§ Order for Second Reading read.
§ 7.0 p.m.
§ The Under-Secretary of State for the Environment (Mr. Michael Heseltine)
I beg to move, That the Bill be now read a Second time.
This Bill comes to us from another place, and it is needed to ensure the continued solvency of the Ironstone Restoration Fund, set up by the Mineral Workings Act, 1951. The Fund was established for two main purposes—first, to finance the reclamation of past dereliction, then covering about 2,500 acres of land caused by opencast iron ore extraction in the East Midlands and, secondly, to ensure that, in conjunction with planning control, future workings would be restored to a proper standard. The Fund has been financed by a levy on ironstone operators. That levy was 2¼ old pence per ton of ironstone worked by opencast methods.
Rather than convert the precise old pennies calculations into decimal coinage I shall be referring to old pence in all the figures that I give.
To this figure of 2¼ old pence the Exchequer added three farthings per ton, making 3 old pence in all. Normally the operator has been able to recover half the 2¼ old pence from the ironstone royalty owner, so that the owners themselves also contribute, although indirectly.
There is an exemption from the owner's share if the ironstone is owned by a charity or the land is subject to a full restoring lease. The resources collected in this way and accumulated in the Fund have been used in three main ways—first, the Fund has met the cost of restoring virtually the whole 2,500 acres of dereliction existing in 1950. There are only one or two small, isolated pockets of dereliction remaining. Virtually we have completed the initial job. The work has been done partly by local authorities and partly by the ironstone operators, and it has been financed by the Fund and approved by the Minister controlling it—now the Secretary of State for the 103 Environment. This work has been made possible by the existence of the Fund.
Secondly, the Fund has met part of the costs incurred by operators in complying with restoration requirements imposed on them since 1950 and conditions attached to planning permissions. These planning permissions call for the levelling of land and restoring of topsoil. The Act of 1951 entitled operators to receive from the Fund the approved cost of this mandatory work, in so far as it exceeded the so-called standard rate.
I ask the House to note the term "standard rate", because it is a term of art in the Act of 1951, and in the new Bill it is also paramount. I shall return to it later and explain its significance.
The third purpose for which revenue from the Fund has been used has been to level land and to put it back into good heart for agriculture or, where the alternative has been preferable, to use it for afforestation. For the purpose of bringing land back to fertility my right hon. Friend draws on the Fund to make grants to owners and occupiers of land which has already been levelled. These are the ways in which the restoration has been done up to date. Up to March 1971, about £250,000 had been spent out of the Fund on reclamation of derelict land worked before 1950. About £1,500,000 had been paid to operators for the cost of complying with restoration requirements in excess of the standard rate, and just over £500,000 has been paid to landowners and farmers for agricultural aftercare; and forestry and amenity work brought the total disbursement under the Fund to £2½ million.
The accounts of the Fund, which are laid before the House annually, show that at 31st March, 1970, there was a balance in hand of £444,000. Nevertheless, given the trends, which are totally predictable, insolvency of the Fund would, but for the measures proposed in the Bill, face those responsible for its administration. It does not require any great depth of understanding to realise why this insolvency has come about. The reasons are simple. Although the cost of restoration, like other things, has been increasing year by year, contributions to the Fund are still at the level fixed by the Act of 1951, which contained no provision enabling 104 the rate of levy—which was fixed over 20 years ago—to be altered. Nor was there any provision in the Act for the standard rate to be changed by any provision in the legislation.
The concept of the standard rate was that operators generally had some liability to restore land under their leases and should continue to bear, without assistance from the Fund, the cost of meeting these requirements, drawing upon the Fund only to the extent that planning conditions required them to restore to a higher standard than was generally called for in the leases. The Act of 1951 left the standard rate to be determined by Order. This took place in 1955, when a figure of £110 per acre was made the standard rate. There was no provision for changing this, once the £110 per acre had been fixed.
In 1955 the figure of £110 seemed adequate, and it reflected the average cost of restoring an acre of land in 1950 to the standard required by the leases at that time. Therefore, it is precisely 21 years out of date. Consequently, the ironstone operators have, as the years have passed, been bearing a decreasing proportion of the total restoration costs, while the share borne by the Fund has increased correspondingly. It is not very surprising that payments out of the Fund are overtaking income, and this trend not only exists but is now being accentuated, because, on the one hand, iron ore production is falling —which means that contributions are diminishing—and, on the other hand, the closure of quarries enables restoration to be speeded up, so that the time lag between receiving contributions for the ore extracted and paying for the restorating is shortening.
The Bill proposes measures to keep the Fund on a sound financial basis and so enable current restoration standards to be maintained. One objective has been to provide the flexibility that the Act of 1951 lacked, and so enable the Fund's stability to be maintained in the future by permitting any variation in contributions and in the standard rate that may subsequently prove necessary for that purpose to be made without further amending legislation.
Under Clause 1 my right hon. Friend will be required to prescribe by Order a new rate of contributions to be levied on ironstone operators in respect of ironstone extracted after 1st April, 1971.
105 Contributions at the new rate will first become due after 1st April, 1972, since the operator pays each April in respect of extractions in the preceding year. The Order must also prescribe a new reduced rate applicable to owners who are exempted from the owner's share of levy—charities and owners who have granted full restoring leases. The exemption originally provided for in the 1951 Act will be maintained. The Clause also empowers my right hon. Friend to vary the rates of contribution from time to time, as may be necessary, by making new Orders; so it will have this flexibility and updating process which was not part of the original provision.
Clause 2 deals with the owner's share of the contribution levied on the operator. Under the 1951 Act the owner pays half. Under this Clause my right hon. Friend will specify by Order what the owner's share of the new contributions will be. It is recognised—this is why we have put this provision into the legislation—that some of the original leases may leave very little profit margin from which the royalty owner could be expected to contribute more to the Fund, thus having to contribute more than he is drawing by way of royalties. For this reason the Clause is drawn so that the Order may prescribe different rates of owner's contribution according to the terms and the dates of the original leases under which the owners draw their royalties.
Perhaps I should explain that a good deal of what is in the first two Clauses is a re-presentation of the provisions in the 1951 Act and that the essence of the new matter lies simply in giving to my right hon. Friend a new power to vary from time to time the rate of levy on the operators and that part of the levy to be passed on by them to the royalty owners. In other words, the first two Clauses deal with the income side of the Fund.
Clause 3 will affect the outgoings of the Fund. It empowers my right hon. Friend to vary from time to time by order the standard rate which I defined earlier. This represents the restoration cost per acre which the operator has to meet from his own resources before drawing on the Fund. The intention is that the original standard rate of £110 per acre should be revised so as to reflect 106 the current cost of doing the work that used to cost £110 in 1950.
The first three Clauses are, therefore, complementary in enabling my right hon. Friend to see that the Fund's income and outgoings are such that it remains able to meet its obligations. But before he makes any order he will be obliged under Clause 4(1) to consult representatives of the ironstone operators and of those who have an interest in the worked land. Obviously this must include surface owners as well as the royalty owners where the two differ.
It may help the House if I explain that in practical terms "ironstone operators" today virtually means the British Steel Corporation, since, apart from one company producing pigment and working ironstone on a very small scale, production in the ironstone district by the private sector has in face ceased. There have already been discussions with the Corporation, the Ironstone Royalty Owners Association and the Country Landowners Association, and these consultations will continue with a view to the making of orders under the new powers in the coming months.
In addition to the statutory requirements, my right hon. Friend proposes to arrange for officials of his Department to meet the British Steel Corporation and representatives of the royalty owners and landowners regularly, so that for the future the state of the Fund may be kept under review in the light of the industry's forecast of developments.
It only remains for me to draw attention to Clause 4(2) which abolishes the Advisory Committee on Ironstone Restoration. This committee was established under Section 34 of the 1951 Act. Initially the committee undoubtedly played an extremely useful rôle in helping the Minister to fix the standard rate for 1955 and in advising him on certain other technical and costing matters. However, the Committee has not met since 1957 and it therefore seems inappropriate that we should continue to keep it in statutory existence when there appears to the Government to be no purpose in so doing.
I hope this will be seen as a helpful Bill which is designed to continue the work of restoring the environment in areas which have been used for this form 107 of extraction, and that the House will feel it is a Bill that they can welcome.
§ 7.14 p.m.
§ Mr. Alan Williams (Swansea, West)
I do not intend to take up too much time in dealing with this Bill, but there are three specific problems with which I should like to deal briefly, and to which I may return when we reach the Committee stage. These three problems have one factor in common—that is the possible arbitrariness of the rôle of the Minister. I will try to demonstrate during this brief contribution that the arbitrariness which has been displayed in dealing with the first problem is an ominous warning of the arbitrariness which may be shown in the exercise of the powers which give rise to the other two problems.
The first problem is one to which the hon. Gentleman alluded—the problem of the deficit on the existing Ironstone Restoration Fund. I do not think the figures are a matter of great dispute, but it would be as well to outline the situation in case there is any difference, so that the Minister will have an opportunity to remedy any inaccuracies later. I understand that there are at present approximately 3,140 acres of land which have already been worked for ironstone but which remain to be restored. The average cost per acre of levelling and spreading is about £545 of which, as the hon. Gentleman accurately said, the operator is responsible for £110, the standard rate to which he referred. The operator claims the balance above the £110 from the Minister under Section 9(1) and (2) of the 1951 Act, which is qualified by Section 2(2) of that same Act to make it clear that the Minister's responsibility does not involve Exchequer payment. It involves only payment from this Fund. I think that is the situation as it stands.
It has given rise to a problem to which there is no legal solution, as I hope to demonstrate. We have possible operators' claims on the Fund of £1⅓ million in addition to which, because of the type of expenditure, to which he referred, by local authorities on fencing, attempts to improve the fertility of the land and so on by farmers, we have to allow about another £100 per acre for this additional expenditure which can be claimed against 108 the Fund. Therefore, we have a total possible—I would go so far as to say probable—claim of £1.6 million against the Fund.
The problem to which this gives rise is the direct outcome of the fact that since 1951 costs and standards of restoration have risen substantially, whereas contributions per ton of mineral and the standard rate per acre restored have not changed. So we are faced with outgoings of around £1½ million, but, with the contributions outstanding, the total assets are only about £0.4 million. I believe the hon. Gentleman gave a figure of £440,000. We have a net deficit of around £1¼ million, speaking in round figures. That figure would vary whatever estimate we put upon it because of the future changes in costs.
From this deficit two important questions emerge. The first is, how should we avoid a future deficit? I think the Under-Secretary is right in saying that we must in future ensure that there is flexibility and that it is possible to alter the contributions and the standard rate to reflect adequately changes in costs. This was a serious mistake in past legislation and one which we should remedy on this occasion. I support the hon. Gentleman in that intention.
The difficulty arises over how we clear the past deficit. The noble Lord, Lord Sandford in another place on 1st April said, when speaking on the British Steel Corporation:… as the proper successor to the industry and heir to its liabilities—I stress the word "liabilities"—as well as its assets, it is right that the responsibility should pass squarely on to the shoulders of the Corporation …".—[OFFICIAL REPORT, House of Lords, 1st April, 1971; Vol. 316, c. 1510.]But of what liability is he speaking? The liability is clearly established at law and the liability at law is £110 an acre plus the contribution per ton. The contribution per ton has already been paid and the Steel Corporation is right to make its contribution of £110 per acre.
It is not the responsibility of the Steel Corporation that a deficit exists. It has fulfilled its legal commitments. It is the fault of successive Governments. I am not attributing responsibility to the Under-Secretary. Successive Governments have over 21 years failed to deal with 109 the problem. The fault lies with the Minister who is in charge of the Fund and who may bring legislation to this House if he wishes. Because Ministers in the past have failed to act and have failed to bring amending legislation to this House, it is the Steel Corporation that is being condemned to paying the £1 million deficit which has arisen during these years. That may be politically expedient, but it is of doubtful equity.
I agree with the principle enunciated in the other place by both Lord Greenwood and Lord Sandford—to put it in Lord Sandford's words—… the man who despoils or damages the countryside must be made to pay for the damage for which he is responsible—but the same Minister in the other place had said only a moment earlier:It is true that some will be land which has been worked by other operators" —[OFFICIAL REPORT, House of Lords, 1st April, 1971; Vol. 316, c. 1510.]So much for the inviolable principle of damage being paid for by those responsible for it.
What we have, therefore, is a Minister using the full weight of his Parliamentary power arbitrarily to impose an additional obligation on an operator—in this case the Steel Corporation—who has not even caused the damage and who has honourably fulfilled the legal debts and obligations required of him. I urge the Minister to think again before the Committee stage. There is a dangerous precedent here, the precedent that, when a company, be it private or public, has fulfilled its legal obligations, a Minister may retrospectively—for that is what it amounts to in being applied to work already undertaken—change the nature and the level of those obligations. That approach to problems of this sort causes concern not only to the Steel Corporation but to others, as, I am sure, the hon. Gentleman will discover during the debate.
The Steel Corporation, which has already been denied £100 million of investment grants and 7 per cent, of the price rise which it considered necessary, now has to meet £1 million for which it has no legal responsibility whatever. In effect, since it has been found that responsibility under the 1951 Act for the deficit is now—if I may use a non- 110 legal term—in limbo, the Government are shrugging off their responsibility and imposing it, with full use of the Parliamentary majority, upon the British Steel Corporation.
If I may make a point of slight political significance, I noticed that in the other place—this is reported in HANSARD, C. 271 on 15th March—the Minister went to some length to make clear that outstanding restoration by the private sector of the steel industry would be largely completed before the new standard rate was introduced. This sounds somewhat questionable, and, as I say, we intend to explore the matter in greater depth in Committee.
That is all I say on the first problem. I am not asking for assurances now—we shall have a chance to discuss it further —but I hope that the Under-Secretary of State will consider the complaint which I have expressed, which, I suspect, will be echoed by other hon. Members.
The second and third problems are inter-related: the first is the future of the contributions and of the standard rate, and the second is the abolition of the Advisory Committee. I have already said that I completely accept the need to vary the income of the Fund as costs and standards rise. Failure to make that provision was a serious mistake in the past, and I give entire support to the Minister's present intention. However, I am a little afraid of the unimpeded arbitrariness of the Minister's power and his complete freedom from any checks in the future in altering either the contributions, or the standard rate, or both, save as regards the Government's contribution, of course. This is the one contribution which cannot and will not be altered. The Government's contribution is fixed in the Bill at the level at which it stood in 1951, although costs have risen, standards have risen, and the real value of money has changed in that time.
It seems anomalous that the Advisory Committee existed but did not meet at a time when the Minister had no powers to vary charges but is now to be abolished when the Minister is assuming powers to change charges and the standard rate, and change them very much at the Minister's whim.
111 The absurdity of the situation is revealed by Lord Sandford's words in the other place on 15th March:… it was not any defect in the Committee but the inability of the Minister under the Act as at present worded to take action on the advice that the Committee gave."—[OFFICIAL REPORT, House of Lords, 15th March, 1971; Vol. 316, c. 279.]Now that the Minister has power to act under this Bill, the defect alleged against the Committee has been removed, yet at that very point it is to be prevented from giving advice.
There is a suspicion here—it may be utterly unjustified, and I have no doubt that the hon. Gentleman will make clear what the motive is—that the Minister and his Department may be following a policy of division of voices, hoping not to split opinions but to reduce the volume and effectiveness of what might otherwise be co-ordinated advice. We all know that it is easier to set aside advice which can be represented as coming from individual pressure groups than it is to set aside the co-ordinated and concerted advice of an advisory body. Far from abolishing the Committee, the Minister should be considering the possibility of widening it to include not only representatives of the Steel Corporation, the Ironstone Royalty Owners' Association and the Country Landowners' Association but representatives of the local authorities as well. This, also, is a matter which we shall pursue in Committee.
Against that background of the arbitrary treatment of the past deficit and the possible arbitrariness of future changes in what I may call the restoration tax, for that is what it is, in effect, whatever we call it, we see with some alarm the last straw, that is, that the powers exercisable under the Bill will be exercised through Statutory Instrument subject only to a negative Resolution of the House. So not only is the Minister not subject to any criticism from an advisory body but he has adopted the weakest form of parliamentary control, and that at the very stage when he is introducing a new flexibility into his powers.
I hope that the Under-Secretary will take those points in the constructive spirit in which they are put. I hope that he will have thought again, especially about 112 the impact on the Steel Corporation, before we take the Bill in Committee. If he can bring forward some modification at that stage, it will considerably shorten our proceedings.
§ 7.28 p.m.
§ Mr. John Farr (Harborough)
I pay tribute to the valuable work which has been carried out through the Ironstone Restoration Fund for the environment generally and especially for agriculture. In many parts of the Midlands in and around my constituency where many of the workings lie, there has been a tremendous improvement as a result of restoration. A good job has been done. It has not been done simply by returning a lot of earth into the holes willy-nilly; there has been careful restoration, with careful grading and the segregated topsoil put back.
The Ironstone Restoration Fund established under the Mineral Workings Act, 1951, has fulfilled a good purpose. As has been said, there was a considerable backlog of work to do in 1951. About 2,500 acres of worked land remained to be restored. But the Fund has seen nearly all of that done now, and there is only a negligible quantity left.
As my hon. Friend the Under-Secretary of State said, under the Fund a contribution of 3 old pence per ton of iron ore excavated was fixed, the operator paid 1 ⅛ old pence towards it, the royalty owner paid 1⅛ old pence, and the Treasury bore the balance of three-farthings. One of the defects of the 1951 Act, probably unforeseen by its architects, was that costs got so out of hand and rose so much that within a short time, and at an accelerating pace, the contributions became unrealistic and could not cover the full cost of restoration. It was calculated in 1950 that it would cost about £110 an acre to restore land adequately. Today the figure is over £500, to restore land to first-class agricultural condition. It can be restored at a lower figure, of about £200 or £250 per acre, provided the standard required is not so high. But naturally most of the land under which the ironstone lies is first-class agricultural land as is the case in the East Midlands. The owners and occupiers are very anxious to have it restored to its former quality.
113 The Fund has been running into trouble for some years because the cost of restoration has steadily increased. The levy rate has remained at three old pence a ton of iron ore mined. Unfortunately, in recent years the production of United Kingdom iron ore has been declining, and it is likely to decline still more, particularly in the districts around Corby and elsewhere, with the result that the gross output upon which any levy is calculated is likely to be a declining factor. It has been estimated that but for the Government's action in the Bill the Fund would shortly go into deficit. The figures I have agree that roughly 3,000 acres of land remain to be restored. If it is to be restored to first-class agricultural standard, an expenditure of about £1.5 million or £1.6 million is foreseeable. Yet the Fund, on its existing mechanism, can produce only about £500,000 more by way of outstanding contributions. Therefore, hon. Members on both sides will welcome the aim of the Bill to bring contributions up to date and make the Fund solvent again.
The Exchequer contribution is one of my big concerns about the Bill. Why is it still fixed at the old rate of three-farthings, whilst the operators and royalty owners' rates will be varied by Order later to be published? We do not know what the figures will be, but they will certainly be increased considerably. Whilst they will be varied to meet the cost of work in 1970, Schedule 2 states that the Government rate shall remain unaltered at the equivalent in new pence of three-farthings.
I do not know, and my hon. Friend did not say, what he thinks the cost of restoration per acre is likely to be, and he did not say what he thought the levy was likely to be when the Order is produced. It is now three old pence a ton, but I should be very surprised if he is not thinking of a figure of about 5 new pence a ton, at the lowest.
The increase in levy is welcome, but the equitable way to deal with it would be, if, say, an increase of four times is required, simply to multiply by four the contributions from the different sources to the Fund, the operators, royalty owners and the Government. But it seems that the Government have no intention of doing that. Paragraph 4 of 114 Schedule 2 says that they will be responsible for contributing only the same rate of three-farthings a ton. The pegging of the Exchequer contribution at the rate fixed by the 1951 Act relieves the Exchequer of bearing an equitable share of rising costs; it means that the considerable rise in costs since then will be suffered by the royalty owners and operators, who are largely the British Steel Corporation.
It is desperately unfair that future production should be saddled with the cost of funding the current deficit in the Fund, which on current workings is likely to amount to £1½ million. It is also desperately unfair that although the owners and operators may not necessarily be the same, a past deficit is to be funded from future workings.
What worries me even more is that the Government's action ignores the fact that the deficiency arises from claims in the pipeline in respect of ironstone production on which contributions have already been paid by both owners and operators.
The Minister said that he did not accept that the Bill is retrospective, but the hon. Member for Swansea, West (Mr. Alan Williams) said that in his view it was. I share the hon. Gentleman's view. In a letter of 8th April in reply to a letter I had sent him on the matter, my hon. Friend the Minister for Local Government and Development said:I do not know why it should have been suggested that Government is evading its responsibilities. We are not interfering with the original provision requiring an Exchequer contribution of ¾d. per ton of ironstone extracted. Nor is the amending legislation retrospective. The first contributions at the new level will be payable in April 1972. The new standard rate will come into force at a future date to be specified in an Order to be made later this year, after consultation with those concerned.I should like my hon. Friend to think about this before Committee, because it is not right. There is a certain retrospective action in what the Government are doing. I hope that careful consideration will be given to getting the Government to pay their full and proper contribution to the increased cost of the works.
§ 7.40 p.m.
§ Mr. George Lawson (Motherwell)
I apologise to the Under-Secretary of State for not having heard his speech. I had 115 intended to be here, but one or two items cropped up at the last minute. Possibly, if I had heard him, I might have modified what I want to say, but I gather, from what has been said by the hon. Member for Harborough (Mr. Fair), that the situation is what I thought it was.
I want to consider in the first place the argument about retrospective legislation in relation to this Bill. I cannot see how it can be argued that this is not a clear case of retrospective legislation—and a mean case at that. The effect of the Bill is to make a person or group of persons, who acted quite properly within the law as it stood, fulfilling their obligations under that law, pay more than they expected to pay under that law. That is a clear example of retrospective legislation. The Bill as drafted undoubtedly has that effect.
The Bill may refer to ironstone extracted subsequent to the date given, but it is clear that the amount to be charged for such extraction will bear part of the cost of restoration following extractions carried out previously. There will be an added burden, a greater charge, on the ore extracted from April, 1971, than would otherwise have been the case. If the Minister denied this and said that the charge will be upon the ore extracted after April, 1971, in relation to restoration of the land rendered derelict by extraction after that date, then this would not be retrospective legislation, but that is not so. About 3,000 acres of land have yet to be restored, but less than one-third of the cost of carrying out restoration will be borne by the extractions subsequent to April of this year. This is imposing upon persons, whether they be individuals or groups or great corporations like the British Steel Corporation, a penalty for actions carried out prior to April, 1971—that is, under the law as it stands.
It may be argued that this cost should have been levied earlier, but it was not. I will not enter into the arguments about why it was not levied. If there was fault, then it was the fault of successive Governments. In these circumstances, the responsibility should be carried by the Government. The degree of restoration can vary greatly in cost. It may be restoration of the land for full agricul- 116 tural purposes or for quite different purposes—afforestation or amenity, for example. But, as I understand it, the Government are taking power to charge the full cost of restoration up to the maximum, whatever it may be. They are going to see to it that the full cost is borne by those extracting minerals from April, 1971—and that cost will include land still waiting now to be restored.
There is not only retrospective legislation in the sense that firms are to be made to pay for what was done quite properly under the law as it existed. They are to be made to pay up to the hilt for a level of restoration which might mean going far beyond what was required in an earlier day. That is rubbing salt in the wound. It is a very mean line for the Government to take. The Tory Party has made great play of the theme that the Government should get out of business and should interfere as little as possible with the economy. Here, however, is an example of interference of the other sort—imposing burdens that otherwise people would not have been carrying.
Before the 1951 Act, one could virtually do what one liked with land and have no responsibility for clearing up the mess one made. But since 1951 there has been a welcome acceptance of social responsibility for clearing up the mess made in earlier days. My whole area was scarred by pit bings—pit heaps, as they are called, in some parts of the country. There was an 85 per cent, grant—sometimes up to 100 per cent, grant— for the clearing of these eyesores. Society accepted responsibility for clearing up the mess. If, between 1951 and 1971, however, when the parties concerned were operating as the law then allowed, sufficient provision was not made by Parliament to clear up the mess created, we should clearly accept the responsibility now. The Government should say that they will wipe the slate clean for the past but for the future ensure that, when these workings are carried out with considerable destruction of the land, those profiting from them should pay for the land to be restored to a fit condition. That would be the proper thing to do. It is not reasonable to insist that payment being extracted now should bear in large measure payment for something done in the period 1951 to 1971. That is unfair retrospection and the Government should reconsider.
117 The Government like to assume the guise of being fair. This Measure entails a small amount in relation to Government funds but it will be a large cost to the British Steel Corporation. Perhaps this is a manifestation of anti-naitionalisation bias by the Government. I wonder whether it really is the question altogether of landowners having to pay which has led the Government to adopt this line. A nationalised industry, the British Steel Corporation, will be carrying the burden in the main. That suggests to me a bias against nationalised industry.
§ Mr. Lawson
We all agree, however, that the great weight of this burden is to be carried by the Corporation. That is beyond dispute. I am not saying this positively, but simply suggesting that were it not for the bias so manifest on the Government side of the House, we might have had fairer consideration of this matter. If the Under-Secretary can show by his efforts in Committee that the Government are prepared to turn their backs on this mean little action and behave with a little generosity, we will think much more of him and the Government.
§ 7.51 p.m.
§ Mr. T. H. H. Skeet (Bedford)
I cannot detect any bias against a nationalised corporation. I pay tribute to the Government for bringing in the Bill, although I am not certain that it is the proper Bill. Several years ago, in 1951, there were many owners and many prospectors and extractors of material. Now there is only one, the British Steel Corporation, and it would seem that simply to bring in money from contributions and to pay out when claims are made, probably after a gap of five years, accounting for the administrative charge, is rather a heavy way of doing it. But this is a matter which could be discussed in Committee.
My hon. Friends have mentioned the facts. It seems to me that there are potential claims of roughly 3,000 acres which have to be restored, taking into account what is yet to be done. One is unfortunately faced with a situation in 118 which production is declining over the years from 10 million tons to six million tons in 1981. This is no fault of the United Kingdom. Iron ore can be obtained very cheaply from abroad and it is of a much higher grade. Therefore, while there is much restoration to be done, the amount now available for restoration is in the region of £444,000, which is small and largely meaningless, for the simple reason that contributions are made on a tonnage basis, whereas the amount which has to be paid for restoration depends on inflationary factors, and probably other, which act as escalators One has the added predicament that the total cost is likely to be somewhere between £1.25 million and £1.5 million, a very substantial sum.
Hon. Members have considered this problem deeply and have pointed to the fact that the Minister has decided that he must stand by the solvency of the Fund. My hon. Friend has indicated that in several years' time it will be going into the red. This will be rather serious. He has chosen, by Order in Council, to revise the payments which will be made by the mineral operators and by the royalty owners. He has left aside entirely an additional contribution from the Treasury. We debated recently the Town and Country Planning (Mineral) Regulations covering both England and Scotland and provided that planning permission will be granted for a period of only ten years. Mineral undertakers will have to go back to the planning authorities and argue their case afresh, probably in public, and probably be liable to more stringent terms.
This could mean that the undertakers will be under a greater liability. This is an obligation or condition imposed by Statute, and I should have thought that as the Crown was responsible for imposing these terms, the Crown's contribution should be upgraded substantially. In the Bill, however, the Crown's contribution will remain at three farthings, at which it has remained unaltered since 1951.
The Minister in another place said that there was no flexibility in the 1951 Act. This is conceded, but inflexibility by whom? The mineral operators have been paying their instalments year by year against their tonnages. If the Minister found that the Fund was falling far be 119 hind, the Government of the day, Conservative or Labour, could have initiated fresh legislation to put the matter right. They did not. So we find ourselves in this situation, and I think the hon. Member for Swansea, West (Mr. Alan Williams) was right to say that the British Steel Corporation, while it succeeded to the liabilities of the former owners, succeeded to no liabilities in this connection. Once a contribution had been paid, that was all owners had to do; that purged their liability completely, and new owners took over no liability at all.
In 1950, or thereabouts, it was calculated that £110 per acre was all that was required for this purpose. It has certainly gone up over the succeeding years. It soon became apparent that what the Fund would have to contribute would be a sizeable sum, particularly as we now concede that the cost of restoration is about £525 per acre.
Looking at it fairly and reasonably, I should have thought that this was an opportunity, if the Crown wants the restoration of property to the highest standard, whether for afforestation or for turning land into lagoons, or for the purposes of agriculture, for it to make a substantial contribution; but there is not a bit of it.
Why was the Crown prepared in 1951 to make a contribution of three farthings? The reason was to clear up a backlog, but there must have been some point in it, too, because there were difficulties. One had to extract from the soil and replace the overburden and get the land back for suitable purposes. One of our chief anxieties about the Bill is that we are having the old system of taxation by Order in Council. We are even worse off, perhaps. We knew a little time ago what the contribution was to be and it was unrevised all over the years. Now it is to be determined by the Minister himself by Order in Council. He will prescribe the rates.
My hon. Friend the Member for Harborough (Mr. Farr) has asked what the standard rate is to be. We have had no indication of that. When people make plans they like to know whether it is to be double the contribution, or treble—
§ Mr. Skeet
Indeed. This decision should be made at an early date. The hon. Member for Swansea, West asked: if we put up the contribution and stand by the solvency of the Fund, what chance have we if all that we can do is to try to combat what has been done by means of a negative Resolution? The Advisory Committee is to be scrapped. Admittedly it had not functioned since 1967, but whose fault was that? Could not all the gentlemen be collected together, or was it that the Government did not want it to be solvent?
If the idea was to advise the Government of the owners' recommendations and if it be the Government's case today that this policy must be maintained, even allowing for the fact that there is only one operator, B.S.C., I should have thought that it might be in the interests of the royalty owners that we had the Advisory Committee to give the Minister some views. Otherwise he might come round to the view that if he is to curb the Advisory Committee, it is not the right way of maintaining the solvency of the Fund. I recognise that some sort of fund is desirable.
The yield contributions over the years will be affected by several factors. They are geared, first of all, to falling trends of production, and therefore receipts will drop. In addition, if there is any variation between the yield and tonnage in Lincolnshire, as opposed to that in the Midlands, the yield will also drop. The Midlands has been subscribing, per acre, I think, less than Lincolnshire, but there is this tendency for there to be constriction on the domestic industry in favour of the imported material.
In addition, if there is a higher percentage of total production from charitable lands or the land under full restoring leases, then contributions will come down by that extent. We are looking forward to a future when contributions cannot be precisely stated. They are variable but not nearly as variable when we find out what the cost of restoration is to be.
The inflationary factors working through the economy have been dealt with. The higher standards being maintained by the authorities—and these are being made tougher every year—are leading to a very sorry predicament. These are the crucial facts: in 1969 the yield 121 per acre of contributions, including Exchequer contributions, was £321. Current restoration cost, per acre, is between £420 and £500. Costs have gone up substantially this year. Expensive equipment has to be installed, as it is no good case to argue that the land may be used only for aforestation. There is plenty of land available for that in certain other parts of the country. What we want to do is to ensure that this land is returned to amenity or agricultural purposes.
The actual payment over the last 2¾ years has been £360 per acre. If the Minister had it in mind that he would double the rate, that would cause a liability on the Fund of about £250 an acre. This would have an effect of transferring liability from the Government in favour of the mineral undertakings and the royalty owners, which would mean the same thing, because the British Steel Corporation is not making a profit and therefore it falls back on the taxpayer. The Treasury must derive its monies from the Consolidated Fund, and therefore we must all pay. If the Corporation ever makes a payment on its profits in future years, the only way it can recoup that expenditure is by putting up prices, because the price of the ore would be more expensive. Or it could run down still further the small quantity of ors which is extracted locally. Some of my colleagues may think that that is an unwise thing to do.
Can the Minister give some answers to several questions I wish to ask? There should be provision under Section 18— that is, dealing with the work not imposed by planning conditions and under Section 20, that is, through the Minister of Agriculture and Fisheries. He has been considering most carefully the Section 9 grants, which were those dealing with planning conditions. When he readies the figure, by agreement or in consultation with the interested parties, will he cover all three Sections—9, 18 and 20?
Would my hon. Friend also give us the most up-to-date figure he has of the total outstanding potential claims? While he is prepared to abolish the Advisory Committee, will he ensure that consultations are continued, not merely with the Corporation but with the Ironstone Royalty Owners' Association? Is he satisfied that his mathematics are correct? I say this because I see one substantial difficulty. 122 The gap between payments per ton which accrue year by year and claims—that is, the difference between the standard rate and the actual cost of restoration—is about five years. It is, therefore, not possible to examine at any one moment the state of the Fund.
We seem to have got ourselves into a complicated mathematical process and I will certainly support the suggestions that have been put forward on this subject. Could this not be simplified in the interests of all concerned, particularly the owners, the British Steel Corporation and the Government who must operate it? On a former occasion I declared my interest.
§ 8.7 p.m.
§ Mr. Eddie Griffiths (Sheffield, Brightside)
I congratulate my hon. Friend the Member for Swansea, West (Mr. Alan I Williams), my hon. Friend the Member for Motherwell (Mr. Lawson), and hon. Gentlemen opposite for the way in which they have dealt with this subject. I want to press what I consider to be a moral question. When the bulk of the steel industry was nationalised the then Government took over the assets and liabilities, debts, and so forth, of the 14 I companies and a price was paid, a price according to the valuation, on an equitable basis and according to the law r which then existed—not according to a dreamland law that might come from a future Government of either the same political shading or of another shade.
If we compare this with the act of the present Government in nationalising Rolls-Royce (1971), we see that they allowed the old company to go bankrupt, the receiver went in and the debts and liabilities were washed to one side, with the Government taking over certain assets. To the best of my knowledge there is no indication, as yet, that the Government are taking over the liabilities and debts of Rolls-Royce.
With hindsight, I suggest that if the Government of the day had been able to predict the content of this Bill, which as I understand it will place a substantial liability on the Corporation, then the compensation paid would have been adjusted by deducting an amount which the Government are now saying is an extra liability falling on the Corporation. This is a most immoral act of saddling 123 the Corporation with a debt which, at the time of nationalisation, it could not foresee. It would be seen that the Corporation has received very little benefit from the iron ore workings in this country. The profits that have been gleaned from these workings in the private days of years ago have now been dissipated and the Corporation tends to use less and less local ore because it is of poor quality and it is cheaper to import ore.
I ask the Minister to think again, not upon any technical or commercial grounds, but on the moral ground that it is wrong at this time to saddle the Corporation with a bill which at the time of nationalisation could not have been foreseen and which, if it had been foreseen, would have resulted in an adjustment to the compensation paid.
§ 8.10 p.m.
§ Mr. Michael Heseltine
With leave, I should like briefly to comment on some of the points which have been made. The House will appreciate, however, that there will be an opportunity to explore them in Committee.
The hon. Member for Swansea, West (Mr. Alan Williams) welcomed the broad concept behind the Bill, and I am grateful to him for doing so. The most significant point which he made was that the difficulty is not whether we should make up the deficit and put the fund on a coherent financial basis, but who will do it. That was the main burden, not only of the hon. Gentleman's speech, but of the speeches of my other hon. Friends. The first place to which one looks for this purpose is the Exchequer. It has been suggested that the Government should pay, but that means the taxpayer. At present there is already a contribution of three-quarters of an old penny to the fund for every ton extracted.
It might interest the House to know that it was first the Government's view, in reviewing the situation, that the Exchequer had made a real contribution to solving the problem of clearing up derelict land and should withdraw completely from any financial commitment in proposing fresh legislation. It was only after discussions with the various interests involved that the Government were persuaded to go on paying a contribution. 124 We therefore accept that there is a continuing responsibility on the Government—
§ Mr. Heseltine
The Government made a contribution when the first Bill was introduced in 1951 in order to clear up the existing problem involving something like 2,500 acres of land. That problem has been cleared up. Therefore, the first assignment to which the Government agreed to be a party to the tune of three farthings per ton, has come to an end. We are now looking to the situation created by the land which has been worked since the introduction of that Bill and which is to be worked in future. The Government's view was that there was no continuing call on them to remain in the job of restoring this land. It was not a long and unidentifiable historical situation. It has happened in relatively recent years—perhaps over 21 years, but nevertheless in the relatively recent past. The Government did not feel that they would wish to continue to support the work in this way. They believed that the responsibility should rest on the shoulders of the industry as as present constituted.
As a result of the representations made to us, we have decided to continue with the payment of three-quarters of an old penny per ton. We have therefore already gone some way towards meeting the points made by hon. Members.
§ Mr. Alan Williams
Does the hon. Gentleman agree that the deficit has arisen because of the under-contribution by all the partners under the previous legislation? The Government were a partner. In order to remedy a past defect, the hon. Gentleman has intimated that the first thought of the Government was to withdraw altogether but now say that everyone else should pay more but not the Government.
§ Mr. Heseltine
There are different factors. The problem has arisen in the relatively recent past. The Government were able rightly to claim that over the last 21 years the initial problem had been cleared up. That was the Government's 125 total commitment arising under the earlier legislation. They reviewed what should be done about the situation which has developed over the 21 years. After representations, they decided that they would wish to play a continuing part in the important work of restoring the land.
My hon. Friend the Member for Bedford (Mr. Skeet) and other hon. Members asked whether there was a need for the advisory committee to continue.
§ Mr. Lawson
During the 21 years, the parties other than the Government did everything asked of them. The fact that they did not do enough was not their fault. The fault must be put at the Government's door, whichever party was in office. Both parties are involved. If there was a mess involving 2,000 acres to clear up when the first Bill was introduced, there is a greater mess to be cleared up now which is, in large measure, due to the failure of Governments of both parties in 21 years to ensure that the intentions of the 1951 Act were carried out. Is there not a responsibility on the Government in this matter?
§ Mr. Heseltine
It is arguable whether the Government have failed. It is arguable—and I would put the argument with great force—that it is the people who created the problem and not the Government who have failed. The Government introduced a scheme to deal with the outstanding problem in 1951. It has been dealt with. If the industry continue to create problems, I do not see why we should say that it was the Government's fault. The industry should have understood that sooner or later the Government would say that it was necessary to sort out the problem.
§ Mr. Lawson
This is an important point. In the 1951 Act the Government assumed power to ensure that the mess of the past was not continued. The fact is that the Government have not ensured that over the years.
§ Mr. Heseltine
The hon. Gentleman is not right. The Government have ensured it. The mess has been cleared up, and that is what the 1951 Act was designed to do. We are now concerned 126 about clearing up a mess created since 1951. It has been created in a much shorter period and therefore it is much easier to identify the industry responsible in the last resort for under-paying during all those years. It is now necessary to put legislation on the Statute Book which enables the recently created problem to be dealt with.
The industry which we believe to be responsible and where the money should be found is constituted very largely in the British Steel Corporation, although there is one other small private company. The Corporation has had the benefit over the years since it came into existence of working a lot of this land. Not only has the Corporation worked it and therefore benefited from undercharging in real terms, but so have a given number of companies which were nationalised to form the Corporation. The Government say, modified only by our determination to go on paying the three-quarters of an old penny per ton, that the industry is responsible and the industry must pay.
§ Mr. Eddie Griffiths
I accept the hon. Gentleman's point that we are talking about retrospective payments back to 1951. But then the Corporation had been in existence for only four years. For the remainder of the time the industry was in private hands. If we are making retrospective legislation now, will the hon. Gentleman undertake to ascertain from the private people who worked these areas the position over the other 17 years, and the Corporation will then be happy to pay in respect of the four years when it was involved?
§ Mr. Heseltine
The hon. Gentleman must know as well as I do that that would be impossible. [HON. MEMBERS: "Oh"] I do not wish to run away from the point. Some of the concerns are components of the Corporation, but not all. Some will have gone out of business. It is impossible to look back over the situation. It would be much better to have flexibility to keep the charges up to date. But we do not have it, and we did not do it. Governments of both parties have failed in this respect; it is nothing new.
I wish to refer to a precedent which I can quote from my experience. When the Conservative Party came to power 127 there was a deficit on the driving test fund. People taking the test under the Labour Government had not been paying enough for it and there was a deficit of something in the region of £3 million on costs incurred in testing people which had to be made up. If the argument of hon. Members opposite were adopted, the taxpayer should have made it up. But it was the Government's view that it should be made up from a charge on future applicants to take the driving test. That is the exact paralled to what I am talking about. No doubt by the time we get into Committee there will be a whole range of examples of that sort, where future commitments carry with them an element of cost which relates to clearing up the earlier problem. I am sure every Government have done it and we certainly wish to do anything we can.
It is true that the industry now happens to be the British Steel Corporation. I accept that the hon. Member for Mother well (Mr. Lawson) took the opportunity to make a point in party political terms, but the truth is that it is not that, and it just happens that the industry is the British Steel Corporation. And so it happens that they will be the people likely to bear the charge.
The question was raised about the Advisory Committee. I accept at once what my hon. Friend the Member for Bedford said, that the Committee did a very good job, but the job which the Committee did in the early 1950s was quite different from that which now needs to be done. The fact is that at that time there was a variety of different operators, different leases, different costs, different environmental standards. Somebody had to advise the Government in setting up the paraphernalia on setting up the standard rate in 1955. That was a complicated technical problem on which outside advice was needed. The situation has now quite changed, and it does not require anything like the same expertise in deciding how costs should be revised, so it does not need to be reviewed by the Advisory Committee. I would say at once in reply to my hon. Friend the Member for Bedford that we will certainly consult not only the British Steel Corporation but the owners and the Ironstone Royalty Owners Associa- 128 tion. I mentioned that in my opening speech and I can repeat the assurance.
I can help my hon. Friend again by saying that the Sections to which he referred, Sections 9, 18 and 20, will go on. Claims will be able to be made upon the Fund—the replenished Fund, I may say—and there is no need for a change in legislation because of that situation.
So I believe that it is right to say that this Bill is widely welcomed. It is completely in the spirit which we all have of wanting to improve the quality of the environment. The only issue is, who is to pay? It is the view of the Government that the polluter must pay the costs. In this particular case, there is certainly a clear responsibility, a firm responsibility on the industry that in its future activities it should bear the cost of putting right the disturbance caused, and accumulated over the last 21 years. I hope that the House will have no hesitation in giving the Bill a Second Reading.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40(Committal of Bills).