HC Deb 25 February 1971 vol 812 cc957-1014
Mr. Varley

I beg to move Amendment No. 12, in page 5, line 16, at end insert: Provided further that any such direction in respect of the interests of the Board or any of them in gas and/or oil in the seas surrounding the British Isles shall give a right of preemption to the Gas Council. We regard this Amendment as particularly important. Under Clause 7 as it stands the Secretary of State may direct the N.C.B. to dispose of any of its assets. In Committee we moved an Amendment which would have prevented the Secretary of State from disposing of the Board's North Sea gas activities. Unfortunately, and we believe shortsightedly, the Government did not accept our proposal on that occasion.

Although we gather that there is no criticism of the way in which the N.C.B. conducts its North Sea activities, the Minister appears to insist that it is necessary for the Government to retain these powers in the Bill.

In Committee we discussed the whole question of the hiving off of these North Sea gas activities and, at that stage, there was some confusion, which I hope the Minister will clarify today. For example, we are not sure whether it would require the 1966 Act to be repealed if the N.C.B. were asked to dispose of its North Sea gas activities, or whether it could be done under Clause 7. We think that the 1966 Act would not need to be repealed and that it would only be necessary for the Secretary of State to issue a direction under Clause 7.

For doctrinaire reasons the Government want to prevent the National Coal Board from pursuing its North Sea gas activities. The Government have many times demonstrated that they are prejudiced against the Board's being involved in those activities, and we believe that at some stage it will be instructed to get rid of them. I know that the Minister for Industry has not said as much. He has talked about calling for a review, but I think that the hon. Member for Bedford (Mr. Skeet) believes that the Board should be instructed to get rid of those activities, and that his view is shared by many of his hon. Friends. So we have a contrast, with Ministers playing this down—softly, softly—and backbenchers wanting them to go ahead. I think that in his heart the Minister wants to be able at least to put the Secretary of State in a position where he can give that instruction.

Therefore, the Amendment seeks to ensure that if the Secretary of State issues a direction under the Clause for the Board to get out of North Sea gas, this valuable asset will be retained in public ownership and the Gas Council will have the first chance to acquire it. There is nothing outrageous in that suggestion. My hon. Friend the Member for Rother Valley (Mr. Hardy) moved an Amendment in Committee that would have prevented the Secretary of State disposing of any of the Board's assets and undertakings to a private or public organisation of a foreign nation. The Minister for Industry turned that suggestion down. But we all know that many people and organisations have their eyes on the Board's profitable ancillaries, and none is more attractive than its North Sea gas interests.

We are told that about 24 holes have been drilled in the North Sea, and surveys have been carried out in other waters around our coast. It would serve no useful purpose to go into the minute detail of these activities, but it cannot be denied that the discoveries so far are highly profitable and extremely valuable to the nation. The Secretary of State can direct the Board to dispose of its interests, and if he did there would be no shortage of bidders. Plenty of people want to get their hands on this valuable asset.

Both on Second Reading and in Committee there have been references to Mr. James Poole's article in the Sunday Times of 29th November. 1970, the rag-bag of riches article, as it has come to be known by members of the Committee. Mr. Poole said, for example, that the Dutch State Mines would be vigorous bidders for the Board's North Sea assets. That would certainly be so.

All that the Amendment seeks to do is to make it absolutely certain that if a direction is given to the Board under the Clause to get rid of its North Sea gas activities and its activities off our coasts, those activities should at least go to the Gas Council. It would be deplorable if a direction were given. We understand that there is no criticism of the Board and the way in which it engages in those activities along with its partners. But if that deplorable directive were given—and many people suggest that it will—it should go to the Gas Council, which is also involved in the North Sea operations, so that this valuable asset remains in public ownership.

Mr. Skeet

We spoke extensively on this topic in Committee and I do not intend to repeat what I said there. I have, however, one or two what I hope will be helpful observations.

First, the Gas Council is working in conjunction with the Gulf Oil Corporation and with the Continental Oil Company. Obviously, when they entered this agreement, they may have made arrangements for what might happen if one side sold its interest to another. Obviously, if that is a contractual obligation, they will be bound by it. Therefore, it may be that the interest would have to go back from the N.C.B. to Continental or Gulf, or pay full market considerations.

The other point is that the Gas Council should not be pre-empted, because we have to ascertain the true market value, and the only way that that can be established is on the open market. If the Gas Council is to be allowed pre-emption, how are we to assess the market value? The reserves of the Viking field may well be known, but National Coal Board-Conoco made a discovery the other day and the reserves have not been ascertained. How is the value to be ascertained? If bidders all round come forward, one will be able to ascertain the market value and one will be able to get the highest bid. The whole thing should be put aside for a bid, the proceeds of which would be useful for the expansion of the National Coal Board's facilities.

Mr. Dan Jones (Burnley)

Why sell it at all?

Mr. Skeet

Because the National Coal Board will have to provide at least £25 million for development, and as it is running at a considerable loss, I cannot see how it will be able to do so. It would be better if, instead of trying to provide that £25 million, it sold the asset and used the proceeds to pay for some of its losses, or, as I said in Committee, went ahead with coal research, which I very much favour.

The hon. Member for Chesterfield (Mr. Varley) said that Dutch State Mines may be coming in as a bidder. That was argued in Committee. It was said that it might come in as bidder for Nypro Limited, which is a producer of caprolactam. As I understand it, what happens in Holland is that the State has a right to intervene if a production licence has to be granted. It may intervene for a certain percentage. Would the Gas Council be likely to intervene in such a case? I think not. The Gas Council is so heavily committed and has so vast an expenditure that it would be glad to dispose of an asset which is now held by N.C.B.-Conoco.

The most practical line is not to give any pre-emption to the Gas Council but to hold the asset over for the open market to ascertain the true market value, to dispose of the asset and to capitalise the funds needed for research and any other activities which may be essential to the National Coal Board.

9.30 p.m.

Mr. Ogden

Both the Ministers who have taken part in these debates have given the impression of being if not helpless at least harmless. They have tried to give the impression that of course they want to help the industry and are reasonable men. But immediately they give such an impression and it has seemed almost plausible, up pops the hon. Member for Bedford (Mr. Skeet) to destroy all their arguments. If the Ministers quail at anything said in this House, it is more likely to be a remark from the hon. Member for Bedford than anything said by us. But I prefer a Tory to be a Tory rather than posing as a "LibLab". I make no complaint. But I want to put on record that the hon. Member for Bedford has blurted out what we fear. He has confirmed the fears we have held all along. I do not intend to go into the arguments which he put forward.

However, I ask the House to do something very difficult. This is a reserve Amendment. My hon. Friend the Member for Chesterfield (Mr. Varley) put it forward very reasonably and explained the reasons for it very carefully. Let us try to assume that this is the first time in the last nine months that anyone has talked about the Coal Board and hiving-off operations. Let us give the Minister a fresh start and try to forget temporarily everything said on this issue. Will the Minister accept that the activities and interests of the Coal Board in North Sea gas and in drilling operations in the Irish Sea are an extension of its technical operations on land?

Mr. Skeet

indicated dissent.

Mr. Ogden

I am sorry that the hon. Gentleman does not accept that because it was accepted by the former Member for South Fylde, who had extensive coal mining operations. The Coal Board was led into this activity as a result of its interest in underground mining and drilling on land.

Mr. Skeet

If this were simply an extension of mining at sea, I could understand that the Board would be regarded as an operator. But it has gone in with an oil company in the operations in the Bristol Channel and in the North Sea and the oil company is the operator and does the drilling. Therefore, it is not an extension of the Board's normal facilities.

Mr. Ogden

I am aware of what the Board has done. I am suggesting that this is a natural extension of what it has done for a long time. It has carried out inshore operations and then offshore operations and now it is carrying out operations on the Continental Shelf.

This is not of itself a nationalised undertaking. This is a partnership in operations in the North Sea and the Irish Sea between a nationalised industry and a private industry. The nationalised part of the operation in both the North Sea and the Irish Sea is a minority holding. This is not a 51 per cent. Government holding in a private organisation, as is the case with Shell-B.P., Rolls-Royce or B.O.A.C. The partnership came into being because two sets of people—private enterprise and public enterprise—with their own special skills and resources, decided that it would be better if they could work together. This is a straightforward extension of a practical industrial operation. I do not think the Minister will disagree with that.

Although the Coal Board is in an industry which provides power should it be concerned only with solid fuel and not with any other kind of energy? If so, the Minister might fall back on another nationalised industry, again operating in a minority partnership. He surely cannot deny that the gas boards have an interest in natural gas or in a raw material, oil, for making gas. If he rejects this Amendment he will deny the Coal Board the chance of operating profitably, and he will be saying that the gas boards shall be only a means of distributing offshore gas.

One of the reasons why we find it very hard to trust what the Government say is that no one knows who is the master in the Department. Is it the Secretary of State, who, we are told by means of well-defined "leaks", is in favour of the kind of partnership, albeit a minority partnership, which has been in operation between the nationalised industries and private enterprise in the North Sea; or are the masters the Minister for Industry and the Under-Secretary of State? If we say that we can seldom or never believe the Minister, he must understand that there are a number of good reasons why we should not.

I ask the Minister to be careful in his reply because, assuming all the difficulties which I have put forward, this is as good a test case as any of the true intentions of the Minister and of who is the master in his own house.

Mr. Peter Hardy (Rother Valley)

This important Amendment illustrates the considerable gulf existing at present, especially between the parties, and it is considerable evidence that there is much dangerous thinking on the Conservative benches.

I now understand why John Bunyan was put in prison. The hon. Member for Bedford (Mr. Skeet) clearly demonstrated that he and some of his colleagues on the Government back benches quite recklessly regard profit in private hands as something to be unfettered and which counts for top priority. They regard it as virtuous. They do not always seem mindful of the national interest which inspires the Opposition Amendment.

There may be nothing ignoble about a reasonable return on investment, especially if it is from a very honourable and legitimate activity. No one can argue that the National Coal Board's investment in the North Sea at present is dishonourable or illegitimate. What concerns hon. Members opposite is, not that it is dishonourable or illegitimate, but that the returns on that investment are likely to be considerable, and, what is more important, comparatively imminent; and they see rich pickings.

Many arguments were advanced in Committee about the need to defend the national interests in respect of the Board's assets. They have been largely ignored. But it is clear that there is considerable interest among the Conservative Party and its supporters in getting hold of some of the rich assets of the Board. My hon. Friend the Member for Chesterfield (Mr. Varley) made it clear that if the Government are determined to hive off the N.C.B.'s North Sea assets, which are perhaps the choicest assets in the N.C.B.'s possession, they should be reposited only in the hands of the Gas Council and no one else.

There are perhaps five basic reasons in support of that idea. First, the public would then be assured that there would be no cut price, under-cover deal adversely affecting the national interest. There is a great deal of suspicion among the public, especially in the constituencies which many of us present on this side of the House represent. If the Government decide to hive of the N.C.B.'s assets to private enterprise, then my people, certainly in South Yorkshire—I speak for one part of South Yorkshire, and I do not know whether my hon. Friend will give me permission to speak for Don Valley in this connection—would suspect the Government of giving favours to those who have supported them so abundantly in the past. It would be wrong of the Government to cause that suspicion to be aroused and intensified. They should, for at least a moment, end the state of political trigger-happiness with which they seem to have been imbued since the General Election. They should say, "This is one example where national interest must count more than our party's interest."

The Government should demonstrate that there are no grounds for the suspicions of the ordinary people of Britain as regards the Conservative Party and its approach to the nationalised industries. The second reason is that we could make is clear that we believe in a fair arrangement of our economy, that public enterprises should receive identical and proportional investment to that being received by private enterprise in the same sphere. This would be the case in the North Sea.

Another important reason not yet touched on and very relevant, which the Minister might consider commenting upon, is that there has been no sign of disharmony in the relationships which have existed between the National Coal Board and its private enterprise partners in North Sea development. If the relationships are happy and cordial, and if there is satisfactory progress and development, no interference is justified.

There is good reason why the Board and these organisations should get on well. After all, they have a great deal in common. Some of the private oil companies have coal interests. The Board and private oil companies alike are large, important and diversified commercial industrial and economic concerns. It is reasonable that they should be on good terms and work together happily. As they seem to be doing so, the Government should leave them well alone and not interfere.

Mr. Skeet

The hon. Gentleman has said that certain oil companies have coal interests. I admit this. Would it not be reasonable to expect the reverse, namely, that oil companies should have a right to invest in British coal?

Mr. Hardy

Once again, the hon. Gentleman illustrates that he is not greatly interested in British activity and in protecting British interests; because the companies that I had in mind as having mining interests have had plenty to do with bringing the standards in the mining industry in places like America and Europe up to the very high standard which the Board has achieved in Britain.

I do not know whether the Minister has received any application from Continental Oil or Gulf Oil to invest in British mining. The National Union of Mineworkers would have a certain interest in any such application.

The Board cannot be criticised for the way in which it has carried out its mining operations, despite all the restraints it has laboured under as a result of Conservative policy in the 1950s.

If the Government wish to hive off some of the Board's activities, two other points are important. There is the fact that the Board can be expected to arrange its affairs with the expectation of rich rewards coming in from October 1972. If the Government say to the Board, "We want a report on your activities in the North Sea", and if that report comes in in 6, 9 or 12 months time, the imminence of profits would be very close and it would be hardly fair to put the Board into a position where it had to scramble to get out of its North Sea operations before the rewards started to roll in.

A final reason, which is even more important, is that if an interest were to be taken from the Board and it did not go to the Gas Council, the great probability is that the principal bidders would be foreign concerns. I believe that it is in the national interest that the Board should retain the assets, in view of the imminence of profits and in view of the importance of this resource for strategic reasons.

In the past overseas concerns were given too great a share in the development of the North Sea potential. For example, in 1962 during the first round of negotiations the Conservative Government gave over 70 per cent. of the opportunity to foreign concerns. West Germany, in pre-Brandt days, kept a very much greater share of its part of North Sea oil and gas extraction in West German hands. The 1962 Conservative Government allowed this very important strategic resource to be under foreign control. After the 1964 election the Labour Government rectified this imbalance. I believe it would be extremely dangerous if the Government in their petty, partisan attitude towards the Board were to compel the Board to surrender its resources and thus sacrifice the national interest.

9.45 p.m.

Mr. Gower

I would ask the hon. Gentleman whether it could not be said that in the early days they were getting 70 per cent. of the risk as well?

Mr. Hardy

That is probably the case although before Britain was involved in negotiations and licences were issued it was perfectly clear to any skilled geologist that somewhere in the North Sea there were rich and abundant rewards to be found. The vital point I would make in answer to that made by the hon. Member for Bedford (Mr. Skeet), that the National Coal Board were not exactly drilling the holes, is that this may be the case but he should be aware that neither are the oil companies. This is usually done by specialist companies working on a contract basis. If the hon. Gentleman accept that it destroys one of his arguments.

Mr. Eadie

This point was dealt with at the Committee stage and it is appropriate that my hon. Friend should have been responsible to some extent for reopening the debate and making the House acquainted of the rather extreme views of the hon. Member for Bedford (Mr. Skeet). He is an oil man who believes in extreme forms of private enterprise and the selling or hiving-off of profitable sections. During the Committee stage I mentioned that we had had the ridiculous situation of the Scottish people on one day enjoying the news by Press, radio and television of a great oil find off the coast of Aberdeen—and people like us who have been associated with the mining industry have always said that any new source of wealth found by the country must be a matter for enjoyment by the whole nation—and the next day learning to their amazement that probably they would never see that oil, that it would be landed in Holland or elsewhere.

An additional factor that emerged was that the oil that had been found was of a type that caused less pollution so that because of the different standard set for pollution in the United States of America that oil would in all probably be shipped to that country. Two new aspects now confront us. The first is that there has been a tremendous escalation in the price of oil. The hon. Member for Bedford will be disappointed to know that when I ask the library research staff to analyse trends of the tremendous increase in the price of oil it was found that it was increasing in price so rapidly that not even the library staff were able to keep up. We used to talk of coal being too dear to buy but now we are talking of oil being too dear to buy. The escalation in the price of oil has far outstripped anything experienced by the British people up to the present time. We have to take heed of the defence strategy of this country, and of the necessity to build up our indigenous resources. The rise in the price of oil has resulted in coal becoming much more attractive.

Mr. Skeet

Until the recent rises roughly 50 per cent. of the cost of oil was taxed. There is no tax on coal, in fact the taxes are there to assist coal.

Mr. Eadie

To my astonishment, the hon. Gentleman has not done his homework. The tax on oil was introduced, certainly to assist the coal industry, but also to raise social revenue and any Chancellor who decides to reduce that tax must find that revenue elsewhere. Even the oil moguls are getting worried about the rise in the price of oil.

In Committee we did not know that the Government were bringing out details of their plans for dealing with pollution. According to their White Paper vast capital sums will have to be earmarked to deal with pollution. If we have a valuable indigenous fuel source off our shores we will naturally want to control that source. The propositions put forward by my hon. Friends would safeguard such resources and would do something to make this country healthier and cleaner in future.

Mr. Kelley

We have explored this argument in Committee and in debates earlier today. What is likely to happen is that Government will take power to direct the Coal Board to conduct inquiries into its various activities described as "non-colliery activities" and then it will be left to the Government to prepare, with the Board, for the sale of certain commercial interests which are showing a profit. I wonder why the Government have not thought of trying to sell the Coal Board.

Mr. Skinner

I am interested in this point about there being no buyers for the Coal Board. While we on this side would possibly agree that a buyer would be difficult to find, there are some hon. Members opposite, notably the right hon. Member for wolverhampton, South-West (Mr. Powell), who have consistently put forward argument.

Mr. Kelley

I am afraid that the right hon. Member for Wolverhampton, SouthWest (Mr. Powell), who is not present, would probably subscribe to the idea that the Coal Board should be sold to private enterprise, but I am suggesting that he would find no buyers, and nor would the Minister. Coal cannot be mined in any country at an economic price. The intention of the Clause is to enable the Government to sell profitable enterprises which the Government are using as a cushion against the rigours of the economic situation which they are not prepared to face. Considerable subsidies are being paid in continental Europe to the production of coal.

I regard it as part of my work in the House and in the movement to which I belong to make a solemn declaration that whoever may buy the stocks which are to be sold shall not benefit by a penny from what they have bought. We shall require our people to stand by that solemn undertaking.

Mr. Peter Rees

Does that undertaking apply also to the loss-making activities of the National Coal Board if the Coal Board is taken back into private ownership?

Mr. Kelley

I answer that question by saying that the Coal Board is up for sale. I do not think that any hon. Gentleman opposite believes in nationalisation, and the only reason the Coal Board is retained in public ownership is that nobody would buy it.

Mr. John Biffen (Oswestry)

Is it the hon. Gentleman's view that in commercial transactions loss-making activities are never sold? One has only to open the newspaper on any day of the week to see that loss-making activities can be disposed of.

Mr. Kelley

The loss-making activities of the Coal Board are highly doubtful. It is possible to make a profit if the right capital value is written down in the book—hon. Gentlemen opposite know the commercial practice better than I do. The colliery activities that have proved themselves in the commercial market are being sold because there are ready buyers. North Sea gas will be a source of income to people who buy the stock, but it should be known that when we have the power to do so we shall take back those assets without a penny compensation.

Mr. Golding

I am pleased to hear that statement by my hon. Friend, as I am pleased to hear the Labour Party declaring itself on this subject. I have possibly a more direct interest in the telephone service, and I hope that it applies equally to that service also. I certainly hope it applies to the coal industry and all its other activities.

I wish to examine the rationalisations of the hon. Member for Bedford (Mr. Skeet) because they represent the thinking of the Government. The argument they are using is that it would be better to take funds at present invested in North Sea gas—

It being Ten o'clock, the debate stood adjourned.

Ordered, That the Proceedings on the Coal Industry Bill may be entered upon and proceeded with at this day's Sitting at any hour, though opposed.—[Mr. Hector Monro.]

Question again proposed, That the Amendment be made.

Mr. Golding

The Government's argument, as I understand it, is that it would be better to take the funds which are at present invested in North Sea gas and use them within the colliery activities. I find this hard to understand because the rate of return to be earned from North Sea gas investment must be very much higher than can be expected from investment in colliery activities. I would say, from a cursory knowledge of coalmining, that the limiting factor of colliery profitability is not investment. I imagine that at present the industry needs money, not so much for mechanisation, as to be able to pay its work force a reasonable wage. The industry needs money to work with local authorities and the Government towards removing the dereliction of the environment inflicted by the coalmining industry in the past.

I cannot understand the argument that, because an industry is contracting for technical reasons, activity should be confined to trying to protect that industry. Let me take several examples. I wonder whether the hon. Member for Bedford had he been alive many years ago, would have gone to a Hackney carriage manufacturer and said to him, "Concentrate on Hackney carriages and leave somebody else, such as Henry Ford, to develop the car." That is the logic of the argument.

I remember just after the war economists—Tories among them—giving advice to Lancashire. The Lancashire cotton industry was facing a threat of chemicals and synthetics. The Tories did not go to the textile manufacturers and say, "There is a threat from outside—respond to it by putting more money into textiles". They said that the answer was obvious: "If you can't beat them, join them." The advice of every economist was that the cotton industry should diversify in its own interests and in the interests of its work people and of the localities in which the cotton mills were situated. And it is not only at that level that one gets diversification. There are rumours that the steel barons in the United States and Europe are considering going into plastics because they realise there will be a threat to the steel industry from the plastics industry. The answer is obvious: "If you can't beat them, join them."

Mr. Ogden

It does not apply to this House, does it?

Mr. Edwin Wainwright

Who would want to join hon. Gentlemen opposite?

Mr. Golding

There are many courses of action I would advise, but that is the last piece of advice I would give to my hon. Friends.

We are faced with a contracting industry which has other problems to face. It is not only a contracting industry, but is concentrated geographically. We all know that there is an unemployment problem which is euphemistically called "redundancy" and which to a large extent is a problem flowing from the contracting of the mining industry. When we were talking a little earlier about redundancy payments, we were told from the Conservative benches that, because of inflation, the Government could not afford a little extra for redundant miners.

In a logical world, the leaders of the coal industry would see that their policy of rationalisation was putting men out of work who could not find alternative employment. In a logical world, they would ask themselves where they could find sufficient wealth to keep their employees in comfort. They would not decide to concentrate on their own little patch and tell their men that they were unable to pay them enough because the industry could not afford it, nor would they tell their employees that they were unable to offer sufficient redundancy benefits to compensate them for the loss of their jobs.

The miners who are being declared redundant today are men who suffered unemployment in the 1930s. Theirs has been a very hard life, and it would do us all good to be able to look into the minds of workers who are forced to retire in this way. The industry is crying out for money, and that money could be obtained from what the Government call the Board's diversified interests. It could be obtained from the North Sea, for example, and it is the responsibility of the Government to see that it is obtained.

I have not sufficient knowledge to join the argument that we have heard about geological exploration. However, if the Coal Board is exploring the North Sea in an attempt to discover deposits of coal, surely the geologists engaged in that work have the skill to find oil. If they have that skill, the Board should utilise it. The situation in the gas industry is far better than that in the coal industry, and I would not like to see the Coal Board's interests in the North Sea handed over to the Gas Council. That would be a regrettable move, since it would take away one slight cushion from the contraction that is bound to occur and cause further hardship to our miners. At a time when the industry is about to make large profits on its investment of £5 million, it should be kept in public ownership. That is the nub of the argument.

We have heard suggestions and counter-suggestions about whether one hon. Member opposite is an oil man. I think that that is totally irrelevant. Behind him, the Minister has not one oil man. He has the whole City of London after him for pickings, and the Coal Board's North Sea activities are a picking.

Mr. Concannon


Mr. Golding

My hon. Friend says "Shame". The mentality being shown by the Government is shameful. If they can dip their dirty fingers into the public purse they will do so. That is what we are debating tonight. We are debating whether the money earned by British industry should be distributed thinly amongst men taking home £12 or £13 a week or should be added to the already luxurious lives of a few who work —who do not work—in the City of London.

This has been clear over the last twelve months. The election of 18th June was fought over the issue of wealth. [Laughter.] Hon. Gentlemen opposite laugh. Of course they laugh. They are going to laugh all the way to the bank. While our lads cannot afford to live properly, the friends and relations of hon. Gentlemen opposite will be doing well out of the State and out of the Bill. They will prepare the way by Clause 6, but when it comes to Clause 7 —well, for the working classes, "Bonanza" is something which they see on television, but these lads opposite will have a bonanza the like of which has never been seen before.

10.15 p.m.

Mr. Gower

I shall be brief. I had not intended to say anything on this Amendment, but the hon. Member for Newcastle-under-Lyme (Mr. Golding) has made some quite disgraceful suggestions. I hope the hon. Gentleman will ponder over them after he leaves this House tonight.

There are objective arguments for and against the Amendment. For the hon. Gentleman to make these unseemly, unsubstantiated, untrue suggestions is—

Mr. Biffen


Mr. Gower

Entertaining, yes, but also unfortunate. I hope that very few hon. Gentlemen opposite will associate themselves with the kind of bunk which we have heard in the last few minutes I hope also that very few hon. Gentlemen will associate themselves with the unfortunate proposal put forward by one hon. Gentleman, that any industry which it taken from public ownership into private ownership will be taken over again without compensation. Hon. Gentlemen opposite have the most remarkable ideas about what is right and wrong. [HON. MEMBERS: "Oh."] In their view—they are entitled to think this—all in State ownership is virtuous and good; all in private ownership is bad. [HON. MEMBERS: "Withdraw."]

I hope that hon. Gentlemen opposite will ponder over this point, too, As a country we are particularly suspect to conduct by other countries which might arise from responding to that kind of suggestion. We have acquired a lot of industry in other countries. I hope that the hon. Gentleman who spoke about foreign interests coming here will consider this point. I believe that the future of the world is in greater flowing of industry between different countries and less narrow nationalism of the kind preached by the party opposite. Those countries which in the post-war years have relied on private enterprise have produced for their peoples the highest standard of living in the history of mankind.

Mr. Golding

Hon. Members should examine my speech carefully tomorrow. I think that it was another hon. Member who talked about the introduction of foreign firms. I have been pondering the suggestion of the right hon. Member for Wolverhampton, South-West (Mr. Powell) about bringing the Japanese over here to run Rolls-Royce. I wonder whether he would prefer a Dutch or Japanese company to control the present assets of the National Coal Board.

Mr. Gower

The Amendment is unduly restrictive and would confine any future development to the pre-emption of the Gas Council. I hope that it will not be accepted.

Sir J. Eden

The hon. Member for Don Valley (Mr. Kelley) was absolutely correct when he said that the subject matter of this debate had been explored at considerable length in Committee. I am tempted to echo that remark, because we have tended tonight to go back over some of that ground. However, I recognise that a number of hon. Members could not take part in those debates, and for the benefit of those hon. Members, could I repeat my earlier assurance that, if it had been the Government's view that the Coal Board should be denied the powers given to it under the 1966 Act, steps would have been taken to remove them altogether?

I was as categorical as I could be in assuring the Standing Committee that there was no intention to use the powers in Clause 7 so as to nullify the provisions of the National Coal Board (Additional Powers Act) 1966. However, for the benefit of those who were on the Committee, I hope that I may be forgiven if I do not try to cover all the points raised in this debate but instead address myself to the Amendment itself.

It is intended to provide that any direction relating to the Coal Board's interests in the United Kingdom offshore gas or oil activities should give a right of preemption to the Gas Council. Under its agreements with Conco and Gulf, the Coal Board has the right to assign its interest in the continental shelf licences which it holds with those companies to a third party, but the respective partner has the right to acquire the interest under certain conditions. The Opposition know that such an agreement exists. The Amendment would override this contractual arrangement between the Coal Board and its partners.

The hon. Member for Midlothian (Mr. Eadie) and others asked about the desirability of safeguarding indigenous resources for the nation. They will know that there are already safeguards to protect the national interest in any disposal of these assets. I made this clear in Standing Committee. The Secretary of State has discretionary powers under the Continental Shelf Act, 1964, over the assignment of licences. In approving any assignment of the N.C.B.'s licences in the North Sea, the Secretary of State would, of course, take into account the overall interest of the nation.

The intention of the Amendment seems clear. It is, as my hon. Friends have underlined, designed to ensure that in the event of the disposal of these particular assets of the N.C.B., special rights would be given to the Gas Council. While the intention is clear, the drafting of the Amendment is defective. The N.C.B.'s North Sea interests are held by a wholly owned subsidiary, National Coal Board (Exploration) Ltd., and to achieve its objective, the proviso should have been applied to subsection (2) and not subsection (1). I have previously made it clear, but I think it necessary to repeat, that there is no decision whether or not to require the disposal or reorganisation of any of these assets. In other words, no decision has been taken on these matters.

The Amendment would not achieve what it is intended to achieve. Like the views of so many hon. Gentlemen opposite who have spoken on the subject, the Amendment is unacceptable, and I therefore invite my hon. Friends to reject it.

Mr. Michael Foot

I will not comment at length on the Minister's remarks because he has underlined the malignity of the purpose he has in mind in this part of the Bill.

It may be true, as he said, that there is something defective in the Amendment as drafted and that it would not achieve the exact purpose we have in mind. However, if that were the ground on which he was trying to secure its rejection, he should have said that the Amendment could have been phrased in a different way and that he would be happy to make arrangements for something of the sort to occur. That is the normal method of proceeding if an Amendment is being criticised solely on technical grounds.

In rejecting the Amendment and in referring to what would be the procedure if the Government tried to use their powers under the Bill to compel the N.C.B. to dispose of its North Sea gas operations, the Minister explained that an offer would have to be made to the partner of the N.C.B. in these operations. That is the case, is it not? The hon. Gentleman said that the Opposition understand the position. We do.

Mr. Edwin Wainwright

We were told that no decision has been taken one way or the other, and I presume that the Minister was referring to the selling off. That means undoubtedly that the Government are going to sell the activities off, otherwise they would leave things as they are.

Mr. Foot

It is argued that no decision has been made by the Government on these matters. We know that there is a general intention on their part to seek powers to do these things. I dare say that it is true that they have not taken any decision about any particular project. They follow the procedure of the Bill and say that they must have the report of the study group and then decide what to do.

What would happen if the Government decided, following the investigation, that they wished to compel the National Coal Board to dispose of its partnership in the North Sea gas operations? This is a very important matter. The Minister says that the Opposition know what the position it. We do, and I am asking him to confirm it. The position is that if the Government decided to take this action the subsidiary concerned would have to make an offer to the American company. Therefore, if they tried to hive off this part of the activities a very likely result, which the Government would not be able to prevent, is that the whole North Sea gas operations would be sold off to the Americans.

I do not want to put the spokesmen of the oil lobbies in any order of precedence. They are among some hon. Members who have spoken as if the Board's North Sea gas activities constitute the juiciest plum of the lot. That is the one that they want to see plucked, but it should be known that if it is plucked by anyone it will be plucked by the Americans.

Mr. Christopher Tugendhat (Cities of London and Westminster)


Mr. Foot

I will certainly give way. This is oil man No. 1.

Mr. Tugendhat

Perhaps if that is so the hon. Gentleman will allow me to correct him on a matter of fact. Before rising to speak, perhaps especially when he speaks from the Front Bench, he should keep his facts up to the minute. If he had looked at the tape so conveniently placed in this Palace he would have seen that the National Coal Board's partner in the North Sea, which he described as purely American, is merging with that great British company, Burmah Oil. That was announced today. When the hon. Gentleman is making a point about flogging those activities to the Americans, he should keep up to the minute with his facts.

Mr. Foot

I have been so busy during the day keeping an eye on hon. Gentlemen opposite that the latest activities of Burmah Oil have escaped my notice. I assure the hon. Gentleman that I shall study the matter with great care and see what mergers and machinations are going on.

When we think about it, we see that this news strengthens the case enormously. The Government were saying that they would be prepared to sell the Board's North Sea gas operations to the partner, knowing, at least until the hon. Gentleman intervened, who the partner was. But now they are prepared to sell them to a partner perhaps merging with someone else, and they may not know who that is.

The Minister acknowledged that we know the position, and we do. Those gentlemen, whether Burmah Oil or anyone else with their eyes on the Board's North Sea gas operations had better avert their gaze because they will not have them. Not even this Government—and I know that in saying this I am going extremely far—would dare to offer to sell off the operations in the North Sea to an American partner first, whatever junctions it may have made with another firm in the meantime. Not even this Government would be prepared to do so.

10.30 p.m.

Indeed, the Government would be asking this House and the country to agree to the disposal of an asset on which millions of £s have been spent and from which we believe the British public should get the benefit. Whichever part of the country they come from, however great their enthusiasm may be for different sections of the oil industry, whatever advantages they think they are going to get from this part of the Bill, hon. Members opposite had better control their greed, because it is not going to happen.

It has been made abundantly clear in Committee—and the hon. Gentleman has confirmed it, although not with complete candour—that the way in which this disposal would have to take place means that no one in this House or in the country who has any respect for the rights of the country would be prepared to engage in such a manoeuvre. If anyone were prepared to engage in it, he would he putting his respect for cash and cash transactions above the spirit of patriotism, and we will not accuse even the hon. Member for the Cities of London and Westminster of wanting to take that course.

It was said by William Hazlitt that the City of London ought to be represented in this House by one large turtle. The hon. Member for the Cities of London and Westminster has not got quite the physique to qualify for that position—he has only just started. But we know very well the interests he represents in the House. He does it with great charm and effectiveness.

I make it clear—and I hope that it will be well understood in the country—that whatever other depredations the Government may seek to make against the National Coal Board under this Bill, they are never going to get their greedy hands on the North Sea gas operation. It is going to be kept by the Board; it will be made to prosper by the Board, and it can make its contribution over the years to come to the public coffers of this country and not to private persons.

Amendment negatived.

Sir J. Eden

I beg to move Amendment No. 27, in page 5, line 26, at end insert: Provided that the Secretary of State shall not give any such direction unless he is satisfied that the taking of the steps in question will not prejudice the proper discharge by the Board of its duties.

Mr. Speaker

It would be convenient to discuss at the same time Amendment No. 13, in page 5, line 26, at end insert: Provided that the Secretary of State shall not give any direction under this subsection unless he is satisfied that the proper discharge of the duties of the Board will not be prejudiced by their giving effect to the alteration which the direction requires to be made. standing in the name of the hon. Member for Ebbw Vale (Mr. Michael Foot) and the names of his hon. Friends, if that is acceptable to the House.

Sir J. Eden

I should first draw attention to the fact that there is a small grammatical error in Amendment No. 27 in reference to the Board. It is usual to use the plural sense and therefore "its" should read "their".

The Amendment is an attempt to meet the point enshrined in Amendment No. 13, and does not arise from any particular point raised in Committee. Having seen Amendment No. 13 on the Order Paper, I thought that it would be right to table a Government Amendment which would meet the point contained in it and overcome one or two minor drafting difficulties involved.

The Opposition's Amendment refers to the Board "giving effect to the alteration", while Clause 7(3) refers to a direction to the Board "to take specified steps" with a view to altering. Amendment No. 27 is designed to meet the Opposition's point and at the same time to fit in with the rest of the subsection. In the circumstances of a direction of this kind under this part of the Clause, it is absolutely reasonable that the same sort of provision should be made as has been made in subsection (1).

Mr. Varley

We are pleased that the Minister has introduced his Amendment to ensure this minor safeguard to the powers of the Secretary of State. We are happy not to press Amendment No. 13 but to accept the Government's Amendment. However, I do not want to let the occasion pass without saying that it is only a minor safeguard. By subsection (3) the Secretary of State can direct the Board to "take specified steps", and this means taking an active day-to-day interest in the affairs of the Coal Board.

The provisions for which the Secretary of State asks are wholly undesirable. They are totally unprecedented in a publicly-owned industry, they bring a ludicrous degree of ministerial interference into the affairs of the Coal Board and they will have far-reaching effects. They come ill from a Government who are supposed to be carrying out their election manifesto, which talked about Government disengaging from industry. The Secretary of State should not have sought this power, especially the right hon. Member for Knutsford (Mr. John Davies), because he has demonstrated that he is prepared to be pushed around by the Minister for Industry and the Under-Secretary of State. However, the Government's Amendment offers a small safeguard and goes some way to meeting our point.

In a few years the Secretary of State will probably wish that he did not have the power in subsection (3) because it may well be that the Select Committee on Nationalised Industries will have a wonderful time questioning the right hon. Gentleman about how he exercises it.

We are not happy about subsection (3), but the Government's Amendment goes some way to meeting our point and limits to some extent the wholly objectionable nature of subsection (3).

Mr. Ogden

Strange things happen in this Chamber from time to time, but when there is a meeting of minds such as we have had on these two Amendments I find it very strange indeed.

Mr. Concannon

We cannot win.

Mr. Ogden

I agree. My hon. Friend the Member for Chesterfield (Mr. Varley) says that the Government's Amendment is a minor safeguard. But both Amendments—and it is possible to take either one of them because there is no difference between them—mean that no direction shall be given to the Coal Board unless the Secretary of State is satisfied that such a direction will not harm the Board in the operation of its major statutory duties. Who will decide that a direction given will not harm? Who indeed but the Secretary of State, who was proved only a little while ago to have no power in his Department? In replying to the last debate, the Minister at least could have said, "In certain circumstances we are in favour of a partnership between private enterprise and nationalised industries." The man who introduces these Clauses into the Bill will be the sole judge, jury and executioner on what he will decide for a nationalised industry. That is no safeguard.

The only question in which I was interested was who put whose Amendment down first. I understand that it was done by my hon. Friend, with all the good intentions in the world. No wonder it was seized upon by the right hon. Gentleman opposite. I do not like it when he says "taking steps" if he means "taking action". "Taking steps" is ungrammatical, but I will not argue about that. This offers no safeguard except the limited safeguards which my hon. Friend has mentioned.

Mr. Varley

I thought that I had made the position clear. My hon. Friend will recall that in Committee we tried to knock out the complete Clause, especially subsection (3). I agree with him that it is wholly objectionable. We were the first to put down the Amendment, but we are prepared to accept the Government's Amendment. It offers only a minute safeguard, but I hope that my hon. Friend appreciates that we share his objection to the whole concept of subsection (3).

Mr. Mark Hughes

On the whole of the Clause there must be a series of both philosophical and conceptual differences which the Government Amendment highlights. The use of the word "proper" brings into question the philosophical and conceptual difference between the two sides of the House on the Clause.

During the Committee debate the Minister made the Government's view absolutely clear. I shall not bore the House by quoting more than what he said on the 9th February: In the case of the coal industry, the objectives or duties of the National Coal Board were clearly set out in the opening Section of the 1946 Act. It was not the intention, nor should it now be the intention, of Parliament to allow the National Coal Board to diversify into a wider range of activities, further away from its primary purpose, which is, as my hon. Friend the Member for Bedford (Mr. Skeet) pointed out, the getting or winning of coal."—[OFFICIAL REPORT, Standing Committee B, 9th February, 1971; c. 700.] That statement of what the Minister holds to be the proper discharge of the Coal Board's function is in very marked distinction to the general philosophical position taken up by the hon. Member for the New Forest (Mr. Patrick McNair-Wilson), where a week earlier he had come out with what to me, even for a member of the Government side, is a marvellously encouraging view on the positions of the nationalised and private sectors: There is an obsession among hon. Members opposite about the problems of nationalised industry. Perhaps they believe that we suffer from an obsession about private enterprise. There are about four crossed parallel lines of obsession here at present. But the fact is that there is nothing magical about State enterprises, just as there is nothing magical about private enterprise." —[OFFICIAL REPORT, Standing Committee B. 2nd February, 1971; c. 486.] 10.45 p.m.

In view of these two somewhat differing concepts of what the proper function of the National Coal Board should be, I believe that the House should carefully examine the Amendment.

I make three propositions, the first two of which are self-evident. First, coal is a heterogeneous fuel rather than a homogeneous product, and within the whole range of calorific and chemical constituents of coal it is entirely possible that some forms of coal can be produced at what is in fact zero cost. In order to produce one sort of coal, the Coal Board cannot help but produce some other forms of coal which may have very little merchantable value and very little cost in terms of the original pricing processes. Second, far more than being just a fuel coal is a major chemical raw material.

From those two and other simple propositions which are self-evident there emerges what is far more important—the third proposition, namely, that it is of the nature of the coalmining industry that it should diversify. This is the crux of the discussion on the Clause. If the first two propositions are accepted and we start to examine the third, we come, either on historical evidence or on contemporary international evidence, to but one conclusion—that all coalmining adventures have ended in diversification.

I do not need to bore the House with references to the Duke of Bridgwater. It was not his canal that preceded his coal ownership. He built the canal because without the canal his ownership of the coalmine just outside Manchester was worthless. The history of the family of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) shows that saltpans and glass bottle works have a close affinity with the exploitation of coal royalties. The development of the port of Blyth and Hartley by the hon. Gentleman's family was based as much upon glass bottles, grindstones, banking and everything else as it was on the coal industry. No entrepreneur in the North-East ever believed that coal ownership ended at the pithead.

Mr. Ridley

May I correct the record of this piece of family history by saying that my family did not own coalmines.

Mr. Hughes

With great deference, in 1738, of the Kenton Colliery just outside Newcastle Sir Matthew White—he had not at that time become Sir Matthew White-Ridley—owned 47 per cent. of the shares. As such one may be persuaded to believe that he had an interest in coal ownership. The home at which I lived until June perhaps illustrates this as well. The family of Lambton sank a pit there. From Lambton it passed to Joycey. From Joycey it passed to Bolkow Vaughan to Dorman Long, from whence it passed to the Coal Board.

The history of the coal industry in the North-East shows continuously that it is not possible to do anything but diversify out of the coal industry.

The development of the early chemical industry on Tyneside and Teesside, the development of the steel industry, all of these stem from the coal industry. This is true of more recent times as shown by the history of the United States in the mid-60's or the recommendation of the European Steel and Coal Community in 1964 to the privately-owned coal com- panies of Western Europe which was "Go out and diversify". This is what every reasonable privately-owned coal company has done. To expect the coal industry of this country not to diversify or for it not to be a proper function of the industry is pure economic idiocy.

No coal industry can survive, or ever did survive, without a major degree of diversification. At the time of nationalisation those who drew up the 1946 Act and worked the schedules immediately after recognised this. The House is well aware of Section 1(2)(c)(d) and (e) in which it is made clear that in 1946 this propensity to diversify was fully understood, accepted and welcomed. It was never suggested that this was simply a nationalisation of coal-getting. Hon. Members opposite will be aware that the first passenger rail service to be nationalised in this country was the Whitburn-South Shields line, owned by the National Coal Board.

Salt works, everything, came in with nationalisation as a normal part of coal industry activities, as a proper part. Therefore, when we look at the problems of Clause 7 we see that the Board has diversified not because it is a nationalised industry but because it is of the nature of colliery activities and coal mining that it must diversify. Historically and currently this is the case.

Clearly we must accept this basic proposition, that the coal industry cannot be confined to sending coal to the pithead. The Government's position, from the statements of 9th and 7th February seems to be that although every other coal mining concern in the world should be encouraged to diversify in whatever way seems to be best to the management, our mining industry should be denied that opportunity. This is not because it is inefficient. The Minister has said clearly that he has the greatest faith in the management of the Coal Board. It is not because it is beyond the terms of the 1946 Act, because again it is clear that nothing the Board has so far done is beyond what it can properly do under the Act. It is not because it does not carry out these activities properly, whether or not judged by the yardstick of profitability. Hon. Members opposite have made clear that the profitability of any undertaking is not the criterion by which it shall be determined whether it shall be hived off. Where does it all end? We are told that the Board is to be ordered to stop what it is doing for no other reason than that it is nationalised. Here we have dogmatism and delusion erected into a public policy, a disgrace to every economic tenet that has been preached in this country for the last hundred years. This is nothing more than a determination that the National Coal Board should be used as the example pour encourager les autres; that whatever the National Coal Board has been allowed to get away with, this Government and the Ministers opposite will use it as an example for not permitting other nationalised industries to follow the normal economic bents in that particular sector of the economy. That no ordinary economic criteria are to be applied, but that what is to happen is that a ruler, containing only one line at the extreme left hand end, is to be used and for everything that passes that mark it is to be said: "This is undesirable and shall be got rid of because it is improper."

What about coke ovens? Are we to be told that they are improper? If so, let us be told clearly why. And if coke ovens are considered to be improper, then the whole range of heavy organic chemical production follows as night follows day. How can a steel company in West Germany, a coal company in the United States, or the National Coal Board involve themselves in coke production without moving towards the heavy organic chemical spectrum.

Is the merchanting of coal an improper activity any more than an oil company, which permits the sales of cars or garages in its ownership, is an improper activity. Is the merchanting through Sankey of coal appliances wrong because they burn coal, any more than it is wrong to sell products of the motor industry through an oil company because those products use petrol? These are the sorts of criteria of propriety that even in this helpful Government Amendment we are called upon to support.

What we fear in the whole of Clause 7 is that, though words may be used by the other side which have a sweet reasonableness to which among friends no objection can be taken, in the last analysis those words have no meaning in reality. When they talk about the proper functioning of the Coal Board, they mean something that is totally unacceptable to every Member on this side of the House.

It is in this sense that we object to this Amendment. We find that, with the best will in the world, the whole concept of the Government, even when it is divested of emotion, is totally unacceptable when they say that x is a proper activity. Speaking for myself and for my hon. Friends and those in County Durham whom I represent, what is proper for the present Government we cannot believe is proper for us.

Amendment agreed to.

11.0 p.m.

Sir J. Eden

I beg to move Amendment No. 16, in page 5, line 33, leave out from first 'Board' to end of line 40 and insert: (6) A direction by the Secretary of State to the Board under subsection (1) or (2) of this section shall be given by order made by statutory instrument, of which a draft shall be laid before Parliament. During our proceedings in Standing Committee, with the assistance of some of my hon. Friends, the Opposition wrote into the Bill certain words which my Amendment now proposes should be left out. The words that were written in, at the instance of the hon. Member for Ebbw Vale (Mr. Michael Foot), were brought forward to establish some form of parliamentary procedure concerning the directions which may be given under Clause 7. My hon. Friends were motivated by a proper desire to ensure effective accountability to the House for any actions that Ministers might take under the Clause.

In the form of words that I put to the House in the Amendment, there are a number of ways in which improvements are secured over the words which are currently in the Bill. First, the existing subsection (5) provides that only in the event of the Board objecting to a direction would such a direction have to be incorporated in an order. I think I am right in saying that the hon. Member for Ebbw Vale indicated that he recognised that that was not wholly appropriate and he would not, I think, take it amiss to see that aspect removed. I do not think it would be right that the Board should have the initiative in deciding whether a direction should be presented to the House. Also, in the event of the Board objecting to a direction, the House would be placed in the position of having to act as some kind of umpire between my right hon. Friend the Secretary of State and the Board. My Amendment would remove that aspect of the wording which was written into the Bill by the hon. Member's Amendment.

Secondly, while the Government recognise the importance of the principle of parliamentary procedure relating to the directions under Clause 7, subsections (1) and (2), that principle need not be extended to directions under subsection (3). As the House well knows, directions under that subsection would involve only organisational changes. They would not involve the disposal of assets acquired with public money. If, subsequent to a reorganisation, the Board were directed to dispose of an asset, such a direction would, of course, come under subsection (1) or (2). That would mean that it would be subject to the parliamentary procedure proposed in my Amendment.

Thirdly, the form of parliamentary procedure enshrined in my Amendment will, I think, be generally more acceptable to the House. The affirmative Resolution procedure requires a debate in any circumstances. In this instance, with the negative procedure, an element of option is open and it would ensure that a debate would take place only when it was required.

My final point in support of the Amendment is that the laying of an order in draft and making it subject to the negative procedure avoids the situation which might arise under the alternative procedures that were proposed in Committee by the hon. Member for Ebbw Vale. An order under the affirmative procedure would require to be subject to debate automatically. If it were an order to be made, as distinct from an order to be laid in draft, even though it was subject to negative Resolution, the Board would be under an obligation to comply as soon as the order was made.

I hope that with that brief summary of the aspects of my Amendment, the House will feel that I have honoured the undertaking which I gave to the Standing Committee to produce a form of words which would meet the spirit of our debate in Committee on the Amendment moved by the hon. Member for Ebbw Vale. I hope that what I am now inviting the House to support fully discharges that obligation.

Mr. Michael Foot

I should like first to consider what the hon. Gentleman has proposed, and then to make some comments upon it. But perhaps I may say, in reference to his last remarks, that it is not only a question of his wishing to discharge an undertaking that he gave to the Committee. Somehow or other he had to deal with the vote of the Committee, and it is the vote which caused the change in the situation. He had obviously been making undertakings which were not satisfactory to this side of the Committee at that time and which were not satisfactory to some of his hon. Friends, so a vote took place and it was because of that vote that we are now having this discussion.

The hon. Gentleman may argue, and nobody can disprove it, because the whole matter is retrospectively hypothetical—if there is such a condition—that he would have produced something like this if he had been left to his own devices. But of course he could have put it in the Bill originally, if that is claimed. He could have had this enlightenment before the Bill started. The reason why that did not occur is that the Bill was hastily concocted and chunks were taken out of other Bills and slammed into this one, and nobody thought about this question of how we were going to have proper accountability. However, I do not propose to press that very much.

Now let me turn to the points which the hon. Gentleman mentioned in defence or in elaboration of what he is proposing. First of all, he said that when I was putting forward the Amendment which was eventually carried, and which is now incorporated in the Bill, I acknowledged that there were defects in it; and I still accept that that is the situation. It would have been unwise to leave the Amendment in the form in which it stands in the Bill—partly for the reasons which the hon. Gentleman has stated. He was perfectly entitled to argue, as were others, that the question of whether there should be parliamentary control of this nature should not rest on whether the Board made an objection or wanted a matter referred to Parliament in any form at all. It is much better that the provision should be one which covers the position altogether, irrespective of what is the argument between a Minister and the National Coal Board. So with that part of what he said I am in agreement.

However, when he comes to argue that we turn the affirmative procedure into the negative procedure, I think it would be better if he had still retained the affirmative procedure, because we all know in this House that the affirmative procedure is a stronger one than the negative procedure. The affirmative procedure ensures that there shall be Parliamentary time, and we know that all Governments—particularly this Government—get into trouble over parliamentary time, so it is easier to get time if the affirmative procedure prevails. That is one ground on which I should prefer the affirmative procedure.

It is the case that the affirmative procedure is often employed when matters are of major consequence, and some of these questions which may arise under this Bill would be of major consequence, So the affirmative procedure would have been better. However, during the Committee stage, when we were arguing and seeking to enlist the support of hon. Gentlemen opposite in securing the change, I said that we wanted an undertaking from the hon. Gentleman. We hoped it would be the affirmative procedure, but it would be an improvement on the position if it were the negative one. Therefore, if that were the only quarrel I had with the way in which he introduced this Amendment, or with his interpretation of the situation, I would not object so strongly on that ground.

The most substantial objection to the way in which the hon. Gentleman has interpreted the alteration is the removal from the Clause of its application to subsection (3). The Minister referred to the matter candidly in his statement and did not try to conceal it. The Minister knew that he was removing from the operation of subsection (5), as we had arranged it in Committee, subsection (3).

The argument is that subsection (3) describes an action which can be taken by the Minister of a different order from the kind of action which can be taken by the Secretary of State under subsections (1) and (2). It is a different form of action; none the less, it is action of a serious character.

Subsection (3) states: The Secretary of State may direct the Board to take specified steps, in respect of any activities of the Board or a subsidiary of the Board, with a view to altering the way in which those activities are organised. Therefore, that kind of instruction to the Coal Board will, if the Amendment is accepted, be in operation and the Secretary of State will be able to give orders to the Coal Board to alter the way in which it organises various activities.

That raises a peculiar clash with the Act under which the Coal Board operates as a whole. Section 1(2) of the 1946 Act sets out the functions of the Board: The functions of the National Coal Board …shall include the carrying on of all such activities as it may appear to the Board to be requisite, advantageous or convenient for them to carry on for or in connection with the discharge of their duties. Similarly, the additional powers in Section 1(3) of the 1946 Act are: The Board shall have power to do any thing … which in their opinion is calculated to facilitate the proper discharge of their duties … or is incidental or conducive thereto. Similar language is used in the National Coal Board (Additional Powers) Act, 1966, to which reference has been made, which deals with the North Sea gas operations of the Board.

So there can easily be a clash in the sense that the Board may say here, "We want to carry on these activities in one way, and that is the duty which is imposed upon us by the original Act", but the Minister, under subsection (3), could give orders to the Board which may conflict with that situation. We are saying that that kind of order should be subject to parliamentary approval or discussion as well as orders under subsections (1) and (2).

Sir J. Eden

I am sure the hon. Gentleman will recollect that the House has just approved Amendment No. 27, which adds a proviso to subsection (3) relating hack to the duties of the Coal Board in this connection.

Mr. Foot

Yes. I understand that, too. But my hon. Friends made forceful speeches suggesting that what were proper activities of the Board can be interpreted in different ways. We think that they would probably be interpreted by a Minister seeking to give an instruction to the Board in different ways from the Board. Therefore, I do not think that that is sufficient protection.

I want to emphasise that under subsection (3), as well as under subsections (1) and (2), the Government are seeking powers to give directions to the National Coal Board to operate in a different way than it has hitherto. Hitherto, the whole thing has been governed by the 1946 Act, which gives various powers for the Minister to intervene. The Coal Board is told in effect to get on with the job and it makes its own interpretation as to how it shall do the job. Now, the Secretary of State is possibly taking powers not only to say "You must not continue with such activities; you must hive them off", but also to intervene directly and say, "You must conduct some of your activities differently and we will give you detailed instructions on how to do it."

11.15 p.m.

That is a strange doctrine to come from those who have preached the doctrine of disengagement, as the Secretary of State —who is here to listen to our debate—did in such a strong speech at the Tory Party conference, when he described his idea of disengagement in the nationalised industries. But this is not disengagement. This is the Minister taking powers beyond those which have existed before to intervene by decree in the affairs of the Coal Board and in such a way, possibly, that the Coal Board would not be able to carry out its statutory functions under the original Act. I believe that the Government should look again at the question of including subsection (3). If they did that, leaving aside all questions of why the hon. Gentleman had to come forward with this Clause at all, he would at least be in a better position to say that he had discharged his obligation.

I know that he cannot make a manuscript Amendment to his own Amendment, but there is still the resort of the House of Lords, It has some uses after all. That is a very difficult thing for me to acknowledge but I suppose that the House of Lords may rescue even this Government from some of their more outlandish actions. But at least there is the possibility of reinstating subsection (3). I hope that he will give an under- taking now that he will consider incorporating it. I believe that that will cover the situation.

If he does not do it, there will be left a legal situation which is certainly open to great question, because there will be a clash between the Minister who says that he has the powers under the Act to give orders, and the Chairman of the Coal Board who says that he has to carry out the instructions under the original Act to do what he thinks is best for these activities as a whole. So, in the interests not only of protecting the Coal Board, as we have sought throughout these debates to do, but also of achieving constitutional clarity, the Government should be prepared to accent our Amendment.

Of course this Amendment which we have secured is of major importance. It is not only a minor question of having secured an insertion of an afterthought which the Minister had overlooked and which has now been put into the Bill. Something more important than that has been secured, and I acknowledge our gratitude to those hon. Members opposite who were prepared to consider the matter, as we believed, on its merits and to vote in that sense.

I believe that the situation has been changed most beneficially by this Amendment. It governs the whole Bill, except for the parts which I have been talking about under subsection (3). There are all the hiving-off measures which the Government may have in mind, although the Minister has insisted that his mind is completely vacant on this subject. At least, he says that in the House, but not in Bournemouth, where he makes speeches for which he is rapped over the knuckles by the Secretary of State. I am interested to see the Secretary of State here tonight to see that the Minister does not commit in the House the indiscretions of which he is guilty outside.

It should be known that as a result of our deliberation—-I am a supporter of the parliamentary method of conducting these matters; sometimes, even tonight, people may think that our procedures are strange and that we take a long time to reach conclusions-we have secured a position which was not provided by the Government in the Bill as originally drafted.

The House of Commons will now have some say when it is proposed to hive off parts of the N.C.B.'s activities. In other words, we have greatly reduced the area of Ministerial decree, which was the deepest offence in the Measure as originally proposed. The Secretary of State had proposed that over a wide range of activities he would have been able, merely by his decree, to have lopped off parts of the Board's activities here and there. Parliament has insisted that that shall not be so and that the right hon. Gentleman shall not have such dictatorial powers.

I trust, therefore, that the House fully appreciates the importance of what has been secured. I ask the Government to go further—I hope that I shall have the assistance of some valiant hon. Gentlemen opposite in this request—and include the subsection (3) principle in the provision. Irrespective of that, we have, I believe, taken an effective step towards ensuring that this programme of hiving off parts of the Board's activities will not go ahead. In any event, it will certainly not be done in the dark. Any proposals will have to be made public and the arguments adduced in the House. This is a major victory for democracy and for enabling the N.C.B. to do its job properly.

Mr. Swain

I regret the absence of two hon. Gentlemen opposite—hon. Members will know to whom I am referring—who served with us in Committee upstairs. However, I applaud the presence of one hon. Gentleman opposite who, though he did not vote with us in Committee on this issue, did not vote against us. We thereby achieved the victory of which my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) spoke, though I am not sure that "victory" is the right word to use in this context.

Bearing in mind what occurred in Committee, I am surprised that the Minister is not prepared to take more notice of it. Originally I asked for the Committee stage to be taken on the Floor of the House. However, the Government decided, following the democratic process of a Division, to send it upstairs.

We in Committee upstairs were charged with certain duties, among them to examine the Bill thoroughly and amend it where necessary. As a result of some hon. Gentlemen opposite appreciating the need for an Amendment which we moved, we now have parliamentary accountability in this matter, and back benchers will have the right to air their views on some of the major issues which may arise under the Bill. Originally the Government were to have governed by decree, thereby preventing back benchers from having their democratic right to examine how and why a Minister reached a decision.

I think that I can outline the principle underlying the debate in Committee without being out of order. Having passed Clause 6 after a series of Amendments had been defeated, we thought that the Minister would have the relevant facts and figures locked away in his own possession and would not be accountable to Parliament. What hurt us most, and what made Conservative hon. Members vote with the Opposition, was that Parliamentary accountability was going by the board, and we were leaning towards government by decree. The Minister was to be charged with the sole responsibility of locking away those facts, having conducted the review, and the only people with whom he would discuss them would be the prospective buyers of the sections of the industry to be hived off. No Minister in any Government should have that sort of responsibility conferred upon him. Back-benchers and Parliament would have no responsibility, and it would be left entirely to the wisdom or otherwise of the Minister, whoever he might be at the time, to decide which sections of the industry should be sold to private enterprise and which of the private enterprise undertakings should be the prospective purchasers.

Therefore, we carried the Amendment in Committee. I felt that day not a member of the side which had just won a major victory but a member of a team which had just won a victory for democracy, something I hope all of us on both sides stand for. I am certain that if tonight we could ventilate the whole of the arguments advanced in Committee, and the two Conservative hon. Members who supported us were here to express their verbal support, the House would be prepared to instruct the Minister to change the wording of the Amendment. I hope that he will use the other place to restore the Committee's wishes. The Committee was charged with a responsibility which it carried out in 13 long sittings. It argued the merits and demerits of every point in the Bill, particularly on public accountability. It was one of the finest Committees I ever sat on, because every detail was analysed.

The Minister has blatantly refused to accept the Committee's decision on a major Amendment, and is prepared to use a built-in majority of hon. Members who have not heard one word of discussion in Committee or on the Floor of the House on Report to impose his wishes upon the House.

I feel very strongly about this. Without becoming too acrimonious, I ask the hon. Gentleman seriously to consider what my hon. Friend has said and what I have said in trying to support him, and to change the wording in the other place so that democracy can be the victor at the end of the day.

11.30 p.m.

Mr. John Mendelson

When explaining his attitude, the Minister used certain phrases which have convinced me that it was critically important to support my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) in his plea to the Government. The Minister said that it was not necessary or important to apply the change, to which he agreed after the vote and argument in Committee, to subsection (3), because that would deal only with reorganisation. But he added that that might lead to other changes later, that reorganisation would precede other changes which the Government might have in mind, but these other changes would fall within subsection (1) or (2) and therefore be covered by the exceptions.

Sir J. Eden

The hon. Member misunderstands what I said. The first part was absolutely right, but I said that if subsequent to a reorganisation the Board was directed to dispose of that asset, that would come under subsection (1) or (2).

Mr. Mendelson

I do not think that we differ. Perhaps I did not express it as clearly as the Minister and I am grateful to him for that intervention. While he does not think that the change should apply to subsection (3), he agrees that it would deal with reorganisation only if such reorganisation led later to a disposal of the assets.

Sir J. Eden

There is one difference between us. It is not that the reorganisation itself would or might lead to disposal; it is whether after any reorganisation had taken place, but not necessarily on account of it, there was a direction to dispose when that direction would be subject to this provision.

Mr. Mendelson

That is precisely the point about which I am worried. It is not necessarily because of reorganisation, but when reorganisation leads to a decision by the Government to dispose of some assets of the National Coal Board, I am worried, because of the debate in Standing Committee, about which we have heard, and in view of what the Minister has said, that the original instruction given under subsection (3) could deal only with reorganisation inspired by a previous private decision of the Government that it should eventually lead to disposal of assets.

Sir J. Eden

If that were the case, it would be subject to the procedure.

Mr. Mendelson

I fully accept that. What I am insisting on is if the Government privately decide that there should be a disposal of assets and actively implement their decision and direct the Board to dispose of some of its activities. It must be common ground between us that this may happen, and it is therefore all the more essential that Parliament, not at the stage when the Government give instructions to reorganise some activity, but at the earliest stage, should know what is in their mind. This is a decisive reason why the procedure suggested by my hon. Friend should be agreed by the Government.

It has always been assumed in con stituencies earning their livelihoods through the work of the Board that all directions would lead to the improvement of efficiency or work, or make the work more profitable, or provide for future profits to improve the assets of the Board to be invested in new machinery, all the normal good reasons for which reorganisation might be required. But this would introduce an entirely new motivation in a direction to reorganise, namely, to improve efficiency in a part of the Board's activities, not for greater investment to continue and extend its activities, but for a completely different and negative purpose, namely, so to rearrange or reorganise the activities of one part of the Board so as to be in a better position to dispose of that part of its assets.

That would come as a great shock to those who earn their livelihood in the industry because it would be the reverse of the normal purposes of reorganisation. That makes it all the more urgent that at this early stage Parliament should be able to examine the purposes of such a formal direction, long before there might be an instruction in respect of the disposal of the assets. Although we may not agree, at least the Government and I understand each other on this matter.

This is all the more important because there has been considerable concern among those employed in the industry about the Government's intentions and also because of our experience in recent years of the policy of mergers. Often, possibly 18 months or two years ahead, a secret decision is taken by management about which the employees—staff and those on production work—and the unions know nothing. But they see that a lot of reorganisation seems to be taking place in the shop, although they do not know why. There seems a reluctance to install a certain type of new technology, while other technology is used in a different way. Nobody knows why. But suddenly, two years later, without anybody having been previously informed, there is an announcement in the newspapers that a merger will take place resulting in so many redundancies.

The Secretary of State for Trade and Industry knows that I made this point to him when he made an announcement not long ago on another type of reorganisation concerning firms. It is important that those employed in the coal industry should always know at the earliest possible moment the policy which the Government are pursuing. Although this may appear a technical point, I agree with my hon. Friends who said that in Committee they secured a major improvement in the Bill and that part of the improvement is being carried through by the Government in the Amendment. If we are to be reassured that a direction limited to reorganisation is not merely a consequence of a previous Government policy decision and that such reorganisation is not merely a gateway to a disposal of assets, then the positive procedure which my hon. Friends have urged should be accepted and the Minister should meet the wishes of the Opposition, in another place. by extending the procedure also to subsection (3).

Amendment agreed to.

Mr. Stainton

I beg to move Amendment No. 28, in page 6, line 5, at end add: (8) The Secretary of State may direct the Board that any sums arising from the disposal of any part of their undertaking or assets shall be applied to a Disposals Proceeds Reserve Fund, which Fund shall be available to the Board for application in the general financing of its activities. It is curious that one tends often to spend a long time on a subject and deal with it with apparent thoroughness and yet, after the event, find a realisation that there is some considerable omission. There was just such a considerable omission in the Standing Committee concerning what is to happen to the proceeds of the operations of the N.C.B. to be hived off. I imagine that it is like the rising and the setting of the sun. At high noon, we were really flaying each other and gradually enthusiasm for debate waned. [An HON. MEMBER: "It started to rain."] Yes, it started to rain, and a realisation set in that we had to draw stumps and that we should complete our discussion on this topic of how the proceeds of disposals were to be dealt with. We turned our backs on the problem entirely.

Since then, I have spent a little time looking through the Bill and I must confess that it has been a case of "hunt the slipper". Where on earth does the money go? How is it dealt with? I started first with the financial provisions and spotted a good place in Clause 9(2). It contains a lot of confusing words about the Consolidated Fund, which intrigued me. But I concluded that they had no relevance to the question.

I concluded that the only thing to do was to put down an Amendment on Report. I move this Amendment hanging my head. If hon. Members study the Notice of Amendments printed on 22nd February, they will see that the Amendment there standing in my name extended to ten lines; it now extends to 3½. The other 6½ lines were lost on the basis of advice that, as the Amendment was drafted, Mr. Speaker might rule it out of order because it provided for payments into the Consolidated Fund not covered by the Money Resolution. I was told that it could, however, be brought into order by leaving out all the words after "activities" in the middle of the fourth line. Whether I have been truncated, amputated or dismembered, I do not know; whether I have the torso or the head, I am not certain. All I have is the index finger with which to point to my hon. Friend on the question of hiving-off proceeds.

How will the cash flow? Where will it reside? Where will it finish up? What are the accounting implications? What the acounting provisions will be for the Board is a separate question from the cash implications. After last night, I do not feel in very good trim to pursue the argument in all its niceties. Would that it were two or three hours earlier!

My understanding of the situation of the cash flow arises merely from deductions from going through the Report and Accounts and looking through the Charter Act of the Board and various subsequent enactments, and it is that the proceedings of the hiving-off, should that come about, will be paid into the joint stock bank of the Board. They would presumably be accounted as capital receipts and would flow from the joint stock bank to the clearing account in the Bank of England, and that clearing account in the Bank of England would automatically—[Interruption.] The Minister and his colleague are knitting their eyebrows. I have been into this matter in detail and I do not want to be treated with scorn. Despite the lateness of the hour, I regard this as a very important topic. I take my share of responsibility for the error of omission in Committee, but so do all other hon. Members who served on the Committee.

11.45 p.m.

I understand that money will flow from the joint stock bank if it was designated there on capital account. It will pass to the clearing account of the Bank of England from where automatically it would go to the paymaster's account to reduce the day-to-day borrowings of the Coal Board presumably under the ways and means advances heading. Perhaps my detective work and deductions are wrong, but that would appear to be how the cash would flow.

I will come in a moment to the question of how all this is treated in the Coal Board's accounts. It is a separate topic, but it is at least of equal importance. It is important that we deal adequately with this question because we have had a variety of comments, not only in the Chamber tonight, but in Committee, and the range of the comments is well illustrated, for example, by reference to my hon. Friend the Member for the Cities of London and Westminster (Mr. Tugendhat), who in a very dramatic intervention in Committee pointed out to an hon. Member opposite, who was talking about the lack of finance in the Coal Board to exploit a smokeless fuel process, that, as a result of hiving off, finance would come back into the Board which would then be available for refinancing the expansion of the smokeless fuel process. That was one theme of argument—that the working capital of the Coal Board would be vastly enhanced by hiving off.

We have heard comments about rich pickings and selling off the plums. These are arguments which can easily be, perhaps not disposed of, but come to grips with in terms of the accounting procedures adopted from a cash and accounting point of view. How is this matter to be handled and shown in the accounts?

Let me take an entirely hypothetical example. For ease of argument at this time of night, I shall assume that the Coal Board realises a profit over the original cost on the assets when it comes to hiving off. Suppose that the assets were acquired for, say, £100,000 and this amount was financed by Exchequer money at 8 per cent. They were sold on a willing buyer, willing seller basis at £200,000. This shows a capital profit of £100,000. Had my original Amendment stood, I would have directed my proceeds into a disposals proceeds reserve fund and made the funds available for general financing of the Coal Board for the time being and then left it for consultation between the Minister or the Secretary of State and the Coal Board to decide whether there was any surplus and then, should it be decided that a surplus existed, it should be redirected to the consolidated fund. But I do not know whether I have the head or the torso. Let me pursue the argument. I am not especially advocating my Amendment, and I realise that I must be careful in saying that because I am speaking to it. I have explained my difficulties, and I hope that the Amendment will serve as a useful and legitimate vehicle for airing this difficult and important question.

We have the asset acquired at £100,000 and disposed of at £200,000—a capital profit of £100,000. One presumes that in accounting terms, irrespective of the cash which has now gone through the Paymaster-General's account and been lost to the National Coal Board perhaps overnight, the £100,000 capital profit will be reflected in the capital reserves of the Board and be available to the Board, against which to write off, for example, colliery closures or losses on other realisations. This is a very important point. I am differentiating very carefully the accounting procedures from the cash procedures.

In terms of the gain, I should like to raise the question of the status of the N.C.B. in taxation terms. So far as I can deduce from the accounts, there must be about £300 million of revenue tax loss carried forward, but I am unclear as to the situation on capital gains tax and whether offsetting will be permitted in this situation and just where the N.C.B. will finish up.

I apologise for landing the House with such a complex problem at this time of night. I have skated over the surface [...]very hurriedly. I hope that I have elicited the interest of my colleagues on this side of the House and excited the curiosity of hon. Members opposite, and that we shall have an interesting and useful debate.

Mr. Skinner

I am very much attracted to the proposals put forward by the hon. Member for Sudbury and Woodbridge (Mr. Stainton) in the form of an Amendment. They hold out many possibilities, especially for the National Union of Mineworkers.

When we have all this money from the proceeds of the disposal, the hiving off of activities, the first thing we could think about using it for would be to possibly offset part of the £74 million which the Coal Board had to pay for importing mainly American fuel at the time when we were short of coal in the late 1940s and 1950s.

Mr. Swain


Mr. Skinner

Naturally we should not expect it to reach the astronomical amount of £74 million. Nevertheless, we should feel a little pleased about getting part of it back. Against that, the N.U.M. officials and membership generally might consider that it might go a small part of the way towards offsetting the £2,000 million which the Coal Board lost as a result of subsidising private industry between 1947 and 1959.

We might consider putting it to a more parochial use. For a considerable number of years the miners have been able to secure from the Board a guarantee of only two weeks annual holiday. In recent years we have managed to get rest days, but these are only in lieu of shorter hours. The sum of £13 million, the amount which has accrued in profits from the assets which are to be hived off. would help to pay for another week's holiday and miners would be pleased to think that they were getting an additional week's holiday as a result of a Tory Amendment. For many years the majority of the white collar sector of industry has enjoyed 3 or 4 weeks' holiday. Many industrial workers now get more than two weeks.

The N.U.M., at its annual conference in July, may arising from the Amendment think in terms of long service payments for miners. One of the tragedies of this industry is that when a miner reaches retirement age, whether at 55 or whether he manages to stay on to 65, he generally finishes up on a lower wage than that which he was receiving 10 years earlier. Because he is disabled or because he is worn out after 30 or 40 years service at the coalface, he must take a job at a much lower rate. Miners have been greatly attracted to the idea of long service payments. A large part of industry operates incremental scales. One of the arguments in the Post Office dispute surrounds the question of incremental scales. At its conference in July the N.U.M. might consider that this pot of gold could well be used for such a purpose. An even more worthy use to which this money could be put would be to finance additional payments for unsocial hours. Mining is one of the most arduous industries in the world, yet it is a tragedy that very few people working underground or on the surface receive any additional payment for working unsocial hours. A few workers get 6d.—21½p—an hour for working between 8 p.m. and 6 a.m. In the context of the recent award to the power workers, the N.U.M. might consider that this money could well be used to provide an extra 2—p an hour for miners, thus somewhat improving their wages and conditions.

Mr. Edwin Wainwright

After the money has been obtained by selling off these firms, would it not be far better for us to buy half the shares back in the private enterprise firms immediately?

Mr. Skinner

There has been a strong link between Yorkshire and Derbyshire.

Mr. Swain

Let us not break it.

Mr. Skinner

My hon. Friend the Member for Dearne Valley (Mr. Edwin Wainwright) was probably out of the Chamber when my hon. Friend the Member for Don Valley (Mr. Kelley), who has made several speeches, made it clear that, if there were to be renationalisation of the hived-off assets, it would be without compensation.

12 m.

Coming from what is generally recognised as a militant Left-wing area of that union, I feel strongly about the proposition put forward by my hon. Friend. The most attractive proposition is that the money should be used to provide coal for retired and redundant miners. There is a misconception, even among people in the coalfields, that the retired miner receives free coal. The tragedy is that in a good many areas they do not receive anything at all. It is only in areas where benevolent miners having got together, where people like my hon. Friend the Member for Derbyshire, North-East (Mr. Swain) who was branch secretary for long enough of a large colliery, have championed such schemes that this coal has been forthcoming.

Mr. G. Elfed Davies

Surely my hon. Friend will not forget South Wales. We had a scheme like this long before it was even thought of in Derbyshire.

Mr. Skinner

I am glad to hear it. The most attractive proposition—

Mr. Golding

May I question my hon. Friend's priorities. As I understand it the Coal Board, for the first time, has had to admit legal liability for pneumoconiosis cases. Would it not be a good thing for the Coal Board to add to this crock of gold the money that it will be spending fighting the unions in the courts over individual cases. From that money there could be established a special fund for miners suffering from pneumoconiosis. In addition something could be provided for those miners being denied compensation because their doctors wrongly diagnose emphysema or bronchitis.

Mr. Skinner

I am pleased that my hon. Friend has made that point. Before coming to this House I read many of the HANSARDS and I noticed that there were often debates and questions asked about pneumoconiosis, bronchitis and emphysema and associated chest diseases.

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. The hon. Gentleman needs a little reminding that it is the Chair he should address.

Mr. Skinner

I apologise if I was not keeping in order.

Mr. Deputy Speaker

Let me make myself clear. When an hon. Member is speaking the main part of the time he should look at the Chair and address the rest of his remarks to the rest of the House.

Mr. Skinner

Thank you, Sir Robert. I shall be glad to look in your direction. Perhaps I will get more inspiration.

Mr. Stainton

I would like to point out that in moving this Amendment I explained that it had been truncated. It was within my discretion to withdraw it completely. I have been endeavouring to work with the Opposition and with the House. Let us have some good sense.

Mr. Skinner

There may have been some humour as a result of the points I have been making, but I am trying to be honest in the propositions I have put forward for the spending of this money usefully.

Mr. Stainton

The hon. Gentleman must pursue the point whether the money was a receipt of the National Coal Board. The proposition in the Amendment would leave the money available to the Board. I have explained that that was not my intention and it was fortuitous that the Amendment appeared in that way to give the House the opportunity to consider this question. Are we going to proceed with this or not? If not, I shall take no further part.

Mr. Skinner

I take the point, but naturally it would be getting this money as a result of the hiving off. The Coal Board would then have a sum of money which hitherto it had not had. Therefore, instead of the Chairman of the Board saying to the union "There is not sufficient money to improve wages and conditions", there would then be a reserve fund and the National Association of Colliery Overmen, Deputies and Shotfirers would be able to say "What about the proceeds as a result of the hived-off activities?" They might want to take part of it, or they might want to save it for the following year, or might want to dispose of it in countless ways. It is evident that Mr. Daly of the N.U.M. would know there was money around and would be anxious to spend it, especially in the present situation where the bargaining power of the trade union in the coal mines is greater than it has been for a considerable amount of time.

I come back to the attractive proposition that I was beginning to outline. I apologise that I seemed to give the impression that there was no county scheme in South Wales. My point is that hitherto in all the areas of the coalfields without exception retired and redundant miners have received free coal. Part of this money could be used by the National Coal Board to provide free coal to miners in those categories for the rest of their lives. I feel that this is a most attractive proposition which we ought to have considered before.

Since we do not accept the ideology of hiving off activities and accruing money in that way, we did not feel inclined to put down Amendments on the use of such money by the Coal Board for subsequent use by the miners themselves. But since there was before the House an Amendment put down by an hon. Member on the Conservative benches, I took the advantage to make suggestions as to ways in which the money could be utilised. The money accruing could thereby be used for the benefit of the miners, retired mineworkers and wives and widows.

Mr. Ridley

Perhaps it would be convenient if I were to say a few words about this Amendment. I say straight away to the hon. Member for Bolsover (Mr. Skinner) that it would be improper to use capital receipts for income purposes in the way he has been suggesting. Any suggestion of that sort would be totally wrong since the only way these capital moneys could be dealt with would be by putting them to capital account or spending them on capital projects.

My hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) is owed a full answer. I am sorry that he is not present to hear it, but I would not like that to prevent me from trying to answer his questions so that he will be able to see them on the record. There were three questions: first, what would happen to the moneys that were received if any activity was sold off; secondly, how they will be accounted for; and thirdly, what is the tax position of such capital moneys if they are received. I will try to deal with each question.

There is in Section 29 of the Coal Industry Nationalisation Act, 1946, power to establish a reserve fund, and that fund is established. The moneys would be paid into that reserve fund. The moneys would, of course, be paid into the current banking account of the National Coal Board but they would be credited to the reserve fund. They could, from there, be used for any proper capital purposes, such as further investment in new investment projects, reducing any accumulated capital deficit or repaying loans from the Government if the Coal Board so chose.

The Board would be free to decide in which way it wanted to apply those moneys. They would remain the possession of the Coal Board. My hon. Friend was quite wrong in suggesting that, in some way, they would find their way automatically into the Consolidated Fund. They would do so only if the Coal Board chose to pay them there. I should add that my right hon. Friend the Secretary of State has power under Section 29 (2) (b) of the 1946 Act to give the Board directions, with the approval of the Treasury but not with the negative procedure, that the sums in the fund should be applied in certain ways.

Mr. G. Elfed Davies

Over the years, the Coal Board will have invested the money in different subsidiaries, including the sort of things we have been talking about which might be sold off, and the general result of this has been to determine the level of wages paid to miners. Because the Board has spent a terrific amount of money in certain projects, it has not been left with enough money to pay high wages. Is the Under-Secretary suggesting that if those projects are sold back and money is received for them, it cannot be used to pay good wages in the future?

Mr. Ridley

I confess that an accumulated deficit could be arrived at by paying higher wages and, therefore, causing a greater deficit. The deficit in those circumstances becomes a capital liability. To be frank with the House, it would be possible to apply capital sums to reducing a deficit, because they become capital losses. If, however, the sums were paid out directly in bonus, wages or concessionary coal, I do not think that they would be passed by the accountant who looked at the Board's accounts.

Mr. G. Elfed Davies

I am still not happy. Over the years, the wages and conditions of miners have been determined by the overall position of the Board. The purchase of different parts or subsidiaries over the years has meant that the Board has had less money to pay out in wages. Is the hon. Gentleman suggesting that if those activities are now turned over and a profit is made, it cannot be used to improve the wages or conditions of men employed in the industry? May I be given a clear answer?

12.15 a.m.

Mr. Ridley

Yes, I am suggesting that, and it is quite wrong to suggest that money which has been used by the Coal Board for investment, either in subsidiaries or in its mainstream activities, has in some way reduced the stock of money available to the Coal Board to pay wages. It must be quite clear to the House that investment monies are accounted for separately and come straight from the Government, and it would be quite wrong for investment monies to be used for revenue purposes. The difference is perfectly well-known and clear between capital and revenue moneys. So it would be totally wrong, either for new capital investment to be made at the expense of wages, or for capital receipts from sales to be applied to wages. There would be no question of that being allowed in the way I have described.

Mr. Kinnock

The hon. Gentleman obviously has great experience—and I credit him with that—in matters financial. He has just put the point that it would be quite wrong to make a "mix" between the investment responsibility of any concern and the responsibility to meet wages. But is it not the case that quite often when people—especially from his side of the House—are commenting on the current wage inflation and the problem of paying higher wages, they refer to the fact that one of the reasons why we have a comparatively low investment record in this country is because of the employers having had to pay higher wages? How does the hon. Gentleman explain that apparent paradox?

Mr. Ridley

I am talking about accounting for the sums under this Bill. It may well be that a trades union feels that there is a certain amount of money somewhere in the business and succeeds in increasing the wages, and the only way the company can manage to pay those increased wages is at the expense of its profits and, therefore, its ability to invest. This is very common. But what I am saying in this instance is that if monies are paid into the capital account, they cannot be used directly for financing further wage increases. This is an accounting point and not an economic point, and the hon. Gentleman is mixing the two. I wish it were true that the accounting procedures applied in real life economics, and this is one of the reasons why our wage inflation continues.

The second question I must deal with is the accounting procedures, and how the House will know what is happening to any of these monies. Again, under Section 31 of the 1946 Act, as amended by Clause 8 of this Bill, the Secretary of State is empowered to specify the form of the accounts. A direction issued in 1968 already requires the Board to provide in respect of the reserve fund: first, the balance at the beginning of the year; secondly, any amounts transferred into or out of the fund during the year; and, thirdly, the investment or employment of the fund at the end of the year. So provisions for accounting for this money are already in existence and can be strengthened under Clause 8.

Thirdly, I was asked about the liability for taxation. It is of course absolutely true that the Board is subject to capital gains tax legislation, just as any other enterprise or individual would be. If an activity which might have been bought for £100,000 is sold for £200,000, then 30 per cent. of that gain of £100,000 will accrue in capital gains to the Exchequer, unless sales had been made which caused losses of a similar or greater amount, in which case the losses would cancel the gain. So I can assure my hon. Friend that there is the reserve fund already in existence which he seeks; there is no doubt at all about the monies belonging to the Coal Board and not to the Government; and I have explained exactly how the acounting for them will take place and how they will be subjected to tax treatment. In the light of what I have said, I feel there is no need for this Amendment to be pressed. I hope the House will accent that all the fears which have been expressed on this point are groundless.

Mr. Swain

I was rather surprised when the Under-Secretary intervened. He saw that several speakers were standing. and if he had waited a little he could have answered several questions at the same time. I am sorry that the hon. Member for Sudbury and Woodbridge (Mr. Stainton) left in rather a huff. If I moved an Amendment and some hon. Gentleman opposite saw its advantages and spoke in support and explained why he supported it, as my hon. Friend the Member for Bolsover (Mr. Skinner) did so eloquently, I should be very pleased.

It rather proves beyond doubt that the hon. Member for Sudbury and Woodbridge moved his Amendment as a talking point and was not prepared to support it to the limit. This was fairly obvious to me. I am sorry to say this in the hon. Gentleman's absence. The hon. Gentleman said that he was tired. We are all tired. Some of us—I do not include Ministers—are human. We all get tired, especially when we have been here until half past three yesterday morning.

I should like to take un one point mentioned by the hon. Member for Sudbury and Woodbridge on which he was supported by the Minister. The hon. Gentleman said that if something cost £100,000 and it was sold for £200,000 there was a profit. I should like to illustrate what happened with the hiving off of Stavely Holdings which was nationalised in 1949. Compensation of £8¾ millions was paid to the Stavely company when it was nationalised. In 1961 an Order was laid in this House which resulted in Stavely Holdings being resold for £6 million after about £4½ million of the taxpayers' money had been ploughed into the company to modernise it. That is the philosophy of the Tory Government. Hon. Gentleman talk about £100,000 and £200,000, but they want to start reversing it and say, "£200,000, and we will flog it for £100,000 to our friends"—the vultures. This is what they mean when they talk about hiving off.

Experience has proved beyond doubt that any compensation which they pay will be far greater than the money which the vultures will pay them in return for their profitable industries on which all the research has been done arid the return on capital is beginning to come in. The Minister will sit there, as smug as a bug in a rug and, over a glass of port, will say: "Come on, friends, let us dispose of these few assets. Come on, you vultures, let us have you."

I should like to know what section of the 1946 Act the Minister prays in aid when he speaks about the accountability of the Coal Board. The hon. Gentleman has categorically stated what the moneys which would accrue during the hiving off process could be used for. We appreciate that under the Local Government Act money accrued from sales for capital investment can he spent only for certain things within the ambit of the local authority. What does the Minister mean when he says that the accountant would not pass the points made by my hon. Friend the Member for Bolsover?

I should like to know in what section of what Act the Coal Board would be inhibited from disposing of money which it accrued during the hiving off process to whatever source it desired. For example, the £24 million limit in the Money Resolution, to cover the social costs, which has to last three years, could, in the event of a catastrophe—which seems to overcome us every day under this Government—be expended in two years. The Coal Board then has to make a two-thirds contribution to the total social costs in the third year. Where would the money come from? Would this be classed as capital expenditure or would it have to borrow money if it had nothing in the kitty to fulfil its obligations under the social Clauses? Or would the Minister amend the Regulations to lower the benefits payable under the social Clauses? There are several alternatives and I should like to hear the answers.

I wish that the Amendment could be accepted. The Coal Board should have this reserve fund and should be allowed to dispose of it as it sees fit. Since 1947, we in the mining industry have been inhibited every time that we have met at Hobart House on the National Joint Negotiating Committee to discuss wages. We have always been categorically and rightly told by the Chairman of the Board, "There is a limit. That limit is at your disposal and you must help us to share it out". That limit has never come up to the expectation or the demands of the N.U.M.

Therefore. there was common sense in the speech of my hon. Friend the Member for Bolsover. After all, sacrifices have had to be made around the joint national negotiating table because the Coal Board has been investing in these enterprises—and rightly so. If the Board is prevented from disposing of its fund acquired through the hiving-off process, why has it been allowed to use the profits from these joint enterprices to help to pay the wage increases negotiated this year? Where is the subtle difference between the two?

Mr. Peter Rees

Would the hon. Gentleman give way?

Mr. Swain

Someone's woken up.

Mr. Rees

The hon. Gentleman's speech has been a little soporific. I should have thought that there was a fundamental difference between revenue and capital profits.

Mr. Swain

I appreciate that. In my pocket, I have always had no revenue and lots of capital losses. I understand not the subtle difference but the major difference between revenue and capital. For 23 years, while the hon. Member was sitting on his backside studying, I was doing my stint in the pit and on a local authority. I understand the difference between capital and revenue—[An HON. MEMBER: "Write your memoirs."] The hon. Member's memoirs could be written in the stop press of The Times.

What is the difference between spending profits from joint enterprises in boosting wages which are properly and constitutionally negotiated around the table and spending the capital assets acquired through disposal of sections of the industry? I do not think that the Minister can give me these answers. He smoothed over it very nicely. He was like a man who has just had his teeth out, eating jelly with a knife and fork. But he did not get any down. He did not prove anything.

I should like to enunciate further on the subtle differences between the two, and see whether he can satisfy us. I do not think he can. I give credit to the hon. Member for Sudbury and Woodbridge who left the Chamber just now. If I knew that several bobbies were after me with a gun, I would have left the Chamber. I would have gone out faster than the hon. Gentleman.

I hope that the Minister will be scrupulously honest over this. It is about time that we had some honesty of purpose from him. I heard every speech made in Committee and every Ministerial reply. Had the Minister switched on a tape recording containing one of his speeches and then gone off to the Savoy Hotel, we would have got just as much commonsense from the tape as we got from him personally. I hope that tonight he will be more forthcoming and explain how this exercise can be done and why he has made his statement tonight without giving a concise explanation.

12.30 a.m.

Mr. Golding

My hon. Friend the Member for Derbyshire, North-East (Mr. Swain) put his finger on an important and topical subject. There is no clear distinction between capital and income account when one considers the nationalised industries because of the pay set-up.

For example, postmen, but more particularly telephonists, are being told that they cannot have more than 8 per cent. or 9 per cent. because they are not exceeding their targets, and we are told that targets for the nationalised industries are fixed to enable a degree of self-financing to take place. In other words the employers tell the trade unions, "You cannot have more than a certain level of pay because some money must be held back to buy new equipment and for other investment purposes".

My hon. Friends are arguing that if, in the coal industry, past investments are to be hived off—remembering that the workers in the industry have had to accept lower rates of pay because of the need to make these investments—the workers are entitled to benefit from the sale of those investments. I remind my hon. Friends that while, during these debates, many golden eggs have been laid for our examination, we must be careful not to allow the Government to kill the goose.

Mr. Skinner

I agree with my hon. Friend. I pointed out, however, that the additional money raised by this hiving off process might be used to pay management consultants high fees to hive off further activities.

Mr. Golding

That is an important point. We must concentrate on the defence, because the mining industry in particular depends on diversification. If parts are hived off the miners will be worse off.

It is tragic that the hon. Member for Sudbury and Woodbridge (Mr. Stainton) left in a huff, because he did not realise that this was the issue. The issue for us is not only the stealing of public money, though that is an important moral issue, but the fact that by weakening the industry the Government weaken the miners' situation. Hiving off the profitable parts of an nationalised industries leaves the work force worse off.

It is reasonable for anyone representing labour rather than capital to argue that the money must be used in the interests of labour, though there might be some argument, as there is in a productivity deal, as to how it is split.

Mr. Ridley

Capital moneys must be paid back in the end. How would the hon. Gentleman propose to pay them back if he has used them meanwhile to pay higher wages?

Mr. Golding

They do not always have to be paid back. Investment in each nationalised industry comes from three sources. I hesitate to give a Minister a lecture at this time of night on something he should well know. One source is money borrowed from the Treasury, on which interest is paid. The second is self-financing from depreciation, obtained directly from revenue. The third is the profit of the industry.

I make no apology for talking about the telephone service as an example, because I know the three elements there rather better than in the mining industry. In the telephone service substantial profits—

Mr Deputy Speaker

Order. The hon. Gentleman should not stretch too far his examples from other industries.

Mr. Golding

Internal self-financing is itself a function of wages. The lower the wages, the more self-financing.

If the Minister denies that and will go to other Ministers and tell them that there is no relationship between wages and self-financing, I for one will be very pleased; but there is, so we are told.

In this instance, it is important that some of the benefits from the equipment obtained from self-financing should accrue to the work people, and this is what my hon. Friends have been arguing.

Question put, That the Amendment be made:—

The House proceeded to a Division, but no Member being willing to act as Teller for the Ayes, Mr. DEPUTY SPEAKER declared that the Noes had it.

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