement, for 1846 power-loaded faces. Remembering that these workers are now on piece work, one must consider whether or not this will lead to lower productivity. Changeovers of this type must be accomplished with care—particularly when there is a change-over in wage payments—because they can result in having a serious adverse effect on productivity.

I will briefly mention a few arguments that have been used recently about the coal industry. It simply is not true to say that one can sit back and wait for a rapid, continuous, unimpeded, increase in productivity in the five years to 1970–71. We had a remarkable increase in productivity in the National Coal Board from 1960 to 1965, but that did not drop out of the air. It was the result of preparation and years of prototype experimentation with machines; and all this paid off between those years. But we now have nothing of a technical nature in the coal industry equivalent to such a development, so that it is not likely that there will be, so to speak, one great painless increase in productivity in the near future resembling anything like what happened between 1960 and 1965.

Then again, I do not believe that the Inter-Divisional Transfer Scheme can fill the manpower gap that exists in the Central Divisions. The National Plan estimates that 25,000 men will move under the scheme. I was associated with that scheme for four years, but in our best year we moved only 2,800 men. I ask the Minister to take a close look at that figure of 25,000 and at the basis on which it was arrived at.

There are certain further points I wish to put to the Minister and which he might be able to answer in the short time allowed for him to reply. First, the debate has been useful in the sense that I have been able to draw attention to the serious situation in the coal industry. Secondly, he would do well to reappraise the present position and urgently consult with the National Coal Board on the future prospects of the Board in the light of the circumstances I have described.

Thirdly, I think that he should suspend the accelerated colliery closure programme until this appraisal has been completed. Fourthly, there is now an abundant need for a recognition of the miners' worth to the community in terms of conditions of employment and wage 1847 levels. This is vitally necessary to restore confidence. It is also very important that the Minister takes a long hard look at the cost to the country's balance of payments of the present trend in terms of output and manpower in the coal industry in the short and long term.

I have said nothing about the announcement of the finds of natural gas in the North Sea and in Yorkshire. I welcome these developments and I want to see them utilised and making their contribution as quickly as possible. I hope that the Minister will see to it that over the next five years we can take more of these sources into public ownership whether they are in the North Sea, Yorkshire or Caterham in Surrey. They cannot help the present situation in the coal industry, because they cannot come into operation until the 1970s.

I am grateful for this opportunity of drawing attention to this vital problem and I will say no more now in order to allow the Minister to reply.

§ The Minister of Power (Mr. Richard Marsh)

The House is in some debt to the hon. Gentleman the Member for Lewisham, West (Mr. Dickens) for raising the extremely important and serious issue and it is a pity that we could not, for other reasons, have had longer to deal with it. Many of the points which he raised are, because of his special knowledge of this subject, ones which one would want to look at and discuss with him at some future date. He raised a number of matters which are well known as common problems and I should like to deal with some of them, inevitably very briefly, because I have but a few minutes left to me.

No one disputes that there is a serious problem affecting the whole of our energy supply. It is a problem created in part because of the vast increase in the demands for total energy, and in part by the fact that the whole energy structure is changing, at least in the future. It would be a great mistake, and I am sure that the hon. Gentleman would not wish to do this, to exaggerate some of the immediate consequences of these difficulties. The one thing that could make the difficulties more acute, I am sure he would agree, would be a tendency to exaggerate the existing difficulties. This is certainly true of manpower rundown.

1848 On the point of cal supplies, my information, and I will look at the points he has raised, is that the Coal Board stocks at present are 18½ million tons. I take the qualifications which he has raised. There seems to be no risk of an absolute shortage of coal stocks in 1966–67. I have been in very close touch indeed with the National Coal Board and I met the Chairman only yesterday to discuss this and other issues. A meeting of my Energy Advisory Council is being convened immediately after Whitsun.

The Chairman of the Board told me that it is taking very vigorous action, which I have not time to detail, to maximise production of large coal and to accumulate stocks in readiness for the winter demand. Additional steps, with the co-operation of the union, such as Saturday working in the pits, could be taken should the situation demand it. My hon. Friend has made a great point about the accelerated rundown in manpower. The figures are large but it should be borne in mind that since nationalisation the total number of men in the industry has reduced from 700,000 to the present total of 430,000. Between 1960 and 1964 the average rate of reduction was about 5 per cent. per annum. At the end of 1964 the rate of rundown had increased to about 6 per cent. and in 1965–66 it was about 7 per cent. In recent weeks the rate has increased to 10 per cent. The point that I am making is twofold. First of all, there is a higher manpower rundown than one would like to see but, secondly, this is not a new thing—it has been going on for a long time and there is an immediate short-term acceleration which makes the position different now from what it was before.

Having got to that stage, there are two questions which should be asked: first, why are these men leaving; and, secondly, do we want them to leave at this speed? The answer to the first question is very complex. At a time when there is very strong competition for labour, it is not surprising if men who work in the pits underground are tempted by offers of employment above ground. In conditions of full employment, it is partly the price which we pay, and it is a good price to pay, that men now have opportunities of alternative employment. This is a factor.

1849 Another contributory factor—and it is only a contributory factor—is the fears expressed, sometimes with more concern for their dramatic impact than their accuracy, about the future of the industry. In the last five weeks—indeed for many years—my Department has spent most of its time thinking and arguing about the future shape of the fuel economy. There is a very great deal more to be done. But I should like to make this point if no other in this debate. Despite all the changes which face this country, both industrial and in energy policy, British coal will be for many years to come a major factor in our economy and one of the biggest coal industries in Europe. Indeed, the greatest threat to the future of the industry would be any attempt to average up the cost of economic low cost pits to subsidise pits which can only be a burden on the economy in general and the coal industry in particular. There is a very real future for the industry. It does not lie in dodging the need to bring the industry to the maximum of its efficiency.

As my hon. Friend mentioned in passing, there is a lot of talk about natural gas. I refer to this only because it is a feature which tends to cast doubt on the future of the industry. I do not know how much natural gas there is. Sometimes, in my more depressed moments. I wish it had never been found. So far there have been four strikes of commercial quantities, but there have been also eight wells which have been abandoned. No one knows, but even if the figure of 1,200 million cubic feet a day by 1970 were true, that is equivalent to 5 per cent. of our total energy requirements and equivalent to about 16 million tons of coal a year. That is a great deal of coal. But in 1964–65 there was an increase of 11 million tons coal equivalent in the demand for energy coal. Far from solving all our energy problems, the most commonly quoted estimates—unofficial estimates—of North Sea gas would be equal only to about half the increased energy demand by 1970.

I think that the picture is clear. There is a long and continuing demand for coal in this country. I accept entirely that a major and uncontrolled rundown of the industry would have very serious effects 1850 on the economy. Everybody in this field is concerned that it should be maintained as an efficient industry. The rate of rundown is higher than I should like to see. There is a future for the industry, and this is something of which people should take cognisance when wondering whether they should work in it.

We are in communication with the National Coal Board. A special drive is being started with five buses in the North—there will be three more—to take men for interviews to alternative pits, to show their wives the houses and schools and to show the men the working conditions to try to persuade them into the economic pits. Various changes have been made. The settling-in allowance has been increased from £5 to £6 for the first four weeks. My hon. Friend knows of these factors. As I say, there is a very good and long-term future in the coal mining industry. What we want is more people in it.

Exhortation is insufficient. Within the next couple of weeks or so my hon. Friend the Parliamentary Secretary will be touring a number of coalfields in Scotland, the North-East, and South Wales. He will be able to get first-hand impressions of exactly what is happening and why it is happening. He will have discussions with the local authorities and all the other bodies in the area to see what we can do to minimise some of the difficulties.

One of our problems, as is the case in so many other respects, is this. I do not want to refer back to the past 13 years, but it is a fact that we are paying the price for the failure over many years to get to grips with the long-term problems facing this country.

It is essential to the economy that we have an energy policy which takes into account the provision of energy from all its sources. I think that my hon. Friend would agree that the balance of payments implications of imported oil are very complex indeed. It is very difficult to work out exactly what they involve. But we have to arrive at a figure and to continue with the policy outlined in the White Paper published by my predecessor which was specifically designed to be a flexible policy capable 1851 of meeting our energy needs and to produce for the future a long-term energy policy which will ensure that British industry is able to get the energy it needs at cheap cost.