HC Deb 22 November 1971 vol 826 cc1096-106

10.19 p.m.

Mr. Dennis Skinner (Bolsover)

I wish to draw attention to the announcement made on 3rd December of last year that the Government intended to lift the ban on coal imported under general licence from 5th December, 1970. It was done in a strange way in that the announcement came in the course of the Second Reading debate on the Coal Industry Bill. Many of my hon. Friends, including my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot), complained at the time that it was wrong of the Government to make such an announcement when the House was discussing a very controversial Measure in the shape of hiving-off provisions affecting the coal industry in a manner which did not allow hon. Members to question the Minister closely about it.

My hon. Friend the Member for Morpeth (Mr. George Grant) has spent a great deal of time and taken considerable trouble in tabling Questions to the Minister. For that reason, I hope that he will have an opportunity to intervene briefly in this debate. For that reason, I shall not take up the whole of my 25 minutes. [Interruption.] I say that deliberately, because some of my hon. Friends met the Minister for Industry last week, when they were given the hon. Gentleman's answer. To that extent, it is not all that important that we hear what the Under-Secretary has to say—[Interruption.] That may be unfair, but I think that it needs saying. We had the Minister's answer last Thursday.

I intend to argue that there was no industrial case for importing coal on 5th December and that there were powerful economic reasons why the country could not afford to spend up to £40 million to build up stocks of inferior and expensive coal.

The real motive for importing coal was just another example of the way in which this Government operate, obsessed as they are not with unemployment, as the Minister made clear three weeks ago, but with hammering trade unionists generally and the miners specifically. It is well known that the Tory economic strategy is based on curbing inflation by holding down wage claims in the public sector and thereby cutting the real purchasing power of those who work in those industries.

Over the past two years, the miners have had a more favourable bargaining position, since the 40 million tons of stock coal which existed during the late 1950s and early 1960s has been removed. As a result, it became apparent to this Government that it was necessary for them to interfere in miners' wage negotiations with the National Coal Board, and that interference took the form of introducing coal imports under general licence. In other words, the Department of Trade and Industry, while indulging in killing off all our lame ducks, was not averse to allowing private coal owners abroad to feather their nests and, at the same time, initiating a vicious campaign against British miners.

I said at the outset that there was no economic case for importing coal. One has only to look at some of the figures on prices of coal from countries abroad supplied in answers to parliamentary Questions tabled by my hon. Friend the Member for Morpeth to see that my argument is proved conclusively. Whereas British coal, save for power station use, averages slightly above £7 per ton, including transport costs, in the past 12 months we have seen coal brought in from as many as 10 different countries at double and in some cases treble that price.

It is no wonder that the Central Electricity Generating Board commented in its Annual Report for 1970–71 that it had an additional fuel bill of something in the region of £20 million, part of which was due to its imports of foreign coal. It could be argued that the Generating Board imported coal of its own free will, but I do not think that that is so. I think that the Government instructed it to do so.

It would have been more sensible for the Minister to have explained that, since the country was to be plunged into the worst economic recession for 35 years, the Electricity Board would not need as much coal. In the financial year 1970–71—the tendency seems to be showing itself in this financial year—we are, for the first time since the Electricity Board was nationalised, using less electricity than we did in the preceding winter. Therefore, the Minister should have told the Electricity Board that, rather than scouring Europe and the rest of the world for coal which would be ultimately stocked in large quantities in Rotterdam, it would be better to use British coal.

It may be of interest to the House that coal from the United States of America, Australia and South Africa at £33 a ton, and more, has to be stocked on the Continent, not as a gesture to the environment lobby but because, when the ban was lifted, neither the Government nor the Central Electricity Generating Board realised that the large ships which carried the coal from those countries—mainly from the United States and Australia—could not bring it direct into this country. It has to be shipped into ports, such as Rotterdam and Amsterdam, stocked there, and then transferred to smaller ships so that ultimately it can be transferred to British power stations.

It was considered a waste of public money when we were involved in stocking coal on the British mainland. In fact, the N.U.M. and hon. Members in this House consistently argued that there ought to be some offset to the National Coal Board because coal was being stocked as it was at that time. But whilst it seemed wrong at the time to pay for the stocking of coal in Britain, like the argument on the common agricultural policy by the French farmers, it now seems right for the Government to allow the British Steel Corporation and the Central Electricity Generating Board to pay out money across the exchanges for coal to be stocked in Rotterdam.

The British Steel Corporation has also been involved in importing coal. It has not imported the large amounts which have been imported by the Central Electricity Generating Board, but contracts have been placed with various countries to the extent of about 1 million tons over the next three or four years. Whilst it can be argued that, for a short time, there was a shortage of coking coal, the fact is that most acknowledged fuel experts—I do not take too much notice of them—and most Governments would argue that there is not the same shortage of coking coal that there was at that time. Here again, the same argument could be applied as was applied to the Central Electricity Generating Board. Instead of coercing the British Steel Corporation to buy coal, why did not the Government tell Lord Melchett, who at that time was fighting with sponge-like tenacity for a small matter of £4,000 million investment in the British Steel Corporation, that it would not need the additional coal because they were going to run down the steel industry? Why did not the Government say that the Corporation would not want the British coal, never mind the foreign coal?

Some of my hon. Friends have made the point several times in steel debates that the workers at the Rover Don and Irlam steelworks would relish the chance to use British coal next year. I contend that the Government lifted this ban for purely political reasons. They wanted to take a hand in the wage claim which the National Union of Mine- workers is negotiating in 1971. By building up these large stocks of coal they hope to frighten the miners into accepting a cut of what amounts to 5 per cent. in real living standards by accepting the 7 per cent. offered by the National Coal Board. I fervently hope that the miners will respond to this challenge, when they take part in the ballot this week, by fighting for better wages and conditions.

If it is right for the Government to import coal from European countries where, it is alleged by some of the pro-Marketeers even on this side of the House, miners and other workers are getting wages as much as £7 above those of British miners, how can a claim for £7 or £8, which has been lodged by the N.U.M., be considered outrageous compared with the so-called wages on the Continent?

I hope, therefore, that the Government will listen to the voice of the miners this week and will keep their dirty nose out of the negotiations that are taking place. If the Government really want to curb price increases they ought to stop bawling and shouting about the trade unions ruining the economy by negotiating wage claims over and above what is the acceptable Government norm.

But it is time that the Government started to clean their own doorstep by stopping the importation of foreign coal, and by stopping it now, because it is nothing less than Government-sponsored inflation to allow £40 million worth of coal to be imported when we do not need it. They should, instead, allow British miners to get on with the job of producing indigenous coal; miners such as those at Oxcroft Drift which has been threatened with closure, despite making a profit of £3 million over the last four years.

10.31 p.m.

Mr. George Grant (Morpeth)

I am grateful to my hon. Friend the Member for Bolsover (Mr. Skinner) for allowing me to come in on this important debate. Unlike my hon. Friend, I am pleased that Under-Secretary of State is to reply on behalf of his right hon. Friend.

The Government's coal policy is ridiculous. Coal stocks now exceed 33 million tons, yet the Government are encouraging the importation of coal. According to grade, foreign coal varies in price from £9.26 to £33.50 per ton. Home-produced coal varies according to grade from £4.50 to £17.50 per ton. Apart from the differences in prices, what is the Government's view of the effect of importing coal on the balance of payments? And what is their view of the effect on the morale of the men in the mining industry?

Recent history shows that stocks of 30 million tons of coal have heralded a massive programme of colliery closures. Many miners are afraid that history will repeat itself. What is the real position in the mining industry? In recent mining debates in the House the Government have said that there is a need for a healthy, robust industry. Quite recently Sir David Barran, the Chairman of Shell, said that the Government should develop the coal industry, that the era of cheap coal had gone, and that oil prices would continue to rise. If the Government believe in the need for a strong, healthy mining industry, if they believe that stocks of 30 million tons are ample, why have they adopted their present policy? Is it because the Government want to embarrass the miners' wage claim, for a fair wage for a dirty and dangerous job? The country will achieve a strong and healthy mining industry only with the the good will of the miners.

Last year the National Coal Board made an operational profit of £34 million. After interest charges, the surplus was reduced to £500,000. This is where the answer lies. The Government restrict the Coal Board from increasing its prices, so they must be prepared to inspect its finances to keep miners' wages abreast of those in other industries. Imports of coal are not the answer to the problem.

10.36 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Nicholas Ridley)

I am very glad that the hon. Member for Bolsover (Mr. Skinner) has raised this subject, because it is right that it should be discussed in the House, and I think that I can adduce some arguments to justify the Government's position. I hope to make the hon. Member feel that we are sensitive to his arguments and will certainly consider them.

The right hon. Member for Barnsley (Mr. Roy Mason) and some of his hon. Friends came to see my hon. Friend the Minister for Industry and myself a few days ago. We were able to discuss this matter and put forward some of the arguments to justify the Government's position. I hope that the right hon. Gentleman, who is present tonight, will forgive me if I repeat some of those arguments, because it is much better that they should be made public in a wider forum than was possible when he came to see us.

I would emphasise that the policy a year ago when the coal import ban was lifted was simply to ensure that supplies would be available to those who burned coal. This was beneficial to the coal industry, because it kept the markets of the industry open. If people who burned coal were unable to obtain supplies, they were likely to switch to other forms of fuel, and that in turn would have reduced the permanent market for coal and have damaged the miners' cause.

So there can be no question but that the Government's policy of allowing imports a year ago was designed to help the industry's customers and indirectly the industry itself by keeping markets for it in a period when there was grave doubt as to whether there would be sufficient coal to get through the winter. My hon. Friend the Minister for Industry said at that time that he would review the import ban not later than March 1972, and we will do so. I emphasise the words "not later than", which mean that it can be reviewed before. My hon. Friend would like to have flexibility as to the exact date on which he comes to a conclusion about the future of the control or otherwise.

It must be remembered that the prospects of a shortage last winter were not made any easier by the strike which took place and that the consumers were worried that they would be faced with a situation in which they would not be able to obtain coal for their fuel plants. They were prepared, it seems, to pay considerably extra for security of supply. We reckon that four million tons has come into the country altogether—about half from the United States, a third from Australia and very little from Europe. Although most of it was shipped, as the hon. Gentleman said, to Rotterdam. very little of the coal imported has been European coal. I can give a rough indication of price differentials, but I emphasise that these figures are averages and may be misleading because some qualities of coal are more valuable than others.

The average price of United Kingdom coal at the pithead last year was, according to the N.C.B. Report, £5.80 per ton, whereas the average price of imports—this includes the cost of transportation across the oceans to this country—was £9.40 per ton. There is, therefore, a big price disadvantage to imports, which shows that the only reason why people imported coal was because they wanted to secure their own supplies and be certain they would not be interrupted if coal really became short last winter.

Some of this consists of special coals, mostly for the British Steel Corporation, and is of a quality or type which is not available from British production. On 9th April, 1970, the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) said that imports might prove necessary in this category—of special coals—and indeed they have.

There has been no pressure placed by the Government either on the B.S.C. or the Central Electricity Generating Board to import coal. I give that categorical assurance to the House. There has been no pressure either way to import or not to import coal. The C.E.G.B. was the main importer. The Board imported steam coal to assure electricity supplies for the country if the winter had turned out to be hard, instead of the relatively mild winter we had last year.

As the contracts which were entered into were fulfilled, the level of imports dropped, and it is broadly true to say that the coal which has come to this country has nearly all come in as a result of expected or possible shortages due to the stocks position this time last year, coupled with the possibility of a much more severe winter than we in fact experienced.

Mr. Roy Mason (Barnsley)

If that is true, what steps are the Government taking to stop an upsurge of coal imports in present circumstances? What public warning is the Minister prepared to give to all coal importers that when the ban falls on coal imports the importers concerned will have to accept the consequences themselves, without compensation, of indulging in long-term contracts?

Mr. Ridley

Any importer who imports coal at £9.40 per ton when he can obtain it in this country for £5.80 would not be a very shrewd businessman. I confirm what the right hon. Gentleman said about contracts; any contract which exists if a ban falls will not be exempt from the operation of the ban. But I emphasise the word "if" because I do not want in any sense to prejudge my right hon. Friend's decision about the future.

This brings me to the present position. Distributed stocks of coal stand at 23.8 million tons, and the N.C.B.'s undistributed stocks stand at 10 .9 million tons. That was the position at the latest count. This is a satisfactory level of stocks to get through the winter, whatever may be the condition of the weather.

I would have said that, apart from the small area of special coals for the steel industry, nobody would be willing to import when there is this quantity of coal on the ground and when the price differential is as I have said. I do not believe, therefore, that there is any likelihood of large imports of coal in the present conditions.

The only worry—and hon. Gentlemen opposite must face this—in the minds of consumers of coal is whether there will be a serious interruption of coal production due to a possible strike following the ballot this week. It is right for me to say that the Government are holding the possibility of coal imports open so that they can preserve the markets for coal, even if there were to be a coal strike—[Interruption.]—which would only damage the markets for coal. That should be pondered by the miners when they ballot this week, because it shows that the policy of coal imports, however much it may be suspected and thought to be threatening the miners, has helped them to preserve a larger coal industry than would have been the case if there had been no imports allowed.

The present position is as follows. Apart from special coals, which are small in quantity—the House accepts that we must allow in some special coals—there is a very great price advantage to British coal. The Government's overriding consideration must be that supplies must be maintained to burners of coal, in particular to the C.E.G.B. This is in the interests not only of the public at large but of the coal industry because it has the effect of keeping markets open.

I stress that if any consumer of coal feels that he is unlikely to get supplies at a crucial period, in the worst of the winter when the weather is at its coldest, and when perhaps stocks cannot be moved because railways are frozen up or roads blocked with snow, he is the most likely to switch to alternative fuels. There is no stronger guarantee of a buoyant and continuing market than that there should be coal freely and readily available to those who want to buy it.

I add a fifth point for consideration by hon. Members. When we join the European Economic Community, there will be free trade in coal—about a year from now. We already export 2½ million tons to the Continent of Europe. With free trade in coal, there is no reason why that figure should not increase considerably if the Coal Board can sell it.

Mr. George Grant

Then why import it now?

Mr. Ridley

It would be clearly crazy to impose a ban on imports of coal from the Common Market countries for a period of only a year. No one feels that that should be done. I wish that hon. Gentlemen would be more aware of the great opportunities that exist for coal. When I mentioned the figures £5.80 against £9.40 for imported coal, does not any hon. Gentleman say to himself, "Here is a very competitive British pro- duct. Let us go out and sell it and let us increase production by selling it"? Why are we so on the defensive?

Mr. George Grant

That is what the whole argument is about.

Mr. Ridley

Why do hon. Gentlemen not say that we should strip off the protection for coal and that it is so well priced and competitive that we should increase production by selling more? Why do hon. Gentlemen opposite have this defensive attitude? Why do they not welcome the opportunity which unfolds—

Mr. Deputy Speaker (Miss Harvie Anderson)

Order, the Question—Mr. Leadbitter.

Mr. Ted Leadbitter (The Hartlepools)

I did not intend to rise, but the Minister has provoked—

Mr. Ridley

On a point of order, Mr. Deputy Speaker. I think we started the debate at—

Mr. Deputy Speaker

Order.

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 eleven minutes to Eleven o'clock.