COAL INDUSTRY BILL

HC Deb 05 December 1967 vol 755 cc1265-301

Again considered in Committee.

Question again proposed.

Mr. Marsh

I return refreshed, after that short intermission or technical hitch, to the subject of the money with which the Clause is concerned. A number of hon. Members have asked for explanations. Seldom, if ever, has such a degree of detail been given as is presented in the White Paper. In paragraphs 128 to 131 appear a great many explanations, and the hon. Member for Worcestershire, South (Sir G. Nabarro)—I mention him this early in my speech to satisfy him—quoted freely from these paragraphs.

The position is that borrowings under the 1965 Act, excluding temporary borrowings, will be about £700 million by March, 1968. If one therefore allows for temporary borrowings and stocks, borrowings may exceed £800 million by the end of next year. I must come to Parliament long before there is any danger of the statutory limit being exceeded, and this means that under the Bill I would expect to ask Parliament to approve a draft order, probably before the end of 1969.

It is not unreasonable that an industry faced with the difficulties which the coal industry faces should have a clear idea of its future, certainly up to the middle or end of 1969. It is equally right that, when dealing with sums of this size, Ministers should have to return to Parliament. This system means that I or some other Minister of Power—which is an attractive thought from time to time—will return here before the end of 1969 for further discussion on this to get an adidtional order. Hon. Members on both sides have considered ways of avoiding this procedure. However, the sums involved are so enormous that there must be some method of adequately dealing with the matter.

The hon. Member for Worcestershire, South pointed out strongly that we should sell off coal stocks. This is an attractive proposition which, I assure the hon. Gentleman, had crossed the mind of the N.C.B. from time to time. With 30 million tons of coal on the ground, if the N.C.B. could get someone to buy it, that would be considered a good thing. The problem is that if one were to sell it internally, one would be displacing coal with coal. We are making arrangements to use additional coal in power stations, but we will be coming to that in a subsequent part of the Bill.

Exports have been a difficult problem for a long time. A large element of American coal going to the Continent consists of coking coals—they probably constitute the major proportion—but a large proportion of our stocks consists of bituminous coal, and that does not mean that our stocks are of coals which other people are buying from the United States. I should not have thought that we could break into the American market and, in any case, I am sure that hon. Members on both sides would agree that it would be very marginal in the short term—

Sir Harmar Nicholls (Peterborough)

rose—

Mr. Marsh

No, I really must get on.

Sir Harmar Nicholls

I should just like—

Mr. Marsh

The hon. Gentleman is a brief visitor this evening—but never mind.

Sir Harmar Nicholls

That does not alter the fact that I am listening to the Minister's speech. Is he saying that this £30 million worth of stock is unsaleable, and therefore should not be included as stock or what does he mean?

Mr. Marsh

I did not say that it was £30 million worth of stock, but 30 million tons of stock. I say that it is unsaleable in that the Board has not been able to sell it. Most people would agree that the Board's marketing is extremely efficient—

Sir G. Nabarro

I have put this point to the right hon. Gentleman on many occasions. He has given a variety of good reasons why the Coal Board cannot sell that 30 million tons of coal. I put to him earlier, and on Second Reading, that a large part of this coal has been there for years. Is it not the fact, therefore, that it is unsaleable? If that is the case, will he say so? Alternatively, why not switch over the dual-fired power stations that are consuming millions of tons of imported oil, and use this allegedly unsaleable coal, all of which is capable of being burnt in power stations, instead of imported oil?

Mr. Marsh

We will come later to the question of coal-burning power stations. In terms of the deterioration of stocks, our coal stocks 10 years ago amounted to 8.6 million tons. It, therefore, follows that the vast bulk is less than 10 years old, and its deterioration has not been considerable. If someone would buy it, nobody would be happier than I to see the Coal Board sell it.

My hon. Friend the Member for Midlothian (Mr. Eadie) advanced a proposition which I find attractive though, with regret, I have to say that I do not think that it offers much hope. He said that the compensation paid to the coal owners was too high. That matter, of course, was not one for me—I was not the right hon. Gentleman who fixed the compensation stock for nationalised industries at that time—and it would be profitless for us to discuss whether or not the level of compensation has been sold many times, and those who now own it probably have no relationship to the original coal proposition but it is not one that helps us out of our difficulties.

My hon. Friend also referred to a matter on which he feels very strongly. I respect him for it because has has always pushed the interests of his constituents. He said that there needs to be a plan on a regional basis for dealing with the social consequences whatever may be the scale of the rundown. It was to this point that my right hon. Friend the Member for Easington (Mr. Shinwell) returned when he asked specifically about rundown.

It is quite impossible to project as far ahead exactly which pits will close when, and rather easier to say what the total coal production will be. None the less, two pits are known to be due to be closed during 1968—as a result of exhaustion, for which there could be no argument. One would certainly expect most of the 16 deferred pits to be closed in the course of 1968, and there are known to be some 31 pits in jeopardy, of which a number would clearly go during that period. Of course, in a year, and certainly in the course of more than a year, this pattern changes very much; some pits improve their performance. But we can see pretty clearly what the size will be in the end.

My right hon. Friend made a point about productivity. He was passing on a question which miners asked him and which I am asked at miners' meetings from time to time. The question was: what is the effect of productivity on manpower leaving aside any decision to change the levels of coal production? This is one of the dilemmas we face, and it is important to face it. If productivity rises, it means by definition fewer men. If productivity does not rise, it means higher prices, inability to sell the coal, and fewer men. There is no way out of this impasse. That is a phrase I wanted to get in at some stage this evening, but seriously this is an important point.

If, as is sometimes said—I think it completely impracticable and quite impossible—coal production were frozen at the existing level until 1970–71, we would lose 100,000 coal miners as a result of productivity alone. If we could not get that productivity we would lose even more men and be able to produce less coal.

It is right that hon. Members should say, "Have the Government done enough in alternative employment?" It is right that they should put probing questions to Ministers. What would be disastrous would be to try to convince coal miners that there was any way out of this contraction in mining manpower apart from certain limits. It would be a wicked thing to do because (a) they would be disappointed and, (b), social measures would not be taken.

Mr. Shinwell

I am following with great attention what my right hon. Friend is saying and I recognise that in a sense we are on the horns of a dilemma. Does he not realise that if we say to men in the mining industry, "Your pit is not paying its way, therefore you have to work harder, use the machinery at your disposal with greater effort and greater effectiveness. If you do not do that the pit will close," so that the men go ahead, put their hearts into the work and produce more coal, greater productivity, only to discover that many of them become redundant—there is the dilemma—obviously, the third question I put to my right hon. Friend applies? Before men become redundant, or are made redundant, the Government in some way must be able to offer them alternative employment.

Mr. Marsh

The Government are, of course, engaged in a series of new measures in relation to alternative employment in these industries. The whole point of the Bill and of the White Paper is based on a belief that increased coal-mining productivity is the defence which the miner has against redundancy on an unacceptable scale. Therefore, the purpose of the Bill is to give the industry a breathing space to help it to get the level of productivity to enable it to compete with other industries.

My right hon. Friend made the point that he would not vote—Front Benchers on this side of the House know that this can frequently be no idle threat—unless he was satisfied that the money was being used for social purposes as well as other purposes. But some of this money arises out of the increased coal stocks and there is some criticism about the growth of coal stocks. One of the arguments we would get is that we should curtail production because that would involve coal stocks. But part of the price which the community has to face in giving the breathing space is a recognition that there are large stocks of coal on the ground and the policy which we are pursuing is bound to mean that these coal stocks will continue to increase for a time. The financing of additional coal stocks is part of the social measures.

10.15 p.m.

Mr. Swain

My right hon. Friend has referred to coal stocks. Is he aware that part of the money to be found under the Bill will go to finance 15 per cent. or so of the total stocks which are open-cast mined coal at the moment, and that 15 per cent. represents about 3 million tons of the overall stocks? Will he not wisely consider the abandonment of all opencast working in the future, as nearly its total production today is being put into stock? Will he abandon open-cast working in favour of deep-mined coal?

Mr. Marsh

I hesitate to be led astray by my hon. Friend into the rather complex issue which he has raised. There is this clash, as it were, between open-cast coal and deep-mined coal. Open-cast coal at present is, I think, about 4 per cent. of total production; it is absurdly cheap in comparison with normal coal and is, therefore, beneficial to the industry commercially. On the other hand, there is the question whether it is sensible to go on mining open-cast coal, given the surplus of deep-mined coal. This is a perfectly reasonable question to raise, and it is one I am in process of discussing with the Coal Board at present.

I want to finish dealing with the perfectly fair questions put by my right hon. Friend the Member for Easington. He spoke about investment in the industry. It is essential to get increased productivity, and one of the methods of doing it is investment in the most modern efficient machinery in the world, such as we have in some of our long-life pits. I was very interested recently to meet the Soviet Minister of Mines and, only last week, the Ukrainian Minister of Mines, both of whom were very impressed by the standard of British mining equipment in use in this country. Eighty per cent. of all the investment it is intended to make would be in the long-life pits, and the remaining 20 per cent. is a minimum level of investment, mainly on safety measures, in short-life pits. To that extent again, therefore, one would hope that this level of investment would all go towards ensuring that miners may have the breathing space to which I have referred.

My hon. Friend the Member for Derbyshire, North-East (Mr. Swain) said that he wished the figure in the Bill were even bigger. I have a lot of sympathy with that view. I do not think that the Committee is under any illusion that it has paid the final bill for this exercise by the present Bill. At other stages in the future, other Ministers of Power, as in the past, will return to the House with Coal Industry Borrowing Powers Bills. But, because of the size of these figures, it is important that limits should be set which force Ministers back to the House of Commons in order that not only the finances but the policies upon which those finances are based can be debated.

The White Paper, the Bill and the measures stemming from it will be debated many times in the future. It is proper that they should be. I ask the Committee to resist the Amendment. Perhaps it is too much to hope that the hon. Member for Yeovil (Mr. Peyton) will now feel inclined to ask leave to withdraw it, on the ground that he has been convinced. However, if he is unwilling to do so, I ask my right hon. and hon. Friends to vote against the Amendment, in the belief that the borrowing powers are essential to the health of the industry and the humane treatment of the men engaged in it.

Mrs. Thatcher

Without wishing to restrict anyone who wishes to follow in the debate, I think that it might be convenient at this point if I were to comment on what the Minister has said. He has, rightly, covered a wide debate and answered many of the points raised, but I shall confine myself to the narrower issues before the Committee. I shall make my comments under five heads: forecasting, the financing of stocks, investment, closures, and financial disciplines.

I agree with the Minister when he says that no one knows what will happen. This, in a way, is the key to the Amendment now before us. If there is one sure thing about forecasting it is not only that it has been wrong but that it has been proved wrong at an unparalleled rate recently. All forecasts have been wrong, but the rate at which they have been wrong has been increasing. It is easy to demonstrate that merely by looking at the figures put up to the Prices and Incomes Board in 1965, on the basis of which the National Coal Board asked for a price increase. The figures put forward then were confounded in the Board's Annual Report for 1966–67. The demand forecast was already too high and the productivity forecast was already too low, even in that restricted time.

In the Second Reading debate we went over the past year's forecast, which has been even more wrong. I agree with many hon. Members that we now face problems the dimensions of which could not have been appreciated a number of years ago. In 1959 we had a target of 200 million tons a year and one of my colleagues, then Parliamentary Secretary to the Ministry of Power questioned whether we could sell that quantity of coal in a year if it were produced. The then Mr. Robens said: This is the answer to the Parliamentary Secretary, who shrieked the other week, "It is all right talking about 200 million tons, but you have got to sell it when you have got it." Of course one has, but it can easily be sold. There is no need to get bothered about it. We could export 10 million tons of coal a year, too."—[OFFICIAL REPORT, 23rd July, 1959; Vol. 609, c. 1553] Earlier in his speech he had said that contraction was the answer for the coal industry, and that if it contracted and had time to do so coal could be competitive with oil anywhere in the country.

We have followed up the remedies of contraction. The industry has had time to contract, but it has not become competitive with oil anywhere in the country, and we still have tremendous problems. It is not only the forecasting of demand that has been wrong. There has been forecasting of the rate at which the remedies would work and how, and this also has been wrong. For this reason, we think that if the Coal Board wants large, increasing sums of money it should come to the House more and more frequently. We should keep a much closer watch on the changing forecasts about coal, because they change far faster than was ever envisaged when we first had these Acts.

I want to add something about financing stocks. During the Second Reading debate I asked the right hon. Gentleman a number of questions about stocks—about their quality and age. He has not answered them, but we still have to face some rather confusing figures about stocks. The hon. Member for Dearne Valley (Mr. Edwin Wainwright) has said that under a Tory Government we had stocks of 50 million tons. I quickly looked back at the figures, which were for undistributed stocks held by the Board. The highest figure was in 1959, when stocks were 35.7 million tons. That does not take into account distributed stocks. Had the then Minister pursued the current policy of adding to the stocks regardless, the problem with which the right on. Gentleman is faced today would be far greater than it is. We should have a larger and larger stockpile and larger and larger amounts of working capital tied up in stocks which were never likely to be sold.

What the Coal Board did then was to say, "We shall reduce the stocks by reducing production below the level of demand", and the stockpile naturally fell. But at the end of last year we had stocks of 20 million tons, valued in the Coal Board accounts at £80 million on the basis of their current value. That was writing them down from a higher value, because I understand that when they are put on the stockpile they are valued at market price and not cost price. Their market price has been higher but their written-down value was £80 million. That applied to 20 million tons.

We now have an extra 8 million tons. Assuming this to be put on the stockpile at £5 a ton, we have in stock tied up an extra £40 million, which means at the moment that we have tied up in stocks £120 million. Already the right hon. Gentleman is proposing to go on increasing stockpiling, although he knows that probably a number of these stocks will never he sold. An article in The Economist of 21st October said: So on the Coal Board's own unpublished reckoning, up to 50 million tons will be piled up into huge coal tips by the early 1970s. A ton of coal costs as much to store over ten years as it does to dig—which is close on £5 a ton. So £500 million could eventually be locked up in vast deteriorating heaps, for which the Minister of Power has undertaken in theory to compensate the Coal Board. If this is so, it is economic madness in any terms, bad for any business enterprise and bad for the morale of those in the coal industry. Morale will never be raised in the industry while the men know that the coal they mine is going to increasing stocks in increasing piles. As far as I can see, morale will be raised and the right people recruited at managerial levels only when the industry has finished its contraction and is once again competitive on its own unsubsidised merits. At that point it can expand.

Mr. Marsh

The logic of what the hon. Lady is saying would be to return to a policy now of reducing production below the level of demand so that the demand could be switched into stocks. If that is what she is saying, the figure in 1970 would not be 155 million tons but something like 120 million tons. Does she think the industry could face that?

Mrs. Thatcher

The logic of what the right hon. Gentleman is saying is that he will go on increasing stockpiles regardless of demand. Is he seriously saying that? I would prefer to have production reduced below demand and spend the money on what we will have to spend it on eventually—not on increasing stock piles, which is putting money to a dead purpose, but on helping people to go to other industries and helping other industries to go there if need be. That is a more constructive use. If the right hon. Gentleman's predecessors had followed his policy, we should have a problem of unmanageable proportions now.

Now I turn to the financing of investment. I asked about this on Second Reading and it is germane to the Amendment. I asked what the increased amount for investment would be used for. In the White Paper, the right hon. Gentleman says that part of these extra borrowing powers would be used for increased investment. Increased investment was to have been generated from internal sources but now it cannot be since sales are down on the expected amounts. The White Paper says that increasing investment is required to the tune of £60 million for net capital investment in collieries and ancillary activities.

We are very anxious that any increased investment should go into productive pits, to help produce coal more and more competitively. The Minister, in his Second Reading speech, said that the money will be required … to supplement internal resources, mainly depreciation, available for capital investment of all kinds."—[OFFICIAL, REPORT, 28th November, 1967; Vol. 755, c. 260] Presumably that would include ancillary activities. The Parliamentary Secretary, in response to my question at the end of the debate, said: A point raised by the hon. Member for Finchley was whether capital expenditure as intended under the Bill will be confined to colliery modernisation or will go to diversifying the activities of the N.C.B. The assurance I give is that this capital expenditure will be extended to the programme of modernisation in the pits, which is of course the policy of the N.C.B."—[OFFICIAL REPORT, 28th November, 1967; Vol. 755, c. 390.] 10.30 p.m.

Who is right? The White Paper and the Parliamentary Secretary or the Minister? They cannot both be right. If they are to have increased borrowing powers, and the Minister and the Parliamentary Secretary do not agree, that is another good reason for reducing the borrowing powers, and to get them to come back to Parliament when they have agreed.

One point on pit closures. I criticise the Government with regard to the instructions which appear to have been given to the Coal Board on pit closures. I noticed that in the debate on the Coal Industry Bill in November, 1965, the then Minister said that the Board intends, with the Government's full support, to speed up the process by effecting more than half these closures within about two years from now."—[OFFICIAL REPORT, 25th November, 1965; Vol. 721, c. 784.] So he said the Board intended to speed up the closures. The Report of the National Coal Board for the year 1965–66 said on page 6: The Board had originally planned to phase the colliery closures fairly evenly over the years 1966–70 but at the Government's suggestion the major part of the closure programme will be completed in the two years 1966 and 1967. No enterprise, whether public enterprise or private enterprise, can operate on contradictory instructions, and it looks at the moment as if the Government asked the Board to speed up these closures, and are now telling the Board to slow down the closures. My sympathies go to the Board on this, because contradictory instructions appear to have been given to it. That is not the Board's fault, but the fault of the Minister and his predecessor, who is now running economic affairs in the North-East.

What we are anxious to do is what was recommended by the National Board

for Prices and Incomes when it considered the prospect of raising prices of coal which that Board agreed to. That Board said that what the industry needed was "tightening financial discipline ". On page 15 of its Report No. 12 it said: Costs and prices can be held for the future only if this is changed.

The change required was concentrating on the profitable pits, but not to get the profitable pits to carry the unprofitable pits. It went on to say: The Government can help to induce this change by tightening financial discipline.

This is what we on this side are seeking.

I feel fairly certain that my hon. Friends will not have been convinced by the right hon. Gentleman's reply. I am not convinced myself. I hope, therefore, that my hon. Friend will think it right to press his Amendment to a Division.

Mr. Brian O'Malley (Lord Commissioner of the Treasury)

rose in his place, and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The Committee proceeded to a Division—

Mr. Webster

(seated and covered): On a point of order. I understand that you have put the Closure, Sir Eric. Although I have been in the Chamber for the last hour and a half, as I was here for the whole of Second Reading, and although I saw a Whip stand up and open and shut his mouth, I heard nothing. What happened was completely inaudible to me. Did you, in fact, put the Closure?

The Chairman

I do not understand what the hon. Gentleman's point of order is. I have accepted the Motion for the Closure.

The Committee divided: Ayes 177, Noes 114.

Division No. 8.]	AYES	[10.33 p.m.
Albu, Austen	Bence, Cyril	Braddock, Mrs. E. M.
Allaun, Frank (Salford, E.)	Benn, Rt. Hn. Anthony Wedgwood	Brooks, Edwin
Archer, Peter	Bidwell, Sydney	Brown, Bob(N'c tle -upon-Tyne, W)
Armstrong, Ernest	Bishop, E. S.	Buchan, Norman
Atkins, Ronald (Preston, N.)	Blackburn, F.	Buchanan, Richard (G'gow, Sp'burn)
Atkinson, Norman (Tottenham)	Blenkinsop, Arthur	Cant, R. B.
Barnett, Joel	Booth, Albert	Carter-Jones, Lewis
Beaney, Alan	Boston, Terence	Coleman, Donald
Concannon, J. D.	Houghton, Rt. Hn. Douglas	Oswald, Thomas
Conlan, Bernard	Howarth, Robert (Bolton, E.)	Owen, Dr. David (Plymouth, S'tn)
Craddock, George (Bradford, S.)	Howell, Denis (Small Heath)	Owen, Will (Morpeth)
Cronin, John	Hoy, James	Padley, Walter
Crossman, Rt. Hn. Richard	Huckfield, Leslie	Page, Derek (King's Lynn)
Cullen, Mrs. Alice	Hughes, Emrys (Ayrshire, S.)	Palmer, Arthur
Dalyell, Tam	Hughes, Roy (Newport)	Parkyn, Brian (Bedford)
Davidson, Arthur (Accrington)	Hunter, Adam	Pavitt, Laurence
Davies, Dr. Ernest (Stretford)	Jackson, Colin (B'h'se & Spenb'gh)	Pearson, Arthur (Pontypridd)
Davies, G. Elfed (Rhondda, E.)	Jackson, Peter M. (High Peak)	Pentland, Norman
Davies, Harold (Leek)	Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)	Perry, George H. (Nottingham, S.)
Davies, Ifor (Gower)	Jenkins, Hugh (Putney)	Price, Christopher (Perry Barr)
Dell, Edmund	Johnson, Carol (Lewisham, S.)	Price, Thomas (Westhoughton)
Dempsey, James	Jones, Dan (Burnley)	Price, William (Rugby)
Dewar, Donald	Jones, J. Idwal (Wrexham)	Probert, Arthur
Dickens, James	Jones, T. Alec (Rhondda, West)	Randall, Harry
Doig, Peter	Kelley, Richard	Rees, Merlyn
Dunnett, Jack	Kerr, Dr. David (W'worth, Central)	Roberts, Albert (Normanton)
Dunwoody, Mrs. Gwyneth (Exeter)	Lawson, George	Rose, Paul
Dunwoody, Dr. John (F'th & C'b'e)	Ledger, Ron	Ross, Rt. Hn. William
Eadie, Alex	Lee, Rt. Hn. Frederick (Newton)	Rowlands, E. (Cardiff, N.)
Edwards, Rt. Hn. Ness (Caerphilly)	Lewis, Ron (Carlisle)	Shaw, Arnold (Ilford, S.)
Edwards, William (Merioneth)	Lomas, Kenneth	Sheldon, Robert
Ellis, John	Lyon, Alexander W. (York)	Short, Mrs. Renée(W'hampton,N.E.)
Ennals, David	McBride, Neil	Silverman, Julius (Aston)
Ensor, David	MacDermot, Niall	Skeffington, Arthur
Evans, Ioan L. (Birm'h'm, Yardley)	Macdonald, A. H.	Spriggs, Leslie
Faulds, Andrew	McGuire, Michael	Stonehouse, John
Fernyhough, E.	Mackenzie, Gregor (Rutherglen)	Tinn, James
Finch, Harold	Mackintosh, John P.	Urwin, T. W.
Fletcher, Ted (Darlington)	McMillan, Tom (Glasgow, C.)	Wainwright, Edwin (Dearne Valley)
Ford, Ben	Macpherson, Malcolm	Walker, Harold (Doncaster)
Forrester, John	Mahon, Peter (Preston, S.)
Freeson, Reginald	Mapp, Charles	Watkins, David (Consett)
Galpern, Sir Myer	Marks, Kenneth	Watkins, Tudor (Brecon & Radnor)
Gardner, Tony	Marquand, David	Weitzman, David
Garrett, W. E.	Marsh, Rt. Hn. Richard	Wellbeloved, James
Gourlay, Harry	Mason, Roy	Whitaker, Ben
Gray, Dr. Hugh (Yarmouth)	Mendelson, J. J.	Whitlock, William
Grey, Charles (Durham)	Mikado, Ian	Wilkins, W. A.
Griffiths, David (Rother Valley)	Miller, Dr. M. S.	Williams, Alan (Swansea, W.)
Griffiths, Rt. Hn. James (Llanelly)	Milne, Edward (Blyth)	Williams, Clifford (Abertillery)
Griffiths, Will (Exchange)	Mitchell, R. C. (S'th'pton, Test)	Williams, Mrs. Shirley (Hitchin)
Hamilton, James (Bothwell)	Morgan, Elystan (Cardiganshire)	Willis, George (Edinburgh, E.)
Hamilton, William (Fife, W.)	Morris, Charles R (Openshaw)	Wilson, William (Coventry, S.)
Hamling, William	Mulley, Rt. Hn. Frederick	Winnick, David
Hannan, William	Murray, Albert	Woof, Robert
Harper, Joseph	Neal, Harold	Yates, Victor
Harrison, Walter (Wakefield)	Norwood, Christopher
Haseldine, Norman	Ogden, Eric	TELLERS FOR THE AYES:
Hilton, W. S.	O'Malley, Brian	Mr. Eric G. Varley and
Hooley, Frank	Orbach, Maurice	Mr. William Howie.
Horner, John	Orme, Stanley
NOES
Atkins, Humphrey (M't'n & M'd'n)	Doughty, Charles	Jones, Arthur (Northants, S.)
Awdry, Daniel	Drayson, G. B.	Jopling, Michael
Baker, W. H. K.	Elliot, Capt. Walter (Carshalton)	Kimball, Marcus
Balniel, Lord	Elliott,R.W.(N'c't1e-upon-Tyne,N.)	King, Evelyn (Dorset, S.)
Bennett, Dr. Reginald (Gos, & Fhm)	Emery, Peter	Kitson, Timothy
Bessell, Peter	Farr, John	Knight, Mrs. Jill
Black, Sir Cyril	Fortescue, Tim	Lancaster, Col. C. G.
Blaker, Peter	Galbraith, Hon. T. G.	Lane, David
Boardman, Tom	Gibson-Watt, David	Lewis, Kenneth (Rutland)
Boyd-Carpenter, Rt. Hn. John	Glyn, Sir Richard	Loveys, W. H.
Braine, Bernard	Gower, Raymond	Lubbock, Eric
Brown, Sir Edward (Bath)	Grant, Anthony	MacArthur, Ian
Brown, Hugh D. (G'gow, Provan)	Gurden, Harold	Mackenzie, Alasdair(Ross&Crom'ty)
Buchanan-Smith,Alick (Angus,N&M)	Hall-Davis, A. G. F.	Maclean, Sir Fitzroy
Buck, Antony (Colchester)	Harris, Frederic (Croydon, N.W.)	Mawby, Ray
Burden, F. A.	Harrison, Brian (Maldon)	Maxwell-Hyslop, R. J.
Clegg, Walter	Harrison, Col. Sir Harwood (Eye)	Maydon, Lt.-Cmdr. S. L. C.
Cooke, Robert	Hastings, Stephen	Mills, Peter (Torrington)
Cooper-Key, Sir Neill	Hawkins, Paul	Mills, Stratton (Belfast, N.)
Cordle, John	Heald, Rt. Hn. Sir Lionel	Montgomery, Fergus
Costain, A. P.	Higgins, Terence L.	More, Jasper
Crowder, F. P.	Hiley, Joseph	Morgan, Geraint (Denbigh)
Dalkeith, Earl of	Holland, Philip	Morrison, Charles (Devizes)
Dance, James	Hunt, John	Munro-Lucas-Tooth, Sir Hugh
Davidson, James(Aberdeenshire, W.)	Hutchison, Michael Clark	Nabarro, Sir Gerald
Dean, Paul (Somerset, N.)	Iremonger, T. L.	Nicholls, Sir Harmar
Deedes, Rt. Hn. W. F. (Ashford)	Irvine, Bryant Godman (Rye)	Onslow, Cranley

Osborn, John (Hallam)	Silvester, Frederick	Walker, Peter (Worcester)
Page, John (Harrow, W.)	Sinclair, Sir George	Ward, Dame Irene
Percival, Ian	Smith, John	Whitelaw, Rt. Hn. William
Peyton, John	Steel, David (Roxburgh)	Weatherill, Bernard
Pink, R. Bonner	Stoddart-Scott, Col. Sir M. (Ripon)	Webster, David
Powell, Rt. Hn. J. Enoch	Summers, Sir Spencer	Wills, Sir Gerald (Bridgwater)
Pym, Francis	Taylor,Edward M.(G'gow,Cathcart)	Woodnutt, Mark
Ramsden, Rt. Hn. James	Thatcher, Mrs. Margaret	Worsley, Marcus
Rees-Davies, W. R.	Tilney, John	Younger, Hn. George
Ridley, Hn. Nicholas	Turton, Rt. Hn. R. H.	TELLERS FOR THE NOES:
Robson Brown, Sir William	van Straubenzee, W. R.	Mr. Reginald Eyre and
Rossi, Hugh (Hornsey)	Wainwright, Richard (Colne Valley)	Mr. Hector Monro.
Scott, Nicholas

Question put accordingly, That the Amendment be made:—

The Committee divided: Ayes 115, Noes 181.

Division No. 9.]	AYES	[10.43 p.m.
Atkins, Humphrey (M't'n & M'd'n)	Hall-Davis, A. G. F.	Onslow, Cranley
Awdry, Daniel	Harris, Frederic (Croydon, N.W.)	Osborn, John (Hallam)
Baker, W. H. K.	Harrison, Brian (Maldon)	Page, John (Harrow, W.)
Balniel, Lord	Harrison, Col. Sir Harwood (Eye)	Percival, Ian
Bennett, Dr. Reginald (Gos. & Fhm)	Hastings, Stephen	Peyton, John
Bessell, Peter	Hawkins, Paul	Pink, R. Bonner
Black, Sir Cyril	Heald, Rt. Hn. Sir Lionel	Powell, Rt. Hn. J. Enoch
Blaker, peter	Higgins, Terence L.	Pym, Francis
Boardman, Tom	Hiley, Joseph	Ramsden, Rt. Hn. James
Boyd-Carpenter, Rt. Hn. John	Hill, J. E. B.	Rees-Davies, W. R.
Braine, Bernard	Holland, Philip	Ridley, Hn. Nicholas
Brown, Sir Edward (Bath)	Hunt, John	Robson Brown, Sir William
Bruce-Gardyne, J.	Hutchison, Michael Clark	Rossi, Hugh (Hornsey)
Buchanan-Smith, Alick( Angus, N&M)	Jones, Arthur (Northants, S.)	Scott, Nicholas
Buck, Antony (Colchester)	Jopling, Michael	Silvester, Frederick
Burden, F. A.	Kimball, Marcus	Sinclair, Sir George
Clegg, Walter	King, Evelyn (Dorset, S.)	Smith, John
Cooke, Robert	Kitson, Timothy	Steel, David (Roxburgh)
Cooper-Key, Sir Neill	Knight, Mrs. Jill	Stoddart-Scott, Col. Sir M. (Ripon)
Cordle, John	Lancaster, Col. C. G.	Summers, Sir Spencer
Costain, A. P.	Lane, David	Taylor,Edward M.(G'gow,Cathcart)
Crowder, F. P.	Lewis, Kenneth (Rutland)	Thatcher, Mrs. Margaret
Dalkeith, Earl of	Loveys, W. H.	Tilney, John
Dance, James	Lubbock, Eric	Turton, Rt. Hn. R. H.
Davidson, James( Aberdeenshire, W.)	MacArthur, Ian	van Straubenzee, W. R.
Dean, Paul (Somerset, N.)	Mackenzie, Alasdair(Ross&Crom'ty)	Wainwright, Richard (Colne Valley)
Deedes, Rt. Hn. W. F. (Ashford)	Maclean, Sir Fitzroy	Walker, Peter (Worcester)
Doughty, Charles	Mawby, Ray	Ward, Dame Irene
Drayson, G. B.	Maxwell-Hyslop, R. J.	Weatherill, Bernard
Elliot, Capt. Walter (Carshalton)	Maydon, Lt.-Cmdr. S. L. C.	Webster, David
Elliott,R.W.(N'c'tle-upon-Tyne,N.)	Mills, Peter (Torrington)	Whitelaw, Rt. Hn. William
Emery, Peter	Mills, Stratton (Belfast, N.)	Wills, Sir Gerald (Bridgwater)
Farr, John	Monro, Hector	Woodnutt, Mark
Fortescue, Tim	Montgomery, Fergus	Worsley, Marcus
Galbraith, Hon. T. G.	More, Jasper	Younger, Hn. George
Gibson-Watt, David	Morgan, Geraint (Denbigh)
Glyn, Sir Richard	Morrison, Charles (Devizes)	TELLERS FOR THE AYES:
Gower, Raymond	Munro-Lucas-Tooth, Sir Hugh	Mr. Reginald Eyre and
Grimond, Rt. Hn. J.	Nabarro, Sir Gerald	Mr. Anthony Grant.
Gurden, Harold	Nicholls, Sir Harmar
NOES
Albu, Austen	Buchan, Norman	Dickens, James
Allaun, Frank (Salford, E.)	Buchanan, Richard (G'gow, Sp'burn)	Doig, Peter
Archer, Peter	Cant, R. B.	Dunnett, Jack
Armstrong, Ernest	Carter-Jones, Lewis	Dunwoody, Mrs. Gwyneth (Exeter)
Atkins, Ronald (Preston, N.)	Coleman, Donald	Dunwoody, Dr. John (F'th & C'b'e)
Atkinson, Norman (Tottenham)	Concannon, J. D.	Eadie, Alex
Barnett, Joel	Conlan, Bernard	Edwards, Rt. Hn. Ness (Caerphilly)
Baxter, William	Craddock, George (Bradford, S.)	Edwards, William (Merioneth)
Beaney, Alan	Cronin, John	Ellis, John
Bence, Cyril	Crossman, Rt. Hn. Richard	Ennals, David
Benn, Rt. Hn. Anthony Wedgwood	Cullen, Mrs. Alice	Ensor, David
Bidwell, Sydney	Dalyell, Tam	Evans, Ioan L. (Birm'h'm, Yardley)
Bishop, E. S.	Davidson, Arthur (Accrington)	Faulds, Andrew
Blackburn, F.	Davies, Dr. Ernest (Stratford)	Fernyhough, E.
Blenkinsop, Arthur	Davies, G. Elfed (Rhondda, E.)	Finch, Harold
Booth, Albert	Davies, Harold (Leek)	Fletcher, Ted (Darlington)
Boston, Terence	Davies, Ifor (Gower)	Ford, Ben
Braddock, Mrs. E. M.	Dell, Edmund	Forrester, John
Brooks, Edwin	Dempsey, James	Freeson, Reginald
Brown, Bob (N'c'tle-upon-Tyne, W.)	Dewar, Donald	Galpern, Sir Myer
Gardner, Tony	Lomas, Kenneth	Price, Christopher (Perry Barr)
Garrett, W E.	Lyon, Alexander W. (York)	Price, Thomas (Westhoughton)
Gourlay, Harry	McBride, Neil	Price, William (Rugby)
Gray, Dr. Hugh (Yarmouth)	MacDermot, Niall	Probert, Arthur
Grey, Charles (Durham)	Macdonald, A. H.	Randall, Harry
Griffiths, David (Rother Valley)	McGuire, Michael	Rees, Merlyn
Griffiths, Rt. Hn. James (Lianelly)	Mackenzie, Gregor (Rutherglen)	Roberts, Albert (Normanton)
Griffiths, Will (Exchange)	Mackintosh, John P.	Rose, Paul
Hamilton, James (Bothwell)	McMillan, Tom (Glasgow, C.)	Ross, Rt. Hn. William
Hamilton, William (Fife, W.)	MacPherson, Malcolm	Rowlands, E. (Cardiff, N.)
Hamling, William	Mahon, Peter (Preston, S.)	Shaw, Arnold (Ilford, S.)
Hannan, William	Mapp, Charles	Sheldon, Robert
Harper, Joseph	Marks, Kenneth	Short, Mrs. Renée(W'hampton,N.E.)
Harrison, Walter (Wakefield)	Marquand, David	Silverman, Julius (Aston)
Haseldine, Norman	Marsh, Rt. Hn. Richard	Skeffington, Arthur
Hilton, W. S.	Mason, Roy	Spriggs, Leslie
Hooley, Frank	Mendelson, J. J.	Stonehouse, John
Horner, John	Mikardo, Ian	Swain, Thomas
Houghton, Rt. Hn. Douglas	Miller, Dr. M. S.	Tinn, James
Howarth, Robert (Bolton, E.)	Milne, Edward (Blyth)	Urwin, T. W.
Howell, Denis (Small Heath)	Mitchell, R. C. (S'th'pton, Test)	Wainwright, Edwin (Dearne Valley)
Hoy, James	Morgan, Elystan (Cardiganshire)	Walker, Harold (Doncaster)
Huckfield, Leslie	Morris, Charles R. (Openshaw)	Watkins, David (Consett)
Hughes, Emrys (Ayrshire, S.)	Mulley, Rt. Hn. Frederick	Watkins, Tudor (Brecon & Radnor)
Hughes, Roy (Newport)	Murray, Albert	Weitzman, David
Hunter, Adam	Neal, Harold	Wellbeloved, James
Jackson, Colin (B'h'se & Spenb'gh)	Norwood, Christopher	Whitaker, Ben
Jackson, Peter M. (High Peak)	Ogden, Eric	Whitlock, William
Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)	O'Malley, Brian	Wilkins, W. A.
Jenkins, Hugh (Putney)	Orbach, Maurice	Williams, Alan (Swansea, W.)
Johnson, Carol (Lewisham, S.)	Orme, Stanley	Williams, Clifford (Abertillery)
Jones, Dan (Burnley)	Oswald, Thomas	Williams, Mrs. Shirley (Hitchin)
Jones, J. Idwal (Wrexham)	Owen, Dr. David (Plymouth, S'tn)	Willis, George (Edinburgh, E.)
Jones, T. Alec (Rhondda, West)	Owen, Will (Morpeth)	Wilson, William (Coventry, S.)
Kelley, Richard	Padley, Walter	Winnick, David
Kerr, Mrs. Anne (R'ter & Chatham)	Page, Derek (King's Lynn)	Woof, Robert
Kerr, Dr. David (W'worth, Central)	Palmer, Arthur	Yates, Victor
Kerr, Russell (Feltham)	Parkyn, Brian (Bedford)
Lawson, George	Pavitt, Laurence	TELLERS FOR THE NOES:
Ledger, Ron	Pearson, Arthur (Pontypridd)	Mr. Eric G. Varley and
Lee, Rt. Hn. Frederick (Newton)	Pentland, Norman	Mr. William Howie.
Lewis, Ron (Carlisle)	Perry, George H. (Nottingham, S.)

Mr. Peyton

I beg to move Amendment No. 4, in page 1, line 12, leave out subsection (2).

As is my custom, I think that I can do this with great brevity. It would be possible, subject to any guidance which you, Sir Eric, might see fit to give to the Committee, for the same arguments as were appropriate to the first Amendment to be repeated on this one.

The Chairman

Since the hon. Member asks for my guidance, it might be convenient if I indicate to the Committee that that is not the case. This Amendment is very much narrower, and the debate on it will be much more restricted.

Mr. Peyton

Sir Eric, I think that you misunderstood me. I did not ask for your guidance. I said that the opinion which I was expressing was subject to any guidance which you might see fit to offer. That is quite different. As all hon. Gentlemen opposite know, asking for guidance is something which I would never be foolish enough to do, unless I was in great straits.

The point here is really explained by the wording in the Explanatory and Financial Memorandum, which says in paragraph 2: It also raises from £30 million to £50 million the limit imposed by section 1 (4)(b) of the 1965 Act on the amount of accumulated deficit which may be financed by temporary borrowings. It is true that the Committee now comes down from the level at which it has lately been considering figures. On the last Amendment we were dealing with £900 million, so it is quite a relief to come down to the small change of £30 million or £50 million. Nevertheless, I think that we are entitled to ask the Minister for some explanation. I am sure that the hon. Member for Derbyshire, North-East (Mr. Swain) who takes such an interest in these matters will wish to pay attention to this most important debate.

Mr. Swain

I am listening, very seriously. I merely smiled not at the content of the hon. Member's speech, but at a fourth-rate comic trying to play Hamlet.

Mr. Peyton

I am not quite sure how long the hon. Member is seeking to pro- long the discussion on the Bill he is so anxious to support, but it is nice to hear these civil interjections, which I realise are done with all that polished courtesy for which the hon. Gentleman is well known.

If I can now get back to the subject of the contents of the Bill, I would just say that I think we are entitled to some reasonable answer telling us why the Coal Board needs this extra £20 million on its borrowing powers for temporary purchases. I hope that the brevity of my remarks will not lead the Parliamentary Secretary to think that he can avoid this issue with some vague generalities.

Sir G. Nabarro

The issues here are much wider than denoted by the hon. Member for Yeovil (Mr. Peyton), and I rise therefore to support him a little more powerfully than I have done on earlier occasions. [Interruption.] The hon. Member for Feltham (Mr. Russell Kerr) who has just joined our debates for the first time today—

Mr. Russell Kerr (Felham)

No.

Sir G. Nabarro

The hon. Gentleman shouts at me "another comic turn". Perhaps he will give me a few minutes to talk about the finances of the Coal Board and judge then how comic I am in my attribution of deficits to mismanagement by the Board.

Mr. Kerr

That shows how comic you were a long time ago.

Sir G. Nabarro

Sir Eric, I heard the hon. Member refer to you as being a comic. I hope that if I resume my seat you will put him into good order.

The Chairman

Order. If the hon. Gentleman did make that remark and address it to me I hope he will withdraw it.

Mr. Kerr

I do so unreservedly, Sir Eric. As you will gather it was directed at another hon. Member of this House.

Mr. Stephen Hastings (Mid-Bedfordshire)

On a point of order, Sir Eric. Is it in order for the hon. Gentleman to refer to my hon. Friend as a comic turn?

The Chairman

Order. I have heard similar expressions used in the House before.

Sir G. Nabarro

These ribald and irrelevant interjections from sedentary hon. Members opposite are, of course, merely protracting our proceedings. I can make speeches of very great length on deficit financing if I am called upon to do so. I will, however, be relatively brief this evening as long as I am given a continuously quiet hearing without sedentary interruptions from hon. Gentlemen opposite.

I shall powerfully reinforce what the hon. Member for Yeovil has said. There is an extraordinary contradistinction in the financial fortunes of the Board, comparing last year with the projected deficit during the next two years.

I said in the immediately preceding debate that the Coal Board had almost broken even in the last couple & of years on its current account, and in this subsection (2) it is providing for a deficit of £50 million over the length of life of operations which will flow from this Bill.

That length of life, in the immediately preceding Amendment, I put at 16 months. The Minister thinks it is a bit longer. He muttered "1971" on one occasion. But it will not be 1971 or anything like it; it is much more likely to be 1969. Hon. Members representing mining constituencies will agree here. If it is 1969, that is two years ahead. We are budgeting, in effect, for a deficit of £50 million over two years, which represents a loss of about £25 million per annum on current account.

But the Coal Board has been almost breaking even. To quote from paragraph I of the Board's Report and Accounts for 1966–67, that is the last chargeable period ended 31st May last: Operating profit on the Board's activities in 1966–67 amounted to £28.5 million. Interest paid was £28.2 million and the surplus on the Board's accounts was £0.3 million. of £300,000 profit on a year's operations.

How is it then that subsection (2) now talks about an annual deficit of £20 million or £25 million in each of the two years of the duration of the operations flowing from the Bill, whereas, in the last full year, the Board made a small profit? What has caused this dramatic change in its financial operations? To quote from paragraph 2 of the Report and Accounts: The improvement in the industry's results was largely due to a surge in output and productivity in the latter part of the year. In their Report for 1965–66, the Board said (see paragraph 24) that too rapid a rundown in manpower might prevent the industry from realising its full potential. But a purpose of the Bill is to prevent any acceleration in the rundown of manpower, and one would therefore suppose that the financial achievements of the Board in each of the next two years should be not less favourable than that in the year ended 31st March, 1966.

Effectively and shortly, how does the Parliamentary Secretary account for the fact that, in this short period of 12 to 18 months, there should be a turnover from a small profit to a large deficit of possibly £20 million to £25 million, with a rundown of manpower in the coming two years which is said to be at a rate not larger than the rundown in the last full year?

My second question flows from the intervention of the hon. Member for Derbyshire, North-East (Mr. Swain) in the Minister's speech on the previous Amendment, about opencast coal. It is notorious financially that opencast operations are extremely profitable. The Report and Account says: The Board's opencast production made an operating profit of £7.5 million, or 22s. 2d. a ton. The average cost of production was 80s. 7d. a ton. That last price for opencast coal compares with 100s. 7d. a ton, average pithead price, for deep-mined coal, so opencast coal is reported £1 a ton cheaper, and, on a very limited output of only a few million tons, the Board made the huge profit of £7.5 million on opencast operations last year.

It follows from that that if the deficit budgeting for each of the two forthcoming years is about £25 million a year, and if there is to be a profit on opencast mining of £7.5 million a year, the real loss envisaged on deep-mined coal is £32.5 million a year in each of the two years ahead covered by the Bill.

Mr. J. D. Concannon (Mansfield)

The profit on opencast mining mentioned by the hon. Gentleman is before interest has been paid, and, of course, 25 per cent. of the total amount of deep-mined coal is produced at 77s. 9d. a ton, which is below the opencast sum.

Sir G. Nabarro

I do not dispute that and I will not conduct an analytical survey of mining figures. I repeat that the average pithead price of deep-mined coal in Britain is 100s. 7d. a ton, based on last year's activities, while the average price of opencast coal, based on last year's activities, was 80s. 7d. a ton. The two are strictly comparable figures.

What has caused this dramatic change in the financial fortunes of the Board? Whereas in 1966–67, after meeting all charges and after paying a very heavy interest charge, the Board still turned in a tiny profit of £300,000. In this Measure we are talking about a deficit of a maximum of £50 million at the end of any chargeable accounting period flowing from the Bill's operations. That is much too big a change-over from profit to loss to pass unnoticed and unchallenged. I therefore warmly support my hon. Friend the Member for Yeovil and congratulate him, as always, on his Parliamentary perspicacity in tabling the Amendment.

Mr. Russell Kerr

Now lick him all over.

Sir G. Nabarro

The hon. Gentleman is both indelicate and vulgar. As a protest against his continued sedentary interventions in what was intended to be an important financial contribution to our deliberations, I resume my seat.

The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson)

I will reply to some of the points raised by the two hon. Gentlemen opposite. I will deal with the questions asked by the hon. Member for Worcestershire, South (Sir G. Nabarro) first and, in doing so, I will confine my remarks to the matters in question and try to avoid elaboration by adjective.

The hon. Member for Worcestershire. South asked for reasons for the change in the Board's financial position from a £0.3 million surplus last year to a position in which we shall have to budget or allow for continuing deficits over the next few years. The hon. Gentleman quoted at some length from the Board's last Annual Report. Had he continued to quote from the same series of paragraphs he would have been able to indicate in some detail the answer to his own question.

He quoted from paragraphs 1 and 2. Paragraph 3 refers to the effects on the industry's finances of the recession in the economy and an exceptionally mild winter. It goes on to refer to increased expenditure on materials, stores, power supplies, local rates and so on.

It also refers to the additional expenditure in which the Board was involved as a result of the National Union of Seamen's strike last year in putting to stock and later picking up over 1½ million tons of coal and coke. These were some of a whole series of factors which were forecast last year in the Board's Annual Report as affecting the Board's finances.

Mr. Edwin Wainwright

When the hon. Gentleman refers to increases in prices, was he quoting an increased amount of materials obtained from private enterprise, or did the price go up for the machinery being sold?

Mr. Freeson

I understand that the Board was referring to increased costs, and not the increased quantities, as such. Those are the reasons specified, and they are reasons which one has to repeat in explaining the changing situation.

A question was then put about deep mining, as compared with opencasting, and the Annual Report to which reference has been made gives just the information for which the hon. Member was, in fact, asking. If he would look at the paragraph preceding that from which he quoted about opencast mining, he will see that on page 2 it is stated: The operating profit at the Board's collieries was £17.7 millions or 2s. 2d. a ton. The average cost of production was 98s. 5d. a ton. Then there is a table of figures showing costs.

I should like to go back to the first point which was made by the hon. Member who moved the Amendment who asked in general terms for an explanation of the increased figure which he sought to reduce by the Amendment. The object of the increase is to make provision for covering possible deficits in the current year and up to 1970–71. After the capital reconstruction authorised under the 1965 Act, the Board aimed to earn each year a revenue surplus of £10 millions. This would have been used to bridge the gap, and in 1966–67—the first year—the surplus amounted to £300,000. On present trends, however, there may be a deficit of £10 millions this year, although the revenue earned up to 1970–71 will depend upon coal price policy, policies about uneconomic pits, and matters which cannot be calculated accurately in advance.

Mr. Lubbock

Why is there this worsening position from a profit of £300,000 last year to a deficit of £10 millions this year?

Mr. Freeson

The Board was indicating the worsening position in which it was and—

Mr. Lubbock

The hon. Gentleman said that certain factors had affected the Board adversely, but paragraph 3 of the Report states quite clearly that Other factors contributed to the improved linances of the industry".

Sir G. Nabarro

I do not wish to weary the Committee by giving lengthy quotations from the Report, but the hon. Gentleman opposite might have put matters into better balance—into correct balance—by quoting from the first page of the Report, The financial position of the industry was, however, strengthened by the continuing effects of the capital reconstruction announced in November, 1965". I would remind the Committee what that capital reconstruction was. It was the writing off of many millions of accumulated losses and it was that which enabled the Board to go into the "black" in a normal operating year rather than to stay in the "red". I must say that this is a most curious time to announce a deficit of £10 million, post-devaluation, after a profit last year.

11.15 p.m.

Mr. Freeson

A series of non sequiturs is being put by the hon. Gentleman—[HON. MEMBERS: "No."] I repeat—it is a non sequitur. Unfortunately, the hon. Member will keep quoting just little bits and pieces from paragraphs when he should deal with the full context. The financial strengthening to which he referred when speaking of the last Annual Report of the Board was connected with internal financial arrangements, as the rest of the paragraph from which he quoted makes quite clear. However, I do not intend to pursue this matter in any great detail, as it is not particularly germane to the question before us—

Sir Harmar Nicholls

rose—

Mr. Freeson

No. I was saying in answer to the first point raised by the hon. Member for Yeovil that in view of the difficulty—

Sir Harmar Nicholls

On a point of order, Sir Eric. Are we not in Committee, and is not the whole object of the Committee stage to allow these things to be examined in detail? Is it right for the Parliamentary Secretary to resist our convention, and not allow himself to be cross-examined?

The Chairman

The Minister decides in his own discretion when he will give way and when he will not.

Mr. Freeson

Perhaps I might be allowed to answer the points put to me by the hon. Member for Yeovil. I was saying that in view of the difficulties facing the Board in the next few years, it is necessary to provide for a possible deficit of the kind to which I have referred—[Interruption.]

The Chairman

Order. We really cannot go on if we have sedentary interruptions on both sides. Mr. Freeson.

Mr. Freeson

rose—

Mr. G. Elfed Davies

Will my hon. Friend give way for a moment? If he were a collier, he would suggest to the hon. Member for Peterborough (Sir Harmar Nicholls), that he should get in the manhole out of the way.

Mr. Freeson

As a matter of fact, if the hon. Gentleman would contain himself, I was about, at the end of the sentence, to resume my seat.

Sir Harmar Nicholls

If the Parliamentary Secretary accuses my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) of muddying the waters by not explaining the position clearly, he is in a position to straighten it out. Can he explain—whether or not his hon. Friends want the information, I do not know—why we have this acceleration of the deficit from £0.3 million to £10 million? It should be on the record, so that we can know.

Mr. Freeson

I am accusing no one of muddying the waters, but I would refer the hon. Member to the latest Report of the Board—[HON. MEMBERS: "He has not read it."]

To return to the original general point put to me by the hon. Member for Yeovil, I would say that in view of the difficulties we are expecting the N.C.B. to face over the next few years we must provide for the possible deficit that may arise. The sum included must be related in our minds, as well as in practice, to a turnover that will be more than £800 million a year. Over the four years in question, the £50 million laid down in the Bill represents less than 1½ per cent. of turnover.

I have tried as best I can to give the reasons for the changing position. Without going into an accountancy exercise which it would not be my responsibility to undertake this evening, I have tried to give some of the general reasons for which the hon. Member for Yeovil asked.

Mr. W. Baxter

Cannot my hon. Friend give a better explanation why we should permit to be written into the Bill a proposition that there will be a deficit in an undertaking which should be showing a profit and which, if it were run on a businesslike basis, would show a substantial one?

Mr. Freeson

I refer my hon. Friend to the Annual Report, where he will see stated at some length the reasons for the changing position. I have referred to these. This Bill deals with the situation facing the industry. I ask the Committee to resist the Amendment.

Sir Harmar Nicholls

I had not intended to speak—[HON. MEMBERS: "Oh."]—and I do not want to speak on the detailed terms of the Amendment.

Mr. J. J. Mendelson (Penistone)

The hon. Member knows nothing about it.

Sir Harmar Nicholls

I know enough about it to know that we are being fobbed off by a very inept Parliamentary performance. It is not just a matter of criticising the Parliamentary Secretary; there are certain rights which Parliament must insist upon.

Mr. Swain

rose—

Sir Harmar Nicholls

I will give way to the hon. Member for Derbyshire, North-East (Mr. Swain) in a moment because he does know what he is talking about. When the Parliamentary Secretary has questions put to him to explain the deficit, which is of some importance to this nation, he should not try to put us off by asking us to read the Report. The whole object is for him to explain the Report as he sees it. Whether we have read the Report or not is irrelevant. Parliament does not insist that hon. Members must read all the reports placed before them, but when a Minister is responsible he is asked for a summary of reports and Members of Parliament are entitled to an answer. We have not had that.

Mr. Swain

I thank the hon. Member for giving way. I remind him that if he did not consume so much natural gas produced by his hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) he might be able to understand these things better.

Sir Harmar Nicholls

The hon. Member referred to natural gas, but his hon. Friend accused my hon. Friend of using unnatural gas.

The Parliamentary Secretary is entitled to speak again without leave being given. He should give his version of how this deficit has come about.

Mr. Edwin Wainwright

I wish to say a few words because it seems that the hon. Member for Peterborough (Sir Harmar Nicholls) spoke in temper and was not rational in his approach to this problem.

Whether the Coal Board made a profit this year, last year or the year before, can be checked by the Accounts. In the Accounts we find that the income of the Board fluctuates each year. In 1966–67 it was up by £40 million on the year before and in the year before that it was up by £46 million on the previous year. Obviously the Board and the Government expect that this next year there will be a drop in the income of the Board. If we sell less coal the income is bound to go down. If we increase capital investments to make sure that the industry is more efficient, that will cost more. If the amount of coal produced is less, the average burden per ton is greater.

If the Opposition want to restrict the amount of money allocated to the Board to make it more difficult for it to carry on, the Opposition must remember that the industry is going along a tortuous path. We are dealing with human beings. If the Opposition want pit closures to come more rapidly so that less coal is produced, that will make it more difficult to cater for the men who will be displaced. Those men have to be looked after. When the demand for coal was greater than the supply the nation's industries had cheap coal, and the Coal Board was not allowed by the Tory Government to put up its prices, and it could not build up its reserves. Now that there is an excessive amount of coal it is up to the Government and the Opposition to try to help the industry and the men in it, to make certain that there is no great hardship to individuals. I hope that the Opposition will treat the matter more humanely and not with tongue in cheek as they are treating it at present.

Mr. Paul Hawkins (Norfolk, South-West)

I want only to make two small points. I did not intend to intervene. I know that it is strange for an hon. Member for an agricultural constituency to start talking about coal, but my constituents have to pay towards the deficit. We should have a better explanation than we have had. I do not see why every back-bencher is expected to read Reports of the Coal Board, the Ministry of Agriculture, and so on, on every subject.

Mr. Swain

rose—

Mr. Ogden

rose—

Mr. Hawkins

I do not intend to give way.

East Anglia suffers from receiving nothing but bad coal. If we are to have to pay towards the deficit, we should receive decent coal.

Mr. G. Elfed Davies

rose—

Mr. Hawkins

The industry is going through a very difficult period. The miners must be treated properly, and I recognise that there will be a big deficit for some years. But back-benchers are entitled to a proper explanation for the loss.

Mrs. Thatcher

I shall be brief. I had intended to intervene, and I have read the relevant Reports.

In the 1965 Act we wrote off an accumulated revenue deficit of £91 million, in order that the Coal Board might start with a clean slate, and there was also provision for a £30 million deficit to last the rest of the lifetime of the Act. After that, the National Board for Prices and Incomes granted a price increase M the following terms: The National Coal Board have proposed increases in the pithead price of coal in order to recover an estimated deficit of £80 million in 1966–67 and to meet the prospect of greater deficits thereafter. The accumulated deficit was written off and a price increase was given to meet all prospective deficits, in spite of which there was still a saving clause of a permissible deficit of £30 million. No reasoning that we have yet heard has been sufficient to increase that amount of deficit in the face of the price increase given, and I hope that my hon. Friend will press the Amendment to a Division.

Mr. G. Elfed Davies

I should not have intervened but for the remarks of the hon. Member for Norfolk, South-West (Mr. Hawkins). It was highly impertinent of him to say, "I am from an agricultural constituency and my people pay their price for coal". Miners have paid subsidies to agriculturists for many years. It is an insult to the House and to the miners for a remark of that kind to come from the hon. Member opposite. It would have been far better had he not come into the Chamber at the last moment to listen to the debate.

We must realise that we are dealing with a grave problem for the industry. The Amendment would leave out a subsection which deals with many matters which are important for the industry and I recommend hon. Members to vote against it.

11.30 p.m.

Mr. Peyton

May I say a few words? I was surprised that the Amendment brought out from the Parliamentary Secretary, almost as a chance aside, that it was too bad but there might be a loss of £10,500,000 this year. He said that there had been difficulties, and even the strike of the National Union of Seamen was trotted out, with one or two other things like that.

This microcosm of a discussion on this question is abundant justification for the attitude of the Opposition to these matters. I profoundly believe that this country will never come to its senses or have any chance of getting out of its present mess while it is prepared to continue in this, the central form of Government, the attitude of levity towards many millions of pounds which have to be hard earned by someone else.

I do not wish to be too rough with the Parliamentary Secretary, but he must stand condemned for what appeared to be, at least from this side, a very flippant answer to a serious question. I have no difficulty or diffidence whatever in echoing everything which was said by my hon. Friend the Member for Finchley (Mrs. Thatcher) and I echo her advice that we should divide the Committee in protest.

Sir G. Nabarro

I spoke before my hon. Friend the Member for Yeovil (Mr. Peyton) and at a good deal greater length. I had no idea, in supporting this Amendment, that it would wring from the reluctant lips of the Parliamentary Secretary a confession that the Board has lost nearly £11 million this year. I say unhesitatingly that the characteristics of the Coal Board finances today are profligate, casual, cavalier, and flippant. In the present economic troubles of the country the reply of the Parliamentary Secretary ought to be stigmatised for what it is—utterly disgraceful. Never shall I walk through the Lobbies with greater joy in my heart than tonight.

Mr. Ogden

The Parliamentary Secretary has come in for some extremely unfair criticism from the Opposition benches. When he is under fire from the Opposition at least he is sure of our support, although there may be differences between hon. Members on this side. These personal attacks were made upon him for refusing at 11.30 at night to give answers to questions which have already been answered since the debate started at 6.45 p.m. The questions were asked by hon. Members who rolled in late to ask questions to which they ought to know the answers.

Mr. Freeson

I was accused by the hon. Member for Yeovil (Mr. Peyton) of being flippant. There is a good deal more flippancy from hon. Members opposite in their asides than there is from this side of the Committee, either from me or from my hon. Friends. It has been suggested that I gave no reasons for the changing financial position of the industry. Not only was I not offhand in my remarks but if hon. Members did not hear some of the reasons I gave they should read HANSARD tomorrow, because they will see that I referred to the source of information that is available to all hon. Members who wish to take part in a debate of this kind. [HON. MEMBERS: "It has nothing to do with it."] I wish hon. Members would not keep interrupting. "It has nothing to do with it." There have been many personal remarks about me and some unnecessary adjectives used by an hon. Member who has now left the Chamber.

Sir G. Nabarro

I have not left the Chamber. I am sitting here watching.

Mr. Freeson

I know that it is getting late and that the hon. Member for Worcestershire, South (Sir G. Nabarro) likes to entertain us from time to time but do not let us have too many shocks like his sitting on this side of the Committee.

Sir G. Nabarro

I was not. I was talking to an hon. Member.

Mr. Freeson

I want to refer back to some of the reasons I gave. It has been suggested that I am treating the matter in an offhand fashion. It has been stated clearly by the Coal Board—and I presume that hon. Members will accept these reasons—that the change in the financial position is because the industry had less results than expected from the increased prices; because of the recession in the economy; because of the exceptionally mild winter which affected coal sales last year; because of rising costs under a wide range of headings to which I referred and because of additional expenditure on stocking arising directly from the seamen's strike.

I referred in my speech to the general position of the industry. I was surprised at the rather over-intensive manner in which the hon. Lady was so quick to support the Amendment. She knows as well as we do, even if some of her hon. Friends do not—although she does not want to play it up too much—that the industry is in a serious transitional phase.

It is rightly important for the industry that costs in terms of productivity or efficiency, or whatever heading one chooses, should come into balance with sales, and with price levels in relation to other fuels. That is the difficulty the industry is facing. It is making tremendous efforts, successful and effective efforts, to increase productivity. There are, again, examples in the Report, which hon. Members should read—and I am not directing this advice to the hon. Lady but to some of the more vociferous interventionists.

There is abundant evidence in the Report of the effective action being taken by the industry to increase productivity and efficiency, which is going to make for sensible, sound and competitive price levels in future. We are catering in this Bill for a transitional period of years. That is what all this is about. That is the issue. Therefore, we have to accept that the industry is financially going to be out of balance during this transitional period. The hon. Lady herself said so. She said that even following the 1965 Act, before it was known about the increased prices, it was expected that there would be a £30 million deficit.

We are expecting to move into a more transitional period soon. [Laughter.] It is not a joke. I say to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) that this is a serious situation. The industry is moving into a serious situation. We are aware of it and that is what the major debate is about. We have to assist the industry to get into a sound technical and economic position so that it can be competitive. That is why it is important to provide for the deficits which are bound to arise against the background I have described earlier and which I have now recapitulated.

Mr. Peter Emery (Honiton)

Will the Parliamentary Secretary answer one short question which I tried to suggest that he might answer before he concluded? He referred to a possible deficit during the current year of about £10 million. This is not in the Annual Report or in any information that we could previously have had. It is entirely new. Therefore, I want to make certain that we understood the hon. Gentleman clearly. Can he tell us how the £10 million is made up?

Mr. Freeson

As I indicated earlier, I am not in a position to give any makeup of the figure by any kind of accountancy exercise. If I did not make it clear before, I do so now. It is expected that this will be the range in the intervening years between now and 1971.

Mr. Edward M. Taylor

I was amazed at the Parliamentary Secretary's reply. He referred us to the Annual Report. He should appreciate that hon. Members on this side have read the Annual Report, in which we see the reasons why there was a profit of only just under £½ million last year.

Among the reasons given by the hon. Gentleman, he mentioned the recession in the economy, but that was in respect of 1966–67, a year in which a small profit was made. He referred to the mild winter. That was last year, not this year, when the hon. Gentleman expects a £10 million deficit. He referred to the effect of the seamen's strike. That was last year, not this year, when he is talking about a deficit. He referred to expenditure on the social cost of an accelerated colliery closure programme, but we are not to have an accelerated colliery closure programme.

Every one of the reasons given in the Annual Report explained why we had a profit of only £300,000. All those factors should result not in a loss this year, but in an improvement of the situation. The simple question asked by my hon. Friends the Members for Yeovil (Mr. Peyton) and Worcestershire, South (Sir G. Nabarro) and others was why there is a loss this year. All that the Parliamentary Secretary has done is to give a series of reasons, as outlined in the Annual Report, why we did not make a £10 million profit last year.

When we are being asked to approve a loss of £10 million, we should know the reason for it. That is the question which the hon. Gentleman has not answered. Every one of the reasons which he has given does not explain a loss of £10 million but explains why the result should be better. We will not have a seamen's strike this year, we may not have a mild winter and we may have an improvement in the economy. All these things should improve the position and not worsen it. The least that we are entitled to from the Minister is a proper explanation.

Question put, That the Amendment be made:—

The Committee divided: Ayes 96, Noes 154.

Division No. 10.]	AYES	[11.43 p.m.
Awdry, Daniel	Grant, Anthony	Munro-Lucas-Tooth, Sir Hugh
Baker, W. H. K.	Gurden, Harold	Nabarro, Sir Gerald
Balniel, Lord	Hall-Davis, A. G. F.	Nicholls, Sir Harmar
Biffen, John	Harrison, Brian (Maldon)	Onslow, Cranley
Black, Sir Cyril	Harrison, Col. Sir Harwood (Eye)	Osborn, John (Hallam)
Blaker, Peter	Hastings, Stephen	Percival, Ian
Boardman, Thomas (Leicester, S.W.)	Hawkins, Paul	Peyton, John
Boyd-Carpenter, Rt. Hn. John	Higgins, Terence L.	Pink, R. Bonner
Brown, Sir Edward (Bath)	Hiley, Joseph	Powell, Rt. Hn. J. Enoch
Bruce-Gardyne, J.	Hill, J. E. B.	Pym, Francis
Buchanan-Smith, Alick (Angus,N&M)	Holland, Philip	Ridley, Hn. Nicholas
Buck, Antony (Colchester)	Hunt, John	Rossi, Hugh (Hornsey)
Burden, F. A.	Hutchison, Michael Clark	Scott, Nicholas
Carr, Rt. Hn. Robert	Jones, Arthur (Northants, S.)	Silvester, Frederick
Clegg, Walter	Jopling, Michael	Sinclair, Sir George
Cooke, Robert	Kimball, Marcus	Smith, John
Cordle, John	King, Evelyn (Dorset, S.)	Steel, David (Roxburgh)
Crowder, F. P.	Knight, Mrs. Jill	Stoddart-Scott, Col. Sir M. (Ripon)
Dalkeith, Earl of	Lancaster, Col. C. G.	Summers, Sir Spencer
Davidson, James(Aberdeenshire,W.)	Lane, David	Taylor, Edward M.(G'gow,Cathcart)
Dean, Paul (Somerset, N.)	Lewis, Kenneth (Rutland)	Thatcher, Mrs. Margaret
Deedes, Rt. Hn. W. F. (Ashford)	Loveys, W. H.	Tilney, John
Doughty, Charles	Lubbock, Eric	Turton, Rt. Hn. R. H.
Drayson, G. B.	MacArthur, Ian	van Straubenzee, W. R.
Elliot, Capt. Walter (Carshalton)	Mackenzie, Alasdair(Ross&Crom'ty)	Walker, Peter (Worcester)
Elliott,R.W.(N'c'tle-upon-Tyne,N.)	Maclean, Sir Fitzroy	Weatherill, Bernard
Emery, Peter	Mawby, Ray	Webster, David
Eyre, Reginald	Maxwell-Hyslop, R. J.	Whitelaw, Rt. Hn. William
Fair, John	Maydon, Lt.-Cmdr. S. L. C.	Worsley, Marcus
Fortescue, Tim	Mills, Stratton (Belfast, N.)	Younger, Hn. George
Gibson-Watt, David	Montgomery, Fergus	TELLERS FOR THE AYES:
Glyn, Sir Richard	More, Jasper	Mr. Timothy Kitson and
Gower, Raymond	Morrison, Charles (Devizes)	Mr. Hector Monro.
NOES
Albu, Austen	Edwards, Rt. Hn. Ness (Caerphilly)	Jones, Dan (Burnley)
Allaun, Frank (Salford, E.)	Edwards, William (Merioneth)	Jones, J. Idwal (Wrexham)
Archer, Peter	Ellis, John	Jones, T. Alec (Rhondda, West)
Armstrong, Ernest	Ennals, David	Keller, Richard
Atkinson, Norman (Tottenham)	Ensor, David	Kerr, Mrs. Anne (R'ter & Chatham)
Barnett, Joel	Faulds, Andrew	Kerr, Dr. David (W'worth, Central)
Baxter, William	Fernyhough, E.	Kerr, Russell (Feltham)
Beaney, Alan	Finch, Harold	Lawson, George
Bence, Cyril	Fletcher, Ted (Darlington)	Ledger, Ron
Benn, Rt. Hn. Anthony Wedgwood	Ford, Ben	Lee, Rt. Hn. Frederick (Newton)
Bidwell, Sydney	Forrester, John	Lewis, Ron (Carlisle)
Bishop, E. S.	Freeson, Reginald	Lomas, Kenneth
Blackburn, F.	Gardner, Tony	Lyon, Alexander W. (York)
Blenkinsop, Arthur	Gourlay, Harry	McBride, Neil
Booth, Albert	Gray, Dr. Hugh (Yarmouth)	MacDermot, Niall
Boston, Terence	Griffiths, David (Rother Valley)	Macdonald, A. H.
Brooks, Edwin	Griffiths, Will (Exchange)	McGuire, Michael
Brown,Bob(N'c'tle-upon-Tyne,W.)	Hamilton, James (Bothwell)	Mackenzie, Gregor (Rutherglen)
Buchan, Norman	Hamling, William	Mackintosh, John P.
Buchanan, Richard (G'gow, Sp'burn)	Hannan, William	McMillan, Tom (Glasgow, C.)
Cant, R. B.	Harrison, Walter (Wakefield)	MacPherson, Malcolm
Carter-Jones, Lewis	Haseldine, Norman	Mahon, Peter (Preston, S.)
Coleman, Donald	Henig, Stanley	Marks, Kenneth
Concannon, J. D.	Hilton, W. S.	Marquand, David
Crossman, Rt. Hn. Richard	Hooley, Frank	Marsh, Rt. Hn. Richard
Cullen, Mrs. Alice	Horner, John	Mason, Roy
Dalyell, Tam	Howarth, Robert (Bolton, E.)	Mendelson, J. J.
Davidson, Arthur (Accrington)	Howell, Denis (Small Heath)	Mikardo, Ian
Davies, Dr. Ernest (Stretford)	Howie, W.	Miller, Dr. M. S.
Davies, G. Elfed (Rhondda, E.)	Hoy, James	Milne, Edward (Blyth)
Davies, Harold (Leek)	Huckfield, Leslie	Mitchell, R. C. (S'th'pton, Test)
Dell, Edmund	Hughes, Emrys (Ayrshire, S.)	Morgan, Elystan (Cardiganshire)
Dewar, Donald	Hunter, Adam	Morris, Charles R. (Openshaw)
Dickens, James	Jackson, Colin (B'h'se & Spenb'gh)	Mulley, Rt. Hn. Frederick
Doig, Peter	Jackson, Peter M. (High Peak)	Murray, Albert
Dunnett, Jack	Jeger,Mrs.Lena(H'b'n&St.P'cras,S.)	Neal, Harold
Dunwoody, Dr. John (F'th & C'b'e)	Jenkins, Hugh (Putney)	Ogden, Eric
Eadie, Alex	Johnson, Carol (Lewisham, S.)	O'Malley, Brian
Orbach, Maurice	Ryan, John	Wellbeloved, James
Orme, Stanley	Shaw, Arnold (Ilford, S.)	Whitaker, Ben
Oswald, Thomas	Sheldon, Robert	Whitlock, William
Owen, Dr. David (Plymouth, S'tn)	Silverman, Julius (Aston)	Williams, Alan (Swansea, W.)
Page, Derek (King's Lynn)	Skeffington, Arthur	Williams, Clifford (Abertillery)
Palmer, Arthur	Spriggs, Leslie	Williams, Mrs. Shirley (Hitchin)
Pentland, Norman	Swain, Thomas	Willis, George (Edinburgh, E.)
Perry, George H. (Nottingham, S.)	Tavarne, Dick	Wilson, William (Coventry, S.)
Price, Christopher (Perry Barr)		Winnick, David
Price, William (Rugby)	Tinn, James	Woof, Robert
Probert, Arthur	Urwin, T. W.	Yates, Victor
Roberts, Albert (Normanton)	Wainwright, Edwin (Dearne Valley)
Rose, Paul	Walker, Harold (Doncaster)	TELLERS FOR THE NOES:
Ross, Rt. Hn. William	Watkins, David (Consett)	Mr. Eric G. Varley and
Rowlands, E. (Cardiff, N.)	Watkins, Tudor (Brecon & Radnor)	Mr. Joseph Harper.

The Chairman

I think that Clause I has been adequately discussed and I therefore proposed to put the Question, That the Clause stand part of the Bill.

Question put and agreed to.

Clause ordered to stand part of the Bill.