COAL INDUSTRY BILL

HC Deb 02 March 1977 vol 927 cc497-557

Question again proposed, That the Bill be now read a Second time.

Mr. Latham

The National Coal Board says "Ah, but it will be investment" Certainly it will be investment, but whether the confident predictions in "Coal for the Future" that it will be profitable investment we in this House must at least seriously consider.

Again, as Sir Arthur Hawkins, Chairman of the Central Electricity Generating Board, said at the Church House discussion 12 months ago, in a statement that was regarded as being almost heresy at the time but should be on record— There is no advantage in capital investment just to keep people happy if it brings no real benefit to them, whether they be miners or electricity supply workers. There is no point in capital investment; it is costly, it puts the ultimate price up, and it reduces still further the demand for the product, so if we are going to keep electricity competitive we must restrict our capital investment as the Government are pressing us to do, as part of the private sector. No one, least of all myself, disputes that coal has an important part to play in a four-fuel economy, but as guardians of the wider economic interest we in this House must also try to see the broader picture. I hope that I have asked enough questions to suggest that we have much to do as a country before we can even consider making a decision on "Coal for the Future". The Secretary of State's Energy Commission will, I hope, as well as representatives of both management and unions of the energy producers, also include strong representation from sceptics who will ask pointed questions as to how much energy we will really need and who will pay for it. Only then can this House discharge its rôle to the people of carrying out a national financial energy audit. That process has hardly yet begun.

10.3 p.m.

Mr. Eric Ogden (Liverpool, West Derby)

The hon. Member for Melton (Mr. Latham) looked far into the future at Britain's needs and requirements for energy. While I disagree with much of his comments, I agree that we should all be extremely sceptical about forecasting which industry will be required to provide what amount of energy and at what price. Every such forecast that I have heard over the last 12 years about our future energy needs has been proved wrong.

However, I recall one forecast which came true—and it is perhaps a personal matter between the hon. Gentleman and myself. He and I were opponents in Liverpool, West Derby in 1966.

Mr. Michael Latham

1970.

Mr. Ogden

It seems longer ago. The Opposition Benches are becoming full of Members who did not win Liverpool, West Derby. I look forward to seeing many more of them. On that occasion, I forecast, after our confrontation, that the hon. Gentleman would move on to become an extremely good Conservative Member for an extremely good Conservative seat. That forecast at least has been proved accurate.

I made another forecast only a couple of hours ago. At the top of the notes from which I intended to speak, after hearing my right hon. Friend the Secretary of State make a quiet and responsible introduction of the Bill, followed by the ritual complaints about Socialist mismanagement but an equally responsible speech from the hon. Member for Bridgwater (Mr. King), I wrote "This has been a quiet and responsible debate". But the debate then erupted in speeches from my hon. Friend the Member for Dearne Valley (Mr. Wainwright) the hon. Member for Barkston Ash (Mr. Alison) and others. Nevertheless, I think that it has been a responsible debate.

So far, no hon. Member has declared an interest. I presume that that is because everyone in the debate has known who has interests to declare. Those of us on this side of the House who are members of the National Union of Mineworkers, as I am, have declared their interest on countless occasions, as I have done, and that they are sponsored by the union, as I am. All this is known already to the House. My views on the Bill would be exactly the same if I had no interest at all to declare. It is noticeable that, whereas in the past there was no great opposition to any important support for coal, in this debate we are all pro-coal.

I confess that, while I and my hon. Friends have done our best in the past 12 years to persuade the Government of the importance of coal, the oil-producing countries did more to persuade the Government to my point of view than anything that the NUM and its members did. If ever an honour were to be placed on the OPEC countries, we ought to award them honorary membership of the NUM.

I support the provisions of the Bill. To put the Bill into context, it is different from past Bills in one respect. In the past we have been concerned with where we could get the coal to burn, while before that it was a question of how we could burn the coal that we had. Now we are talking about support for an industry in a difficult period.

Every Department of Government now has severe limitations on its expenditure. We should all be aware that these financial restrictions must continue and even be increased during the next two or three years at least. It is not simply a case of having financial restrictions this year and then taking the lid off. The restrictions must continue.

Therefore, we should ask not merely whether the expenditure entailed by the Bill is justified. We have to justify this amount of expenditure in these circumstances. I confess that in the last few years, in spite of what I have just said, I have taken a number of deputations to various Ministers asking for investment in a particular industry or a particular area. I have no shame about that. But I was aware that when I approached any Department there was an invisible sign on the door saying "Please do not ask for credit as a refusal may offend" Where the Minister sat there was another invisible sign, "The bank is closed."

The Minister has to justify not only the Bill, but the Bill in these circumstances. I think that he did so to the reasonable satisfaction of both sides of the House—not an easy task and certainly to my satisfaction.

There are three reasons for supporting the Bill. Government aid for investment to industry is moving from the geographical basis of assisted areas, which are arbitrary geographical areas, so that instead of having assisted, intermediate and special development areas the trend is to move towards direct investment in a particular industry. The Bill fits in with that exactly. Clauses 2, 3, 4 and 5 deal with grants for promoting the sale of coal to electricity boards, grants for the stocking of coal or coke, grants in respect of coking coal, and regional aid.

The Bill recognises the responsibility of the NCB for security of supply. One thing that the hon. Member for Melton did not include in his calculations was security of supply, which must be considered in addition to cost and availability. He may have mentioned this point, but not to any great extent. The NCB has more than the normal obligations of a private industry. Clauses 6, 7, 8 and 12 of the Bill are concerned with pit closures, redundant workers, regional grants and pensions. Again, the Government recognise that the NCB has rather more social obligations than most private enterprise industries.

One point that I wish to put directly to the hon. Member for Dundee, East (Mr. Wilson) is that I hope the Scottish National Members, two of whom have been present during the debate, and the Welsh nationalists, of whom I have not seen any during the debate, will realise that Clause 6 is particularly important for the Scottish and Welsh coalfields. One of my hon. Friends had an Adjournment debate a week or so ago about the difficulties of the Scottish coalfields. The Bill applies to the whole of the United Kingdom and is important to every part of the United Kingdom. The aid is available to every coalfield in the United Kingdom. I hope that if the hon. Gentleman catches your eye, Mr. Speaker, he will be generous enough to recognise that fact.

Clauses 9, 10 and 11 of the Bill are perhaps more controversial. Indeed, they might become even more controversial if the hon. Member for Bedford (Mr. Skeet) is successful in catching your eye, Mr. Speaker. If it is right for private industry to diversify, it cannot be denied to a national enterprise. I agree that there should be equal opportunity. The NCB in these operations would not be in a monopoly situation, so competition would apply.

I wish to put two specific questions to the Minister. I hope he will be able to reply to both of them. If not, I know that it is his good custom and practice to write to individual Members with the information, and that is appreciated.

The coal industry, which includes both public and private interests, believes that there are major coal deposits under the North Sea. Members from the North-East Coast know that coal has been taken from under the North Sea for many decades. In the main, seams have not gone out further than two or three miles from the coastline. Now we are told that there are high hopes, great expectations, of major coal deposits being found far out under the North Sea. Some attempts have been made to discover how those deposits might be extracted and used.

The normal convention in mining of sinking a shaft or a drift and bring up the coal in bulk will not be possible in the North Sea. Is it possible for the Department of Energy to support research and development by the NCB, which cannot in any way be helpful in the short term but might make a substantial contribution in the long term, directed towards undersea burning, gasification and so on? Is it possible to have research and development contracts for the long term? Too often in this place we look at the next three years, not at the next 20 to 25 years.

The second question, which has not so far been mentioned, relates to Drax. If I simply say "Drax", Members and the Minister will know what all the other questions are about. I do not expect my hon. Friend to make a statement about the Government's intentions regarding Drax in this debate. However, that is a way of assuring him of the continuing in- terest of Members, particularly Members of the miners' group. Perhaps he will indicate when a statement is likely to be made. "Drax" is my shorthand way of putting the question, and I think that all hon. Members will understand it.

Finally, I should like to mention productivity and costs. Coal miners are not capstan lathes. Most hon. Members understand that. Coal mines are not machine tools. Coal mines work 24 hours a day, so it is not a question of putting on another shift. We cannot really compare productivity and progress one with the other of coal mines in England, Scotland and Wales. It certainly was a disservice by the hon. Member for Bridgwater to say that it was proposed that our coal production should increase by about 6 per cent. whereas the Americans were making plans to increase their production by about 135 per cent.

Mr. Tom King

About 58.5 per cent.

Mr. Ogden

I am sorry. There was mention of about 135 per cent. somewhere along the line.

Mr. Tom King

Perhaps I may help the hon. Gentleman. If I remember correctly, the figures are as follows: Australia and New Zealand, 58.3 per cent; the United States, 58.5 per cent; Canada, 86 per cent; and the average for the whole of the OECD, 36 per cent.

Mr. Ogden

I am grateful to the hon. Gentleman for that helpful intervention. I must have been adding the figures for Canada and America to reach about 135 per cent. However, as the hon. Gentleman eventually recognised, taking brown coal out of America and hard coal out of Britain arc two very different things. It is not a matter of making a machine to go faster, speeding up a belt and so on. Essentially, real productivity in British coal mines has been increasing, though that is not shown in the output per man-shift. It is more difficult to get coal from a British pit now than it was five years ago. The older the pit, the more difficult it is. We run faster in order to stay still. My only hope for major increases in productivity which will help to hold down costs is the finding and working of new seams and pits. It is a fact of life that any major increase in productivity must come from new pits and new seams.

Mr. Tom King

I agree with the hon. Gentleman. To put the record straight, since there still seems to be some misunderstanding, my purpose in mentioning the OECD figures was to show the importance that all those countries now attach to coal production. None of this coal would be won without substantially increased capacity. It is an indication that all those other countries are recognising the significance and importance of their coal industries.

Mr. Ogden

I am grateful: the hon. Gentleman and I have come by different paths to the same point.

As I was saying, the only hope of major increases in productivity lies in the new pits. Almost all the investment in the industry in the next three years will have to be directly aimed at production, but a great deal of time has been spent tonight on the environmental aspects. That is absolutely right. Whether at Aberfan, Barkston Ash, Selby, Belvoir or the new one, we must not repeat the mistakes which the industry, private and public, has made over the past 100 or 200 years.

I ask only that after the next year or two some of the resources being made available for the new pits should be devoted to the old pits. Some resources, no matter how limited, should be spent on improving their environment.

The Bill provides large amounts of taxpayers' money for direct investment in an industry which is vital to our future. There has been more agreement tonight than in any other debate on this subject. I do not want to incite the hon. Member for Bedford or any SNP Members, but I believe that the underlying tone of this debate has been a recognition that this is a major British industry which both sides want to assist because of its vital importance to the economy.

10.17 p.m.

Mr. John Hannam (Exeter)

The hon. Member for West Derby (Mr. Ogden) has made a thoughtful contribution to an interesting debate. There has been great concord between the two sides about the future of this important industry. In a spirited speech, the hon. Member for Blaydon (Mr. Woof) indulged in a little name-dropping. I should like to do the same by referring first to the person that he mentioned—the President of the NUM, Mr. Joe Gormley. In a discussion that I had with Mr. Gormley a year or so ago at a joint industry meeting, he stated very firmly what has also been expressed by the hon. Member for Blaydon, West Derby that a bipartisan approach was desperately important if we were to obtain the fullest benefits from our massive energy resources. He has developed that theme, of course, on other occasions.

Therefore, in my approach to the Bill, with all its implications, both financial and otherwise, I retain my fundamental belief that our coal reserves are our most important asset. North Sea oil and gas, vital though they seem in our present dire economic straits, are of limited duration. With all the alternative sources of energy—tidal, solar and wind power and even nuclear energy—coal, if produced economically and used wisely, will increasingly play an important rôle in our industrial processes. I am therefore pleased that once again the House can deliberate constructively on a major Coal Industry Bill.

Having said that, and declared my unequivocal position as a supporter of the coal industry, I must express, as other hon. Members have done, some concern at the present state of affairs. I know that there is tonight a feeling of unease among some hon. Members and Ministers, shown in the thread which has run through most speeches about the decline in productivity in the mines.

Writing in the Colliery Guardian in May last year, the Secretary of State said: What is needed is a viable industry to get the coal out of the ground. And to get it out at competitive prices. With coal prices rising by nearly 100 per cent. in the last three years, there is general anxiety that for reasons people do not undestand vast amounts of their money, the spending of which we are approving, are being poured into the coal industry without achieving anything. There are many reasons why, some of which have been explained tonight. We have heard detailed explanations why we are not obtaining the increases in productivity which successive Ministers when presenting successive Coal Bills have proclaimed would be a direct result of their measures.

Mr. Grimond

The hon. Gentleman draws attention to a distressing fact, that productivity has been falling, but has he noticed that at the new mine in Royston productivity has risen from 2¼tons per man-shift to 8 tons per man-shift? If this is to be the pattern of the new mines being sunk in Yorkshire and elsewhere, that is encouraging.

Mr. Hannam

I agree completely. I want later to develop the reasons why I think it is not the miners' performances at the face but other factors which determine the drop in productivity, and which will determine the increase in productivity which we shall achieve in the years to come.

I have sat on three Coal Bills. Each time we have discussed the whole question of the non-realisation of the hopes expressed in the deliberations on the previous Act. Each time we have had Ministers expressing their determination to come up with a new and acceptable productivity deal so that these new targets could be reached.

The hon. Member for Bolsover (Mr. Skinner) gave the reasons why he feels pessimistic about any new productivity arrangement. Unfortunately, I believe that all the portents are unfavourable, and I agree with the Iron Gentleman in that respect. But it is still necessary for us to indulge in some plain speaking so that we may restore confidence to people and Parliament that we are nut just pouring money into an industry without any idea of what that industry is trying to achieve.

There is no dispute, or there should not be, about the rôle of coal. With coal-generated electricity increasing from 67.8 per cent. of all electricity to 77.8 per cent. last year, the miners should not feel that there is some gigantic conspiracy, on the part of the CEGB or anyone else, to prevent the fullest possible exploitation of our massive coal resources.

I do not share the fears of the hon. Member for Bolsover that more oil will be used for generating electricity at the expense of coal. But there is, and there should be, concern on the part of workers and management in the industry about the fall in demand for coal. The Secretary of State is right to stress the need for a viable, competitive industry. But what indication has he given today that the frighteningly large increase in prices of the last year or two will not be added to substantially by a lack of productivity, inflation and other factors, such as bringing forward Drax B, early retirement—the costs of which will have to be added to the price of coal—and a miners' pay claim which could be far in excess of the present voluntary limit?

As my hon. Friend the Member for Bridgwater (Mr. King) pointed out, miners are just reaching the end of their phase 1 pay agreement. They still have to go through the whole of phase 2 at a time of frighteningly large increases in the cost of living. We are entitled to an assurance from the Government that there will be a satisfactory pay settlement later this year which will relate somehow or other to productivity.

The overall decline in OMS has not been consistent. I disagree with the hon. Member for West Derby, who implied that we were facing a continual problem of trying to catch up with the year before, because there has in fact been an up-and-down situation for some years. Productivity has gone up for one or two years and then down. It is a worrying situation, because we should be expecting productivity to increase, especially if we are considering investment in new equipment and new mines.

Various reasons are advanced for the decline in productivity. Unless it is reversed, the Selby field, the first to be developed in Britain for 70 years, may finish up producing very expensive coal. The strategy in the 1974 "Plan for Coal", drawn up by the last Conservative Government, aimed at halting the decline in output. We have seen a decline from 184 million tons in 1960 to 120 million last year. The sum of £1,400 million envisaged in 1974 for major improvements has had to be revised upwards dramatically, by over 100 per cent.

I support many of the objectives and figures being put forward in the Bill, the increased funds for coal research, the gasification programmes already taking place, fluidised-bed combustion and the coal-into-oil processes. But the revised expenditures are vast, and if they are not backed up by increased production and the competitiveness which the Secretary of State has insisted is required they are not entitled to receive our unqualified support.

The reports of severe flooding problems at Selby are disturbing, because we base our hopes for productivity upon such new fields producing about 60 per cent. more. The overall 4 per cent. a year increase envisaged in the "Plan for Coal" was based on that kind of premise. Therefore, it is crucial to the debate that the Government give us a clear indication of plans to boost production per man-shift.

I hope that Labour Members will shoot me down if I am wrong, but I suggest that our present shift system of one or two shifts a day, certainly in the newer pits, is not as effective as the Europeans' three-shift system. That is not because the German miner works harder at the face than the British miner. It has been conclusively proved that he does not. But the system there allows for a far better use of the machinery and equipment.

There is also the question of the reliability and design of our coal extraction equipment. It has been reported that we have only a quarter of the length of service compared with European equipment. We suffer long delays, and, therefore, long weekends are used for the servicing of such equipment. I put this forward as an alternative explanation for falling productivity rather than the general assumption that for some reason the British miner is not working as hard as he has done in the past.

I have visited old and new pits. I recall a visit to the new Daw Mill colliery, with faces of 250 yards and wonderful new equipment producing vast amounts of coal by mechanical means. But I also clearly recall my impression of the mine's dependence upon the reliability of those machines. When I talk of poor productivity, I am not implying poor effort by the miners. But I accept the problem of the older pits—

Mr. Gwilym Roberts

Does the hon. Gentleman accept that with a three-shift system of the type he was talking about there are greatly increased maintenance problems with some of the machines at the face? Some of the experts who have compared one or two Staffordshire pits with German pits found that total productivity in the Staffordshire pits that they examined was higher, purely because the machines ran better and there was better maintenance.

Mr. Hannam

That is a crucial point. That is why I related the matter particularly to the need for more reliable equipment and machinery. It appears that the improved productivity in German pits is not a result of producing more in the working time at the face per man-shift but comes about because the Germans are getting longer and better use out of the equipment. I think that the Germans have shown that by using a three-shift system, with better and more reliable equipment, they can achieve a much higher level of productivity, but it is a matter that must be very carefully examined.

Mr. Spriggs

The hon. Gentleman is now comparing the German coal mining industry with the British industry. I do not know whether he has seen the deep, thick seams of brown coal in Germany where they are outcropping seams that are 30 ft. thick. They are doing so 8ft. at a time. If Britain had seams like that, it would be a wonderful asset to the British fuel industry. When the hon. Gentleman is comparing the German coal industry with the British industry he should take such matters into account.

Mr. Hannam

I accept that we must be careful not to liken unlike with like—in other words, using pits from one areas as examples when they are totally different from others. I have seen reports and evidence where those investigating the problem have tried to take equivalent pits in Poland, Germany and other coun- tries when comparing them with others. I am suggesting that productivity does not necessarily lie only with the working of the miner at the face. There are many other factors involved. I accept the hon. Gentleman's point.

Another matter that is connected with productivity is the whole question of incentives and labour attitudes. Surely labour attitudes could be better within the industry. It is important to ensure that we have the right shift system that gets the best use of equipment and machinery and that the equipment and machinery is reliable and long-lasting. If the miners can see positive financial rewards from the increased use of available machinery, if they can see a 4 per cent. increase in production per year as originally laid out in the 1974 "Plan for Coal", they will themselves generate greater confidence in the future along with better industrial relations and much higher wages.

It is not only a matter of financial rewards. If we talk of exports of coal, increased electricity generation and increased domestic and industrial consumption, those increases will not be obtained just by the measures that we have heard proposed by the Secretary of State at Question Time. The premature bringing forward of Drax B, the adding of that generating station to our already under-used generating capacity, will add £150 million to the cost of electricity generation. That will mean a 3 per cent. or 4 per cent. increase in charges, as admitted in answers that have been given in the House, plus the increase of 15 per cent. that we are liable to see added to coal prices, plus the cost of early retirement proposals and the cost of any new wage agreement, and all this will further stifle coal demand.

We have to be extremely careful not to be led up one alleyway only to find that we defeat our objectives in another. I want to see new and more reliable machinery, earlier retirement to create a younger work force and new fields at Selby and elsewhere bringing about the production that we seek, combined with a forward-looking incentive scheme for the miners. If that could be achieved we could put our industry on the right path, but without it we shall continue to lag behind our competitors and fail to seize the opportunities open to us.

The best exposition of the case that I am making came from the Secretary of State in the article he wrote in the Colliery Guardian of May 1976. He referred to the opportunities for exports, which it is important that we bear in mind. He wrote: As the European Community includes among its energy objectives, in addition to stabilising coal production at current levels, a potential increase in coal imports from non-Community countries, this offers the United Kingdom some prospect of increasing its trade in coal within the EEC. By 1985 the Commission estimates 'imports' will have to increase by about 20 million tonnes. If the United Kingdom can achieve a surplus of coal at competitive prices, some of this trade may well come to us. Clause 11 enables the NCB to operate extensively abroad, and I should want to examine the powers very carefully as they could lead to the opposite of what the Secretary of State was saying. They could lead to competitive coal extraction in other countries. I have no objection, to NCB expertise being used and sold abroad in joint ventures, as is being done with the Queensland coking coal development, but some of these projects could lead to NCB imports coming into this country from developments of coal elsewhere and competing with our own production. We need a clear and detailed case made out for the clause by the Government if these overseas developments are to take place.

If these overseas developments are to be slanted towards the new developments of oil from coal or other energy techniques I should favour them provided the closest scrutiny is maintained in order to avoid the possibility of huge loss-making ventures being embarked upon. I need cast my mind back only as far as the groundnuts scheme to realise how we can find ourselves not restraining ventures of the sort which take place abroad.

Clause 9 proposes an extension of the NCB powers to enable it to engage in petro-chemical activities, I know that my hon. Friends will deal extensively with this. The Department's Press notice gave the impression that this clause would not empower the NCB to go downstream with petroleum refining and marketing. The general interpretation of this provision by experts outside the House is that it seems certain that these powers would be given.

In spite of the qualification which is supposedly included in subsection (1), the clause is so loosely worded that I suspect that a deal has been struck with the Government to compensate the NCB for the arbitrary removal of its North Sea oil activities. I imagine that there is still a group of oil experts in the NCB who would like to retain these oil activities, and, therefore, I suspect that a deal has been struck.

There must, therefore, be a conflict between the NCB and the oil companies. How are these powers necessary for helping the board to establish long-term outlets for coal, which is supposed to be the object of the Bill?

I support the Bill since I believe that from the 1990s onwards coal and nuclear power will provide the ever-increasing bulk of our energy. The oil era will end much sooner than expected, and alternative sources of energy—solar, wind and tidal power—will only just enable use to keep pace with demand.

The latest figures from the Oil and Gus Journal paint a worrying picture of declining proven world oil reserves, with a 9 per cent. decline in 1976. If no further additions to reserves were to be found there would be only sufficient oil at the depressed 1976 level of world production to last for the next 29 years.

Taking into account new discoveries made, and balancing them with the increased consumption which will result from the pick-up of world demand, we can see that we are coming to the end of these oil supplies.

We must, therefore, ignore the cynics and look a few decades ahead to a period of nuclear and coal power. The nuclear debate is well tinder way in the House, but coal will be the great source of energy in the 1990s, and not necessarily in the forms we now know. We shall have the new techniques of fluidised-bed combustion, gasification of underground and undersea coal strata, liquefaction and "gas from coal", and "coal-plexes" for petro-chemical processes as already exist in South Africa and elsewhere. These are the coal uses for the future, and it is right to provide for the NCB to carry out research and development on these matters.

I want all this to take place, and I want our embattled coal industry lifted out of any rut of partisan politics that it may be in. I want an end to industrial confrontation, because of the great future that there is for coal. The Government have not convinced me that they have their priorities firmly in view, but I hope that in Committee all of us can assist them to get these priorities right for the future.

10.40 p.m.

Mr. Albert Roberts (Normanton)

As promised, I shall try to confine my remarks to about 10 minutes to allow some of my colleagues to enter the debate.

I would first make reference to the speech of my right hon. Friend the Secretary of State for Energy. I am pleased that the Bill has been brought forward. If the debate has been wide-ranging, it is simply because in the past we used to have an annual debate on the National Coal Board report. This practice has lapsed during the past few years, and, as a result, we are taking the opportunity to go rather wider than the Bill and discuss other matters which are very important.

On going through the Bill, I feel that my right hon. Friend's comments were very fair. But he must realise that at the end of the day we must face realities. It is an important Bill. I have listened to many coal debates in this House during the last 25 years, and we always seem to get a wide measure of agreement. I cocked my ears when my right hon. Friend made reference to Jack Dunn and the pamphlet concerning oil and energy. That kind of thing has been said in this Chamber for many years and successive Governments have failed to take note of what has been said on these issues.

Without doubt, the Secretary of State for Energy has one of the most important posts in the Government. Without energy we would have no social services, or education, or civilisation. I was pleased when my right hon. Friend mentioned that he was striving to bring all the energy industries under one umbrella. We have argued for this many times in the past but we have never actually succeeded in bringing it about. However, I am now convinced that my right hon. Friend is making a serious endeavour to bring it about.

I smiled slightly when my right hon. Friend referred to the Sankey Commission. I wondered whether anyone in the Chamber knew who Lord Sankey was. When I was a young boy in 1920, I remember that he used to come to the miners. Lord Sankey was a friend to the miners. His speeches on mining and the mining industry are still remembered by many of us. He was appreciated, and we fully understand that he was dealing with a very human problem.

In spite of mechanisation, the mining industry is still fighting nature with bare hands. I have been down about 50 pits and I have also seen opencast mining in Australia and Germany. It is difficult to make comparisons with regard to output per man. But we must look back in retrospect to see where we have gone wrong. As I have already said, this subject always evokes an exciting debate. I am sure that after the debate is finished it will take at least two hours for the coal dust to settle.

This is an industry which needs serious attention. We have to realize that it takes two tonnes of coal to produce as much energy as one tonne of oil. We know that coal is still a reserve, but we must realise that the reserves in Great Britain will last only 200 years. Not many hon. Members realise that there is coal under Reading which is 12,000 ft deep. The time will come when this will be exploited.

The coal industry in Great Britain is one of the best in the world. We have some of the best mine workers. Having said that, we must take into consideration that we have a responsibility to society. That is why I say to my right hon. Friend that if we proceed with the Bill, and with the loan, we must have increased productivity.

I am a sponsored Member of the NUM. I say to both the NUM and the NCB that something has got to be done. Members of the mining group come to the House and support the NUM through thick and thin. We make our speeches in this Chamber, and on many occasions we have been supported by hon. Members on the Opposition Benches. However, as my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) said, we must realise that if we do not get increased production it will be difficult for us to start applying the fringe benefits that we should like to give to those in the mining industry. We should like to do far more than we are doing in that respect.

It is difficult to encourage recruits into the industry. Throughout generations there have been problems in the mining industry and people have made sacrifices to go into it. As an industry producing coal, 100 years ago we were exporting more than half of all fuel entering world trade. Today we can still become the powerhouse of the EEC, and we should do that. Now that we have this Bill, it is up to all of us to see that we play our part, particularly in Western Europe, because if we do there will be a great future for those in the mining industry. There is no reason at all why we should not stimulate confidence within the industry so that we can get the right kind of recruitment.

At present we are obtaining about 15 million tons per opencast mine. The hon. Member for Barkston Ash (Mr. Alison) was waxing eloquent about Selby and the proposed mime there and how some of his people will suffer. I was born in my constituency and I have continued to live there. We have been ravaged by opencast mining since 1941. There is now a proposal to start a new mine in close proximity to 300 hours. I shall oppose that if at all possible. However, we have experienced this problem. It may be fair for the hon. Member to make a constituency speech concerning what may happen at Selby, but I hope that he will realise that we have had the spoil banks and have made the sacrifices.

I have always claimed that Yorkshire, with its agriculture, coal and steel, is probably the most important county in Great Britain. But we have made an enormous sacrifice. I have said to my people, "Opencast mining is justified. The coal is cheaper to win than the coal in a deep mine." This coal must be got out at some time.

Mr. Alison

The hon. Gentleman is a neighbour of mine in Yorkshire. He knows that I have the same problem of the opencast site that spreads dust all over my constituency as it does over his. It is not merely Selby about which I have been talking. We also have the opencast problem in that part of my dividion.

Mr. Roberts

Of course, that is so, However, I hope that my hon. Friends who come from areas that are far away from mining areas will realise what we must put up with, although we know the national need and that we must probably tolerate some of these things.

Mr. Woodall

Does my hon. Friend agree that one of the problems in that part of Yorkshire in which we live is the shortage of tipping space that is now being experienced with some of the long-established pits? That will never be a problem at all in Selby.

Mr. Roberts

Yes, and I accept that that is so concerning Selby. But what has been brought out is what may happen in the Selby area. I have a good amount of sympathy with some of the points that have been made, but people in my area have experienced these problems for generations. I do not mind these points being raised as a constituency matter. I have referred to certain opencasting in my constituency. It will continue for 30 or 40 years. That is what worries me tremendously.

I do not believe that enough has been done, or that sufficient money has been spent, on research. When we talk about oil resources being exhausted within two generations, we should remember that there is a possibility of obtaining oil from coal. It could be done now, but it is a very expensive process. Far more attention should be paid to research. The Bill opens up great possibilities, but I would like to see the whole process stepped up a bit. Whatever we may say about fossil fuels, the fossil fuel that we must bear in mind most is coal. My hon. Friend who is winding up the debate tonight has as much experience of the industry as anyone in this House, but I would like to hear him say that a little more could be done on research.

I am pleased to say that the blackened panoramas in some of the coal fields have disappeared. This is a tribute to those who have subscribed towards the removal of the tips. In parts of my constituency now one can actually see cattle grazing. I very much appreciate this rural scene.

The House debates a measure like this with a good deal of agreement, although some hon. Members do bring up the past a little. If we do not get the kind of agreement we are all seeking, it will be difficult for everyone. Our economy depends on it, and our direct and indirect services depend on it.

I want to see full co-operation between the National Coal Board and the National Union of Mineworkers. To a large extent it will help if we can produce more coal. If people are paying £52 a ton for coal, that is a lot of money. I remember the days when I got my ton of coal for 3s. 6d. I do not believe in cheap coal, because I do not believe in cheap miners. We have had cheap miners for generations, and now we must ensure that they are adequately compensated and have suitable hours. I believe that 25 years is long enough for anyone to work in a pit.

I shall quote from the conclusions of a Government committee under the chairmanship of Sir John Forster which examined the question of juvenile recruitment to the mines in July 1942. It said: The industry has a black record as regards unemployment, and especially since the end of the last war there have been certain districts in which the incidence of unemployment and part-time working has been particularly severe. During that period coal-mining has been subject to a series of shocks which have done serious damage to the prospects of those whose well-being has been dependent on the industry. The memory of these shocks still remains and has operated as a deterrent to recruitment. The wages level, both for boys and adults, does not compare well with other industries, especially taking account of the time lost from sickness, accidents, and short-time working. The type of underground work is uncongenial, and will continue so unless improvements in living and working conditions keep pace with those in other industries. That was in 1942, and it is still true today. We must achieve unanimity on energy policy. If we can retain confidence in the industry, I believe that there can be a good future.

The future for the coal industry is exciting. If I were a young man embarking on a career today, I should have no hesitation in choosing coalmining. I welcome the Bill and hope that it will be fairly treated in Committee.

Mr. Deputy Speaker (Sir Myer Galpern)

I must remind the House that this is not an open-ended debate. It must finish at one o'clock, and the Front Bench speeches will begin at 12.20 a.m. We have only 85 minutes to accommodate the contributions of 11 hon. Members. Therefore, I appeal for brevity and hope that hon. Members will keep their speeches within a compass of seven or eight minutes. I shall then be able to call all those hon. Members who have sat through the debate.

10.57 p.m.

Mr. Gordon Wilson (Dundee, East)

I see this Bill as part of a wider vision in the new approach to the energy gap, but the energy gap will grow wider sooner rather than later.

The future of coal is dependent on two particulars: first, price, and, second, productivity. The subject of productivity has been ventilated a great deal this evening, and it plays an important part in considering whether there will be a demand for coal in the market. As oil and gas go into shorter supply, the price of those products will rise. If the price of those commodities rises, coal will become more and more competitive.

We are now dealing with a partly transitional situation in which coal—which in the 1950s and 1960s was in competition with cheap oil—is now much more competitive than it was because of the policies adopted in the OPEC and the increase in world oil prices. But we still have not reached the situation when coal has come back into its own—to the time when it is regarded as it used to be, as "King Coal".

This Bill is important in two ways. First, it will provide finance for the development of industry, and I shall return to that matter a little later. The other aspect of the Bill involves the development of chemical products from coal, and it is right that research should be conducted into that situation.

I hope that the Minister will be able to answer one or two questions about the coal industry in Scotland. I appreciate that a large part of the finances will go to development of the Selby coalfield, if not to others. That is a commercial matter. But what rate of investment is the Minister proposing for the Scottish coalfields? The rate of investment in recent years has been too low, and I shall be interested to hear what sort of investment programme is in mind in view of the increased lending limits proposed in the Bill.

Will the Minister give some idea when the reserves at Musselburgh, so recently discovered, are likely to be developed? Is not the coal agreement with the South of Scotland Electricity Board almost at an end'? Since Clause 2 relates to assistance in the purchase of coal by electricity boards, will the Minister say something about the Scottish situation? Will he give a little more information on what is happening at the Fallin colliery?

I leave that aside and go on to the matter of petro-chemical developments. Clause 9 contains a most interesting proposal. It gives power to the National Coal Board or, at least, if I can paraphrase what the Minister said, it extends the powers that we are told the Board already has, to go into the petroleum business. My view at the time of the formation of the BNOC was that the NCB had had a raw deal at the hands of the Government. The substantial assets that it had discovered as a result of its own enterprise in exploration, in partnership with the oil companies, were transferred to the BNOC without any compensation other than the refunding of the exploration and other costs that had been associated with the deal. Those oil resources have gone to the BNOC.

I should like to put a suggestion to the Minister. When the NCB becomes involved with petro-chemical activities and research. it should consider doing so in partnership with existing organisations. We already have two successful examples of this—the experimentation that has been carried out on a joint basis into the gasification of coal and the matter of fluidised-bed combustion. This has been done through a wholly-owned NCB subsidiary, NCB (IEA Services) Ltd., which was the operating agent. The finance has come from the USA, West Germany and the United Kingdom under an International Energy Agency agreement. I suggest that this goes on in other parts of the world. Companies that were not obviously linked with the coal industry—some of them are oil companies—have seen emerging a pattern of fuel in energy development and they have been going more and more into coal. It may be that some of the research work that is required and will be necessary before the costs of refining of coal to produce petroleum products is carried out has been done already. It would be desirable if the experimental costs could be shared inter- nationally through governmental action or even by the NCB in co-operation with companies.

I remember hearing from the Continental Oil Company that was a partner of the NCB. It said that it had a good relationship with the NCB because they were both in the extraction industry. They were both involved in mining and interested each other's ways of thinking. So, although there are the NCB on the one hand and the big oil companies on the other, it may be that for certain specific purposes, particularly in research, there might be some possibilities of co-operation. We must look into the petro-chemical possibilities of coal much more in the future than we do now.

If we are heading into a situation in which oil will progressively become scarcer or the further supplies that are discovered are in deeper water and, therefore more expensive to take out, coal will gradually come into its own. In that situation there will be a transition from an oil-based economy to coal. But we must start now. I was impressed by the letter I recently received from Mr. Grainger, who is the member for science on the Board, in relation to the atmospheric fluidised-bed combustion system, the commercial exploitation of which is imminent in the United Kingdom. The United Kingdom has a clear lead as a result of the NCB's pioneering work. The most useful demonstration example is the modified boiler at the Renfrew works of Babcock and Wilcox. It is hoped that overseas sales of plant based on this model will grow rapidly. Opportunities for commercial development may come from the experimentation that may be finance and encouraged under the Bill.

I am bearing in mind your injunction to be brief, Mr. Deputy Speaker. I have said as briefly as I can all that I intended to say in relation to the Bill without going into a critical or analytical examination of the industry as a whole. Having, said that, I shall resume my seat.

Several Hon. Membersrose—

Mr. Deputy Speaker

Order. I am most grateful to the hon. Member for Dundee, East (Mr. Wilson). He took exactly eight minutes, and that was very helpful

11.5 p.m.

Mr. Dennis Canavan (West Stirling-shire)

I thank my right hon. Friends the Secretary of State and the Leader of the House for bringing forward this Second Reading. I asked during business questions three weeks ago that it should be brought forward because I was concerned about further investment in the coal industry, not just at the national level but also at the local level at Polmaise in my constituency.

I hope that the increase in the borrowing powers of the National Coal Board from £1,100 million to £1,800 million, with the possibility of a further extension to £2,600 million, will make possible an increase in the investment in collieries such as Polmaise, which employs 600 men and is one of the largest industrial employers in my constituency. There were once many pits in Stirlingshire, but Polmaise is now the only one left.

On 1st February the Board announced a proposal to close the colliery, despite the fact that, according to reliable information that I have been given, there are enough resources for 15 to 20 years' work. The pit was being closed not because the seams had been exhausted but because of low production. This has arisen not because the miners there do not work as hard as miners elsewhere but because Polmaise is traditionally a difficult pit to work. The miners work very hard, but it is virtually impossible for them to reach the same output per man-ship as men in other pits which are easier to work.

Geological and technical difficulties have existed for some time, and this is not the first time that the pit's future has been raised in the House. I raised this matter during the last coal industry debate'about a year ago. The hon. Members for Clackmannan and East Stirling-shire (Mr. Reid) and Dundee, East (Mr. Wilson) claimed then that the closure of Polmaise was imminent. The Under-Secretary rightly said that this was mere scaremongering by the SNP, whose declared policy is to set up a separate Scottish coal board, which would have resulted in pits such as Polmaise being closed years ago. I was grateful to the Minister for his assurance at that time, because it is the height of irresponsibility for the SNP to spread fear and alarm about people's job security when it has no constructive realistic alternative proposals of its own.

The NUM has taken a strong line against the proposed closure. On 4th February, a mass meeting, attended by union officials and myself, decided unanimously to oppose the closure and came up with a constructive alternative—a 16-point plan designed to increase productivity.

I hope that hon. Members opposite who do not believe in industrial democracy or workers' control will note that the unions deserve to be congratulated in this case because the 16-point plan has been implemented and I am informed that production at the pit has recently increased. This was a union plan, not an NCB scheme.

Last Friday there was a further meeting at the pit with the NCB and there is now a possibility of a reprieve. At least the pit will not be closed in the meantime. But there is still a need for a long-term development of the colliery because the reserves are there. At the time of the closure of the Manor Powis and Cowie collieries, the mining communities in the area received an assurance that Polmaise would be used for access to the seams at the two other collieries.

Speaking of long-term development brings us back to the need for investment. The Bill will help with its provision for increased borrowing powers. I hope that my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) made a slip of the tongue when he referred to the possible application of Clause 6 as being of particularly great benefit to Scotland. That clause refers to pit closure grants. I hope that he meant to refer to Clause 8, which deals with special grants for assisted areas to enable further development to take place.

On this point, could the Under-Secretary of State answer the following question: Why is it that in the green booklet produced by the Department, "Coal for the Future", the Government's regional grant assistance to the coal industry in 1974–75 was 07.8 million whereas in 1975–76 nothing at all was given by way of regional grants to the industry?

The trade unions at Polmaise are opposed not just to closure but to any compulsory redundancies. The socio-economic consequences of closure would be disastrous and the consequences of mass redundancies would also be damaging in an area where the male unemployment rate is already at 9.3 per cent. and there is not much alternative employment.

The nearest large town to Polmaise is Stirling. Stirling has been ruled for many years by a Right-wing alliance—latterly a Tory/SNP coalition, that has been traditionally hostile to industry. Even going back to the days before public ownership of the mining industry there were byelaws forbidding miners coming home from work with dirty faces from walking through the town. They were forced to get off the bus at the burgh boundary and walk round the perimeter of the town. The squalor and degradation of the housing conditions in villages such as Fallin and Cowie at that time had to be seen to be believed and, although housing conditions and working conditions have improved a lot since that time, it is worth remembering that there are still men living who were fined 10s.— a princely sum in those days—for having the audacity to walk through the streets of Stirling with an honest day's dirt on their faces. The authorities are more enlightened now but there is still not enough industry or alternative employment in the Stirling district, despite my efforts to get the Scottish Development Agency to set up a new industrial estate.

Just as decline in manpower can be disastrous for a man and his family, so would it be shortsighted of the NCB to shed manpower, because there will be a build-up of the coal industry in years to come.

The NCB's "Plan for Coal" states that by 1985 it is hoping for an output of 120 million tons of deep-mined coal and 15 million tons of opencast coal. By the year 2000 it hopes for ouputs of 150 million and 20 million tons respectively. Those targets suggest the need for a buildup of manpower, not a rundown. It would be very shortsighted to shed manpower now.

There is another aspect of the Bill which could help Polmaise—aid for the increased use of coal for electricity generation. Polmaise is very much linked with Kincardine power station. Can the Minister say something to reassure the miners of Polmaise and other miners throughout Scotland about coal-burn agreements with the electricity boards for Scottish power stations?

I hope that the Bill will help to keep the industry alive, not only for the sake of the miners of Polmaise and those who work in other pits but because they can play a useful part in providing the energy requirements of the nation.

11.13 p.m.

Mr. Patrick McNair-Wilson (New Forest)

I hope that the Bill will have the results suggested by the hon. Member for West Stirlingshire (Mr. Canavan). However, I believe that the coal industry is experiencing a grave crisis; indeed, the gravest crisis that it has faced since 1965, when it was substantially reduced in size as a result of a deliberate plan of action. I make that grim prediction because the coal industry, for whatever reason, is not able to produce sufficient coal for it to take advantage of the real opportunities that now exist. We would be being unfair to our friends in the industry if we did not underline that and try to say how we can solve the problem.

Next year there will probably be less than 100 million tons of deep-mined coal in the country. The National Coal Board needs 2½million tons of coal a week to break even. It is not getting it, and it is not going to get it. The hon. Member for Bolsover (Mr. Skinner) put his finger right on the problem when he said that we are now faced with a cash crisis. Until it is resolved, we shall not get productivity up.

Various reasons have been given in the debate why productivity has fallen off. I am prepared to stake my life on the fact that until we get improved cash incentives in this industry, productivity will continue to fall, and as it falls, so the industry will have to face two problems. First, it will be unable to make a profit, so that it will be unable to generate funds for its own investment; secondly, and perhaps even more worrying, it will be unable to satisfy its traditional markets.

It has to satisfy the electricity market and the iron-making market and, one hopes, the resurgent industrial market when we get out of our present recession. It also, so the Bill hopes, will be producing new coal for chemicals, liquefaction and other dreams that we have been discussing since I became concerned with the problem.

The fact is that we shall not be able to meet these market demands if we do not get productivity to a higher figure. We are this year 4 million tons short of what we were this time last year, and it is no good for us to try to blind ourselves with the belief that some coal faces are doing better than others and that it will be all right. Unfortunately, the output per manshift is lower than it was in 1973. There may be dozens of reasons for that, but my view is that the key reason is cash.

We have heard in the debate about the problem which faces British coal in export markets. The Secretary of State told us that we had to define the markets and then we would have this great future. We could not satisfy the export markets even if we found them now. That is our situation. We could not export the coal even if we could find the markets to sell it in, because we have not got it. We are now competing with coal at such a low price coming into Europe that we shall never get level with it. Do hon. Members realise that South African coal is being landed in Europe at £8 a ton cheaper than one can get it in South Wales?

To try to compete with such figures makes one realise the terrible gulf which has opened at the feet of our coal industry. We are like an exhausted swimmer. We can see the beaches of Selby and Belvoir in the distance but falling production is carrying us out to sea. Selby will not be coming on full stream for another 10 years; it is already five years behind schedule, and I believe it will slip still further behind. I have disturbing reports of what is happening there which I will not weary the House with at this hour.

If the mineworkers ask to be given a free hand in wage bargaining, we cannot possibly say that they have not been patient in the past. If they asked for 30 per cent. more, it would not be unreasonable in the light of the 15 per cent. inflation rate which has so eroded their standard of living in the last two years. These are the problems that the Government should be worrying about instead of worrying about going into petroleum refining and trading overseas and all the other exciting things that the Bill has to offer.

We face a situation where not only is our demand not going to be satisfied but the prices of coal are rising in such a way as to stifle demand. The Minister knows that one-quarter of the domestic fuel market is in concessionary coal, and the 15 per cent. price increase announced last week will destroy the remainder of the domestic market. There are those in the industry who are happy to sell it go, who say "It is a nuisance getting the right size of coal for the domestic market, so we had better let it go" But let us not have the hypocrisy of talking about building council houses with chimneys when the domestic market is doomed unless something can be done to keep prices steady.

Since 1973 this industry has had a wonderful and unique opportunity, unlike anything it has seen before, certainly since the war. We have failed to take up the full benefit from that opportunity.

We have seen the foreign car take away our traditional markets. We now see Polish and South African coal stealing our export markets in the North German power stations.

We in this House spend hours predicting what will happen in 10, 15 or 20 years. We can see this wonderful vision of how marvellous and successful we shall be. I suggest that, rather than worry too much about the "Plan for 2000", we should worry about the plan for next week. That is the problem facing us. It is an immediate problem, and it requires an immediate solution.

11.21 p.m.

Mr. Gwilyin Roberts (Cannock)

I welcome the Bill. It is another vital step to securing the future not only of the coal industry but of Britain.

As I see it, there are three targets in the development of the coal industry. I am not talking in chronological terms.

The first target—here I find myself in considerable harmony with the hon. Member for the New Forest (Mr. McNair-Wilson)—must be to increase coal production. As has been indicated, that is a complex problem. Almost everyone who has contributed to the debate has dealt with the manpower aspects of the problem. I notice that in a recent article in The Sunday Times there is a quotation from Peter Tregelles, who is in charge of the National Coal Board's research establishment at Doncaster. He is quoted as having said that although incentives and labour attitudes are significant… new systems and machinery already nearly developed will soon give answer to the productivity problem". Therefore, it is a question not simply of manpower but—I agree with my hon. Friend the Member for Bolsover (Mr. Skinner)—of the money being paid to miners. Frankly, talk such as we have had from one or two hon. Members about miners being affluent is rubbish.

Recently I met a face worker in my constituency—he is a local councillor—who had attended a meeting the previous day to select a local government employee. He said "Until I went to that meeting and discovered what was to be paid for a very low level job in local government, I did not realise how poor miners were" Miners now genuinely and rightly feel that they are badly paid. This is not a question of productivity agreements or any simple solution of that kind. There must be a new pay deal for miners generally.

As has been said, when the industry found itself in an advantageous wages position compared with other industries men came into it. We have now reached the desperate situation where manpower is again falling. The answer is not merely some kind of agreement, but a new pay deal for miners generally.

The problem in the short term is to produce more coal. The medium-term problem may not be the same as we move into the era of the oil bonanza. But in that period there is the danger, as my hon. Friend the Member for Bolsover said, that we may lose sight of the need for the long-term development of coal because we shall have a flood of oil. That could well happen.

There must be no contraction in the proportion of electricity generation supplied by coal. If electricity generation is expanded, more of it should be supplied by coal. We must also consider petro-chemical developments in this period. I hope that the oil lobby will not raise its head again as it has done in the past to destroy coal's vital role in this area.

Also in the medium term, we must consider the development of coal exports and possibly the idea, which is being studied by the CEGB, of exporting electricity by wire to the Continent.

In the longer term we shall rely almost entirely on coal for our energy. Nuclear energy will have a rôle to play, but other forms of energy are now very uncertain. One certainty is that we shall have coal resources for a long time; they must be developed to the uttermost. I hope that the NCB will regard the NCB will as a go-ahead for its development plans.

I do not want to be hostile in a friendly debate, but I was a little concerned at the rather fussy planning answers that the hon. Member for Bridgwater (Mr. King) gave to a question of mine earlier. Coal is now so important that environmental considerations should not be allowed to obstruct its development. We should all make our position clear on that.

There has been a great deal of discussion of the major developments at Selby and Belvoir. I hope that we shall go ahead quickly with the proposal to develop Park Colliery near my constituency in Staffordshire. It could supply 300 million tons of coal; already 100 million tons are developable. With a production of about 2 million tons a year it will have an effective life of 50 years. That is a vital development in a constituency where coal is still the lifeblood.

The Bill is particularly important because it deals with so many different aspects of the industry—both its problems and its potential contributions. I welcome it. I hope that it will be regarded not only by Ministers but by the NCB, the CEGB and all other bodies concerned as the green light for developing this vital resource.

Several Hon. Membersrose—

Mr. Deputy Speaker

The last four speakers took eight minutes, nine minutes, seven minutes and nine minutes respectively. We are doing very well.

11.30 p.m.

Mr. T. H. H. Skeet (Bedford)

I shall be equally brief, I shall make my points in Committee in due course, but there are several observations I should like to make at this stage.

I deal first with productivity. Under Lord Robens, output rose from 27 cwt per man-shift in 1961 to 44 cwt in 1971. It then stayed on a plateau, remaining at that level ever since. Lord Robens was a distinguished Chairman of the National Coal Board, probably the best Chairman of the Board.

The redistribution of investment over a number of existing pits will not prove such a profitable use of national resources as the development of new mines, producing at a much higher rate of return in terms of OMS.

The redistribution of tonnage from existing pits is set out on page 9 of "Coal for the Future". The 1974 plan was 63 million tons from existing pits and major projects. In the revised estimates the figure is 89 million, down-grading the new mines from 20 million to 10 million by 1985.

I am surprised that the Secretary of State did not know the OMS figure for Selby, which is 250 cwt., with wages and salaries representing only 15 per cent. of total costs compared with the present 52 per cent. For Royston in Yorkshire the figure is 158 cwt.; for Silverdale, in North Staffordshire, it is 120 cwt.; and for Bettws, in Wales, it is 115 cwt. Although there is a problem with water in the Vale of Belvoir, when that field is developed its OMS figure will probably be equal to Selby's.

It is probably unfair to say that, while the average OMS today is 43 cwt. to 44 cwt., in North Nottinghamshire and certain better fields it is as high as 57.4 cwt. My point is that Lord Robens provided the spur that increased productivity to a certain level, and now there will be a new surge with the new mines, and a considerable reduction in costs.

I turn to a matter raised by my hon. Friend the Member for Bridgwater (Mr King), the market for coal. In 1975–76. when total production was 122 million tons, power stations took 61.4 per cent., the British Steel Corporation 14.8 per cent., and other inland markets 23.9 per cent. I have considerable anxiety that not all the coal that the NCB hopes to produce will find a market.

The Secretary of State will have to take three factors into account. First, coal's forward projections will not be met if the nuclear programme is to go ahead. I doubt whether the Government have a nuclear policy, and their fuel policy is not based on low-cost electricity.

Secondly, indigenous oil from the North Sea will provide stiff competition for coal unless depletion is introduced, and I cannot see that that would be in the national interest.

Thirdly, strong competition from natural gas will adversely affect the market for coal, particularly in the industrial and domestic heating sectors. The total domestic market for coal in 1965 was 28.4 million tons, of which the miners' concessionary coal accounted for 4.2 million tons. By 1975 this had slumped to 11.5 million, and in 1976 it was 10.66 million. It had fallen by 168 per cent.

I deduce that the Board is left with two major markets. One is the power stations, a market which is liable to be upset over the years by nuclear power. The other is the BSC, which is likely to be upset by fresh technology and the direct reduction of iron ore by natural gas and other technological developments. What is known as the rest of the inland market is liable to be overthrown by the force of natural gas from the North Sea and indigenous oil.

I conclude by referring to one or two miscellaneous matters. On the question of the Vale of Belvoir, I want to make one request of the Secretary of State. It would be wrong to sterilise the 500 million tons of coal lying beneath this area, vast as it is, in Leicestershire, but the public and the conservationists should have an opportunity of stating their case at length. I recommend that an application be made, under Section 47 of the Town and Country Planning Act 1971, for a planning inquiry commission so that all factors are taken into account—not merely the issue of this site but issues that arise in all the other locations in the country.

I am fully in favour of technological change in the industry, such as fluidised-bed combustion and SNG—which process will have to await the rundown of North Sea gas surpluses—but I cannot agree with my hon. Friend the Member for Exeter (Mr. Hannam) that it will run out as early as he supposes. Liquefaction will have to await the perfection of the processes and also the rundown of North Sea oil.

I shall lump together the diversification clauses—Nos. 9, 10 and 11—but shall refer to only one—Clause 10, in which I have an interest. According to the wording of the clause, if the National Coal Board, in the course of searching for coal, looks for it in Bedfordshire and, even if there is no coal underneath, it finds other minerals, it will be in a position to exploit them. I do not think that that could have been intended, and I hope that that provision will be removed in Committee.

Also under Clause 10 it will be able to exploit gas. I do not think that that was intended, either.

In overseas activities the Board can do anything. I would mention to my hon. Friend that that would include engaging in the petro-chemicals field. It would be disadvantageous for it to attempt this, because certain markets would be closed to it. It would not go to Rhodesia, where coal is cheap. It would not go to South Africa, because that would not be in accordance with the philosophy of the Government. It would not go far into Australia, because it would have to compete with other oil companies which have got in ahead of it, and it is doubtful whether it would go to the United States, because there most of the coal has been pre-empted by the oil companies and other large mining companies.

In any event, if the National Coal Board is not to cut its monopoly position in the United Kingdom there is no reason why it should receive special dispensation in the United States.

As for the Board's oil activities, I am well aware that it produces its own chemicals. It was rather interesting to learn from the Secretary of State in answer to a Question of mine today that to produce ethylene from coal would involve doubling the price of oil; in other words, it would have to go up to roughly $25 a barrel before ethylene could be derived from coal at a profit.

Therefore, the Board is driven straight to petroleum. Why go to petroleum? Simply because it is working in conjunction with Conoco over PVC and with Dutch State Mines over caprolactam. The Secretary of State indicated that he wanted further experience, but he will not require further experience until about the end of the century, when coal liquefica- tion becomes commercial in the United Kingdom. If the BNOC is to operate in the petro-chemical field, why is the National Coal Board coming in? Or is it that the right hon. Gentleman envisages a later Act to cut BNOC out of this sector and let the Coal Board operate in it? There are prospects, too, of a possible link between the British Gas Corporation, or the National Coal Board, and the BNOC, but these are all matters that will have to be unravelled.

I hope that the Minister will explain the meaning of the words that appear in Clause 9 between lines 20 and 25 that seem to place a restriction on the operations of the National Coal Board. I refer to the words which may lead to new or improved uses of coal or products of coal. Do they enable the Coal Products Division to go ahead and make additional profits by going into petroleum chemicals? Perhaps the answers will be satisfactory if my questions are answered in their entirety.

I fully support money going into the mines but I am saying that too much is going in that direction. I think that production will be too high. We should aim for 120 million tons a year, not the 135 million tons that is envisaged.

11.41 p.m.

Mr. Alec Woodall (Hemsworth)

I welcome the opportunity to make a brief contribution to the debate. It is always a pleasure to follow the hon. Member for Bedford (Mr. Skeet) but I trust that he will forgive me if on this occasion I do not take up any of his arguments. I could argue with him at length about the merits or demerits of Lord Robens but I shall do so on another occasion. I want to talk about something that is more important.

I want to talk about not what is in the Bill but, alas, what is not in the Bill. Nowhere within the Bill is there mention of the human element of producing coal. We have clauses on borrowing powers, grants for promoting sales, grants for stocking coal and grants for pit closures, but nowhere in the Bill is there anything about the human element.

I hope that between now and Committee, or Report, my hon. Friend the Under-Secretary of State will consider the certain shortfall in the pneumoconiosis compensation scheme fund. Although we all welcomed the Government's contribution of £100 million to the scheme in 1974, I think that there will be a shortfall. I am sorry that there is no mention of that in the Bill.

I am sure that every Member who represents a mining area will know of men who have given years of service to the industry and now, unfortunately, cannot work any more as a result of pneumoconiosis or other respiratory diseases. I mention in particular chronic bronchitis and emphysema.

Although nothing of that nature is mentioned in the Bill, I have a report that was presented to the Council of European Communities on 1st June 1976. It is the third medical research programme on chronic respiratory diseases. It is set out on the cover that the programme will involve the expenditure of up to 5 million European units of account, whatever they may be. I do not know whether they are pounds, deutsch-marks, francs or lire, but over the next four years 5 million of them will be made available for the programme.

What attracts me to the report is that there is a list of research centres and institutes that could be called upon to take part in the programme. When I read the list at the back of the report I find that there are 10 institutions in Germany that could be called upon, five in Belgium and six in France. But when it comes to Great Britain I am disappointed at the listing. I find that there are four gentlemen who work at the Institute of Occupational Medicine in Edinburgh, one gentleman who works at the University of Edinburgh City Hospital, a gentleman who works for the NCB in London, a gentleman who works at the School of Hygiene and Tropical Medicine in London, a gentleman working at the Hammersmith Hospital and another gentleman working at the Brompton Hospital, both in London, and another gentleman working at the Medical Research Council, Pneumoconiosis Department, at Llandough Hospital, Penarth, Glamorgan. That makes a total of seven people, four of them all in one institute in Edinburgh. There is none in Yorkshire and none in any of the other coalfields. The report shows that there are five institutes in Italy and others else-where in Europe.

This is a good report, and it intends well, but I suggest that my hon. Friend should be pressing the presenters of the report, and particularly pressing our representatives in Europe, to see that far more research is done in this country to try not only to establish the causes of chronic bronchitis and emphysema but to find out the relationship between these diseases and this industry.

I wish to deal briefly with the question of the Selby coalfield. I am glad that the hon. Member for Barkston Ash (Mr. Alison) has returned to the Chamber, and I am sorry that the hon. Member for Howden (Sir P. Bryan) has not. There are some people in Selby who are trying to brainwash the residents there against the miners in spite of all that has been said and the fine words about how they will welcome the development and how they have co-operated. There is a bit of double talk here in view of certain attitudes that they have adopted against the development.

It seems that the people of Selby welcome the miners every Monday to their open market day. Selby market opens every Monday except if Christmas Day falls on a Monday. It is open on Easter Monday and Whit Monday as well as all the other Mondays of the year. The people of Selby welcome us on those days when we spend our money, but they appear to think that miners today are the same as the old miners of the past. They think that miners wear knotted neckerchiefs, train running dogs and keep pigeons. They think, it seems, that miners go out every Saturday night, get roaring drunk and knock hell out of their wives and children. They have not heard the truth about the male voice choirs, the silver bands and so on. These people should see the exhibitions of arts and crafts produced by miners and their wives. The miners have a lot to contribute, not only through their efforts underground digging coal but through their cultural activities. The people of Selby will find that the miners are the salt of the earth when they get to know them. They will welcome them with open arms, not only on Monday mornings at the market.

Mr. Alison

The hon. Member is being rather sweeping in his allegations about the people of Selby. The stallholders in Selby market for the most part come not from Selby but from outside, and it is not fair to accuse the people of Selby, in what is almost a slander, of saying that they will not welcome the miners. Many of the stallholders do not come from Selby.

Mr. Woodall

A lot of them come from Selby. I have some inside knowledge of these matters since a small part of my constituency is in the Selby district. I know Selby well and I have several friends in Selby, including former miners and ex-members of the old Selby town council. The Selby people have no need to be frightened of the miners or of the coalfield development. As sure as eggs' are eggs, the NCB will be transporting most of the men who work in the coalfield, and they will not be seeking the Selby district council or anyone else to provide them with houses.

I referred earlier to the problem of soil disposal in the traditional Yorkshire coalfield. The problem exists, or will exist, in many of the established pits. They have a very dicey future unless land can be made available for additional tipping, space. But this problem will not affect Selby. All that will be extracted from Selby will be pure solid coal—no dirt. The people of Selby will not have the environmental problems that I and my hon. Friend the Member for Normanton (Mr. Roberts) and others have had.

With regard to the miners themselves, I can tell hon. Members that they will see far more soccer violence in one match at Old Trafford, or at any London football ground, than they will ever see at Featherstone Rovers, or Castleford, or Doncaster Rovers. Miners are responsible to their families, their job and their country—

Mr. Deputy Speaker

Order. I shall have to blow the whistle at this point. We cannot go into details of that sort.

Mr. Albert Roberts

Does my hon. Friend not agree that when the miners take a majority decision they stick to it? It is a different kettle of fish entirely from the car workers.

Mr. Woodall

Yes, I accept that. As my hon. Friend knows, in the ballots that have been conducted in the coalfields there is always bound to be a vote against the point in the ballot. But in the end the majority decision has always been accepted. That is the extent of the loyalty of the miners.

11.52 p.m.

Mr. Peter Rees (Dover and Deal)

The hon. Member for Hemsworth (Mr. Woodall) need not emphasise to me the virtues of the mining community since I have the privilege to have the East Kent coalfield in my constituency. I hope the hon. Gentleman will forgive me if I do not go into the questions of pneumoconiosis and emphysema, which I recognise to be important problems. If I do not do so it is only because I shall try to adhere to Mr. Deputy Speaker's invitation to hon. Members to make brief interventions.

I come at once to the situation in the industry itself, as did the hon. Member for Normanton (Mr. Roberts), whose contribution I appreciated. But I was surprised that the Secretary of State, when opening the debate, did not touch at all on the accounts of the NCB. I should have thought those were the only touchstone by which to judge the financial position of the Board and, indeed, possibly of its future prospects.

As we are being asked to debate the Bill it is surprising that we only have the 1975/76 accounts in front of us. We all know that the NCB's financial year ends next month. It is a pity that the debate could not have been deferred a little so that we could have seen exactly how the Board has fared in the current financial year. However, I do not blame the Government for that.

Doing the best that we can with the accounts in front of us, we must inevitably ask some questions of the Government Front Bench. We read that manpower, capital employed and costs are all up, yet output is down. In the time available to me I want to deal briefly with the financial aspects of the NCB. I want to put one or two specific questions to the Under-Secretary which I hope he will be able to deal with.

It will have become apparent to all hon. Members that during 1974 the NCB borrowed very heavily from abroad—about £183 million. I know that there is a Treasury guarantee in respect of some of these loans, particularly foreign exchange loans, but are we to understand that, with the prevailing state of the pound, the taxpayer in one way or another will meet the increased liabilities resulting from the decline in our financial position?

My second point does not arise so much from the accounts as from the Bill itself. I must confess that I was entirely dissatisfied with the answer that the Secretary of State gave me on the extraordinary provision which permits the Government to make grants to support the promotion of sales to a range of other nationalised undertakings. The Secretary of State brushed this aside and said it did not mean sales promotion in the crudest sense. In what sense is promotion used?

Are we to understand—I put this to the Under-Secretary of State—that sales promotion includes sales at subsidised prices to the CEGB, for example? The House needs a clearer explanation about this provision.

I now come to the fundamental financial question. Assuming that costs go up, either because wages go up or because of early retirement—I fully recognise the need for that—this has to be reflected somewhere. Are those increases to be passed on immediately to the consumer or will they be taken up, either directly or indirectly, through the provisions in the Bill?

I come now to the question of productivity and costs. Again, of course, the pattern is plain for all to see if they will take the trouble to read the accounts of the NCB. I am particularly interested in the explanation that is offered on page 5. It says: Overall productivity declined marginally on the previous year. This resulted from an increase in manshifts per day underground away from the coal face, on development, transport and engineering services. Mechanised face productivity and surface productivity were both at new record levels. I was interested in that because I listened to the contribution of the hon. Member for Bolsover (Mr. Skinner) and was interested to note that he is sometimes pervious to market forces. But that seems to demonstrate that there is scope for increased productivity through mechanisation. I may have drawn the wrong conclusion. I hope that the Under-Secretary will deal with the matter.

I am not persuaded that further recruitment is the answer to this problem. I read in the East Kent newspaper that they are advertising for 100 extra jobs in the East Kent coalfield. At one jobcentre recently I was told that most of the people who have left the industry in East Kent have now returned, and that it is even drawing in people without pit experience. But I am wondering whether it is just a question of manpower, and whether it is a question of more imaginative mechanisation.

I was impressed by the contributions from the Opposition side of the House. We may not have the same experience as some Labour Members of working at the pitface, but we are entitled to have a view and to apply our minds, because we represent producers and consumers. I was impressed by the theme of my hon. Friend the Member for Exeter (Mr. Hannam). Perhaps we now have to think of new means of extracting power from our coal reserves, which may not be just a question of cutting coal in the same way.

It was particularly interested by the speech of the hon. Member for Bolsover. He and I have often clashed on many other issues. I know his direct experience. I wonder, again, whether it is a simple question of increasing wages. Of course, one recognises that the miner must feel that, compared with people in comparable occupations, he is reasonable adequately and properly remunerated, and that he is concerned about his standard of living, self-respect and all the various factors that any working man takes into account in any profession or job. But if it is still a question of forcing wages up and up, the logic of the hon. Gentleman's position, or the position to which he will ultimately be driven, is that more and more marginal pits will be driven out of production and ultimately production will be concentrated in the big fields, such as Selby.

I would be worried about the East Kent coalfield if that were the crude approach of the NUM to the problem. It makes a special contribution because it produces a special kind of coking coal. On another occasion—there is no time tonight—I should like to ask the Under-Secretary whether he feels that the pricing policy has been right for that kind of coal, because over the past 10 years the East Kent coalfield has been in a profitable position in only one year. I am not blaming that on the men, but I wonder whether the pricing policy is right.

Ultimately we must come back to looking at productivity schemes. I was particularly impressed by the Chairman's statement in this respect. He says: We regret that the national production bonus scheme agreed in March 1975 must be judged to have failed and we consider that the poor results achieved with a scheme based on total national output indicate that an effective incentive scheme needs to be based on standards of performance close to the point of production. That seems to be the key point. I see the Under-Secretary smiling. I hope that he will have something important and helpful to give us on that matter. Beyond that, on another occasion, when we have more time, I want to hear the Government's views on the structure of the industry itself.

Regretfully, I must draw my remarks to a close by saying that of course we have coal, and of course we have skilled workers, but I wish that more tributes had been paid to the management and more thought given to its differentials. Management carries considerable responsibility, and at the moment it is not adequately recompensed.

I wonder whether we, as taxpayers, will get good results from pouring capital into the industry. Can we truthfully tell the young men going into the industry that they have an assured career on the present basis? I suspect that at the end of the day the Secretary of State will have to show a little more flexibility and imagination—both qualities he possesses— and a good deal more realism. Therefore, my welcome for the Bill must be a guarded one.

12.2 a.m.

Dr. Colin Phipps (Dudley, West)

The whole essence of the Bill will depend for its success on the price that coal manages to obtain in the overall energy market in the United Kingdom in the next 25 years. It is all very well to say that coal should be the principal fuel that we use, but that determination will be very hard to maintain in the face of oil prices or gas prices that are very much lower.

The Secretary of State pointed out that the various industries involved in energy had certain matters that affected one or the other. That is particularly true with pricing. We are in danger of having an artificial price structure which will harm coal. Natural gas is way under-priced, especially when compared with any other form of energy.

The hon. Member for Bedford (Mr. Skeet) said that natural gas was a competitor of coal in the domestic and commercial markets. It is even more so in the petro-chemical market, where coal is in competition with naphtha and North Sea gas at an effective price of 32 cents a cubic foot. There is no possible comparison.

Not only can a low price cause damage to the overall energy and pricing policy, it is actually disadvantageous to the development of natural gas itself. We are now finding natural gas in deeper waters of the North Sea, and we cannot exploit it at a price of 32 cents a cubic foot. The international price is now about $1 to $1.20 cents in certain areas, and where PRT legislation will operate for new gas discoveries at this price, it means that many gas discoveries that could be exploited in the North Sea will not be exploited.

We are facing a two-edged disadvantage because we arc precluding the development of some gas discoveries and harming the overall price structure on which the whole of the Bill depends. Without a competitive price for coal in relation to other forms of energy the Bill cannot succeed. We have held gas prices artificially low. I know that it would give no joy to any Secretary of State to lift the price of this prime source of energy in order to increase the overall energy economy, but if we do not face up to this we shall see severe damage done to the economy.

Clauses 9, 10 and 11 of the Bill please me very much. I was a member of the Labour Party study group that proposed what is now the BNOC, and we made the point that it should be allowed to operate internationally. This is a welcome conversion of my own Front Bench, and the Conservative Front Bench. I am also delighted that the National Coal Board is diversifying. I would be happier if I thought that all the nationalised industries would be allowed to diversify where this was logically possible.

I see no reason why the NCB should not mine potash if potash is required for the greater good of the community. I believe that we restrict our nationalised industries much too much. We take the view that the nationalised industries are supposed to operate in one industry, and in that industry alone. On the other hand, we ask them to operate commercially, whereas any commercial company would be expected to diversify and we would applaud it for doing so.

I welcome that aspect of the Bill, and I hope that it will be extended to other nationalised industries. On the question of operating overseas, why cannot the NCB operate in America, Australia and Europe? We are always likely to have relatively high-cost coal, and there are areas in which the Board could operate as part of the international energy spectrum where there is a great need for coal.

I remember many years ago working in Venezuela and drilling in an area near Maracaibo. The coal formation in which we were interested was several hundred feet thick and there were 30 or 50 coal seams, some as thick as 70 feet. It was high-grade lignite rather than first-class coal, but it represented an enormous supply of energy. There is no reason why in future years the NCB should not branch out into such countries. I see no reason why it should not enter into such activities.

Since the logic of the situation is leading every major international company to examine reserves of coal which they will subsequently exploit. I see no reason why the world's largest and best developed coal industry should not do precisely the same thing. I welcome that aspect of the Bill.

12.07 a.m.

Mr. Jim Lester (Beeston)

It is a measure of the interest in the coal industry that so many hon. Members have tried to speak in this debate—and, unfortunately, not all potential contributors will be able to take part. I appreciate the fact that the 5,500 miners in my constituency want me to contribute to this debate and generally welcome the Bill because it deals with essential matters of importance to the coal industry.

I wish to welcome Clause 11. It seems to me to be nonsense that one should not make it possible for the NCB to sell and develop overseas. The Board has considerable expertise in deep mining which only Poland can match in terms of technology. Export opportunities are opening up throughout the world, and particularly in the United States. There are great opportunities for us to export technology—and, indeed, we already export much of our technology. A great deal of the equipment manufactured in the mining industry is British. It is very satisfying when one visits mines throughout the world and notes that so much of the equipment is British manufactured. I hope to see the export of deep-mining equipment spread still further throughout the world.

I know that the hon. Member for Derbyshire, South-East (Mr. Rost) knows a great deal about the fluidised-bed combustion process. I should like to see us adopting a more positive approach to the export of deep-mining equipment, particularly in terms of fluidised-bed combustion. It was interesting to hear the representative of the SNP, the hon. Member for Dundee, East (Mr. Wilson), speak of the great technological lead that we possess in fluidised-bed combustion and the way in which it can be developed. We must also think of the European dimension in this context. It is difficult for any of us to say what will develop in this respect in European terms, there must be a real commitment to work together so as to benefit industry in this country as well as in Europe.

The second, and most important point that I want to make is about men and manpower. Much has been said in the debate about productivity, and much needs to be said. I am lucky. The pit in my constituency produces double the national average—not merely output of 40 cwt. per man-shift but output of 80 cwt. and more. It does that year after year. But when one visits the pit one has real reason for concern because the mood is far from happy. One accepts this as part of the general malaise throughout the whole work force of the country because of the reduction in standards that people have suffered over the last two years—and that goes from management all the way down. But it is even deeper than that, and here I take issue with the hon. Member for Bolsover (Mr. Skinner).

Anyone who is familiar with mining knows that miners prefer to extract coal. Mines are designed for that, and that is the easiest work in a pit if it is on seam. One of the reasons for the productivity drop is the present national scheme that does not give any incentive to men in the times of difficulty that every pit goes through—when one runs into geological faults or seam dropping. There is far less satisfaction for a miner and far harder work when there are problems, such as going into geological fault, than when the mine is running steadily and miners are extracting coal full-time with high productivity. The down times are an important factor in productivity.

I am convinced that we need a productivity scheme based on the human dimension. Nobody can visualise a scheme involving the whole industry. It would not be thought of in any other industry. One could not say that all the car factories in the United Kingdom should have a productivity scheme based on production at all factories. It is impossible. I accept what was said by my hon. Friend the Member for Bridgwater (Mr. King), that the scheme has an absolute regard for safety. No one is remotely interested in any attempt to reintroduce the face-against-face, man-against-man system of the past. We need a new scheme. The area for it can be open to negotiation whether it is a pit system based on an agreed level of production, taking into account the pit faces and seams, agreed by the NUM and management, or whether it should be an area dimension. But it must be a scheme that people can recognise and work to. That is the only way that we can restore productivity to its previous level.

If a regional scheme, as opposed to the national scheme, had gone through, miners today would clearly have a higher established real income, and this might help to alleviate some of the current feeling of discontent.

It is the impact of inflation, taxes and pension contributions that concerns men at the coal-face. It is the wide disparity between gross earnings and take-home pay that is destroying morale and causing, even in Nottingham—most moderate of areas—the destruction of the social contract.

I agree with the hon. Member for Bolsover that we shall not succeed unless we have a radical look at the basis of Government policies in the mining industry and the basis for recruitment. We need to look ahead at the age structure, particularly when one considers the present age structure. The introduction of early retirement is essential, but it will quickly eat into the existing work force. Essentially, we need to be able to offer an attractive and well-paid career. New techniques have been mentioned and they are vitally important, but no technique can be developed that will not require the detailed knowledge and skill of the miner below ground.

Manpower will be the most critical factor in the 1980s. There will be mechanised muscle, surely, but more men will be required. We must look critically at the rate of wastage, that there is from existing recruitment. For some areas recruitment is good, but after basic training too many young men are leaving the pits. It is the prospect of 40 or 42 years stretching ahead underground that leads them, as soon as they are trained, to go into another industry. We should consider mining in the same sense as the Armed Forces and the police. We should look at the period of recruitment and consider the possibility of a man "signing on" for, say, 10 or 12 years with certain pension rights at the end of that time. If he wished, he could re-sign for a second or third term. This would be better than recruits having to face 40 years in the pits stretching before them.

We must get right the investment, which we can look at and control, the marketing, which we can control to some extent in the development of new coal burning power stations and, above all, the manpower. Without enough men, the two other elements are not likely to work. Fair words and good intentions in this place cannot do it.

Mr. Michael McGuire (Ince)rose—

Mr. Foreman

rose—

Mr. Deputy Speaker

Order. If the two hon. Gentlemen who still wish to speak will take only two or three minutes each, we shall be able to squeeze them in, and then everybody who wished to speak will have done so.

12.16 a.m.

Mr. Michael McGuire (Ince)

I shall try to obey your injunction, Mr. Deputy Speaker, though I am not sure that I shall be able to finish my speech in two minutes.

I wish to develop only one theme, but it is critical. My hon. Friend the Member for Bolsover (Mr. Skinner) argued passionately that we should not place our faith in productivity agreements as a means of producing a prosperous coal industry. I want to argue the opposite.

I do not see how the National Coal Board can survive as a prosperous industry unless it meets the challenge of productivity schemes. I know what is in the mind of my hon. Friend the Member for Bolsover. He is thinking back to the time when he and I were in the pits. Some people got all the disadvantages of the old piecework system while a select group, of which I was one, reaped the fruits of our labour—but we needed the fruits of other people's labour.

No one wants to go back to that system. My hon. Friend mentioned the Nottingham coalfield. I can tell the House that the third resolution that the Notts miners would put to the NUM annual conference would be a call for a productivity scheme. The NUM leaders, including Joe Gormley and Lawrence Daly, have met the challenge and admit that they will be driven to such schemes anyway, and it is, therefore, far better to embrace them and have as much time as possible to prepare them.

I have sent details of a scheme to the union. It was suggested by a friend who worked in the pits with me and at the face. I believe that it is practicable and could provide the foundation for a scheme.

No one should suggest that we could have the electricity generating industry made the captive of a high-price coal industry. No Government would take that. The public would not stand for it and it would not be sound economics.

Whether we have a productivity scheme or not, I want to see miners become better paid. They are not given enough. They are going elsewhere because they can get paid more for wrapping Mars bars. They need more money. We shall have such a gap in our manpower requirements that we shall have to give miners more.

Anomalies can be removed from past schemes to give more incentive and provide a sound and prosperous industry whose fruits can be shared by all.

12.20 a.m.

Mr. Nigel Forman (Carshalton)

I should like to make two or three brief points in the short time that is available. I am only a layman in these matters but I should like to ask the Minister whether there is some way in the future, when dealing with these important Bills on energy, in which the House can look at an overall energy Bill so that it may consider energy in its totality. I have just served on a Bill dealing with the nuclear industry. When these individual Bills come forward it is difficult for hon Members to consider them adequately and to fit them into the overall energy picture. We need to look at this Bill in the context of a wider energy policy.

I suggest that our overall energy policy needs to fulfil several criteria. First, there must be security of supply. There is no doubt that coal has a great future from that point of view with 45 million tons of coal at our disposal lasting us for 300 years. Second, there must be competitively priced sources of supply. Our coal industry must strive to achieve that by increased productivity and new technology as that becomes proven. Third, there must be diversity of supply without excessive reliance upon any single source. That is important whether it is based partly on coal or partly on nuclear energy, but preferably it should be based on a combination of a number of sources of supply.

Fourth, there should be a favourable impact on the balance of payments. Our coal can certainly achieve that and perhaps do even better if the high target of 170 million tons by the year 2000 can be reached and we can exploit export opportunities within the EEC.

Fifth, there must be environmental acceptability. Coal should be able to satisfy that criterion especially with the new technologies of underground gasification and fluidised bed combustion.

Sixth, there should be public acceptability by both workers and energy consumers in general. There must be a question mark here over the future of recruitment into the mining industry.

Seventh, there must be an energy policy which is wholly related to the best estimates of future demand that we can make and which seeks to match future supplies to future demand. We must achieve a more rational use of supply.

If the Bill can be fitted into that framework I shall be happy to support it.

12.24 a.m.

Mr. Hamish Gray (Ross and Cromarty)

Despite our having reached such a late hour and having started so late, there have been 22 contributions to the debate. That shows the interest and enthusiasm that the coal industry commands in the House. I join my hon. Friend the Member for Bridgwater (Mr. King) in giving the Bill a welcome in principle. There is no doubt that if most of the Government's other legislation was as uncontroversial as this there would be little cause for long debates. Nevertheless, even in this Bill there are many points that we shall wish to probe in Committee.

This is the first occasion on which I have had the privilege of winding up a coal debate. I have listened with interest to the contributions that have been made from both sides of the House. Hon. Members on this side respect the practical experience of the industry that has been revealed in many of the speeches from the Government side. But the objective attitude of my hon. Friends who have gained their business experience in other industries is equally constructive in a Second Reading debate of this type.

Ultimately, our aim is to improve the achievements of the coal industry and the prospects of those who work in it, and to this end I am sure that we have much in common. The main purpose of the Bill is to give the National Coal Board sufficient borrowing powers to implement its long-term strategy. It is heartening for those employed in the industry to know that, once again, coal is in demand as a major source of energy. I am sure that no one would be more delighted with that statement than the hon. Member for Blaydon (Mr. Woof), who, as he so often does in these coal debates, gave us a very great insight into his knowledge of the subject.

Gone are the sad days of the mid and late 1960s, when the Coal Industry Act 1965 set out provisions for the closing of many areas of coal mining. The target at that time was 200 million tons per annum. By 1973 this had been reduced to 120 million tons. By 1975 the actual output from deep mines had dropped to little more than 114 million tons, while last year the deep-mine production was down to 112.4 million tons. There was, however, 10.2 million tons more from opencast works, which showed an increase of more than 1 million tons on the previous year.

Nevertheless, the production from our pits is a continual worry and challenge to those connected with the industry, and it is in this area that an improvement is imperative. Productivity, however, is already 24 per cent higher at the pits where investment is taking place, and, indeed, it is estimated by the Board that, with further investment, this improvement could be as high as 60 per cent. Nevertheless, productivity agreements on a pit-by-pit or area-by-area basis must surely merit further consideration.

The speech by the hon. Member for Bolsover (Mr. Skinner) has been referred to by several of my hon. Friends. I found myself in much greater sympathy with what he had to say than I usually do. I wish that we could more often hear him in the frame of mind in which he spoke tonight, and in the constructive approach in which we found him.

My hon. Friend the Member for the New Forest (Mr. McNair-Wilson) sounded a warning for the industry. It is one that we cannot ignore. There is a very real danger that if we do not pay particular attention to the whole question of productivity the industry will not only suffer but will lose that public sympathy from which it benefits at present. No matter what part of the country one visits, or from which part of the country one is sent here, there is a basic sympathy for the miners. Even at times when criticisms may be made, there is little doubt that the miners enjoy that kind of sympathy.

Clauses 1 and 2 of the Bill provide for the increase in the borrowing powers and for grants for the promotion of sales to the electricity boards. In the former case, the estimate is raised by £400 million stages to £2,600 million, and some of my hon. Friends have raised the point that there could be doubt whether this sort of investment is justified. My hon. Friend the Member for Melton (Mr. Latham) questioned the necessity for such investment and also spoke of the environmental problems, while my hon. Friend the Member for Exeter (Mr. Hannam), who made a highly informed contribution, also expressed public concern about this kind of investment. My hon. and learned Friend the Member for Dover and Deal (Mr. Rees) raised the question of the Board's accounts and, quite fairly, mentioned that this was one aspect with which the Secretary of State did not deal.

It would be possible to use Clauses 2, 3, 4 and 8 to iron out short-term fluctuations which could damage the industry Indeed, these clauses could be of use in Scotland and Wales, where the NCB's costs are particularly high.

I hope that in his reply the Minister will take up the points made by the hon. Member for Dundee, East (Mr. Wilson) about future investment in Scotland with particular reference to Musselburgh.

Clauses 3 and 4 deal with stocks of coke and coal and supplies of coke in blast furnaces where aid is designed to enable production levels to be maintained. We shall be more involved with those clauses in Committee.

Pit closure grants and payments to redundant mineworkers, together with grants for assisted areas, are contained in Clauses 6 to 8. We shall look more closely at those in Committee.

My hon. Friend the Member for Barkston Ash (Mr. Alison) raised the important questions of the environment and of recruiting. Other hon. Members also mentioned the question of recruiting. That is a serious problem. Obviously, with a development such as Selby, where there is a lack of suitable labour in the area, people will have to be brought in. Therefore, it is important that housing and the necessary infrastructure are provided before they arrive. Those of us who represent seats in Scotland, particularly in oil-production areas, are well aware of the problems which sudden development in an area can create. We had considerably less time for preparation than those who are to work at Selby will have.

Clause 9 is probably the most controversial clause in the Bill. We shall wish to examine its implications in detail. The NCB has been engaged in chemicals for a long time through the NCB (Coal Products) Ltd. and NCB (Ancillaries) Ltd., which are involved in subsidiaries with both the British Steel Corporation and Conoco. These subsidiaries are self-financing and have recourse to the market for capital. The 1946 Act was sufficiently loosely worded to enable the NCB to engage in these activities. Therefore, why is Clause 9 necessary? If the NCB has power to engage in these activities, why is it necessary specifically to spell it all out again in Clause 9?

The NCB, through its subsidiary NCB (Exploration) Ltd., has access to 4 million tonnes of oil per year to be disposed of by NCB (Hydrocarbons) Ltd. The NCB already has a close connection with Conoco, which has interests in coal and owns mines in the United States of America. We understand from the National Coal Board that refining would be undertaken only in partnership with that company or with one of equivalent experience. If the NCB is to venture down that path, it will not take risks on its own as it will have the experience of a company such as Conoco to guide it.

We have to decide whether this opportunity to enter the sphere of refining and marketing is necessary for the NCB at this time and what its relationship with the British National Oil Corporation is likely to be. As drafted, the clause would enable the NCB to become involved in oil-based activities in a significant way—possibly even as an integrated oil and petroleum company—and that leads to a number of questions. I do not expect answers to all of them tonight, but they will be on the record and we shall want to pursue them further in Committee.

Are there any effective limitations on the NCB's powers in this regard? We should like some more explanation of the wide drafting of lines 20 to 25. Will the NCB be encouraged to engage in the conventional downstream activities of the oil industry? Have any discussions taken place between the NCB and the BNOC on the subject? The Chairman of the latter, Lord Kearton, has said that it has no intention of moving downstream. It seems strange that the NCB should try to outgun it in this respect.

The BNOC effectively requires the approval of the Secretary of State to engage to any substantial extent in any new activity. That is contained in Section 3(2) of the Petroleum and Submarine Pipe-lines Act. Why will not the BNOC be similarly constrained?

Are the National Coal Board's financial resources for activities under Clause 9 limited by Clause 1? In view of the great demands to be placed on the NCB under "Plan for Coal", particularly in regard to managerial, technical and financial resources, is it possible or, indeed, desirable to divert more of this capacity to oil refining and petrochemicals, bearing in mind the capital investment necessary for a modern refinery or petrochemical plant?

What estimate has been made of the likely cost of such a venture? The £2,600 million provided in the Bill is for a variety of purposes. If the NCB decides to become heavily involved in a refinery or a petro-chemical plant, it could use up a great deal of that money. Will that prevent the basic function of the NCB from possibly developing in other ways?

There has been much talk tonight of productivity. As one of my hon. Friends said, it is very difficult to explain to people in an old pit which is being gradually run down that if they increase their productivity they will probably work themselves out of a job. The same problem has arisen in the oil industry. Troubles have occurred in platform yards when men have seen the result of their efforts about to be floated out but no orders following. It is difficult to convince people that by producing on time they are doing the best for the future of their yard. That should not be passed over lightly, and I hope that the Minister will consider it.

My hon. Friend the Member for Bedford (Mr. Skeet) made a number of useful points about Clause 10. He stated his intention of dealing with the matter at greater depth in Committee. At present the NCB may exploit those minerals which are produced in conjunction with the mining of coal, but the clause extends those powers to minerals discovered in the search for coal, even if no coal is subsequently produced. The hon. Member for Dudley, West (Dr. Phipps) reckoned that that would be justified.

Quite by chance recently I was talking to a former mine owner. I said that some of us had reservations about some of these provisions. His reaction was "If I were still in the mining business I should want to do exactly what the National Coal Board is doing. I should want to be able to diversify" That, among other things, is why we do not rule the Bill out completely, why we have decided not to vote again it, but why we want to pursue certain points in Committee, perhaps at some length. There is a great deal of material for discussion, and we shall want to discuss it in detail.

There were some other points that I wanted to make, but the Minister kindly agreed to give some of his time so that our hon. Friends could take part in the debate. Therefore, I conclude by saying that I look forward to a constructive Committee stage.

12.41 a.m.

The Under-Secretary of State for Energy (Mr. Alex Eadie)

I appreciate the way in which the hon. Member for Ross and Cromarty (Mr. Gray) wound up, and the understanding way in which he approached the subject, realising that in the time available I could not reply to all the points he raised.

This has probably been one of the best debates on the coal industry for a number of years. The House has been well attended and speeches have been based on experience and ideas as well as prejudices. I missed only one speech, and I regret missing it, because I understand that it was very good, but my right hon. Friend the Secretary of State gave me some notes on it. There was only one sour note in the whole debate. Every speaker but the hon. Member who introduced that note was in favour of the coal industry, but that hon. Gentleman had great doubts about it.

A number of useful points have been made, but there have also been a number of red herrings, probably the biggest being the shortsighted tendency to judge the Bill and what it tries to do by reference to some of the difficulties faced by the industry. Many of those difficulties stem from the fact that much of our present coal industry is old, a fact that is illustrated by the average age of our pits. Over half the pits in this country are over 70 years old. Many of them are still good pits, with good coal in them, but almost all of them need a face-lift.

When people attack the coal industry for its low productivity they should remember that coal is an extractive industry. As a pit extends its workings, the further the miners have to travel underground. This acts inexorably against the improvement of productivity, just as increasing difficulties of working—such as narrower seams and geological faulting—do.

When people attack the coal industry for its price increases, they must remember the many years when coal prices were squeezed by cheap oil, and appreciate that coal prices now must bear some of the cost of re-equipping the industry. I have said before and I think that the Opposition Front Bench have endorsed it, that we have been trying to do in 10 years what should have been done in 25.

There is another red herring that is probably in line with the argument about the energy gap. Various views have been expressed about whether and when indigenous supplies of energy may decline to the point where expensive fuel imports have a drastic effect on our balance of payments. The question has been raised in various debates in this House, before Select Committee, and, on a wider stage, at the Energy Conference last June. I shall not enter into this argument now. There may be an energy gap, and there may not. Whether there is or not depends on what we do in the meantime. Because of our great resources in coal under the ground, and oil and gas under the North Sea, we have more time to make our financial dispositions to develop a total answer. To some extent that is an answer to the hon. Member for Melton (Mr. Latham).

But we cannot just stop and think. We cannot let any of our fuel industries run down while we make up our minds. That would be a mad approach. We have to keep our options open while we develop our fuel policy for the future.

The National Coal Board has estimates that possible annual demand for coal in the year 2000 may range between 135 million tons and 200 million tons. That allows for an enormous range of decisions. The point that we are concerned about today is that we shall have nothing like that 135 million tons' capacity unless we follow through with "Plan for Coal".

Let me repeat; coal is an extractive industry. The "Plan for Coal" target is 135 million tons' capacity by 1985. If there is no further investment, losses by exhaustion could reduce that capacity to about 100 million tons a year by the end of the century. If we do not proceed with "Plan for Coal", capacity will be very much less.

As we see it now, the "Plan for Coal" target that this Bill underwrites is a modest one when set against our energy needs at the end of the century. It certainly does not pre-empt further decisions on the fuel mix that we wish for the end of the century. I hope that that disposes of what I have called the two main red herrings that we should avoid in considering the Bill.

I want now to spend a few moments discussing other points that have arisen, before coming to the points to which I wish to give closer attention.

My hon. Friend the Member for West Stirlingshire (Mr. Canavan) raised a very important point, which I shall couple with others concerning Scotland. I shall come then to the question of the Park project.

If I have time I want to deal with the question of manpower in the industry. I can understand the anxiety of my hon. Friend. He said that the Bill is pertinent to the future prospects of the coal mines. I assure him that I appreciate that fact. The up-to-date opinion I have is that the Board's proposal to close the Polmaise colliery has been considered in the usual way, that the NUM has presented its case against closure, backed by a report from its technical adviser. I know that my hon. Friend is aware of this. This was considered at a meeting held on 25th February, when it was agreed that the pit should not close immediately, although it was proposed that there should be some reduction in manpower. A further meeting between the Board and the union has been arranged for today. My hon. Friend can take some heart from the fact that he has played a role for which he cannot criticise himself in any way. I know that he has played a substantial rôle in the efforts that have been made to ensure that the pit remains open.

I visit pits throughout Britain. I am now on my second time round the whole of Britain. My hon. Friend has said that the miners in his area are determined that the pit will not close. Perhaps he can take heart from what I was told during my visit to Bentley colliery in Yorkshire some two or three weeks ago. The men told me that the undertakers were at the pits a year or two ago and that it was said that it had to close. This is the very nature of mining. This is why my hon. Friends and I resent the impetuous and sometimes uninformed calls for closure from Conservative Members. This is why we resent their ill-informed criticism. The nature of the industry is such that pits can go through bad times because of geological problems.

The men at Bentley colliery told me that the undertakers were in but that the pit was reorganised and new investment was introduced. They told me that this year the pit will probably make a profit of about El. million. My hon. Friend can take heart from the fact that the situation can change. He is correct when he says that the men in conjunction with their union have made an effort and that productivity has improved. I hope that, with the co-operation of the men, the union and the NCB, he will be successful in ensuring the continued working of the pit.

Some scepticism has been expressed about the future of Selby. Flooding has been mentioned. I have endeavoured to answer these matters by writing to hon. Members who have written me. I believe that the situation has been exaggerated. Since work started at Selby there has been some problem with water. There have been examples of flooding after the initial drainage but they have not been serious. Questions have been asked recently about flooding at Naburn and Stillingfleet to the north of Selby but they are areas that are regularly subject to flooding. Those occurrences do not indicate that the public inquiry was inadequate in this respect. I can give the House the assurance that this is not a serious matter.

Mr. Skeet

rose—

Mr. Eadie

No, I shall not give way.

My hon. Friend the Member for Can-nock (Mr. Roberts) referred to the Park project. He led a deputation to my right hon. Friend on the matter. We had a useful meeting. A joint working party has been set up and the matter is receiving a great deal of consideration. In the Park area it is estimated that there is probably 100 million tons of coal. It might well be described as a miniature North Sea oil find. It is a find of considerable value and, therefore, the whole problem is being examined. [Interruption.] There may be laughs and giggles from Conservative Members but we are talking about work and wages. I know that there is a serious problem in my hon. Friend's area. It is not something to giggle about. Job prospects are at stake. We certainly attached a great deal of importance to seeing the deputation. We are trying to do all that we can to assist in the matter.

The question of Musselburgh was raised by the hon. Member for Dundee, East (Mr. Wilson) and my hon. Friend the Member for West Stirlingshire. The project is going ahead to the extent that consultant engineers have been brought in. As for new sinkings, both Mussel-burgh and Solsgirth are being considered, and other new projects are on line. Investment since the Government took office in 1974 is running at an all-time high. Apart from Musselburgh, where the reserves are about 50 million tons, investment is running at £27 million.

My hon. Friend and the hon. Gentleman raised two important and all-embracing points. They asked about the prospects of coal-burn for electricity generation. We expect very shortly to announce that a decision has been taken on coal-burn by the South of Scotland Electricity Board. We expect a decision to be announced also about Aberthaw and the burning of coal from South Wales. I can go no further on that point tonight.

Research and development is an important part of the Bill. We said in the first coal industry examination report that three subjects needed clarification. These were coal liquefaction, pyrolysis and fluidised-bed combustion. We attach much importance to research and development, particularly with fluidised-bed combustion, but it is far better to try to get international collaboration in carrying out these expensive schemes. The report said that it would be wrong to go ahead alone on these matters. I refer particularly to the fluidised-bed combustion scheme at Grimethorpe and the scheme at Babcock and Wilcox. The chief scientist of the NCB said that we had a lead in this respect.

I regret that I do not have time to go on. I give the House an assurance that I shall write to hon. Members who have raised other very important points with me. I hope that during the course of the Committee stage we shall be able to get down to some of these details.

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.)