HC Deb 18 June 1974 vol 875 cc226-36
The Secretary of State for Energy (Mr. Eric Varley)

As the House is aware, the Queen's Speech announced an urgent examination of the future of the coal industry. The aim of this tripartite examination, conducted under my chairmanship jointly with the NCB and the three unions in the national consultative machinery, has been to give the industry a new status, perspective and security.

We are aiming to complete our work by the late summer or early autumn but, in accordance with the need stated in our manifesto for a report within three months, we have produced an interim report setting out the facts of the situation and the conclusions we have reached so far. It is being published this afternoon and I have arranged for copies to be available in the Library and the Vote Office.

It is now quite clear that there is a secure, and indeed prosperous future for coal, providing it can retain its newfound competitive position. Potential demand could reach 150 million tons in the mid-1980s. The increases in the price of oil that have taken place over the last year or so have transformed the energy scene. The Government are determined that coal should not be at the mercy of short-term fluctuations caused by variations in price and supply of competing fuels. However, we recognise and accept—as I am sure does everybody in the industry—that the future prospects of the industry should be determined by its long-term competitiveness.

Demand of 150 million tons is well above current output. All sides of the industry accept that a substantial increase in output is attainable with the present capacity. I am sure that the House will welcome the joint production drive which has been launched and will also share the hope that the NCB and the unions will quickly be able to adopt a sound and effective productivity scheme.

The examination has recommended, and the Government have accepted, the adoption of the NCB's Plan for Coal. This proposes new capital investment of some £600 million over the period to 1985 in order to provide 42 million tons of new capacity to replace that lost by depletion.

The NCB should now press ahead with preparations for the development of the Selby coal field as quickly as possible. This will, of course, be subject to the normal planning procedures. Selby will be invaluable in providing power station coal and the decision to develop it will enable the CEGB to give the Drax II coal-fired power station a firm place in their investment programme for the current year. Opencast production will be expanded from 10 million tons to 15 million tons a year.

With proper commercial pricing the NCB should in future be able to cover the real costs of producing coal and we are working out with the board the precise nature of its financial objective.

During our examination we have been constantly aware of the human costs of coal, and the legacy of chronic ill health. Outstanding among these is the problem of pneumoconiosis. All members of the House will recognise the shadow that this has cast over the industry. We have accepted that it would be tragic for the Coal Board and the unions to fight out in the courts claims for compensation in respect of 39,000 sufferers from this disease. The Government support the view that a scheme by which all these claims might be settled without recourse to proceedings is a more sensible and more humane method of dealing with this problem.

The Government will therefore be bringing before Parliament proposals to contribute to relieving the burden of the board's finances in respect of such a scheme for existing sufferers, though it seems only right that the industry itself should make provision for the future. The NCB and the unions are now formulating a scheme to deal with this.

The examination will be continuing the investigation of a number of more detailed points with a view to presenting a final report in the autumn. In particular the research and development working group, under my honourable Friend the Member for Midlothian (Mr. Eadie) will be examining the whole question of long-term uses of coal.

It gives me pleasure and pride to present this report to the House, with the bright future it forecasts for the coal industry, to welcome the positive plans that are being put forward for the industry's development and, perhaps most important of all, to welcome the new spirit of co-operative endeavour demonstrated by the ready participation of all sides in this examination.

Mr. Hannam

We welcome this short statement on the interim report, which we shall study carefully.

The Opposition accept the need for continued investment in coal and our own Coal Industry Act last year was proof of our support for the coal industry. We believe that every effort should be made to sustain coal output. This will involve a great deal of expenditure on research and development, on new mining techniques, on underground gasification and on other areas of new technology. The development of the new Selby field will provide a real opportunity for improved productivity.

In view of the serious decline in output—of nearly 10 per cent.—that has taken place in the coal industry since last year, will the right hon. Gentleman agree that any investment in future should be related to increased productivity and to output? What steps will he be taking to ensure this?

Mr. Varley

I thank the hon. Gentleman for the general welcome he has given to the report.

He asked about output and the decline in productivity since the end of the coal strike. This largely is due to the lack of development work that took place during that period. We want to see development work get ahead very quickly. The investment required to make sure that that development work goes ahead will be forthcoming.

Mr. Hardy

My constituents and I will welcome this statement, since it is positive evidence that Britain will pursue broadly-based energy policies. The hon. Member for Exeter (Mr. Hannam) said that he hoped that coal production could be sustained. I hope that my right hon. Friend's statement will invoke such a response from the mining industry that it will be increased. Would he make two things clear—first, whether the 150 million tons will include any export potential, and second, whether we can be absolotely sure that the Government help to those suffering from pneumoconiosis will be expedited so that tragedy is not further protracted?

Mr. Varley

I hope that the NCB will start talking immediately to the mining unions about pneumoconiosis, so that a scheme can be worked out and brought into operation quickly. There is great urgency about this.

The aim of the coal industry is to get production up to 150 million tons, and that will take a superhuman effort. If we get up to that figure, there will be export potential, but we certainly need all the coal that we can get at the moment for our own energy needs, particularly in power stations. The House will be aware that the CEGB at the moment has to import about 4 million tons of coal a year.

Mr. Skeet

The Secretary of State mentioned a productive capacity of 150 million tons which he said could be achieved provided that the industry maintained its competitive position. Is he aware that there is an outstanding claim for an extra £20 a week and that over the past year productivity has declined from 47.2 cwt per manshift to 42.7, that a large part of that has been incurred not since the closures but over the last year and that in North Yorkshire, which has some of the best pits, there has been a decline of 12.5 cwt? He must bear these factors in mind since they will mitigate against any proposition that he may have for increasing productive capacity—

Mr. Speaker

Order. Questions, please, on the statement.

Mr. Skeet

While I welcome the ideas on Selby, will the right hon. Gentleman bear in mind that mechanisation in the pits already exceeds 93 per cent.? How will he build in additional investment capacity when the maximum has already been reached?

Mr. Varley

When he has had time to read the report, the hon. Gentleman will see that all sides in the examination agreed that there was great scope for productivity and therefore for production gains. That is certainly the commitment of all involved. The examination did not concern itself with wages. I know that there have been reports in the newspapers about wage claims—or rather about proposals for wages—but the policy of the NUM is determined not by one area leader but by the NUM itself. The two representatives of the NUM in the examination, Mr. Gormley and Mr. Daly, very much want to co-operate along the lines of the examination.

Mr. Edwin Wainwright

We all greatly welcome this statement. My right hon. Friend mentioned 39,000 pneumoconiosis cases. Would he bear in mind not only those who are still living and suffering but also the widows of those who have passed away as a result of this dreaded disease? Would he also bear in mind those suffering from emphysema and bronchitis and see whether they can be included? In so far as this is a long-term measure as well as an interim plan, should we not bear in mind the fact that the manpower in the industry is getting older and that this country needs coal regardless of what the oil barons may say about the industry and its competitiveness? Will he do all he can to encourage newcomers, particularly youngsters, to enter the industry?

Mr. Varley

My hon. Friend is on to a very important point when he asks about the age of miners. The age structure in the mining industry should concern everyone. It is much higher than the average age in British industry. Nearly 55 per cent. of all men in the industry are between 40 and 60. My hon. Friend is absolutely right: it is an aging industry. We still need men to go down the pit and to dig the coal that we need from the coal face.

On the question of pneumoconiosis, our top priority will be given to existing sufferers. This is right. If we were to do nothing, we should have the spectacle of the NUM and the other mining unions trying to fight claims through the courts. The union has plans to take four cases to the courts later this year. They could probably get about 3,000 cases through the courts in the next few years, but many of the 39,000 would receive no benefit at all, and top priority must be given to them.

Mr. Adam Butler

Could the Secretary of State say more about the productivity scheme, and whether it is likely to be a national scheme? Would he not agree that it would be preferable that it should be on a colliery basis, for instance, since only by breaking it down in that way shall we provide the necessary incentive to increase productivity? Would he not agree that pneumoconiosis is the only penalty of working in the mines which distinguishes that occupation from others? Because of this, will he encourage the National Coal Board to establish the most generous compensation fund as soon as possible?

Mr. Varley

Apart from a small incidence of it in associated industries, pneumoconiosis is unique to the coal industry. Although I dare say there will be some criticism from certain areas about our proposal for this scheme—I am not suggesting that the hon. Gentleman is criticising it—anyone who wants to criticise should visit any chest clinic in a mining area and see some of the men suffering from this disease. As for productivity, it is not for me to get bogged down in details of how that should be worked out. That is something for conciliation, good sense and common sense within the industry. I know that that is how the unions hope to approach it.

Mr. Swain

Is my right hon. Friend aware that there will be a general welcome in the coal fields for his statement, particularly his reference to pneumoconiosis and its effect on the working population in the industry? But is he also aware that, at that rate of extraction, in present circumstances, even the Selby coal field will not be the long-term salvation that it is hoped to be? Are he and the NCB and the union investigating the possibilities of extracting the rich seam of coal under the county of Oxfordshire?

Mr. Varley

Exploration is certainly going ahead and all possibilities of further development are being explored. My hon. Friend is correct: if we were to do nothing, if we were not to invest the additional £600 million, production would go down to about 80 million tons by 1985. This investment is necessary to hold production up. I am very pleased that my hon. Friend, who knows a great deal about pneumoconiosis sufferers, welcomes the scheme.

Mr. Grimond

When he has finished his examination of the industry, will the right hon. Gentleman lay before the House a paper showing the comparative availability, costs and suitability of various sources of energy, so that we can make some judgment about the amount to be invested in it, and also the Government's proposals for fuel economy? Would he come up and see us some time in Orkney and Shetland? First, we should like to see him. Second, it is very important, since we are the Texas of Europe, that we should know about the general fuel policy. Third, he is a man with vast experience—

Mr. Speaker

Order. I must call to order even the right hon. Gentleman. This is not the time for speech making.

Mr. Grimond

With respect, Mr. Speaker, I had no intent to make a long speech. As this statement shows, there are immense repercussions on human beings of the development of fuel, of which the right hon. Gentleman has great experience. We do not want to repeat the mistakes of the last century.

Mr. Varley

If I can get a pair, I should like to go to Orkney and Shetland. I hope to visit the area within the very near future to look at some of the developments there and to talk to the people involved.

I want to give more information, and over the next few weeks before the House goes into the Summer Recess I want to make a statement about nuclear reactor policy and also about North Sea oil and gas, along with a statement on conservation, energy efficiency and energy substitution. These are important matters, and I shall bear in mind all the suggestions made by the right hon. Gentleman.

Mr. Sillars

Is my right hon. Friend aware that this early implementation of our election manifesto pledge will be welcomed in the South Ayrshire coalfield? Does my right hon. Friend not agree that it is fair for the Labour Government to ask ordinary miners and their families to consider all the implications of today's statement and this report when the miners come to determine their attitude to the social contract between the Labour Government and the TUC?

Finally, can my right hon. Friend elaborate a little on the position relating to Scotland? My right hon. Friend mentioned an investment of £600 million and linked that with Selby. Can he say what will be the Scottish coalfield's share of that investment?

Mr. Varley

I cannot break down the investment figure, but I am sorry if I gave the impression that the whole of the additional £600 million will be associated with Selby. That is not the case. Only a proportion will go there, and the rest will be for other coalfields in other parts of the country.

On the question of reaction to the report, I can only repeat that during the examination the mining unions cooperated fully. They recognised what the Government have done for their industry, and they appreciate the other measures that we have announced.

Mr. Cormack

Is the right hon. Gentleman aware that what he has said will go some way towards reassuring many of us, but does he agree that if the spirit of Aberdeen is persisted with the whole of the coal industry and all his plans, which I personally applaud, could be put in jeopardy?

Mr. Varley

I do not know precisely what the hon. Gentleman is implying, but I imagine that he is referring to the Scottish miners' conference at Aberdeen or, for that matter, the Barnsley miners' conference. The policy of the NUM on wages is determined not by speeches of individual area leaders but by the NUM in conference. I think that that conference is to take place at Llandudno during the first week of July.

Mr. Kelley

Does my right hon. Friend agree that, while the provisions in the report show a more generous attitude to those suffering from pneumoconiosis, there is a lack of understanding about other contributory respiratory diseases such as bronchitis and emphysema which arise from working within the industry and should be regarded as such and dealt with accordingly?

Mr. Varley

I cannot go into the details of the scheme, because it is not yet in being. What is to happen is that the Government having authorised the board to enter into talks with the unions, those talks are to take place. I hope that very soon a scheme will be devised and announced. It is for those engaged in the talks to consider some of the associated diseases and complaints that go with pneumoconiosis.

Mr. Crouch

As the right hon. Gentleman knows, I speak as a friend of the coal industry and I greatly welcome this injection of £600 million into the industry. May I, however, come back to the question of productivity? Productivity goes up in the coalfields when they are under the threat of closure. Can the right hon. Gentleman assure the House that he, as Secretary of State, is taking action with the NUM to ensure that the miners respond to this wholehearted support from both sides of the House for this injection of money so as to make sure that when the industry is supported in this way it delivers not only a social contract but a work contract, too?

Mr. Varley

From the discussions that we have had in the tripartite examination it is clear that there is a will and a desire to co-operate in the sense of the hon. Gentleman's question.

Mr. Fernyhough

Does my right hon. Friend appreciate that what he has said will be a boost to the morale of the men in the industry? The fact that Drax II is to be coal-fired—and I hope that there will be more such stations—will do more to give the men a feeling that there is a future for their industry than anything else that could be done.

Secondly, does my right hon. Friend realise that his statement on pneumoconiosis means that throughout the coalfields thousands who feel that they been brutally neglected will now realise that at last there is a Government who have got their values right?

Mr. Varley

I am grateful to my right hon. Friend for that statement. I know that there will be a ready response and that the interim report will be very well received throughout the coalfields of Britain.

Mr. Tom Ellis

Can my right hon. Friend say what part the present policy of the NCB played in the discussions? In particular, will my right hon. Friend ensure that the so-called gentleman's agreement on pricing, which did so much harm to the industry in the 1950s and 1960s, is scrapped and the board is assured that it will be able to act with flexibility appropriate to good commercial practice?

Mr. Varley

As I think the House appreciates, energy pricing is difficult because no one knows what is to happen to oil prices and how they will fluctuate. We are determined to ensure that if there are fluctuations in oil prices, nobody will start back-tracking on the coal industry. The Government want to foster the coal industry and to make sure that production is increased.

Mr. Rost

As one of the main recommendations of the Wilberforce Inquiry was that productivity deals should be implemented, can the right hon. Gentleman explain why a genuine productivity deal has still not been implemented even though the NCB has put forward and negotiated various proposals?

Mr. Varley

I cannot answer for what happened during the previous administration. As the hon. Gentleman appreciates, the Wilberforce Inquiry followed the 1972 strike. I do not know what happened under the Conservative administration, but I can say that there seems to be a determination by all concerned to make sure that this time a productivity scheme is put into operation.

Mr. McGuire

Is my right hon. Friend aware that hon. Members on this side of the House welcome the opportunity to put into practice many of the things which he advocated when he was on these back benches? We are all pleased about the way in which the pneumoconiosis issue is to be settled. It would be most unseemly to have that dragged through the courts.

What worries miners' Members is that my right hon. Friend has a negative attitude towards or a negative power in the future planning of the type of fuel to be used at power stations. Will there be any change in the present practice? This is one of the crucial questions faced by my right hon. Friend, and I do not think that it is good enough—and I hope that my right hon. Friend will agree with this—to leave it to the CEGB to determine what type of fuel will be used and all that my right hon. Friend can say is that he will not give permission for that, rather than be able to impose his will on the board.

Mr. Varley

I know how concerned my hon. Friend is about coal-fired power stations. I know he will welcome the fact that Drax II is the first coal-fired power station to be built for 10 years. On that basis the CEGB will want to talk to the Government further about the future fuelling of power stations. I know my hon. Friend realises that power station policy is bound up with the Government's decision, which I hope to announce soon, on nuclear reactor policy.

Several Hon. Members rose

Mr. Speaker

Order. We must move on.