HC Deb 13 July 1970 vol 803 cc1322-32

Motion made, and Question proposed. That this House do now adjourn.—[Mr. Monro.]

12.1 a.m.

Mr. William Hamilton (Fife, West)

This debate arises from the publication of the annual report of the South of Scotland Electricity Board and the Electricity Consultative Council for the South of Scotland district. The problem can be put fairly succinctly in the form of a question or two. First, should the South of Scotland Electricity Board have complete commercial freedom to use what fuel it likes to fire its boilers regardless, presumably, of the social consequences? Second, if the Board is not to be allowed to have that commercial freedom, should the Government offset rising coal prices by giving a subsidy to the National Coal Board?

One is conscious in a debate of this kind of the various interests to be considered; namely, it is in the national interest to secure for consumers, both industrial and domestic, an adequate supply of electricity at the lowest possible price. To that end, it would be wise for any Government to ensure that the fuel used to provide that electricity should be the cheapest available, and in adequate supply both now and in the future; and that the quality should be right. Thirdly, it is clearly in the interests of the national economy to safeguard the livelihood of thousands of coal miners, their wives and families, who depend heavily on working to supply the more than 6 million tons of coal used in 1969–70 by the S.S.E.B. That is very nearly half of the total saleable output of the Coal Board in Scotland.

As to the first two questions, the demand for electricity is clearly increasing year by year, with the last year up about 6 per cent. in the South of Scotland area, and the Board maintains in its report that if it had been free to burn oil or gas instead of coal there would have been no price increase in prospect; that, indeed, the prospect of cheaper electricity begun last October … would have gained momentum in the years ahead … That is a prospect which cannot be lightly dismissed. Any thing likely to bring down costs either in industry or for the domestic consumer must be carefully considered. Presumably, that was the motive which led the Labour Government to approve the decision of the S.S.E.B. that the next power station to be built should be oil fired. I understand, further, that the consent to allow the Braehead power station to be converted to oil firing was not on considerations of economy but because of the complaints of people around that power station about grit emission. The same consideration applied to the Dalmanock high-pressure power station. But the Electricity Board went out of its way to say that as a consequence of these two stations going over to oil the savings from these conversions would amount to £2½ million in the next three years.

The S.S.E.B. makes great play with the assertion that not only have coal prices gone up but that the quantity and quality of coal wanted became unavailable for a time and that the use of unsuitable qualities of coal led to boiler troubles and to grit and ash problems and occasionally to reductions in output up to 40 per cent. I am not in a position to challenge these facts but I put them on record as described in the report. If that were not enough, it is pointed out in the report that a 10 per cent. increase in the price of coal in January, 1969, showed that coal in Scotland which has been dearer than oil since 1962, is unlikely ever to become competitive. That is a very serious allegation. I should like the Under-Secretary either to confirm or to deny it and to say whether he has been in contact with the N.C.B. to see if that is so. The S.S.E.B. makes the estimate that, despite the tax of about £2 8s. on a ton of oil, coal is dearer and therefore the use of coal would involve the Board in 1970–71 in costs of about £8 million more than the cost of using taxed oil. The final blow is struck when the S.S.E.B. points out not only that coal in Scotland is much dearer than oil, but that it is also dearer than coal in England and Wales. It gives figures which I do not need to repeat.

These arguments would appear very powerful economic grounds in favour of allowing the S.S.E.B. to convert more of its power plant from coal to oil or gas firing. They emphasise the uncertainty as to the future availability of suitable coal in sufficient quantities. The Board points out that an ever-increasing demand is having to be met by an ever-reducing total output of coal. When the Secretary of the Consultative Council, Mr. Porter, was interviewed by the Scotsman and the Glasgow Herald, he is reported to have said that the Consultative Council had asked for a meeting with the Secretary of State to make the strongest possible representations about the recent requests for a 10 per cent. increase in the price of coal which would add £3 million or £4 million to consumers' electricity bills. I asked the hon. Gentleman whether that meeting has yet taken place and what reply the Ministry has given.

The new electricity charges—to operate from tomorrow, I think—will mean an increase of about 8 per cent., or 1s. a week for the domestic consumer. If all these assertions are true there seems a strong case on commercial and economic grounds for allowing the Electricity Board to convert to oil, but there are powerful reasons on the other side for not doing so until such time as adequate alternative male-employing industries can be provided in those areas which still depend substantially on coal mining as their main source of livelihood.

If it is the Government's policy to have a viable coal industry in Scotland, they should say so openly. The costs should not be met exclusively by consumers in the locality but by the generality of taxpayers. That is why my hon. Friends and I have been urging the Government to introduce a coal industry Bill. That is a matter which it would be out of order for me to pursue further in this debate. I want to put on record certain facts about the prospects of coal supply and to ask one or two questions.

In April, 1969, the Coal Board discussed with the then Secretary of State the availability of coal supplies for the S.S.E.B. I understand that at that discussion the N.C.B. made these points. First, both output and productivity in Scotland in the next two years will be greatly influenced by the build-up of output at the new Longannet complex, which is in my part of the country and which is designed to produce over 2 million tons of coal on completion. The Board proposes to introduce additional opencast output to supplement the existing Westfield site. That will be subject to ministerial approval. I hope that we shall get an answer on that tonight. In addition, proposed additional increases in output are planned at Seafield and Killoch collieries. The total effect of this will be substantially to increase the quantity of coal suitable for power stations.

In addition to the increase in output, the Coal Board emphasised that the availability of coal for the S.S.E.B. will be increased by the decline in demand for coal in other industry and in reduced commitments for Scottish coal shipped to England. In these circumstances, the Coal Board considers that it will have enough coal to meet the S.S.E.B.'s stated requirements of 6½ million tons this year, 7½ million tons in 1971–72, and 8 million tons in each of the next two years.

There is, however, a clear distinction to be made between the position over the next three or four years and developments in the late 1970s. Then the commissioning of the new nuclear Hunterston B power station and the new oil-fired station at Inverkip would operate at near base load capacity, and the requirement for Scottish electricity coal would therefore be very sensitive to the overall growth of electricity demand.

There would seem to be every prospect that in the late 1970s the S.S.E.B.'s coal needs will fall sharply, even if no coal-burning stations are converted to other fuels. In that situation the Coal Board could be faced with a surplus of capacity over demand and any conversion of existing coal-fired power station capacity to other fuels would exacerbate this problem in the longer term. It would also create daunting social problems in the short term.

I pose these questions. In answer to a Parliamentary Question last week, the Financial Secretary said this: The nationalised industries are expected to act commercially."—[OFFICIAL REPORT, 7th July, 1970; Vol. 803, c. 484.] Does that apply to the S.S.E.B.? If so, does it mean, as the S.S.E.B. itself states, that there will be large-scale conversions of coal-fired stations to firing by oil or gas?

I follow up that quotation from a Treasury Minister by quoting from the Minister of Technology's speech last Thursday: … we do not believe that any unit in these or other major development area industries should be propped up regardless of its long-term efficiency and prospects."—[OFFICIAL REPORT, 9th July, 1970; Vol. 803, c. 881–2.] The right hon. and learned Gentleman went on to make menacing noises about the future of the coal industry.

We on these benches know very well the antipathy of the Tory Party to nationalised industries, especially the coal industry. We know that there is a powerful oil lobby on the Tory benches, as powerful as the farming lobby. I notice one farmer sitting on the Front Bench opposite now, but there is no Minister present from the Ministry of Technology. Last Thursday the Minister of Techonology made noises about giving "imaginative and effective help" to redundant miners. No matter how imaginative, effective or generous redundancy arrangements may be, they will never be any substitute for having a job. On this issue many thousands of miners' jobs are at stake. I am, therefore, asking the Government to think long and carefully about the economic and social consequences in allowing complete commercial freedom to the S.S.E.B. to convert coal-fired stations to oil or gas in a very short time.

It may be that circumstances will change in the long term but, however that may be, changes in the use of fuel must be carefully and humanely planned. The brute forces of the market alone cannot be allowed to solve these intensely human problems, and if the Government choose to allow these market forces to work unbridled and unfettered they can expect the most hostile opposition from us.

The right hon. Gentleman the Secretary of State for Scotland wrote to me a week or so ago on this problem and said that if a proposition was put to him by the S.S.E.B. he would consult the Minister of Technology as the Minister responsible for regional development. That worries me a great deal. In view of the record of the Minister of Technology and his statement in the House last Thursday, that worries me not a little.

Mr. Alex Eadie (Midlothian)

And the statement today.

Mr. Hamilton

And the statement today. During these last few days we have heard ominous sounds from the Minister of Technology and other Ministers, and if this kind of thing is pushed through and the S.S.E.B. is allowed to act commercially and damn the social consequences, there will be great trouble for the Government.

12.16 a.m.

The Under-Secretary of State for Scotland (Mr. George Younger)

The hon. Gentleman has raised this evening a matter of very great importance to his own constituents and others in his own part of the country, and, indeed, to many others all over Scotland. I am grateful to him for raising this matter particularly at this time, and also for giving me an apportunity to reply to this debate and to set right the record in some respects. I hope that we can have a useful exchange in a short debate of this kind, and I shall do my best to answer as many as possible of the questions which the hon. Gentleman has raised.

The background against which we have to consider the whole question of the type of fuel used in electricity generation is the very large national investment involved not only in power stations and the provision of electricity directly, but also the large national investment in modern pits and coal mines all over Scotland to produce coal for all purposes and, indeed, very importantly, for the production of electricity.

It is very much the case that any substantial reduction in the demand for coal for electricity generation would be a serious matter indeed for the Scottish coal industry and for all of those who depend on the Scottish coal industry for their livelihood.

The electricity boards, as the hon. Gentleman himself mentioned, already buy slightly more than half the Scottish output of coal, and it seems clear that this proportion is growing rapidly. It is quite clear that any substantial reduction in this would be a serious matter, but I hope that I can at least calm some of the fears which the hon. Gentleman has raised this evening. As I think he knows from the letter that has been sent to him by my right hon. Friend, there has been no proposal submitted to my right hon. Friend or myself that any part of the Longannet power station should be converted to oil from coal, as it is intended to be, at the moment. No proposal has been received, and therefore the matter does not arise at the present time for my right hon. Friend to consider directly.

As regards Braehead and Dalmarnock, again as the hon. Gentleman himself said, these are being converted to oil firing, the principal reason being the clean air policy for the area in which they are situated. Proposals have been received—they were received by my right hon. Friend's predecessor—for the conversion of Carolina Port A in Dundee and Portobello power stations. These requests are being considered by my right hon. Friend, and I assure the hon. Gentleman that no hasty decisions will be taken. My right hon. Friend intends to give the most careful detailed consideration to all the factors, including not merely the relative costs of the fuels but the serious social factors involved and the effects on employment of people in the coal mining industry were either or both of these stations to be granted permission to change to oil firing.

The hon. Gentleman raised directly the question of comparing the economics of coal and oil firing. While it may be correct for the South of Scotland Electricity Board to say that coal may not be economic in terms of pure fuel, as it claims in its report, there are many other considerations involved in comparing it with other fuels. The comparison has to be based not merely on a comparison of the pure costs of fuel but on both social and economic factors, and I assure the hon. Gentleman that this is how my right hon. Friend would approach it in conjunction with the Minister of Technology who has the main responsibility for fuel in these matters. He will approach it in that way, with the Minister of Technology, in the light of his responsibilities to the coal industry generally.

I hope that that will at least reassure the hon. Gentleman on one matter about which he was worried. If requests were received, there would be no question of decisions being taken for the conversion of any of these stations without the fullest consideration of all the factors involved.

Mr. William Ross (Kilmarnock)

The hon. Gentleman should give us a promise that, apart from consultation with the Minister of Technology, he himself would get in touch with the Coal Board in Scotland, as we did, on these very points.

Mr. Younger

Yes, I give the right hon. Gentleman an assurance that not only will there be consideration of those factors, but there will be the fullest possible consultation with all concerned, particularly those who have intimate and detailed technical knowledge of the matters involved.

What has been done—there is nothing new about it; it has always been done—by the South of Scotland Electricity Board has been contingency planning to safeguard the future supply of electricity, and of fuel for its power stations. The Board has a responsibility to supply electricity and to be certain that it will be able to provide it in all the circumstances which it can foresee. All the time, therefore, as part of its normal working, the Board carries out contingency planning to ensure that it can meet its requirements. It has accordingly been considering whether certain factors of cost or technical difficulty might at any time force it or require it to decide to ask permission to make any conversions. Any undertaking with responsibility to the public for the provision of electricity must go through this process from time to time.

Mr. Dick Douglas (Clackmannan and East Stirlingshire)

Would the hon. Gentleman say whether this would involve the possibility of the conversion of Longannet from coal to oil? We are not sure. Second, what about targets? If he proposes to allow the industry to carry on as it is, will he relieve it of its targets under Cmnd. 1337 and, I think, Cmnd. 3437—the targets laid down by the Government for return on net assets of the nationalised industries?

Mr. Younger

This is one of the most important factors which my right hon. Friend will have to consider if and when such proposals come to him for decision and approval. It is quite obvious that if he were going to make any decision on any of these the consequences would have to be discussed in detail with the Minister of Technology, who is the person responsible for the industry, but it is not possible to say hypothetically, when no such decision is being taken or has been taken, what the effect would be; but this is a factor, naturally, which would have to be taken into account were this to be considered.

I was saying that the new pits being developed to supply the needs of the electricity industry are intended to be adequate to supply all its foreseeable needs which they are expected to supply, but it is, of course, only normal commercial prudence for the Board to ensure, that it has at least looked at the technical problem to evaluate the difficulties should there at any time be a need to change over. I will repeat again, just to make sure there is no doubt about it, that no proposal has been put to my right hon. Friend or myself concerning Longannet, and that should, I think, go a long way to resting the fears expressed by the hon. Gentleman and some of his hon. Friends tonight.

Mr. Ross

Quite apart from an actual formal application or proposal, have there been any discussions with the Secretary of State about this?

Mr. Younger

No, not yet. The hon. Gentleman the Member for Fife, West did ask particularly whether a meeting had taken place with the Consultative Committee which had requested such a meeting. I can tell him that no such meeting has taken place, and my right hon. Friend is considering whether such a meeting would be useful at this time or not. No meeting has taken place, and no commitment has yet been entered into to have such a meeting.

Sir John Gilmour (Fife, East)

In view of the fact that Longannet was planned as a coal-fired station by the previous Conservative Administration, is it possible to say what stockpiling of coal there is now to service Longannet?

Mr. Younger

I thank my hon. Friend very much for his intervention. I was going on later to say, but as there may not be time it would be as well to make it clear now, that one thing on which I think we can agree is that our credentials and good faith in this matter should not be put in question, as they were in the time of the last Conservative Government, when a deliberate, positive decision was taken to insist that the firing of Longannet, and, indeed, Cockenzie, should be by coal for the precise purpose of keeping the miners in employment and to help the Scottish coal industry. It is, perhaps, not without significance that my right hon. Friend was at that time the Junior Minister responsible at the Scottish Office for this decision. Therefore, I can assure the House that the credentials of this Government are certainly quite clear on this matter.

But when all is said and done about assessing the costs of fuels and all information and opinions, it is the Government who, in the end, have the main decision to make as to whether any changeovers are to be allowed or not. The Secretary of State has to give approval for any investment required or such a changeover, and this, of course, is precisely because it is well understood by everyone that as well as the purely commercial implications of changing from one fuel to another we must take into account the social implications such as the jobs of the miners, and the health of the mining industry generally. This is why the Ministry of Technology, in relation to fuel policy, has to be brought in as well.

So I would say that is very valuable to have had this matter raised tonight, and I hope I have been able at least to allay some fears. This Government are determined to make no hasty or irrevocable decisions on changing the present fuel patterns without full consideration of all the factors involved, and of course, we particularly intend to take into account the social factors which have so much to do with the fears expressed by the hon. Gentleman this evening.

I do not think, in spite of the rumours, that there need be any great concern in the mining industry at the present time about the question of Longannet. I would hope that the miners will be able to go ahead with their job in what is in fact a very imaginative and tremendous new undertaking to create the whole Longannet complex, as a source of fuel, and with the power station itself in some way self-contained, and I hope this will be able to provide employment for a large number of people in the mining industry for a considerable time to come.

I am certain that it is in the interests of the general public that all these factors should be taken into account, and I am sure that the public can feel that the Coal Board, which has undertaken to be able to supply the fuel necessary for these stations, will carry out its obligation, and it quite clearly maintains that it is desirable to do so.

The hon. Gentleman mentioned some of the difficulties which the electricity boards said they had last winter due to shortages and difficulties in providing the necessary fuel. The main part of this matter is covered on page 2 of the South of Scotland Electricity Board's Report. It is not for me, who am not directly concerned in any way with running the electricity industry, to comment upon the opinions expressed by the Board in that passage in its Report. I would only say that there were several very difficult factors last winter, not only in Scotland but also south of the Border. It was an exceptionally hard winter and there was a need for fuel to be transported, sometimes at very short notice, from one station to another, and the fact that the Coal Board—

The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-nine minutes to One o'clock.