HC Deb 11 December 1972 vol 848 cc31-40
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Walker)

With permission, Mr. Speaker, I will make a statement about the coal industry.

There is real uncertainty about future prices of fuels and an increasing awareness throughout the world of the danger of a shortage of energy. We in the United Kingdom must ensure that our national energy assets are wisely used. Last year the National Coal Board lost £157 million. It is now losing around £100 million a year. Without Government aid, this would increase and could be eliminated only by a massive contraction. We are not prepared to see such a rapid rundown, with all the serious social and human consequences which it would entail. For these reasons, the coal industry must be given the opportunity to re-establish itself as the supplier of a competitive fuel—without being a permanent burden on the taxpayer.

Against this background my hon. Friend the Minister for Industry told the coal industry in August that before considering what help might be provided from public funds the Government wished to know what those in the industry could do to help themselves. As a result, the board and the unions put to us joint proposals for action both by the industry and by the Government. We welcome this joint approach and the drive which the board, with the full cooperation of the unions, is making to stimulate sales and marketing, improve quality, reduce overheads and increase productivity. These efforts have produced results and output per manshift has just reached a new record. The unions have undertaken to co-operate with the board in a review of the performance and prospects of pits. The board is also reviewing its land and property holdings to ensure that these are put to the most effective use and, if surplus to need, are sold.

The industry's joint proposals express a determination to put its own house in order and the Government therefore have decided to seek powers to support the industry in this task.

First, we intend to make a special regional grant to help the board preserve jobs, which are primarily in areas of high unemployment. Nevertheless, there will be redundancies. The Government are determined to do everything they can to alleviate the consequences for those who will be affected. We therefore intend to introduce improved redundancy terms, which will apply to anyone becoming redundant from today. We shall see that every effort is made to provide new jobs, making full use of the Industry Act and of available European Coal and Steel Community funds.

Second, we intend to seek powers to continue grants towards the board's social costs, to contribute towards the cost to the board of holding stocks and to cover losses incurred as a result of special agreements with the electricity generating boards to burn extra coal. At the same time, we propose to follow the Community practice and give support to coking coal.

Third, we propose to write off the board's accumulated deficit as at March 1973 and the amount by which the board's capital assets are overvalued. The total sum involved is about £475 million. This will considerably reduce the board's interest and depreciation charges.

Legislation will be introduced for these purposes and a Bill will be published today. Until this becomes law, any necessary advances for purposes authorised under the Coal Acts will continue to be made from the National Loans Fund.

Over the next three years the cost of the measures to deal with the board's financial problems and to moderate contraction could average up to £125 million a year; those to ease the consequences of any unavoidable contraction could average about £50 million. Such substantial assistance from public funds cannot be justified without effective and sustained efforts by all sides of the industry to improve its competitive position, contain costs and re-establish viability. Indeed, it is only through such efforts that the industry will be able to take full advantage of the opportunities, not least in Europe, which the future holds.

Mr. Varley

Is the right hon. Gentleman aware that, in general, we welcome the statement? What is more, we would have welcomed it just as much in August when we understand that it was ready to be presented but was stopped. Is the right hon. Gentleman further aware that his statement has been made possible by the remarkable co-operation which is building up between management and men in the coal industry, with record productivity, and so on? It will be necessary to consider in detail the statement and the Bill and, if necessary, to strengthen it in Committee. Meanwhile, I should like to put these questions to the Secretary of State.

Will the right hon. Gentleman be more specific about what the statement implies in terms of future production and employment levels, particularly taking into account the coal industry's place in regional policy? We support the right hon. Gentleman's response to the National Coal Board and the National Union of Mineworkers with regard to financial aid in return for the high level of employment in the industry in weaker economic regions of Britain.

Can the right hon. Gentleman confirm that a new redundancy payments scheme will be drawn up and laid before Parliament soon? Can he give any firm decisions about the authorisation of new coal-fired power stations—for example, Drax B? Can he give an assurance that the jobs of British miners will be put ahead of coal imports? Is he aware that, while all the aid possible for the coal industry is welcome and necessary and that we back him on it, it is no substitute for a properly planned integrated fuel policy?

How is the right hon. Gentleman's review going'? When will it be ready, and when will he be prepared to place it before the House? We are of the opinion that the maximum use should be made of indigenous resources in view of the growing energy crisis developing in the world, which the right hon. Gentleman acknowledged in his statement.

Mr. Walker

I cannot give any accurate estimates about future production and employment figures purely because if the pit-by-pit examination with the unions is to mean anything it would be wrong to commit myself to firm figures. Considerable flexibility is provided in the wording of the Bill. Naturally I hope that productivity will improve, which will make more pits viable.

Whatever happens, the redundancies will be very much lower than the manpower reduction which took place, for example, in the period 1964–70. I cannot give exact figures. Negotiations will take place between the National Coal Board, the unions and the Government on the question of redundancy payments and as soon as terms are agreed I shall make an announcement to the House. Negotiations will have to take place with the Central Electricity Generating Board on the question of the future of power stations. I cannot make any firm announcement on it.

It is not my intention to stop coal imports, but I hope that right hon. and hon. Members will get this matter into its correct perspective. In the last month coal production was about 12 million tons; imports were about 200,000 tons There is no undercutting or serious prices effect, but, as those who have been Ministers in Governments of both parties will know, small quantities of coal can be of considerable benefit to us in trading agreements which bring us much business and save many other jobs.

I agree that it is important to develop a total energy policy. I cannot give dates because I want to study the international implications and the world-wide demands to a greater extent.

Mr. Skeet

My right hon. Friend said in his statement that there will be an accumulated write-off of £880 million from the National Coal Board's accounts. Will he confirm that there is a market for coal of 130 million tons in the United Kingdom? Will he agree that an expensive energy policy for the United Kingdom will do nobody any good? Will he also confirm that the money allocated by Parliament will not be utilised to pay excessive wage claims?

Mr. Walker

My hon. Friend is quite right. Previously there was a substantial write-off in 1965. But the present write-off basically deals with what has happened in the past. When looking at the coal industry I think that it is right not to fight the battles of the past but to look to its future prospects. As for my hon. Friend's point about using expensive fuels, all the information available to me suggests that fuels which appear to be expensive at present may prove to be rather cheaper in years to come. There are trends developing in world-wide energy demand which make it vital to conserve our basic resources. Finally, dealing with my hon. Friend's point about future wage claims, the Government believe that, having given this aid and having played their part in what, after all, was the first joint approach to this policy by the National Coal Board and the unions, it is vital that the unions and the management act responsibly together.

Mr. Eadie

Will the right hon. Gentleman confirm that his announcement today is not merely a matter of assisting the coal mining industry but is the formulation of a Government energy policy resulting from their realisation that fossil fuels are wasting assets? Secondly, will the right hon. Gentleman assure the House that any new redundancy pay agreement will be valid as from today and therefore that, after negotiations with the trade unions, it will be retrospective to today?

Mr. Walker

On the hon. Gentleman's first point, my thinking is that there is a need for developing an energy policy. Some major European countries and the United States are aware of the impending problems. It is right that we should be, too. As for the hon. Gentleman's point about redundancy payments, I confirm that any person made redundant as from today will benefit from any agreements.

Mr. Edward Taylor

Will my right hon. Friend confirm that this substantial expenditure will not mean a rise in the price of coal in 1973? Will the present arrangement whereby industry and domestic consumers in Scotland have to pay £5 per ton more for coal be changed?

Mr. Walker

I do not know about my hon. Friend's latter point. I shall find out about it. Certainly the Government take the view that with the increased productivity which is taking place at present, we expect the industry to produce coal in the immediate future at the sort of prices prevailing today.

Mr. Harper

The Government measures will give much-needed help to the National Coal Board and a better sense of security for those employed in the pits. May I press the right hon. Gentleman about Drax? If Drax is not coal-fired, we in Yorkshire feel that much of the benefit which can be gained from the measures that the right hon. Gentleman has announced will be eroded. In view of the high production and the decrease in absenteeism among miners, this is a "must".

Mr. Walker

Yes. There is another party concerned. I am having talks with the CEGB about these problems at present.

Mr. Adam Butler

Is my right hon. Friend aware that we welcome these proposals provided that they bring about a viable coal industry, and that we welcome them especially on strategic grounds? With regard to the operating subsidy of £125 million to which my right hon. Friend referred, will such a subsidy be permissible in the Common Market? How does it compare with the operating subsidies that coal industries on the Continent receive?

Mr. Walker

My hon. Friend asks about the future success of this policy. The Government have agreed to it because for the first time both sides of the industry came to us with a policy that they themselves had agreed. Therefore it depends on the unions and the management carrying out the various proposals that they specified that they would carry out if the Government played their part. These grants are allowed in the Community. All the Common Market countries give aid and grants to their coal industries, and they are in line with or more than we shall paying under these proposals.

Mr. Ellis

When the right hon. Gentleman says that he expects that redundancies will be appreciably lower than in the past, does he mean that the absolute level will be lower or is he speaking in terms of the proportion of those now employed in the coal industry?

Mr. Walker

During the six years of the Labour Government there was on average a manpower reduction of 35,000 jobs a year. For the foreseeable future it will be very much below that level.

Dame Irene Ward

Will my right hon. Friend accept that in the main I am delighted to support his Bill? Is he aware that all my life I have grappled with the problems of the mines and that in the main although coal miners are very difficult men they are grand men? I am glad that we intend to do right by them. At the same time will my right hon. Friend bear in mind that tomorrow I hope that he will be as generous to ship builders and ship repairers as he has been to the miners?

Mr. Walker

I note what my hon. Friend says about this. I know that she has strong interests in both industries as a result of the activities with which she has been associated in the North-East. I am pleased to be able to say that at present the order books of most of our ship builders are not looking too bad. However, we shall be debating this subject tomorrow.

Mr. Palmer

Will the right hon. Gentleman now issue what his predecessor consistently refused—an up-to-date White Paper on the Government's energy policy?

Mr. Walker

I said earlier that I wanted to consider energy in a more international context than we had done till now. A great deal of work has been done on domestic energy policy. But it is important to put this in an overall international context. That will take a little time.

Mr. Biffen

Will my right hon. Friend say whether he foresees a situation where there will be operating losses incurred by the Coal Board over the next two or three years? If that is the situation are we to continue the practice of having target returns imposed on the nationalised industries? What financial disciplines does my right hon. Friend see operating?

Mr. Walker

As a result of these measures, we expect the Coal Board to be able to break even in the immediate future. We are discussing with the board the corporate plan for the industry. The fact that both the unions and the management on this occasion have worked out and agreed joint proposals gives good grounds for optimism that the efficiency of the indusry will be better in the future than it has been in the past.

Mr. Concannon

Is the right hon. Gentleman aware that, although we give a general welcome to certain proposals in the Bill, we believe that we are still not up to the level of subsidisation of coal industries in the EEC countries and that even this aid will not give us any continuity unless it is tied up with our biggest consumer, which is the CEGB? Is not it time that the Government got together with both the coal industry and the CEGB to work out long-term proposals for the industry?

Mr. Walker

The hon. Gentleman asks me about the European position. The biggest single producer of coal is Western Germany. Taking the position there in terms of aid per employee or aid per ton, after the proposals that I have announced, the volume of aid here is very similar. It is true that it is higher in the other European countries, but they are far smaller coal producers than Western Germany or the United Kingdom.

Mr. Pardoe

While the right hon. Gentleman's statement is very welcome, it must represent a miraculous conversion on the part of the Government. The right hon. Gentleman could do worse than recommend to the country that it should burn new fossilised fuels such as the Conservative Party manifesto for 1970. The right hon. Gentleman has accepted that there must be some redundancy. Is he in a position to put a figure on it? How many redundancies does he envisage that his proposals will give rise to in each of the next three years? Is the Government's policy now one of increased productivity or of work sharing?

Mr. Walker

On redundancy, I replied to an earlier question that I did not intend to fix any figure. If one is to examine the potentialities, colliery by colliery, it is absurd, before doing so, to fix a figure for redundancies. The volume of aid which we are now to give will mean a substantial reduction in the total of redundancies which would otherwise have taken place. The management and the unions are now working more closely together than for some time, and as a result of my hon. Friend the Minister for Industry demanding that they met and came forward with a joint programme before the Government decided upon giving any aid at all, many agreements were reached which will be of great benefit to the future operation of the industry.

Mrs. Kellett-Bowman

While accepting that the building of power stations is primarily a matter for the Central Electricity Generating Board, may I ask my right hon. Friend to assure us that, in seeking to help the coal industry, he will not encourage the CEGB to damage the prospect of nuclear power stations, particularly the second stage of the Heysham nuclear power station, which is very important for employment in my constituency?

Mr. Walker

I cannot comment particularly on that power station, but I can assure my hon. Friend that the Government have it in mind to see that the nuclear generating industry fully develops, because we consider that it has an expanding and very important rôle, not just nationally but internationally.

Mr. Skinner

Is the right hon. Gentleman aware that the joint proposals which were put to his hon. Friend made no reference at all to figures relating to prospective redundancies in future? Will he accept, therefore, that, on the basis that he has accepted in toto the proposals put forward, he should not then pursue a line of further redundancies, despite the fact that he cannot put figures to it since no figures were put forward in the proposals?

Will he also remember that one of the reasons—perhaps the main reason—why we are discussing this statement in this way today—is not the effect of any co-operation that has existed during the past 12 months but the effect of what happened 12 months before, when the miners threw co-operation aside and decided to start to tackle the problems with which they were confronted? Perhaps he will remember that if any future Government attempt to roll back the carpet, we shall have to go through the same process again.

Mr. Walker

As always, the hon. Gentleman's remarks are totally unhelpful, both to the interests of the miners and to those of the mining industry and the country.

Several Hon. Members


Mr. Speaker

Order. We have two important debates and I have a point of order to answer.