§ The Chairman
It will be convenient to take at the same time Amendment No. 5, in page 3, line 9, leave out '100' and insert '95'.
§ Mr. Concannon
Some of my colleagues in the National Union of Mineworkers and elsewhere will think me slightly mad in proposing these Amendments. Possibly my union or the Coal Board will garrot me or shoot me on Monday morning if I am wrong.
The Clause proposes to increase the limit on the accumulated deficit of the National Coal Board to £75 million. Amendment No. 4 proposes to reduce the figure to £70 million. Amendment No. 5 proposes to reduce the amount of £100 million mentioned in subsection (2) to £95 million. I was advised that, in order to get the Amendments on the Notice Paper, I had to propose figures which were less than those in the Bill.
It will not come as a surprise to some of my hon. Friends that I should want to reduce the sums involved. I have had some misgivings, to say the least, about the Clause and, in particular, the Government's thinking about the accumulated deficit of the National Coal Board. I have a basic distrust of Tory Governments. I hope that I am proved wrong. If I am wrong, the Minister will have time to put me right. The Board's accumulated deficit can have effects on the financial considerations of the Board, on mineworkers' wages and on the political implications for the Board.
§ Mr. Concannon
I am glad that the hon. Gentleman agrees. The accumulated deficit of the Coal Board at the end of 1970 was £35 million. I am wondering why the Minister wishes to increase the limit to £75 million, with an optional figure of £100 million. Is the purpose to allow the Board to go further into debt so that the Government can force certain policies on it?
During and after the election campaign the Prime Minister said that he proposed to lean on the public industries and would not allow them to increase the price of their products to the consumer. He also said that he would reduce prices "at a stroke". He has failed considerably, but he has refused to allow the Coal Board to increase the price of coal to industry by the amount that it wished to increase it. One of the possible effects of this on the Board is to put it further into debt. Another possible effect is that if the Board does not receive sufficient money for the products of the industry, mineworkers' wages will be depressed.
Next year is what we term parity year in the mining industry and the wages structures in the industry will be brought together. Wages everywhere in the industry will be brought up to the level of those in the Nottingham area. This will involve fairly large wage increases for miners in certain parts of the country. In my area, they will have to mark time or to get cost-of-living increases. There has been a drop in miners' take-home pay in Nottinghamshire in the last five years I hope that nobody expects miners' wages in Nottinghamshire to stand still.
The proposed increase in the limit for the Board's accumulated deficit is only a short-term expedient which will not settle the long-term problems of the industry. But the limit will have to be increased to ensure that there is fair play for the workers in the industry. Until the Government wipe the slate clean and start again, or until we have a Government who are prepared to be honest and to say that it is no longer possible to keep prices down and pay a fair wage comparable with wages paid in the rest of industry, the Government must pay a subsidy for coal instead of hiding behind accumulated deficits and picking up the 901 hot potato when the deficit reaches large proportions.
The Minister gave an assurance in Committee about Clause 7. Although he said that there was no link between the need for Clause 3 and later provisions, he went on to say that if any misfortune befell later Clauses it would still be necessary to have Clause 3.
I wished to put on record my fears and doubts about the accumulated deficit. What the Government propose is the wrong way to tackle the problem. I know that it gives greater flexibility by one year or possibly longer, but what happens simply is that the accumulated deficit limit is continually increased, and we have to wait for the Government to say, "We will wipe the slate clean and start again". My hon. Friend the Member for Don Valley (Mr. Kelley) said that he would sooner see adopted the system which is adopted in other countries of paying a subsidy per ton of coal rather than Governments' hiding behind accumulated deficits. I see something sinister in increasing the limit of the deficit.
The hon. Member for Worcestershire, South (Sir G. Nabarro) talked about the Coal Board receiving £20 or £25 per ton for its coal at the end of 1970. In fact, it was receiving 105s. 2d. per ton, which is nowhere near the figure of £20 or £25 which the hon. Gentleman gave.
I am open to persuasion by the Minister, but I do not give him much of a chance, This matter is one of my hobby horses. I hope that the Minister will explain why the Government wish to increase the limit of the Board's accumulated deficit.
§ Sir G. Nabarro
I am not very impressed by the speech of the hon. Member for Mansfield (Mr. Concannon). Conservative Governments should resist at all times the process which the hon. Gentleman describes as wiping the slate clean. The Labour Government wrote off more than £400 million of accumulated Coal Board losses. The whole of that huge burden had to be borne by the taxpayer.
The present situation is that the Coal Board is losing money. I ask my hon. Friend the Minister: is there any danger in the foreseeable future that the Coal Board will trade at a profit? Is there 902 any danger of the burden being lifted off the taxpayers' shoulders?
In order that hon. Members opposite may judge the position for themselves, let them refer to the last published Report and Accounts 1969–70 of the National Coal Board, Volume II, Accounts and Statistical Tables, page 46, which records that in the year 1968 to 1969 the Coal Board lost—I repeat, lost—£8.881 million. [Interruption.] Hon. Members should not shout from a sedentary position while I am quoting. When I have completed the quotation I will give way.
§ Sir G. Nabarro
I hope that you will reprove hon. Members, Mr. Speaker, for referring to me as "You" and you as me, which is quite wong. I shall repeat what I said and at the end of the quotation I will give way to the hon. Gentleman. The quotation is that the Coal Board lost, in the year 1968 to 1969, £8.881 million. In the year 1969 to 1970 the Coal Board lost—I repeat, lost—£26.280 million. Then the Board, with its characteristic prescience or optimism—dependent on which side of the House one sits—reported in the Report and Accounts 1969–70, page 11, as follows:These factors, combined with general inflation, obliged the Board, with the consent of the Government, to raise their prices. The increases came too late in the year, however, to eliminate earlier losses. The Board made an operating profit of £8.8 million but, after making a net charge for interest of £35.1 million (including £37.0 million paid to the Government), there was a deficit of £26.3 million.I hope that I state the position scrupulously correctly and utterly fairly: that was after interest charges. But, as the Government furnish the capital for the National Coal Board, it is proper that the Board should pay an appropriate rate of interest for their borrowings. No industry, whether publicly or privately owned, should expect to obtain its capital without servicing the capital by way of interest or dividends.
§ Sir G. Nabarro
I cannot talk about Rolls-Royce now, but I will happily talk about Rolls-Royce on appropriate occasions. When the hon. Member for Mansfield asked why the Minister wanted 903 to increase the limit of the deficiency of the Board, he was being a trifle naive. He must surely know that the Board is trading at a loss, will continue to trade at a loss, has not, since the end of the last chargeable accounting period, namely, 28th March 1970, been trading at a profit, and will turn in a loss for the year 1970–71, as we shall see when the acounts are published in a few months' time.
My question to the Minister on this important Amendment is, having regard to the prescience and the optimism of the National Coal Board, which I have just quoted in their last Report and Accounts, would the Minister not tell us, in respect of the first 11 months of the Coal Board's activities in the current chargeable accounting period—that is, the present financial year—whether its prescience or optimism—call it what one will—is being justified, indeed, whether the Board is now trading at a profit, or whether the dismal losses of the last few years are being continued this year and are being projected into the future.
I believe that the Board is continuing to lose money on a large scale. The answer to the hon. Member for Mansfield is that the Board must have an increase in its cumulative deficit in order to accommodate the continuing losses of this nationalised industry. [Interruption.] It is interesting to see the hon. Member for Liverpool, Walton, representing the National Union of Mineworkers, present for this debate. Is not he an ex-miner? I am sorry that the hon. Member for Derbyshire, North-East (Mr. Swain) did not contradict me.
Would the Minister therefore confirm my belief that the Board is continuing to lose money heavily and that there is no danger in the early or foreseeable future of the Board trading at a profit?
§ Mr. Eric Ogden (Liverpool, West Derby)
May I say to the hon. Member for Worcestershire, South (Sir G. Nabarro) through you, Mr. Speaker, that my hon. Friends know from whence I came and which constituency I represent, and what my antecedents were before I came to the House. I am sorry that the ex-hon. Member for Kidderminster, now the hon. Member for Worcestershire, South has not got his facts right. As he is insisting that the Coal Board will produce 904 a loss this year, there is another alternative. Would the hon. Gentleman support an increase in the price of coal?
§ Sir G. Nabarro
The proper alternative is for the Board to increase efficiency and thereby to reduce the price of its products. If it reduced the price of its products it would be more competitive with oil, would sell more coal, and would relieve the taxpayers of their appalling burden in carrying hundreds of millions of pounds worth of coal losses since the industry was nationalised.
Mr. Mark Hughes
Would the hon. Gentleman not accept that the burden which the taxpayer had to pay last year, on the figures which he has quoted, was £26 million on deficit? Would he not also accept that the taxpayer received from the Coal Board £37 million in interest charges? Where did the taxpayers lose on that deal?
§ Sir G. Nabarro
The hon. Member for Durham (Mr. Mark Hughes) is simple indeed if he believes that the taxpayers of this country can provide the capital sinews of a nationalised industry without interest payments. His Government, between 1964 and 1970—he ought to know this perfectly well—legislated for a reasonable and rational return in the form of interest on loans to the nationalised industries. The Labour Government of earlier years have never suggested that capital moneys should be supplied to nationalised industries without interest payments. The payment of interest by the Coal Board on behalf of taxpayers is very proper and adequate. Indeed, if that interest were not paid, it would amount to a direct subsidy on coal, which is to be deprecated in all circumstances. We are dealing here with continuing losses by the Board and the amount cumulatively to which the deficit ought to be limited.
I hope that my hon. Friend will hold out a modicum of hope for the taxpayers that the inordinate level of losses in recent years is to be remedied by competent business management from his Ministry.
§ Mr. Swain
It gives me pleasure to follow the hon. Member for Worcestershire, South (Sir G. Nabarro), though if I were to follow him along all the paths which he took on this narrowly drawn Amendment my shoe soles would be so 905 thin that if I struck a match on them I would rip my stockings. He has been all over Great Britain on this narrowly drawn Amendment. I shall remind him of a few words that he said sourly at the beginning of the debate, when he spoke about the cost of coal.
My hon. Friend the Member for Mansfield (Mr. Concannon) did not touch on the question why the Amendment has been tabled and why the Minister has increased the Board's borrowing powers. My hon. Friend, quite briefly and properly, touched on the fundamental importance of the relationships between the financial implications of Clause 3 and those of Clause 7. Without being out of order, we must relate to the Board's increased borrowing powers the losses which will accrue to the Board of a period of three years as a result of the measures which will ultimately be taken under Clause 7.
We must assume that the figures presented by the Minister up to date are accurate. No one has yet been able to dispute them; and I shall not attempt to do so. The complications of the financial structure or losses arising on Clause 7 fairly reasonably measure up to the Board's increased borrowing powers. Every penny of added borrowing power, assuming that the Board must borrow money and spend it, adds a further burden to each ton of coal produced and consequently, it will ultimately add a further burden to the price of coal.
The hon. Member for Worcestershire, South should at least be consistent. As I said in Committee, the hon. Gentleman is consistently inconsistent, because he contradicts himself in each speech he makes. On the one hand, the hon. Gentleman defends his right to buy cheap coal; and, on the other hand, he attacks the Board for being forced into a position by the Government where it must increase the price of coal. If the Amendment were accepted, it would go some way towards rectifying the relationship between Clauses 3 and 7.
The hon. Member for Worcestershire, South spoke of the £415 million which was written off by my right hon. Friends in November, 1965. The hon. Gentleman did not mention that the Bill which was then introduced was designed to accelerate the closure of mines because of the situation 906 then prevailing. Several of my hon. Friends and I disagreed with the principle behind the 1965 Measure. The writing off of that amount of capital was designed to facilitate the early closure of mines.
Nor did the hon. Member for Worcestershire, South mention that the £415 million which was written off then was only a fraction of the capital debt which was forced upon the Board because of the Tory Government's measures under the "Plan for Coal" in 1955, which envisaged that by 1975 Britain would need 270 million tons of indigenous fuel. The Board had to undertake vast capital expenditure so as to be in a position to meet these demands. By 1965 that whole structure had collapsed because of the Tory Government's bad economic policies. The only mistake made in 1965 was in not writing off £715 million rather than £415 million. If that had been done, we should not have been in this unfortunate position.
The hon. Member for Worcestershire, South also said that the Board should increase its efficiency. In a period of 10 years the Board has increased its production by 66 per cent., a percentage which has not been achieved by any industry, either traditional or modern, since the War. The industry proudly claimed that it is efficient. As proof of this I point to the contrast between the state of the industry today, with all its modern equipment and modern techniques and its happy labour relations, though sometimes it has bad management, and the state of the industry when it was taken over in 1947, when it was bankrupt.
The hon. Member for Worcestershire, South often says that Lord Robens is the best Chairman the Board has ever had. This is another of the hon. Gentleman's inconsistencies. He puts a crown on Robens's head one day and knocks him down with a crowbar the next. This is the pattern of the hon. Gentleman's speeches. No doubt he will be going on television or radio tonight to tell the country what a magnificent job he has done for the taxpayer. The hon. Gentleman will not be sitting here to take part in the debate on Third Reading. He will be bobbing off at 10 o'clock. He will do his shouting before 10 o'clock and he will then sneak out of here with his whiskers dragging on the floor. We know the hon. 907 Gentleman and the rumbustious way in which he addresses the House. We are aware of the idiotic content of some of his statements.
The hon. Gentleman's arguments are completely irrelevant to modern mining conditions. I should like to see him crawling about in a two-foot seam. He would have his moustache fast in his knee pads at the end of the shift.
The Amendment so ably moved by my hon. Friend the Member for Mansfield is one of principle. It is in the interests of the taxpayer and of the consumers in the constituencies of Worcestershire, South and Derbyshire, North-East. It is designed to keep the price of coal down. I hope that the Minister will consider the Amendment with the seriousness which my hon. Friend applied to the question when he moved the Amendment.
It is in the interests of taxpayers and coal consumers that the Amendment should be sympathetically considered and that this subject be ventilated so that taxpayers and coal consumers know what effect the increase in the borrowing powers inflicted on the Board to compensate the Government for the money they will steal from the Board by means of later Clauses will have on the economy of this great industry.
§ Mr. Golding
I should have liked to have spent longer dealing with this subject, but it is important that we move on to other parts of the Bill. I will content myself with saying this.
I put my name to the Amendment because I am very concerned about the Government's general policy towards the nationalised industries as regards pricing and pay. Restrictions on prices will have an impact on pay.
It is one of the Government's unfair policies to discriminate against prices in the public sector. This will have its effect on pay. This could be accepted if two things followed. If there were restrictions on the prices of the commodities that miners have to buy, we could accept some restrictions on their own potential for bargaining. But restrictions on other prices are not being applied. What will happen is that in a very short time the miner will come to be in a very poor bargaining position.
908 Secondly, from the point of view of the industry itself it would be reasonable to control prices if outside firms and concerns had their prices to the Board pegged. If the Minister were to come to us and say, "In return for pegging the price of coal we will peg or limit the charges that can be made by equipment manufacturers contractors and transporters", then it would be reasonable. Here the unfairness of the situation is that the National Coal Board is being discriminated against in that its costs are going up from outside while it, together with other sectors of public industry, is unable to pass on any of those costs. The financial structure of the industry therefore must suffer, but more important for many of us on this side, the miners themselves will have to suffer the consequences.
§ Mr. Kelley
First, I would like to apologise to the hon. Member for Worcestershire, South (Sir G. Nabarro), who has just left his seat, for having acquired some of the habits for which he is very well known, among them making rumbling noises from a sedentary position. I want to congratulate my hon. Friend the Member for Mansfield (Mr. Concannon) on having put down this Amendment. In this inflationary situation £5 million is not a great deal. The purpose of the Amendment is to draw attention to the financial situation in which the industry is placed.
In a debate in this House my right hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever) gave an undertaking that the whole financial structure of the industry would be re-examined in the light of present-day circumstances and that historic values would be reviewed in real terms. The writing-off of £415 million, an exercise which has been referred to by my hon. Friend the Member for Derbyshire, North-East (Mr. Swain), was done simply to try to bring into the affairs of the National Coal Board the sense of loss that it had suffered as a result of bad planning, bad forecasting, unscientific approaches to the question of fuel requirements and the rest, whereby large capital expenditure was undertaken by the Board for something found not to be required. For that reason I would like the Minister in his reply to make some reference to the question of write-off. The hon. Member for Worcestershire, South referred to the fact that there had 909 been losses and quoted figures like £8½ million. It has been mentioned that these are simply a shortfall in interest payments. They are not actual losses at all. Let us examine what might have happened to the taxpayers' money. It might have gone into Upper Clyde Shipbuilders or Rolls-Royce and we might have found ourselves deeper in the mire as far as the RB211 is concerned.
§ Mr. Kelley
Yes, and Concorde; so that when the hon. Gentleman talks about a loss of about £8½ million it might seem to the outside public who are not informed—and the hon. Gentleman has no intention of trying to inform them—that there has been a wicked waste of public money in the production of coal. One thing to which he does not refer, and I have not heard any hon. Member on the other side refer to this, is the enormous losses which the National Coal Board was forced to accept and to suffer by Government policy in previous years when the price of coal could have been a lot more than it was being sold at.
I want to refer to some of the subsidies which are paid in coal-producing countries on the Continent of Europe. There are two elements, the social cost and the actual economic cost of producing coal which in some countries amounts to more than £5 per ton, much more than anything in this country. The hon. Member for Bedford (Mr. Skeet) said during the Committee stage that one country was making a profit, South Africa. What an analogy to make with the British coal industry trying to pay reasonable wages and maintain reasonable communities in and around the pits compared with South Africa where there is an abundance of cheap labour controlled by all kinds of quasi-military means!
§ 6.45 p.m.
§ Mr. Kelley
What a ridiculous analogy to draw from the proud history of our coal industry and the immense progress made in the colliery areas of this country!
§ Mr. Edwin Wainwright
Would my hon. Friend say something about Australia and the system of mining there? Is not it true that much of it is open- 910 cast mining and that even in this country we made a profit out of opencast mining?
§ Mr. Kelley
It is quite true that opencast mining makes a considerable profit because the coal is readily accessible.
§ Mr. Kelley
The reason we have to go underground for our coal is because it was put there by the natural elements and it has a certain quality which has made British coal famous throughout the world. On the Continent of Europe they would like to buy some of our coal at this moment because they have a deficiency of their home output which is not meeting the requirements of their Industrial demands; but we have not got it to sell because of lack of foresight not only on the part of the Government which preceded the present Administration but because of lack of foresight of successive Governments over the past 25 years.
I would suggest to the hon. Member for Worcestershire, South that if he believes that increased efficiency alone can reduce the price of coal then he should be a little more forthcoming in his advice. There is a job going in July—Chairman of the National Coal Board—and if he has all this abundance of knowledge of how the price of coal to the consumer in his constituency, and a few in mine, can be reduced, I suggest that he should present himself as a possible candidate for that high office. I hope he gets it.
§ Mr. Michael Foot
I hope that the last proposition of my hon. Friend the Member for Don Valley (Mr. Kelley) will be treated with the utmost reserve by the Government. We know there is no limit to be placed on their folly, but we hope this suggestion will be treated with some care. We have had discussions on this Clause on the Bill on previous occasions and it is one of the most important in the whole Bill. My hon. Friend the Member for Mansfield (Mr. Concannon) has raised by this Amendment a matter of the utmost importance for the conduct of the industry as a whole. But I am going to resist the temptation to engage in the general debate on the matter for a variety 911 of reasons into which I will not enter, partly because we have demolished the hon. Member for Worcestershire, South (Sir G. Nabarro) so effectively on this matter on so many occasions that it would be tedious repetition to conduct the same operation again.
I understand the reasons why my hon. Friends have presented this Amendment and I share the deep suspicion of my hon. Friend the Member for Mansfield about any proposition that this Government may bring forward. None the less, I hope the Government will not accept the Amendment my hon. Friends have proposed because, particularly if we have to deal with such a Government as this, I am in favour of as much elbow room for the National Coal Board as possible. Therefore, I hope there will be no reduction in the proposal for the amount the Board is to be allowed to borrow under the Bill. Many other industries borrow money extensively, and certainly at a time when the Government are subjecting so many other publicly-owned industries to difficulties, limitations, liquidity squeezes and all these other various devices they are employing I would certainly be strongly opposed to any reduction in the amount that the National Coal Board is able to borrow.
Having said that, I hope that when we are able to discuss these matters further we may be able to consider the proposition which the National Union of Mineworkers rightly continues to press, namely, the need for a further consideration of a fresh capital reconstruction of the industry. The N.U.M. still retains that proposal among the foremost of its demands and it ought to be considered.
This Clause means that the Board is able to continue to operate and one of the reasons why we on this side of the House wish to continue with the Bill, even though it contains the offensive Clauses to which we will come later, is because it also contains Clause 3. I will not repeat the arguments we have used before against the hon. Member for Worcestershire, South (Sir G. Nabarro). I repudiate the accusations he makes against the Coal Board. We have repudiated them in detail on other occasions and will no doubt have an opportunity of doing so again when we come to Third Reading tonight. For 912 the moment I hope that my hon. Friend, after having heard the Minister's comments, will be willing to withdraw his Amendment, because if it were to be accepted by the Government we would be imposing a limitation on the Board which we are not eager to see.
§ Sir J. Eden
These are extremely interesting Amendments. I can assure the hon. Member for Mansfield (Mr. Concannon) that there is no connection between this Clause and later Clauses in the Bill. I am sure that the House will understand that I would much rather not have had to include a Clause of this kind in the Bill. It is no joy to me that the circumstances of the National Coal Board's finances have made it necessary for me to safeguard the statutory position and to bring in such a Clause.
It was because it looked very much as though the statutory deficit limit of £50 million would have been exceeded by the end of the financial year that this Clause was introduced. Obviously some provision had to be made for that. The worsening position of the National Coal Board's finances was due to a number of factors, not least of which, in the latter days, was the impact of the unofficial strikes which had worsened the trading position and considerably added to its costs. Now it looks as though there is a marginally improved situation and I am delighted to be able to say that to the House.
I hope we will not find by the end of the financial year that the previously-imposed limit will have been reached. It is difficult to say what the position will be in a year ahead and I cannot give my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) an assurance that the danger to which he referred is not likely to arise. It is nevertheless the hope of every hon Member, I know, that the Coal Board, during the course of the coming year, should be increasingly able to improve its financial position and reach a state when it will be trading at a profit.
§ Sir G. Nabarro
As my hon. Friend knows, I am passionately devoted to the cause of the Coal Board trading profitably—whatever sort of aberration that may be. Would he address himself to the question I put: Has the Coal Board 913 traded profitably this year, that is the year to 31st March, 1971? That is what I want to know before we have foreceasts for 1971–72.
§ Sir J. Eden
The year is not completely over, but the Coal Board position so far is that it has not succeeded in producing a profit for the year.
§ Sir J. Eden
Nonetheless there is some time left for the latest figures to come in and I hope that these will show that the situation has been transformed. Hon. Members know the position. There have been a number of price increase proposals—there is one before us now—which will have an effect upon the Board's profitability. There are a number of considerations bearing on this.
In the circumstances, with a steadily improving situation affecting the Coal Board's financial performance, as I hope will be the case, there seems to be strong reason for lowering the levels which I have prescribed in the Bill. There is a strong argument for accepting these Amendments but I can assure the hon. Gentleman that I understand his reasons for moving his Amendments in the way that he did. It has, as he said, given rise to an interesting debate, but I do not think it would be helpful to accept the Amendment in the form in which it has been presented and I would advise the hon. Gentleman to withdraw it.
§ Mr. G. Elfed Davies
It is natural when a Government formed of Members of the Party opposite brings forward a Clause of this kind in a Bill dealing with the nationalised industries, that there should be a great deal of suspicion about the ulterior motives. We are entitled to be suspicious because of some of the things in other Clauses. The Minister has given an assurance on Second Reading and in Committee that there is no link between the provisions of this Clause and the later Clauses, particularly Clauses 7 and 8. In accepting these assurances I warn the Minister that his subsequent attitude when and if this Bill becomes law, will be closely watched by those connected with the industry. If the assurances that he has given are in any way broken, by whatever means, he will 914 forfeit the right to be believed by people in the industry and in the House.
§ Mr. Concannon
Having had the Minister's assurances and knowing that he has taken the point about having a completely fresh look at the finances of the industry, promised by the last Administration, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.