§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Clegg.]
§ 11.33 p.m.
§ Mr. Gavin Strang (Edinburgh, East)It is now approximately 18 months since the South of Scotland Electricity Board applied to the Government for permission to convert Portobello power station to oil firing. I understand that the Board is anxious that the Government should take this decision in the near future so that it may introduce the conversion before the winter and replace coal with oil this winter. I have discussed this matter with the representatives of the South of Scotland Electricity Board, the National Coal Board and the National Union of Mineworkers, and I must say at the outset that the Secretary of State would not be justified in allowing this conversion to go ahead.
With the present level of unemployment in the Edinburgh area, it is quite unthinkable that the Secretary of State should allow this to happen. The Electricity Board listed three reasons to me why it wants this conversion. First was the question of pollution and the fact that the power station is emitting grit—something which was drawn to the Board's attention by the Alkali Inspector. There are three points to make in reply to that. First, the Board now accepts that the emission is not a problem at present. This is a reflection of the fact that it is now getting a better quality coal. The manager of the power station said to me on Friday that he had not had any recent complaints from the Alkali Inspector. Secondly, the Board could put in a dust arrester to reduce the problem if it was that serious. The Board says that it is not possible to justify the expense of doing that. That is the argument everyone uses. Of course it will be expensive, but not so expensive as converting the power station. The Board accepts that this is not the main reason. I am listing the three reasons given to me in the order of importance. I do not intend to refer to this again because it is not the decisive consideration.
1231 The second reason the Board put to me was that it was concerned about the quality of coal being supplied by the Electricity Board. Portobello is an old power station, and there are problems with ash fusion in the boilers which leads to agglutination. The coal must meet precise specifications. In the past the Coal Board has let Portobello down in this respect, but this has been overcome. The Coal Board spent a great deal of time making sure that it could meet the specifications for Portobello power station. Management and workers at the power station assured me on Friday that the coal they are using at present meets the specification and they have no problems.
The Electricity Board has made the point that while the Coal Board may have some coal of this quality it will not be able to supply it in sufficient quantity. The Board made a detailed examination of its pits in Scotland and has given the South of Scotland Electricity Board an unqualified assurance that it will meet the coal demand both in quality and quantity. The Coal Board should be given a chance to prove that it can do this.
The third reason—and this was the important one—which the Board gave for wanting this conversion was that it could produce electricity more cheaply from oil. Some of the savings would be operational. The figure given by the Board was £150,000, the bulk of which would be in labour. At least 70 men at that power station, which employs 250, will be redundant before the end of the year if this plan goes through The conversion will cost £1.8 million, and much more than £150,000 must be got out of it before it can be justified.
The Board's view is that the big saving will arise from oil being cheaper than coal for the production of electricity. When I asked the Board what its assumptions were as to the likely movements in the price of oil, the reply was that the differential would stay much the same in the next few years. I find this surprising in view of articles I have seen in the Financial Times, The Sunday Times and other quality newspapers, which are in flat contradiction to that assertion.
1232 We are now in a completely new position. The market has changed. There is no longer an abundance of oil but a shortage. Not only is there a danger that we may not receive adequate supplies, but the oil suppliers, realising their new market power, are using it to force up the price. They have done so already this year, and the view of the articles I have mentioned is that this would continue to happen. It is surprising that the Board should say that it did not expect any change in the relative costs of oil and coal.
Those are the three points which were made, but in discussion the question of flexibility was mentioned. The Board wanted to be not totally dependent on coal. The Board has already converted Braehead and Dalmarnock, and in 1975 Inverkip oil power station will be in operation, so it cannot maintain that it has been forced to be totally dependent on coal.
The South of Scotland Electricity Board obviously takes into account only commercial consideration. This is a single tender contract, and I am not convinced that there should be only a single tender. I have never seen a detailed case for conversion. I have seen no figures of the price of oil or what precise assumptions have been made about depreciation and many other factors. If the Minister has such detailed information I would ask to see it. Here a nationalised industry is taking a major decision, and the public should be able to see the figures.
I find the commercial arguments unconvincing. I cannot accept the assumptions made about the likely cost of oil. But it is not commercial considerations which matter. This is a decision of the Government. It is their responsibility to take into account broader, economic considerations. They accept this. They would not have discussed it with the Scottish T.U.C. if they had not taken this aspect into consideration.
The first aspect is that of the balance of payments. According to an answer I was given recently in the House, the effect on the balance of payments will be minimal. In that context, it may be minimal but I hope that it will not be said that this was a factor taken into consideration, because that is a different matter. If one 1233 applies that argument, one can say that cost-saving in this case is minimal because in the context of total electricity production the effect on unit costs will be minimal. I am not, of course, saying that the cost of production from this power station seems not to be affected. It is affected, just as there is an effect on the balance of payments.
The Government have the responsibility of making sure that the nation makes the maximum use of its indigenous resources. We have the coal for the power station; we have the equipment in the mines, and we have the miners. We have a responsibility to use them. If we do not use them, then pits will close and miners will be made redundant, for it is not a question of these resources being able to be deployed elsewhere.
The Government have responsibility for the morale in nationalised industries. The National Coal Board has made tremendous advances in the last few months; in Scotland it has done even better than the national average. In the South of Scotland last April output per man shift was 38.7 cwt. compared with 35.9 in April, 1970—an increase of 8 per cent.—while the fall in absenteeism was 9 per cent. We have seen spectacular advances in the Scottish coalfield in recent months. For the first time the miners have confidence in the future. If the Government give permission for this conversion to go ahead, they will destroy the morale of the Scottish miners.
The main point is the social question of unemployment. Male unemployment in Britain is the highest of any advanced industrial country. In the United Kingdom it is 4.6 per cent. but in Scotland it is 7.5 per cent. In Edinburgh and the Lothians, where these closures would take place, it is already 7 per cent., and it will be higher next year. If this conversion goes ahead, pits will be closed, because coal stocks are now rising. Last winter, coal was diverted from Scotland to England. Stocks are rising now, the economy is stagnating and industrial demand for coal is not increasing. Pits in the Lothians are fully manned. There is no doubt that if this conversion goes ahead at least 1,200 miners will lose their jobs in addition to the 70 workers at the power station who will lose theirs.
If the Government are really concerned about unemployment in Scotland 1234 —I am not saying that they are not—they cannot possibly take a decision which will put at least 1,200 men on the dole. We do not know exactly how many because once it has spent £1,800,000 at Portobello the South of Scotland Electricity Board may be inclined to consider converting the power station at Cockenzie, in which case the demand for coal will be even less. But we know that we are talking of 1,200 jobs, and if the Secretary of State is really concerned about the present level of unemployment in Scotland, he cannot justify a decision that means over 1,000 additional families on the dole this coming winter. He cannot possibly justify this conversion at the present time.
§ 11.45 p.m.
§ Mr. Alex Eadie (Midlothian)I must congratulate my hon. Friend the Member for Edinburgh, East (Mr. Strang) on initiating this debate. It is probably one of the better types of debate, in the sense that the Minister has stated that he has not made up his mind, which means that the dialogue continues. My hon. Friend and I hope that, as a result of our arguments, what some miners have described as "this madness" will not take place.
I am sure that the Under-Secretary will accept that I am not making a party political point. I was always critical of the policy pursued by my own Government towards the coal industry, and I hope that it will not sound arrogant if I say that many of the speeches that my hon. Friends and I made from the benches opposite about the coal industry have turned out to be true.
My hon. Friend has made a powerful case. Following mass closures and the activities of the "Knock the coal industry" brigade, there was a crisis of morale in the industry. Fortunately, this has levelled out, and we are beginning to inject new confidence. If such a decision were made, 1,200 or 1,300 miners would find themselves redundant, and morale in the Scottish mining industry would again suffer a severe blow. I remind the House, too, that earlier drastic redundancies took place in an atmosphere of comparative peace.
My hon. Friend made the telling point that we now face a new situation. We are now in a buyer's market for oil. Prices have been escalating. Oil is not 1235 an indigenous resource, but coal is, and in various periodicals we read how countries all over the world are trying to conserve and preserve their indigenous energy resources.
Since oil is not indigenous to this country yet, it is absolute madness to put ourselves at the mercy of the tremendous escalation in prices. Even today in the Evening Standard the headline is:
Oil men forced to look again at prices.If the argument for this conversion is on price, I am afraid that it falls flat.More important, a breach of trust is involved in this proposal. On 5th August, 1969, when the decision was taken to have the new Inverkip power station fuelled by oil, the S.S.E.B. issued a statement. Incidentally, there must be doubts now about the ability to get oil at the right price for the station when it comes into operation. But a clear understanding was given by the S.S.E.B., of which the hon. Gentleman must be aware, that there would be produced in Scotland something in the region of 8 million tons of coal for the 1970s, compared with the then figure of 6 million tons. I suggest that there has been a breach of that understanding when the S.S.E.B. comes forward with its dastardly proposal which will result in misery for power station workers and miners alike.
The evidence of the effect of escalating oil prices is fairly substantial. Recently we debated the Coal Bill. I came into possession of an extract from a letter from a steel company pointing out the tremendous escalation in oil prices that had occurred since January, 1971. The figures that I obtained were to the effect that the price had increased by 47 per cent which placed the steel company in a serious financial position, since it meant an increase of £570,000 per annum in its fuel and energy bill. Since I got this document, there have been further increases in the price of oil. We know that in Libya and in Nigeria other increases in the price of oil will be coming forward.
The "knock the coal industry" brigade tried to reduce the price of oil. The price of oil, since July, 1970, has gone up by £5.50. The equivalent coal price has gone up by about £3.30 per ton. In the same period the price of electricity coal has gone up by £1.35. This 1236 is a clear indication that there is greater stability in coal prices. The main point is that we are dealing with an indigenous resource.
I suggest to the Minister, since he has admitted that he has not yet made up his mind, that, on price alone, a decision to convert the Portobello power station to oil is not in the interests of this country, still less in the interests of the miners.
§ 11.51 p.m.
§ The Under-Secretary of State for Development, Scottish Office (Mr. George Younger)I should like to congratulate the hon. Member for Edinburgh, East (Mr. Strang) not only on his good fortune in securing the debate but on the way in which he has presented his case. It was an extremely comprehensive and well balanced presentation. I very much appreciated it.
I should like to start by confirming yet again that no decision has been taken on this very difficult matter which is before my right hon. Friend at this time. Therefore, this Adjournment debate is very timely in that we have the benefit not only of the various other bodies which I shall mention which we have consulted but the views expressed by the hon. Gentleman and his hon. Friend the Member for Midlothian (Mr. Eadie), who can always be relied upon to put his view most clearly and carefully on this subject.
As I indicated last July during a debate initiated by the hon. Member for Fife, West (Mr. William Hamilton) on the general topic of fuelling of power stations in Scotland, the Secretary of State's policy is to give the most careful detailed consideration to all the factors involved. The hon. Gentleman said, quite rightly, that the Secretary of State's function is to take the broadest view of all the factors involved, including social and all other factors affecting the consumers, the coal industry, the electricity industry and the public at large. This is being done in this case before any decisions are arrived at on conversion.
The Secretary of State affirmed that there would be full consideration of the social consequences in reply to a Question by the hon. Member for Fife, West last November and by the hon. Member for Clackmannan and East Stirlingshire (Mr. Douglas) last July. The Portobello case, which concerns an application originally made in February, 1970, which 1237 was before I had the responsibilities which I have now, is being handled in this manner and according to the way in which the Secretary of State has always said that he will handle these matters.
I therefore wrote to the Regional Chairman of the National Coal Board in December indicating that the Secretary of State had before him an application from the S.S.E.B. for approval to the conversion of Portobello power station, and asking for the Board's observations, including its views on any likely social implications of the conversion. I wrote in similar terms to the National Union of Mineworkers in Scotland and sent a copy of the letter to the Scottish T.U.C.
Both the N.C.B. and the N.U.M. expressed their opposition to any conversion, and, following further letters, I recently held detailed discussions with the N.C.B. in Scotland and later with representatives of the N.U.M. and the Scottish T.U.C. At these meetings, which were most useful and held in a frank and cordial atmosphere, the N.C.B. and the unions provided detailed information in support of their case against the conversion of the station on both coal supply and quality and social grounds, and this information is at present being carefully evaluated by the Secretary of State in consultation with the Secretary of State for Trade and Industry as the Minister responsible for the coal industry.
That is the stage reached. I hope that hon. Members will agree that there has been a full collection of views. We express our gratitude for the time and trouble which all concerned have taken to ensure that the maximum information is available before these decisions are taken.
The hon. Member said that he has recently visited the power station to see for himself. One gets a picture of what goes on there, but the real decision must be based on an assessment of wider factors. Of course, the relativity between coal and oil prices is a relevant consideration. I appreciate that it is very difficult to see what future trends will be, and it is more difficult now with oil than it was some months ago, following the events of the last few months.
But, to be fair to both sides, the Electricity Board is a considerable user 1238 of both coal and oil and, rightly or wrongly, does not agree that oil has now become nearly the same price as coal. It maintains its considered view that conversion to oil has economic advantages for consumers and that it will also introduce an element of flexibility into a system too heavily dependent on coal.
I am not supporting those views, but as we have recorded the view of the coal industry and the unions, I am duty bound to record those of the Board, which are to some extent supported by the views of the Electricity Consultative Council. They cannot lightly be set aside.
The hon. Member mentioned the future use of Portobello. It is true that it does not follow that if conversion does not take place the station will continue at the same intensity of use as in previous years, so there is another element in the equation. If, through remaining on coal, it were to become less attractive in what is called the merit order, it is possible that the station would not continue at the same level as in previous years.
We will take carefully into account the fact that there is not a pollution problem in the neighbourhood, but there has been some misunderstanding on one point. The pollution consideration cannot be ignored by my right hon. Friend, however small or great its effect. He has a statutory responsibility for clean air. But I accept that the hon. Gentleman does not think that there is much of a problem at the moment.
There has been considerable discussion about quality, but it is difficult for me to give a precise view because this involves the opinions of a number of people at various levels. I understand that the N.C.B. is doing everything in its power to achieve the level of quality desired by the Electricity Board, and there is, I believe, some evidence of improvement.
In the last two years there have been a number of occasions when the quality has been far from good enough, so much so that there have had to be interruptions in supply from the station. It is to be hoped that if it continues to be supplied by coal the N.C.B. will maintain the improvement in quality which I know it has been trying to achieve.
1239 The question of achieving flexibility by using various types of fuel was raised. The Electricity Board considers that there is value in having some flexibility through, at this station, the use of oil rather than coal. This is a factor which we must take into account, but I would not like to say that it is a factor which is able to overlay all the other considerations that we must have.
I appreciate the questions that I was asked about unemployment among miners, but there is some doubt about the precise figure. It has been represented to us that the figure of 1,200 is very much larger than it would, in fact, be. Nevertheless, we must remember that there would undoubtedly be some redundancy, and this is a factor of considerable importance. The situation on this score is far from clear. We are endeavouring to obtain better information on this subject and about what the requirements will be nationally for coal 1240 supplies next winter and in the winters following that.
Last winter coal supplies were by no means luxuriously plentiful, and it was a mild winter. We in Scotland were, therefore, able to help out by supplying a considerable amount of coal south of the Border. It does not necessarily follow that if conversion took place at Portobello, the coal displaced there would not have a market. If conditions in the coming winter and the winters after that —remembering that the weather last winter was very mild—are hard, it is by no means clearly established that there would not be a need—
§ The Question having been proposed after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at three minutes past Twelve o'clock.