§ As amended (in the Standing Committee), considered.
§ Order for Third Reading read.5.14 pm
§ The Secretary of State for Energy (Mr. David Howell)
I beg to move, That the Bill be now read the Third time.
§ Mr. Howell
I do not wish to detain the House by repeating in detail the points that were covered on Second Reading. It might be more helpful if I concentrate on those issues that have received particular attention since then and have given rise to concern, and in some cases, misunderstandings.
The House will be aware—this was raised in Committee—that an economic summit was held in Venice towards the end of June. I had the privilege of attending that meeting. Among other things, it was concerned with energy, and energy strategies for the OECD countries. At the end of the meeting a declaration was issued which rightly attracted a great deal of attention. Those who are concerned about the coal industry, which includes most of those in this House and most members of the Committee, were particularly worried about what the summit had to say about coal. The United States of America, Canada, Japan, France, the Federal Republic of Germany, Italy and Britain attended the summit, and in a communique they committed themselves together to a doubling of coal production and use during the next 10 years. The important word is "together", and that means adding up all the countries at the summit. Obviously, the circumstances of each country differ enormously.
As hon. Members will know, the United States of America has vast reserves of coal, much of which is easily accessible by opencast methods. It is one of the world's largest coal producers, yet it does not use coal to anything like the 814 extent that we do. Less than half of its electricity is generated from coal. It is clearly reasonable to think that the great bulk of the increase in coal production that the seven countries seek will be found in the United States of America. On the other hand, Italy and Japan—also represented at Venice—have no great reserves of coal. With the exception of their steel industries, they make little use of coal. They have indicated that their aim will be to use more coal for power generation and general steam raising. However, that coal will need to be imported.
Of the seven countries, this nation is in a unique position, because we already use coal for a higher proportion of our energy needs than any of the other Venice countries. The development of the United Kingdom coal industry is proceeding in accordance with the ideas that were first put forward in 1973 by the National Coal Board. At that time a Conservative Government were in office, and those ideas were embodied in "Plan for Coal". That plan was drawn up in the expectation that oil would become scarcer and more expensive from that point on. Although that expectation seemed about to be belied in the middle and late 1970s, it has been borne out by events.
Proposals for developing the industry were formally endorsed in 1974 by the previous Labour Government. At that time, and subsequently, the Conservative Party affirmed its support for that concept. There have been delays in the progress of some of the projects specified in the original proposals. Those delays had a variety of causes, but they were not the result—as far as I know—of any Government's actions. We expect that the original "Plan for Coal" will be more or less completed by later in the 1980s. There has been continuity all the way through under successive Governments. Our strategy for coal is drawn up on the basis of that continuity.
From that strategy stems the various financial provisions in the Bill. First, it increases the borrowing limits, which should be sufficient to sustain National Coal Board investment at the high rates projected in the March White Paper—that is, about £800 million a year at today's prices for about three years. Secondly, it provides for uprating grants of over £500 million on a tapering basis 815 over the four years of the strategy period, until 1982–83. Thirdly, it makes a continuing provision after 1982–83 for social grants to help with the enormous burdens of the past and to ease the transition from what was a declining industry struggling with worn out, uneconomic capacity and feeling that world events were turning against it, to a modern industry operating with high efficiency, much improved working conditions and with colossal potential for expansion. That is the turnround that we all want to see. Nobody interested in the coal industry disagrees on that common ground.
In considering the implications for the United Kingdom coal industry, it is right to bear in mind the progress that has been made so far. Britain uses coal to a much greater extent than any of the other Venice powers. Over 70 per cent. of our public supply electricity is generated by coal. The next highest figures are 55 per cent. for West Germany and just under 50 per cent. for the United States. The other four countries are way behind those levels.
In terms of overall energy supplies, the latest comparable figures are that the United Kingdom draws 33 per cent. of its primary energy supplies from coal, compared with 27 per cent. for West Germany, 19 per cent. for the United States and only 14 per cent. for Japan. Clearly, there is less immediate scope for further developing coal production and use in the United Kingdom than there is in the other countries. That is because, thanks to the foresight of successive Governments—and neither side can claim the credit nor take the blame—and the enterprise of both sides of this enormous industry, we have come a long way. We start further down the track than any of the other Venice powers.
I say that not in a spirit of complacency. There is no room for complacency in any area of energy policy in the next 10 dangerous years. However, for us the Venice affirmation was nothing new. It was an affirmation by the seven countries represented that coal must be developed. Both sides of the House and all parts of the industry made that affirmation six or seven years ago.
The new prospects for coal, nationally and internationally, are now fully understood. They will help to dispel the cloud 816 of fear that still hangs over some people who work in and speak tor the industry. Some people fear that the new investment is a temporary phase and that we shall go back to the bad days of the 1960s. They fear that we shall return to years such as 1967–68 when 62 pits closed and the work force dropped by 45,000. It is no wonder that such times are mentioned when I have the privilege of talking to members of the National Union of Mine-workers.
§ Mr. T. H. H. Skeet (Bedford)
I am following my right hon. Friend's argument with keen interest. We are providing additional capacity in the United Kingdom. Is my right hon. Friend also promising to provide additional markets? Where will the coal be sold? What relevance is the conference in Italy because we are discussing the world coal trade?
§ Mr. Howell
Coal produced at an economic and competitive price will find its markets. As the price of oil in real terms continues, perhaps not smoothly, to rise as it is influenced by political interference or decisions to cut production in the oil producing countries, the competitive position of coal will improve and the markets will open up.
Pit closures will continue. They are inevitable in an extractive industry. No one can shut his eyes to the fact that closures will take place. However, they will be balanced by new capacity and new jobs. The "Plan for Coal" is based on a gradual replacement of old capacity by new.
§ Mr. Howell
I am sure that the hon. Gentleman has a speech to make. I am sure also that he will make some valid points, because he knows the subject.
The message of Venice, which has come up in debates since the Second Reading, is clear and worth emphasising. It is that coal is here to stay. The industry will expand, and we shall move on from the defeatist days. In our view, that expansion is best achieved if the industry has soundly based finances. Our aim is to achieve that.
§ Mr. Grant
The Secretary of State talks of the need to dispel fears about pit closures. He also mentioned 817 competition. Does he accept that the fears are real? Will he examine the stocks of undistributed coal? There are 3 million tonnes more this year than last year. He must understand that the fears are genuine, especially since he has introduced financial restrictions in the Bill.
§ Mr. Howell
I shall come to the financial pattern in a moment. Whether it imposes a straitjacket is something that I shall discuss later. The stocks were low last year and they are higher this year. No one can be blind to the recessionary forces operating in the West generally. They create a challenge for all industries, including our great extractive industries. I do not deny what the hon. Gentleman says, but the challenge is being experienced by all British industries.
I turn to the blocking, or amending, motion tabled by the Opposition. It suggests that the financial limits in the Bill and the money resolution are too restrictive. That is not the situation. On taking office we found that the coal industry's finances were in a disquieting state. For two or three years the industry's reliance on Government grants has been growing. In the short term we have little choice but to continue the grants. For the financial year 1979–80 grants total £ 250 million, of which £ 190 million are operational grants which effectively make up losses incurred on various aspects of the board's commercial operations. The total is more than double the provision made by the previous Administration in the January 1979 public expenditure White Paper. If there is a restriction now, there was certainly a restriction then.
In the longer term, remedial action was necessary. We started from the premise, which we maintain strongly, that it is not for the Government to run the pits. The operation of the British coal industry is a matter for the National Coal Board, in co-operation with the NUM. It is for the Government to establish the framework for operations and to let the NCB management manage. The need was to discuss and agree with the NCB the financial framework, and to set an agreed limit for grants and external finance in the years ahead. We began to do that in the summer, and continued into the autumn of 1979.
818 The conclusion that we reached was that a return to breakeven by the NCB—after interest and after social grants, which go on beyond the strategy and for which we recognise a continuing need—was possible by the financial year 1983-84. Accordingly, we have agreeed with the board limits for operating grant in the years ahead. These are in 1979 money, so that every figure that I mention has already been enlarged by the processes of inflation. I am speaking in constant money. For 1980-81, the figure is £ 135 million. In 1980–81 money that will be a considerably higher figure. For 1981–82 the figure is £ 109 million, and for 1982-83 it is £ 28 million. All those figures are at 1979 survey prices, which are basically the prices of two years ago, and not even the end of 1979. The figures will be revalued to outturn prices in accordance with inflation. When hon. Gentlemen talk about restriction strait-jackets, they should note that. Comments made on Second Reading and, I believe, in Committee seem to indicate that there is confusion. It was believed that they were hard and fast, constant figures that would not be adjusted to money values.
§ Mr. Albert Roberts (Normanton)
The right hon. Gentleman mentioned agreement with the NCB. Was that arrived at under duress?
§ Mr. Howell
The NCB accepts the strategy and recognises that it is a tough challenge. It considers that the challenge should be faced and the strategy pursued.
I repeat that the grants can be adjusted for inflation. In 1980–81 we expect to pay out over £ 170 million in operating grant, by comparison with the uninflated figure of £ 135 million. The total paid in operating grants over the four years from 1979–80 to 1982–83 is likely to exceed £ 500 million.
As I have made clear, the Bill also provides for the social grants to go on and for there to be increases in some areas of social grant to meet the difficult trans-sitional problems. Those grants are an essential part of the modernisation process, and we do not consider it possible to phase them out in the foreseeable future, and nor is it our intention to do so. I made that clear on Second Reading, as did my hon. Friend in great 819 detail in Committee, but it is worth putting firmly on the record. I hope that that reassurance will meet the worries of those who see that side of things also ending. Those grants will not end.
The Bill provides also for an increase in the board's borrowing powers, amounting to no less than £1,600 million. It also provides for loans to be made to the board with interest deferred, which is a useful feature and will allow the NCB more flexibility in financing projects with long lead times. That option was not adopted by our predecessors, who saw no need for it. We believe that it will be a valuable and useful weapon for the National Coal Board.
The main provisions of the Bill in terms of limits on grants were settled with the board in November. In the past seven months the events that have unfolded have not been precisely as predicted. No one can ever see the precise shape of events. Some of the unexpected events are not helpful to the board; for example, the economic downturn in the United Kingdom and world-wide, which must depress the market for coal and has made imports available at low prices. Also, the rationalisation of the steel operation has and will undoubtedly reduce that need for coal.
Other aspects will help the board. For example, the further increase in the price of oil. which will make more favourable the coal-oil price ratio and make coal more competitive, and the Venice summit declaration, which I talked about at the beginning, will increase the possibility for coal exports into world trade if it can be produced at a competitive price.
Our strategy for coal is carefully thought out. It is a robust one. I reject the mistaken concept of a straitjacket.
§ Mr. John Evans (Newton)
The Secretary of State mentions competitive prices for the export market. Does he accept that some of our competitors are unfairly subsidised? Does he consider that fair competition?
§ Mr. Howell
That does not apply to those that are expanding into world markets and entering into the huge world coal contracts for the future. The Australians, Canadians and Americans are not subsidised. The steam coal industry in this country has nothing to fear 820 if it continues with its present trend of productivity and performance. As the hon. Gentleman knows, it is competitive. However, in the world coal trade, which will be entered to a perhaps more limited extent than some people realise, because there will be such an international demand for world coal and so many contracts tying up supplies, subsidised coal will not make the lead.
I repeat that I do not accept the view of a straitjacket. On the contrary, not to have a strategy and to chop and change all the time, would create uncertainty and difficulty for the NCB which is the last thing that the industry needs or wants. Our purpose is not to confine the industry or to hold it down. It is absurd to approach the prospects of such a great energy industry in that frame of mind. Our object should be to build it up, restore it to financial strength and viability, put it on a firm basis for expansion and open up new and exciting possibilities for coal.
In saying that I emphasise again that it is not the Government who can will the industry to succeed. Only the industry can do that. The Government can create the conditions for its success, which we believe we are doing. The industry will succeed, and we have the confidence in its management and men, which sometimes those who comment perfectly sincerely on the industry do not reflect. I ask the House to reject the Opposition motion and to give the Bill a Third Reading.
§ Dr. David Owen (Plymouth, Devon-port)
I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:this House declines to give a Third Reading to a Bill which does not provide adequate borrowing powers to enable the National Coal Board to carry on its operations in a satisfactory manner, and proposes to extinguish operating grants by the end of the financial year of the Board in 1983 as defined in the Bill.I urge my right hon. and hon. Friends to vote for the reasoned amendment but not against Third Reading. Parts of the Bill will bring relief in the coal industry. It also provides much needed financial support. For those outside the House who do not understand the conventions, I should explain that by voting for a 821 reasoned amendment we are focusing our criticism on the central core of the Bill which we find objectionable. The late Iain Macleod once argued in this House that he was not voting against the Third Reading of a Bill because he would not wish to vote against even a one-legged Father Christmas. I ask myself whether there are any elements of a Father Christmas in this Bill. I see not a shade of a Father Christmas but rather an Ebenezer Scrooge.
It was interesting that the Secretary of State was not able to pray in aid one single reputable body that believes that the financial targets are fulfillable. He said that he had great confidence in the men and managers in the coal mining industry. There is no group of people for whom I have greater respect. We have a great deal of coal mining expertise on these Labour Benches.
Where are the people who believe that this industry can reasonably be asked to live within those financial limits? First, the board does not believe that it can. As the chairman of the National Coal Board made clear when he addressed the NCB conference in Eastbourne:the Board were concerned about some other financial aspect of the Bill—particularly the timetable for phasing out operating grants. This view had also been expressed by MPs on both sides of the House of Commons when the Bill was being debated. At the last Tripartite meeting with the Government, the Board and the unions expressed the hope that there would be more flexibility in these financial arrangements.The NUM is on record as saying that it does not believe that it is possible for the industry to meet its targets. The union president Joe Gormley has made that abundantly clear. The National Association of Colliery Overmen, Deputies and Shotfirers has made clear that it does not believe that the industry can live within its financial straitjacket. The managers' association, a non-political body which represents the views of management throughout the industry, has also made clear that it does not believe that the targets are feasible.
Can the Secretary of State pray in aid any of the independent commentators who comment on the energy industry, usually with a great deal of information? I have not been able to find anyone, even on a Conservative newspaper, who is prepared 822 to endorse the financial targets that the Secretary of State has set for the industry.
It appears that only the Secretary of State and the Under-Secretary, together, presumably, with some officials in the Department, believe that it will be possible for the industry to achieve its targets. It might have been possible if the situation had remained the same as it was in August 1979 when the strategy was first negotiated with the NCB, but throughout the Committee stage we searched in vain for the degree of flexibility in the interpretation of the financial targets that we were promised on Second Reading.
We regret that the Secretary of State did not feel able to come to the Committee to discuss these issues. The Under-Secretary appeared to be living in a rigid straitjacket. With the sole exception of the decision to take investment in liquefaction outside the financial limits of the Bill, there was no evidence of flexibility or financial leeway.
The Under-Secretary attaches a great deal of importance to the deferred interest arrangements in the Bill. I admit that if they were flexibly applied they could give the NCB some freedom, but the Under-Secretary was unable to give us any details of how the arrangements are to be applied. We were unable to quantify the extent to which the industry may be able to benefit from deferred interest payments.
We had hoped that the Secretary of State would carefully consider the arguments made in Committee, go back to the Chancellor of the Exchequer and come to the House on Third Reading to announce a great deal more flexibility for the industry. There has been no such give in the Government's position. I conclude that the position has not materially changed from the time when the Bill was presented. Indeed, in one significant sense—the Phurnacite plant—the situation has materially worsened, with severe consequences.
The Secretary of State referred to the Venice summit. At least he was there, though not as a participant, and we must attach some importance to his interpretations. However, his interpretation of the word "together" in the communique is one of the most interesting explanations that I have come across. It appears that "together" means "We are all together, except the United Kingdom".
823 The Government went to Venice after the publication of the Coal Industry Bill and with an existing strategy for coal. They were a joint signatory to an international committee to double coal output by 1990, but, from the moment the ink was dry, the Prime Minister was denying that she had made any commitment. There has been no evidence that any new decision was taken at Venice. I have attended two summits, but if that is the way that everyone who attends summits nowadays is to interpret commitments, it is no wonder that the net outcome has not been as satisfactory as many believe it could have been.
The Secretary of State said that he found a disquieting situation in the industry and a growing reluctance in relation to grants. But he knows that it was implicit in "Plan for Coal" that there would be heavy Government investment to expand an industry that had been declining. The central objective of "Plan for Coal" was a commitment to coal output targets and a commitment to finance them.
The Secretary of State's policy of financial constraints, with no commitment to coal output targets, is not only against the national interest and the arguments for self-sufficiency in this country but is diametrically opposed to EEC energy policy, to which the right hon. Gentleman has been a co-signatory at Energy Council meetings.
In this area, as in so many others, it is time that the Government looked at what is being done by our major industrial competitors in the EEC. I have the latest figures for direct aids to production—coal subsithes—in the EEC. For 1979, the Belgian Government paid about £ 34 per tonne, the Federal Republic of Germany paid about £ 15 per tonne and France paid £18 per tonne. In the nearest comparable year, 1978–79, the United Kingdom paid only £1 per tonne and in 1979–80 we shall have paid £1.60 per tonne. There is a massive difference in the degree of Government support for the coal industry in this country compared with that in Belgium, West Germany and France, and the gap is widening. There was a further increase in financial support by EEC countries in 1979 compared with the previous year. They see the reason for expanding coal output and 824 they are prepared to help their coal industries. Only our Government seem to have doctrinal arguments against such assistance.
Another aspect that needs to be stressed is that our production costs are substantially lower than those elsewhere in Western Europe. Of course, that is one reason why other European Governments are prepared to provide direct subsidies. The United Kingdom's coal production costs are about one-half of those of Belgium, nearly one-third of those in France and nearly one-quarter of the costs in West Germany. That is a remarkable achievement of our coal industry and instead of knocking it on the head, which everyone believes is being done by the Bill, the Government have a duty to provide greater financial support. In no area is that more important than in imports.
Sir Derek Ezra told the Eastbourne conference that:The Board's view was that imports should complement, not replace UK coal. They firmly believed that any excessive imports due to short-term market fluctuation could do long-term harm to the coal industry and its customers alike.The Government have an obligation to assist the board in overcoming the short-term fluctuations that it faces. It would be gravely damaging to "Plan for Coal" if we allowed the short term to impede the medium to longer-term expansion of the industry.
Major changes have taken place since August 1979. There was no answer in Committee to the fact that the NCB expects the higher level of national insurance contributions to cost it about £12 million per annum, and the further increase in oil prices, which will increase opencast costs, will put an extra burden on the NCB of about £15 million per annum.
In addition, there will be a substantial loss of sales revenue on coking coal sold to other markets in order to undertake necessary commitments to alleviate the situation in South Wales. The August 1979 strategy review showed a broad balance over the four years 1980–81 to 1983–84. The NCB was being pushed to live within a difficult financial target, but I think that it believed that it could do so. It now does not believe that it can live within the target. This is made clear in its public statements.
825 I am worried most by the stocking situation. For each 1 million tonnes of imbalance between supply and demand, leading to stocking or sales at low prices, the National Coal Board might expect its revenue results to be worsened by £10 million at 1980 money values. In cash terms, the adverse effect for each one million tonnes stocked could be £40 million. There is a serious situation, with considerable coal stocking. This is further aggravated by the financial situation in which the Central Electricity Generating Board finds itself.
The CEGB faces a dramatic drop in demand. The figures were revealed to the Select Committee of the House yesterday by the chairman of the CEGB, who showed that there had been a substantial fall in demand over the first quarter of last year. I believe that the figure is 2.6 per cent. If this continues, we face, in the short term, an extremely serious situation. I believe that situation has already been reached. The National Coal Board naturally wants to sell all the coal that it can do the Central Electricity Generating Board and move its stocks from Coal Board land to that of the CEGB. The CEGB, because of the financial restrictions placed on it, is reluctant to accept this coal because it comes on to its books. It finds difficulty in taking the coal for which it is contracted.
There is now genuine anxiety about whether the CEGB, facing falling demand and tight cash limits, will be able to meet its commitment to 75 million tonnes from the National Coal Board. I hope that the Under-Secretary will give some indication of his attitude on the matter. Are the financial restrictions and cash limits being applied to the CEGB to be relaxed? It is as important in this debate to argue for a relaxation in CEGB cash limits as it is for those of the NCB.
§ Dr. Owen
As my hon. Friend says, there is also the serious problem of BSC. If demand from Llanwern was to be seriously affected, this would have serious consequences in South Wales. Although this debate is specially related to coal, my case can be argued across the whole of nationalised industry. There is an 826 overwhelming demand, in the interests of the coal industry, for an early relaxation, before the Summer Recess, of the financial limits set for the Coal Board, for the British Steel Corporation and for the CEGB.
There is no room for the CEGB to increase its price of electricity. In its comments on the increase, due to take place on 1 August 1980, the Southwestern Electricity Consultative Council said:These increases amount to an average of 10-7 per cent. on present quarterly tariffs and their size has shocked members of the Council. It is recalled that prices rose by 17 per cent. as recently as 1 April this year and at that time, although statements by the Government have pointed to a further rise in the Autumn, there had been grounds for hoping that this would not exceed 5 per cent. By the time the August increases are implemented, electricity tariffs will have been swollen by about 50 per cent. in 14 months. Electricity prices cannot be insulated from the national level of inflation and this heavy burden for consumers reflects remorselessly its insidious and damaging effects.There is no room for further increases in electricity prices. We are facing a serious situation. The more that prices in the energy industries are increased, the more demand will be cut. This is affecting the whole industry. It affects not only the Coal Board and the CEGB. It also affects jobs. An investment cutback that affects the Coal Board will also affect the CEGB. It is forgotten what major purchasing bodies these industries are. In 1978–79, for example, the NCB purchased £1,033 million worth of equipment. Contracts for services including shaft sinking and plant hire amounted to £226 million, steel, ranging from colliery arches to haulage ropes, amounted to £161 million, coalface powered supports and machinery amounted to £318 million, other equipment and electrical goods amounted to £164 million and stores and general goods amounted to £164 million.
The NCB is a vast investor. If its investment is cut back, the effects will infiltrate every aspect of our industrial life. The effect is already seen within the CEGB which has had to clamp down on many investment orders. A serious situation confronts the power plant industry. I do not believe that it is possible to continue with the present restrictions on CEGB investment if there is to be a power plant industry in the next two or three years.
§ Dr. Owen
As my hon. Friend says, all these issues are interlocked. Many people outside the House, hearing about cash limits on nationalised industries or cutbacks on public expenditure, believe that what is involved is a reduction in bureaucracy or administration. They have not grasped—I do not think any of us have—that industrial jobs are put at risk. The interlocking nature of the problem is not easily understood. Day by day, it means factory closures, lay-offs and short-time working. Until the Government understand that they have the power to make some impact on the appalling unemployment situation, we shall continue to suffer spiralling unemployment. Sensible use of the National Coal Board's investment policy can help protect jobs and prove an investment in the future. These are real jobs. These are not the artificial jobs that the Secretary of State for Industry often attacked in his heady days of Opposition. They are real jobs. They are the sort of jobs that this country has to maintain if it is to be in a position to expand its industrial base when the slump eventually eases.
I turn to another area that causes me great concern. I asked the Under-Secretary to make it clear before the debate or during the debate what would happen to the national smokeless fuels plant at Aberaman. I accept that he answered a written question on this on 21 July. The impact of that decision is appalling. We asked for an investment of £36 million of which about £5.5 million might be met by regional development grants. The Government have turned it down flat. This is a serious situation, with repercussive effects throughout South Wales, if the decision is carried out. Will the Under-Secretary say what is likely to be the attitude of the Alkali Inspectorate towards the plant? At risk, I understand, are five pits and at least 1,000 jobs in Aberaman. How can this be justified when the coal consumers are extremely anxious about the consequences? A letter from the Chamber of Coal Traders, referring to the Coal Industry Bill, says:It is our view that a high degree of self-sufficiency should form the basis of any national energy policy but the Government's 828 proposals in the Coal Industry Bill will force consumers of naturally smokeless and manufactured smokeless fuels to rely more heavily on imported fuels because home produced supplies are not available. And the British consumer will suffer since foreign fuels are substantially more expensive. Such a policy does not seem to us to make economic sense and will give rise to severe social consequences if numerous pits close in the South Wales coalfield".It is no use asking people to switch to coal and to open up their chimneys and to have—I believe rightly—pollution legislation which ensures that people have to use smokeless fuel, only to find suddenly that there is no indigenous production and that supplies have to be purchased from overseas. Is it only the Federal Republic of Germany and other European countries who will invest? Are we not going to invest in our future? We know what will happen. The German coal industry which, as I have already demonstrated, receives greater assistance than the coal industry in the United Kingdom, will be given a Heaven-sent opportunity to take advantage of the decision over the Phurnacite plant by increasing substantially its exports of manufactured smokeless fuels to the United Kingdom, which are already increasing. Sophia Jacoba a major German company, is stepping up its production of a suitable alternative, marketed as Extracite. Large tonnages of this fuel will be sold on the market in the United Kingdom. This in turn could well affect the development of works and plant for the home production of manufactured smokeless fuels as substitutes for anthracite.
One of the meanest and narrowest decisions is not to go ahead with the Phurnacite plant. It will have serious consequences on the longer-term planning of manpower within the South Wales coal-field. It is crucial for South Wales to be able to plan the introduction of new pits or the rundown of existing pits over a period. The policy on imported coking coal, if the Redcar decision is to go ahead, will also have extremely serious consequences in the North-East.
I do not want to give any comfort to those who, perhaps unrealistically, fear pit closures. I know about the anxiety that the threat of redundancies and closures produces in many industries and I do not want to exaggerate it. I believe that Sir Derek Ezra is determined that the pit closure programme should follow 829 the due procedure and that the tripartite agreement will be kept. But, even if he keeps to the agreement, if the financial constraints under which he has to operate are so tight, those areas where there has not been an exhaustion of coal, where the seams are still able to produce coal of a quantity and quality that we need will face the possibility of closure because of the high cost.
§ Mr. Rowlands
I apologise for interrupting my right hon. Friend who is making the most cogent of presentations of the problems. Is he aware that not only have we lost a market for 1 million tonnes as a result of the Margam decision to import coking coal, but that we have firm reports that the British Steel Corporation has marketing men in the United States trying to sign up contracts to replace the Llanwern market? Some of our worst worries about pit closures—we do not want to be scaremongers because we live in these communities—could come true as a result of this nonsense. Will he challenge the Government on that point?
§ Dr. Owen
I agree with my hon. Friend. It is important that the Under-Secretary should say that the agreement on coking coal, which was painfully constructed for this year, will carry on into 1981 and 1982. I hope that as a result of the negotiations he will be able to make that announcement. There would be strong resentment if, as in previous years, the British Steel Corporation were to cobble up an agreement without the fullest consultations with the National Coal Board, leaving the NCB to face a sudden dramatic fall in the demand for coking coal.
What should the Government do? The relaxation of the financial constraints under which these industries operate is the first essential. But more can and should be done. I have already drawn the attention of the Under-Secretary to the need seriously to consider switching modern oil-fired stations to coal. The figures that I have gleaned show that the fuel bill for a modern coal-fired station, such as Drax, using about 5 million tonnes per annum, is about £170 million at present day prices. That compares with a bill of over £260 million for a modern oil-fired station, such as Pembroke, using the same 830 amount of fuel in coal equivalent terms. Perhaps the Under-Secretary will comment on those figures. I gave them in Committee and he did not comment on them at that time. If the figures are correct, the argument for switching earlier than might have been anticipated from oil to coal is considerable.
§ Dr. Owen
The hon. Gentleman grossly exaggerates. Switching would not be taking place to the extent that it has taken place in European countries over the past few years if that were so. We are all trying to switch out of oil. I accept that it has a capital cost, but it is nowhere near as great as the hon. Gentleman implied. If the fuel cost savings are anything like I have suggested—a saving of £90 million a year—the capital cost is containable.
The Government should be doing other things. They should be bringing forward the modernisation and replanning of existing power stations and, where they are oil-fired, switching them to coal. These small power stations throughout the country would have an important effect. First, such a course would provide a market for coal at a time when the market is extremely weak. Secondly, it would provide work for the power plant industry by giving it, not a large work load as for the very large power stations, but a useful infilling work load which it needs. It would provide jobs around the country and would be an investment in the longer term. It would also allow the Government to conserve energy by linking these stations more imaginatively than hitherto to combine heat and power.
Nothing has been more disappointing than the parsimony shown by the Government in their reaction to the Marshall report. That report was carefully documented. It came to a firm conclusion and asked for finance. All that the Government have done has been to ask for yet further studies. The financial contribution and support necessary for local authorities to go ahead in some pilot areas have not been forthcoming. We have yet more strategic surveys and more questions are being asked.
831 Our indictment of the Government is serious. It is not that the intention behind the Bill is as malign as might appear. I believe that it was put forward in the genuine belief that it would allow the coal industry a steady future and reasonable expansion. But there has been a dramatic change in the country's economic circumstances for which the Government must take a high degree of responsibility. When I hear the Prime Minister talk about her highest priority being inflation, I cannot help but ask "Why did you increase value added tax? Why did you add in so many different ways to the inflationary spiral facing the country so that within a year we have had double the rate of inflation?"
All these consequeces are felt by these major industries. They are battling in a difficult situation, with falling demand, high interest rates and high prices. They are facing a squeeze on their investment which will add to the already dramatically high unemployment.
I have tried not to be totally negative but to put forward some concrete suggestions for financial investment. I realise this will mean breaking the limits that the Government have set themselves. I believe that it can be contained. I can think of few more worthwhile investments. It would create jobs, allow industry to modernise and be the right response to the present situation. It will have to come. Everyone in the House believes that day is coming. Whether the U-turn is a gentle curve or more like a V-turn will be up to the Government. But there is no doubt that they cannot continue with their present policies. Already there are signs that the Government are beginning to switch. We have seen the obvious relaxation that is coming in the BSC's financial limits.
I urge the Secretary of State to reconsider his position on the coal industry. He has a heavy responsibility. We thought that the coal industry's investment programme had been largely taken out of politics. There has been an agreement on the need to invest. The Under-Secretary makes eloquent speeches about his commitment to the coal industry. We want action—a positive decision. It cannot wait until the autumn. We hear rumours that the Government are thinking of relaxing the financial limits on the nationalised industries some time in the autumn. It 832 would be an act of folly and would be socially unacceptable to wait any longer. If this decision is to be taken—it is long overdue—it ought to be taken in the next few days.
I urge my right hon. and hon. Friends to vote for the reasoned amendment. If, as I expect, the Government get the Bill through, it will have to go to another place. There is still time for the Government to rethink their strategy, which is fundamentally flawed and is capable of producing great damage to the coal industry, to the confidence of those who work in it and add further to the savage twist of unemployment facing every part of this country, but none more so than the areas where there is a high mining contact—a big mining industry. I refer particularly to the North-east and South Wales. Those areas are crying out for a little sensitivity and a little understanding of the situation facing them.
Mr. John H. Osbom (Sheffield, Hallam)
I do not support the line taken by the spokesman for the Opposition. I hope that my right hon. Friend will retain the financial controls and disciplines that he outlined in his speech.
British coal has a future. Coal is a long-term economic source of energy and has a vital role to play. Though I support my right hon. Friend, I suggest that he engages in further assiduous discussions with our friends in the EEC. My right hon. Friend rightly pointed out that in this country coal accounts for 33 per cent. of our energy consumption. The figures are lower in Germany, France and elsewhere. Coal is important to Britain.
The right hon. Member for Plymouth, Devonport (Dr. Owen) spoke of payment for stock. I have been in the tool, steel and other industries, and I can say that that is a normal commercial problem that faces any supplier or user of a bulk commodity. One would imagine, after listening to the right hon. Gentleman, that this is a new problem because it is affecting the coal and electricity industries. In view of the right hon. Gentleman's comments, I regret the millstone that is tied around the neck of any Conservative Minister with the nationalised BSC and nationalised utilities such as the CEGB and State-owned coal. We discussed those issues two days ago.
833 Our debates in Committee coincided with the national conference of the National Union of Mineworkers, and Members sponsored by that union of course forecast and followed up many of the speeches made at that conference.
Government policy is positive and takes over where the previous Government left off. On Second Reading optimism about the future emerged. Though there is a world shortage of oil and gas, coal enjoys a seller's market throughout the world. Our coal exports, however, are infinitesimally small compared with our total output. British coal should be in a seller's market. I hope, judging by EEC predictions, that our industry will eventually enter the seller's market, because if it does not the EEC will go short of energy.
Anyone living in the villages of South Yorkshire and the bordering areas of Derbyshire and Nottinghamshire—I speak of the newer villages round Selby—could hope for a secure future by producing a commodity needed by other people. It is too early to speak of the Vale of Belvoir.
The Second Reading debate contained references to modern mining techniques and methods of keeping down production costs while increasing productivity. There have been two interesting meetings in the House of Commons lately. The parliamentary and scientific group recently discussed robots. That meeting was addressed by the director-general of PERA, Professor Hegginbotham, who was supported by Sir Henry Chilver, from Cranfield, chairman of the committee that produced the worthwhile ACARD report on this subject.
A few weeks ago Professor Thring, one-time head of the fuel department at Sheffield university, and of QMC, spoke in Westminster. He concentrated on the need to introduce labour-saving devices in order to increase quality and productivity and at the same time reduce costs. If those suggestions were accepted I believe that the miners would benefit in the same way as other people in other industries and countries have benefited. The Yorkshire coal industry need not be a Cinderella industry, though one might imagine that that was the case when listening to Mr. Arthur Scargill and 834 others. It is an industry with a future, and Opposition Front Bench spokesmen are wrong to denigrate it and engender gloom as they did in Committee.
On Second Reading I spoke of my visit to the United States. I met many people who envisaged a great future for coal though admittedly in opencast rather than deepcast mining, in the United States. I met American industrialists who not only run utilities but are engaged in the extraction of gas and oil. They are taking advantage of solid fossil fuels. The attitude of Opposition Members was in contrast to that.
I hope that the Select Committee on Energy will create optimism by better informing hon. Members who are interested in coal and energy. This defeatism is wrong at a time when there is an opportunity for the British coal industry. Perhaps our outlook is too old-fashioned, and perhaps leadership within the industry is not as dynamic as it might be. My right hon. Friend has increased the industry's borrowing powers by £1,200 million, to £4,200 million. That continues the momentum begun in 1976, with £600 million a year building up to £800 million a year going into the coal industry.
The hon. Member for Midlothian (Mr. Eadie) and others talked of pit closures in the North-West, the North-East and Wales. In any mining programme, whether of coal or other minerals, if the product is of low density, or if costs are too high, there is a general acceptance that sooner or later high-cost, futile operations must be abandoned. It is a tragedy that the British coal industry should consider itself to be an exception.
At the NUM conference Sir Derek Ezra was challenged about the closure of 50 pits. Sir Derek denied such closures, but Mr. Arthur Scargill is reported to have said that Sir Derek's denial was a lie.
Perhaps it was regrettable that in Committee we concentrated upon closures rather than opportunities. However, I accept that there is fear of closures in the constituencies of some Opposition Members. How can we deal with that challenge? We know from our debates that the Community is expecting a target of 170 million to 200 million tons a year from this country, much of which should 835 go into EEC exports. On 21 July, in answer to a question from the hon. Member for Rother Valley (Mr. Hardy), my right hon. Friend said that that target depended on coal being sold at competitive prices. That is the rub and it worries me.
An interesting Community document—C174; Volume 23—was produced on 14 July 1980. It contains figures that cause me to think, particularly when I recall the erudite speeches made in Committee. The document contains a list of prices up to 1 April 1980. The South Yorkshire price for long-flame, No. 2 nuts coal of 30 to 50 mm is 88.85 US dollars compared with 95.22 in Lorraine, 96.24 in Belgium and 106.38 in the Ruhr.
If we dealt with smaller nuts, similar figures would be produced. The South Yorkshire figure is 80.95 US dollars per ton as compared with 106.38 dollars in the Ruhr. In table 20 of the report the equivalent prices for imported coal vary, but I calculated it to be about $38 a tonne. Imported coal, therefore, is cheaper.
The right hon. Member for Devonport quoted subsidies in Belgium, Germany and France. I have a different set of figures, but I do not dispute the right hon. Gentleman's figures, because they are probably more up to date than mine. We must remember that the biggest coal producer is Britain, with 120 million tons a year. Germany produces 93 million tons and the countries getting the biggest subsithes—France and Belgium—produce 18 million tons and 6 million tons a year respectively. This must be put in perspective. The big subsidies are in Belgium and France, which produce small tonnages. This matter should be examined by a Select Committee. Certainly there is a subsidy in Germany as well, and we should relate our position to that.
In this country we are concerned about the impact of imported coal, whether it comes from the United States, Australia or South Africa. In the United States there are opencast opportunities and transport challenges. I hope to go with the Commonwealth Parliamentary Association delegation to Australia, a country that I visited more than 25 years ago, when I saw much of its mining potential—not only iron ore but coal.
I do not want to touch on the statement on agriculture that was made this 836 afternoon. With the common agricultural policy there is bound to be a problem for New Zealand, and certainly for Australia. The CAP imposes a levy on imported foods to Britain, when we must import more food than any other EEC country. I dare not raise the question of a common energy policy—as I did on Second Reading—but I suggest that such a policy would benefit this country. The CAP may be against Britain's interests but a CEP could be in our interests. I accept that this makes no appeal to the national executive committee of the Labour Party or to the National Union of Mineworkers. I accept also that my right hon. and hon. Friends are a little timid.
§ Mr. Osborn
My hon. Friend is right. Eight out of nine at present would be against it, and in future it would probably be 11 out of 12. This is the difficult ground that those who represent our interests in the Community must negotiate.
What are the alternatives? British coal will never be competitive with imported coal. No Community coal will ever be competitive. There is a suggestion that by the turn of the century about one-sixth of the coal in the Community will be imported. The right hon. Member for Devonport talked about operational and deficit grants. I believe that the total grants to the NCB could be about 4¼ per cent. of turnover. That is about £200 million next year. My right hon. Friend said that in total it would be £500 million to date.
The Community, and particularly Germany, claims that our industry is subsidised and supported, and that it does not run at a profit. It would be useful for the British and German leaders to compare notes and for our respective Governments to do the same in order to try to work together.
I believe that imported oil, natural gas and coal to a certain extent must be regarded as an insecure source of supply to this country. The coal industry could mean a great deal to this country. We have talked about agreed prices in steel, the Paris Treaty, and the ECSC. Should 837 not our leaders get together and talk about agreed domestic and industrial coal prices? They should relate imported coal prices to domestic coal prices, for example. That is why at Question Time I suggested to my right hon. Friend that he should discuss with Community coal producers an agreed stable price level and try to work out a mechanism by which, if other countries inject subsidies into their industry, subsidies in Britain should be comparable.
My right hon. Friend said that it was not for the Government to run the pits. I agree with that. He spoke about the 1983-84 limits. I share his belief that it would be healthy for the coal industry to be able to stand on its own feet. My right hon. Friend said that it was the task of the NCB to run the industry. The NCB must be given every support by a Conservative Government—I do not draw back from that at all—but the conditions are that our coal must become competitive in price and that we look for higher productivity.
I have already talked about mechanisation and automation. If in the future I have to choose between subsidies, such as those given in France, Belgium and Germany, or some sort of levy on imported coal, I would prefer the latter. I support the Bill and reject the amendment.
§ Mr. Allen McKay (Penistone)
I begin by taking up the challenge of the hon. Member for Sheffield, Hallam (Mr. Osborn) about Labour Members denigrating the industry and the miners. That is the most disgraceful statement that I have ever heard in a debate like this. The hon. Members here have spent a lifetime in the industry and in the trade unions, and they are now sponsored members.
§ Mr. John H. Osborn
I understand the hon. Member's feelings, but I wish that Labour Members could inject some optimism into people in the industry—those in management and those down in the pits. I very much hope the hon. Member will try to do so in his contribution this afternoon.
§ Mr. McKay
The fact is that throughout the history of the coal industry we have learnt to mistrust the words of Conservatives. Those fears are not 838 allayed by the present unemployment situation and by what has happened to the steel industry and to small industry.
I declare an interest, although it is not a financial one. I am biased in favour of the industry that I love, because it has given me work, it has educated me and it has given me every opportunity for promotion and advancement. I shall never be able to repay my debt to the coal industry. My feelings are slightly blemished, because on 1 May my father died of pneumoconiosis after suffering for 20 years.
In the Bill there are elements that we applaud. I applaud the element that finances people who find themselves in the situation in which my mother found herself. For 20 years she had the guts and the courage to nurse my father.
Throughout its life the industry has always had its ups and downs. It was exploited to the full by the old coal owners, who salvaged coal—or savaged coal, I might say—from the easy, workable seams and areas, and left behind a legacy for us. Not all owners were like that, but a good many of them were. By and large, their motive was profit and that motive was to result in the exploitation of the coal industry and the mine workers themselves. I believe that during that period the country lived off the backs of the mine workers. Because of that exploitation and insufficient investment, the industry began to decline.
I have been privileged to work for the coal industry for more than 30 years, originally as an electrical engineer and later as an industrial relations officer. During my time as an engineer I was branch president of the National Union of Mineworkers. During this period I saw the industry move out of private ownership. It was a proud day when I saw the NCB flag flying from the top of the winding gear. At last I felt that I had a stake in the industry to which I belonged.
I have watched the industry heave itself out of being a typical village industry, at the same time retaining its proud village commitment and its traditions to its work force. In fact, it achieved world-wide recognition for the skill of its miners, the expertise of its engineers and the ability of its management, who came from the shop floor. Those ideas welded together the mineworking force. The ability and 839 the co-operation of the trade unions led to the rise of the industry from the condition in which it was left by private ownership. It moved from conventional mining methods of production to the use of the most sophisticated electronic, electrical and mechanical methods—methods that are not only recognised but are required throughout the world. Through its exports of expertise and mining machinery the industry earns for Britain about £200 million a year.
In the 1960s ghastly mistakes were made as the Government bowed to the oil lobby. During that period 400 pits were lost, divisional structures were dismantled and areas were merged. In 1947 there were 958 pits, with an average manpower of 704,000, but in 1979 the figure had been reduced to 223 pits, with an average manpower of 235,000. During that time the miners held back from industrial conflict and watched the industry being dismantled. They accepted miserable increases in wages, because the then chairman of the National Coal Board told them that it was for the betterment of the industry. He said "Be calm, be patient, accept what is given, and the rewards will come later". Those rewards came. We watched other industries race away in the wages league—but still the collieries closed. We accepted the low wages and the conditions to try to save the industry—but still the collieries closed. They were closed not because the reserves were exhausted but purely and simply for economic reasons.
The word "economic" became the most hated word in the mining vocabulary. In those days one could call a colliery anything that one wanted, but it survived. It survived until it was called uneconomic, and that sounded its death knell. A few people protested about the closures and warned that the oil would not last and that it would not always be cheap, but to no avail. The Bill brings with it that same warning. In his Second Reading speech the Minister spoke of a dynamic and vibrant industry. It is such an industry. It is poised to provide Britain with its energy requirements for many years. But at this moment, when it is poised to take off, the Bill is poised to shoot it down. The industry is being put into a financial straitjacket.
The Bill confirms that the Government are interested in the future of the coal 840 industry not as a supplier of the nation's energy needs but only as a profitable concern. The industry cannot meet the Government's requirements in the three years that it has been given. Therefore, it is faced with certain directions in which it can move. It could increase its prices, but that would be inflationary and would lead to further imports of cheap, subsidised coal. An alternative would be the closure of uneconomic pits.
As my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) said, the other EEC countries are more understanding of their coal industries. Belgium provides a subsidy of £24 per tonne, with production costs of £56 a tonne. France provides a subsidy of £14 a tonne, with production costs of £42 per tonne. Germany provides a subsidy of £ 12 a tonne, with production costs of £ 40 a tonne. Britain provides a subsidy of £1 a tonne. I am sure that the mining industries of other countries are equally poised and vibrant. They are poised to export to Britain the coal that we shall fail to produce.
It is easy to close a colliery—it can be closed within a few months—but to open a colliery takes about 14 years. The Minister said that pit closure was the responsibility of the NCB. If he pushes the board into that responsibility, and if it is forced to close mines purely and simply for financial reasons, there will be no replacement capacity. What do the Government expect of the NCB if the financial restrictions are not met within three years? Do they expect uneconomic pits to be closed? If so, from where will the replacement capacity come?
I shall quote from the NCB's comments on the report of the House of Lords Select Comittee on coal.We recognise of course that the industry has a major role in determining its own long-term objectives, and that indeed is the policy we have adopted in putting forward Plan 2000, the main elements of which were summarised in Coal for the Future. However, energy in general—and coal in particular—has very long investment lead times. It will only be possible for the coal industry to succeed in meeting its forward objectives against a background of consitent ongoing Government (and EEC) support in terms of general energy policy, specific coal policy measures and investment funding.It continued:The industry needs to be able to generate some 4 million tons a year of new and replacement capacity in the latter part 841 of the century. After allowing for the closure of old capacity, such a rate of new development would enable the industry to show continuing net expansion and progressive improvement in productivity and competitiveness. If the country is to have the long-term benefits of an expanded and efficient coal industry, it will be essential to maintain the continuity of the investment programme.That indicates that the board was worried about the financial restrictions placed upon it for the next three years. It continued:It remains the Board's view that it will be highly desirable, on grounds of national energy policy, to provide for a significant increase in the use of coal from the mid-1980s".The NCB and the miners have always accepted a challenge. No doubt they will accept the challenge that is being thrown down now.
We are worried that only people from the coal industry recognise that the challenge will be too much. That does not take away anything from the industry. People from the industry know what has happened in the past, and what will happen in the future.
The Financial Times on 17 June said:Until the new mines, and the 87 existing collieries which are being expensively but slowly mechanised and refurbished, begin to make a substantial contribution to coal output, management will have only two options in striving to meet the Government's breakeven target, it will either have to accelerate the closure of uneconomic pits or to raise prices.The Government has pointedly refused to give any indication of whether it expects the NCB to bring forward its programme of pit closures.A report from a colliery stated:The impression has been given that the Germans, Belgians, people like this, have a dynamic force of miners compared with our own turning out this tremendous coal. And they're not, they're not different at all. But they have governments who can see the commonsense policy of applying a subsidy to carry an energy industry through a time of recession so that they are not dependent ever on other nations.If those nations can do it, why cannot we do it?
While we accept the challenge thrown down by the Government, while we accept what the Government have said about the financial conditions, and while we know what those financial restraints will mean to the coal industry, we will not 842 accept the closure of uneconomic collieries. We will not accept that the Government's financial restraints will put the NCB in that position. We will not accept the enforced redundancies and unemployment that will be created by the Government's measure. We will not accept seeing the industry ground down, as we watched the steel industry ground down, because of the Government's policies. If that has to be, so be it. But we shall stand shoulder to shoulder and fight for the industry and the country that we love.
§ Mr. T. H. H. Skeet (Bedford)
The hon. Member for Penistone (Mr. McKay) made a moving and interesting speech. However, I should like to refer to the speech of the right hon. Member for Plymouth, Devonport (Dr. Owen), who made two major points. The first was that the industry was not serviced with adequate borrowing powers. Perhaps the right hon. Gentleman will reflect on the fact that under the Coal Industry Act 1965 borrowing went up from £1,800 million to £2,600 million—an addition of £800 million. Under the Bill it goes up by £1.6 billion. Surely the NCB's borrowing requirements, as provided under the Bill, are ample.
§ Mr. Skeet
I am comparing like with like. I am expressing it in money terms, but even in real terms the increase is considerable.
The other substantial point made by the right hon. Gentleman was that under the new regime the NCB could not live within its prescribed limits. He went on to indicate—I have heard it from him, and many other people, before—that subsidies to European industries, such as those in Germany, France and Belgium, are very much higher than those in the United Kingdom. It is unique that the right hon. Gentleman should use that argument. Between 1975–76 and 1978–79—at the time of a Labour Government—operational grants in the United Kingdom were nil in the first year, roughly £11 million in the next year, £24 million in the following year and £ 117.7 million in the final year. Operational grants have not tended to fall. They have gone up significantly, and in recent years they 843 have tended to escalate. Surely the Government are right to ask the NCB to be viable.
I turn to the social grants, which are being continued. In 1974–75 they amounted to £119 million in round figures. In the ensuing year they amounted to £72.4 million. The year after that they were £43.4 million, and they were £51 million the following year. The trend has been on the social side, where the grants have remained relatively consistent, and it is perfectly right that they should continue. It is, therefore, extraordinary to discover that the right hon. Gentleman is advocating that the operational grants should be continued, because during the period of the previous Government he did not give substantial operational grants to the industry.
The social grants are to be continued as heretofore. We in Parliament must look after the general situation with regard to public expenditure. It is extraordinary that this industry is providing little money of its own. In fact, if one looks at its accounts one finds that very little is being provided by the NCB. It must all come from exterior borrowings. The figures that I cited in Committee reveal that between April 1973 and March 1979 only about 4 per cent. of the total was provided from internal sources, with all the rest coming from outside. Does anyone argue that we should not act as custodians of the public and indicate that certain safeguards should be prescribed? That is what we have done here.
The three largest borrowers are the British Steel Corporation, British Rail and the NCB. NCB expenditure in 1979–80 was £604 million, including Government grants of £172 million. In 1980–81 it is £834 million, including Government grants of £253 million. The point is that the NCB is not being deprived. The miners are not being denigrated. They are being assisted by almost £1 billion a year. It is building up towards that figure. The Minister and my right hon. Friend are determined that the miners will remain the kings of industrial workers. They are receiving more than £100 a week for doing a job which many hon. Members are not prepared to do themselves.
I am saying that the NCB should periodically come back to the House so that 844 hon. Members may vet or monitor its expenditure as it moves ahead through its 10-year "Plan for Coal" to see whether the money is well spent.
§ Mr. John Evans
No Labour Member would object in the slightest to the NCB or any other nationalised industry coming to the House so that we could discuss its spending programmes. I am interested in the hon. Gentleman's arguments about the finance that is made available to the NCB by the Exchequer. He seems to be rather querulous about that. He is a well-known supporter of the nuclear lobby, and he seems to swallow with equanimity the fact that we are talking about a £20 billion-plus programme for the nuclear power industry over the next decade. However, it seems to me that his arguments in that regard do not square with his arguments in this case.
§ Mr, Skeet
I am afraid that the hon. Gentleman is wrong. I believe that a balance of fuels must be available to the CEGB and the South of Scotland Electricity Board. At the present time, 70 per cent. of the CEGB's output is supplied by coal, and about 13 per cent. of total electricity comes from nuclear power. The nuclear side must be built up. In my judgment, coal will not be available in sufficient quantities when it is required. We must also bear in mind that the number of fatalities in nuclear power stations is negligible, whereas the number connected with the mining industry is quite substantial, even now.
§ Mrs. Elaine Kellett-Bowman (Lancaster)
Does my hon. Friend agree that coal is far too valuable a substance to use in this way? It must be used as a feedstock. It is far too valuable to burn just to produce electricity.
§ Mr. Skeet
Something that I shall say in a few moments will indicate that I can see only with difficulty the market for coal. As I am an enthusiast for the coal industry, I am prepared to ensure that it has a reasonable market in future. However, before leaving the subject of borrowing, I should point out that the £2,600 million is likely to be exceeded in 1981–82. The Bill provides enough money to cover the board's borrowing right up to 1985, and I would have thought that that was ample.
This is a unique occasion to monitor the performance of the "Plan for Coal" 845 that was brought forward in 1974. We have now reached 1980, and we have learnt a significant fact. In percentage terms, coal's price advantage over oil in 1974—that is, after world oil prices went up—was 51 per cent. By early 1979 that had declined to 14 per cent. As a result of recent oil price rises, that advantage will have increased again, but one cannot help notice the narrowing of that advantage. As I have indicated, it has a habit of deteriorating as coal pursues the price of oil. Although a State monopoly, there is unequivocal evidence that the NCB is controlled by the market, whether or not it recognises that point.
§ Mr. Peter Hardy (Rother Valley) rose—
§ Mr. Skeet
I have given way quite considerably, and I should like to advance my argument a little further.
Under the "Plan for Coal", initial expenditure in 1974 or thereabouts was £1,400 million. The amount spent to the end of March 1980 was £1,900 million, at 1979ߝ80 prices. If one works on exactly the same price basis, total expenditure for the planned period will be £5.7 billion, and we have virtually gone halfway through the period. What have we got for it?
I turn to annual production of coal. I shall be absolutely fair and take a period of three years. In 1973 production was 132 million tonnes. In 1974, because of disruption, it was 110 million tonnes, and in 1975 it was 128 million tonnes. It was high. Today we have production of roughly 122.4 million tons. Therefore, production has come down—[Hon. Members: "There are fewer pits".]—probably in recognition of market conditions.
Output per man shift is another significant point. In May 1974 it was 2.26 tonnes. In April 1980 it was 2.27 tonnes. Therefore, there has not been an enormous change. The last significant advance forward was at the time of Lord Robens, when output went up substantially through mechanisation. We look forward to the time when it can rise again, but it may take some time to reach that point.
It is interesting to note the differences between 1940 and 1980. I refer to the 846 average cash earnings. In the heady days of October 1974 average earnings were £50 per week. In October 1979 the rate went up to £112. The average mining costs per tonne were £11.79. In 1978–79 the cost went up to £24.10. The average price of coal to large industrial consumers was £ 9.6 a tonne. It went up to £ 27 a tonne in 1979. It trebled in price.
What we have learnt so far is this: production has gone down, the amount of investment has gone up, and earnings have escalated considerably. Has the nation derived benefit from this large investment in the industry?
§ Mr. Allen McKay
Will the hon. Gentleman take into consideration the provisional results for 1979–80? Deep-mined output is up by 3.8 million tonnes to 109 million tonnes. That is the first increase on a previous year since 1963. Productivity of all mine workers is up by 1.5 per cent., and in the last three months it is 4 per cent. higher, making an overall output per man shift of 2.7 tonnes. There has been record breaking productivity at the coalface, with a breakthrough of more than 9 tonnes per man shift since last November. The attendance at work has improved and accidents have decreased. That is no mean achievement in the mining industry.
§ Mr. Skeet
That does not persuade me, as the hon. Gentleman knows. He says that there must be no closure of uneconomic pits. He knows perfectly well that in South Wales only four mines out of 38 had an OMS of over 2.3 tonnes. This is the right solution. I am in favour of phasing out pits only if new ones can be phased in. Taking the Western region, Silverdale has an output of 4.4 tonnes per man shift. In the South Midlands, at Ragworth output is 4.8 tonnes per man shift. At Daw Mill it is 4.8 tonnes and in North Nottinghamshire, at Thoresby, the output is 4.7 tonnes.
That is the way to make a profitable National Ooal Board. That is the way to earn high wages. However, if the productivity of the remainder in Wales—that is, excluding the four mines that are relatively profitable—is too low, one understands that the good pits are being ruined in profitability by the bad ones. The bad pits are not sufficiently profitable.
847 Government supporters are backing a profitable mining industry. I am delighted that we are going ahead with Selby. We must wait for the occasion, but we may be going ahead with Belvoir, in which case productivity per man shift would improve further. I give this indication for a period which has been carefully monitored. Productivity is not as good as it should be because the returns from the good pits are being reduced as a result of the returns of the bad pits. I mean bad only in relation to their return on OMS.
The coal-oil price ratio in pence per therm in 1974 was 0.61. The provisional figure in 1980 is 0.81. That may have changed. Therefore, I do not take any great point on that.
The inland consumption is interesting. The consumption at power stations has gone up significantly, from 67 million tonnes to 88.8 million tonnes. That is a gain of 22 million tonnes. Therefore, a special market has been provided for the major quantity of coal that is becoming available. However, coke oven consumption has gone down; and the industrial market and domestic market consumption have gone down too.
How is it possible to have these figures with these vast injections of public funds into the industry? Taking the totality of the sources of funds that have gone into the NCB between April 1973 and March 1979, the finance that came from the internal resources of the National Coal Board was no more than 4 per cent. The rest came from borrowing from the European banks, the European Investment Bank and Government grants. The industry is providing only 4 per cent., yet the right hon. Gentleman has the audacity to say that the Government are not being fair to the miners. Are they being fair to themselves or the taxpayer, who must provide it? Money does not come like manna from Heaven.
The right hon. Gentleman mentioned that he wanted fixed targets. The target set out in the "Plan for Coal" was about 135 million tonnes by 1985. We all hoped that that would be achieved consistent with the market. The figure for the year 2000 is about 170 million tonnes. The Minister gave these figures in a written answer on 22 July, at column 139. By 1990 the figure will be 127 million tonnes rising to 138 million tonnes. By the year 848 2,000 it will be 137 million to 155 million tonnes. Therefore, the official figures have declined. These figures have been taken from the 1979 energy projections, a Department of Energy paper. According to the Government's expenditure plans for 1980–81 to 1983—Cmnd. 7841—we see that the target output of 135 million tonnes, which was expected in 1985, will not be reached until probably the end of the 1980s.
We are not doing too well on this basis. Therefore, I am giving encouragement to the miners. They are doing better. The Government are reciprocating by providing the necessary cash for development and improvement. That is not coming from the industry. However, much more improvement is required.
I move on to a sector which is of vital importance. I am concerned about the decline in the market. I mentioned that electricity generation is substantial. It is the largest part of coal consumption. The worrying factors on the horizon, such as the fall in electricity demand and the nuclear power programme, must be accommodated. Coal imports are cheap and total 4 million tonnes per annum. Some of these imports are on long-term contracts. There is extensive pollution from power stations. Miners know that in certain areas subsidence is serious.
We see that there is a possibility that the coking coal market will be cut back substantially because of changes in technology, such as direct reduction processes which do not use coking coal, and also the SKF plasma smelt, which is probably a process for the future. The 1979 energy projections for the domestic market indicate that it is likely to fall away to about 3 or 4 per cent. by the year 2000. These figures come from a Government publication. Although it indicates that the figure may not go quite as low as that, nevertheless the downwards trend continues.
We may expect expansion on the industrial front, with fluidised bed combustion. I raise two points. What will industry do with the limestone slurry that is formed, and how is it proposed to reduce the capital price of the fluidised bed combuster, which is much more expensive than the conventional plant used at present? Should we not be giving much more thought to dispersions of oil and coal? This might be a useful way ahead.
849 We have discussed the international summit on coal, which was held recently in Italy. There will not be a great deal of joy for the United Kingdom unless other countries can take on board the earnest recommendation that prices must be competitive. Our prices are well ahead of those in Poland, Australia, South Africa and the United States. This is a worrying aspect. Therefore, the international market for coal may well expand However, it is unlikely that we shall participate in it. It might be possible for us to extend into Europe, but will our European partners buy expensive coal? They will do so only as part of a package, and if they do they will not be told by the miners that they will have to pay the highest prices.
I am concerned about coal burn for power stations—the biggest market for coal. In 1979 that worked out to almost 89 million tonnes.
The Minister said in a written answer on 24 April 1980 that in 1990, the figure is likely to be between 80 and 94 million tonnes. In the year 2000 the figure may be between 65 and 78 million tonnes. Those figures largely confirm the energy projections of 1979. So, the difficulty that we face is that there will be a vast expansion of the coal industry. Long lead times are involved, and the plants must be ready for expansion. The medium and short-term projections for the coal industry are not satisfactory. The National Coal Board has probably got its timing wrong, and when it expects to come into the market the sales will not be there. The Government of the day will then have to make cuts. That will be regrettable, and I hope that it will not happen.
With regard to power stations—this is part of the evidence that was given by Professor Manners in the Vale of Belvoir inquiry in MarchAbove all else, the figures reveal with persuasive clarity that, in order to estimate with good reason a demand for power station coal in excess of 70 million to 75 million tonnes between 1985 and 1990, it is necessary to assume (a) a rate of economic growth of at, or above 2.5 per cent. per annum throughout the decade, and (b) a coal: oil price ratio wider than 0.7 in 1985 and 1990. In the light of British economic performance in recent years and decades, and of coal: oil price relativities since 1973, both appear to be very optimistic assumptions.850 In his evidence, Professor Manners further said:Turning to the coal: oil price ratio, my judgment is that it is unlikely to widen to anything like the differentials proposed by the Department of Energy for the period to the year 2000".It would pay the coal industry to listen to and take the advice of Professor Manners. I am prepared to listen to and take the advice of eminent people who advocate the contrary view. But another view is that matters are not satisfactory, and the public, many of whom will have an opportunity to read the comments of certain hon. Members, will ask whether the money is being well spent or whether the Government are putting too much into the industry at this time. We are not being parsimonious, but are we not being a little over-generous?
§ 7.4 pm
§ Mr. Michael Welsh (Don Valley)
I shall be as brief as possible, because I know that many hon. Members, particularly Labour Members, wish to speak.
I shall speak in favour of the amendment, and along the same lines as my hon. Friend the Member for Penistone (Mr. McKay), who has been involved with the coal industry all his life and has seen many of its ups and downs. We hope that this is not one of the down periods. Having read the Bill, and having served on the Committee, I think that there will be another downturn for the coal mining industry unless we act now. I still believe that the Government can act differently even at this eleventh hour.
I support the amendment, although parts of the Bill are favourable to the coal industry, and are acceptable. That is why we shall vote for the amendment but not against the Bill. Other parts of the Bill spell murder to the mining industry. That is a sincere statement. The Bill does not provide adequate borrowing powers, and it withdraws operating powers by 1983—the wrong time. It would have been far more satisfactory if the industry had been given another three or four years.
The fact that the Bill does not provide adequate borrowing powers is not because of the outlook of Ministers; it is because of a direct instruction by the Treasury with regard to the public sector borrowing requirement. The Bill does not 851 basically deal with coal mining; it deals with public expenditure cuts.
Why could not the industry break even at the end of the period envisaged by "Plan for Coal"? Why should the industry change the method of costing before the end of that period? The morale of the miners is important in the production of coal. They will accept the challenge and produce more coal if they believe that they have friends in places such as the House of Commons. They will make an effort. But if we change from historic costing to current costing we shall not receive operational grants unless there is a loss. Even this year the coal industry could be £190 million in the red. The Government would then give an operational grant, and the profit would be seen to be £90 million. If that is so, why do we not stick to historic costing, give the grants above the line, and show, correctly, a profit of £90 million?
The Bill will help only those who are anti-coal. The hon. Member for Bedford (Mr. Skeet) said that he is pro-coal. I am sure that he supports the miners, even if he does so in a strange way.
§ Mr. Welsh
Miners will accept the challenge and they will not ask for anything more than they deserve. They deserve to work and they deserve the support of the Government of the day. The borrowing power is needed because successive Governments have insisted on investment so that coal can be produced. The biggest problem besides grants is the difference in costing. There is no reason why the method should be changed to current' costing. If we accept "Plan for Coal", why change horses in midstream? Why change the method of costing?
The miners, the National Coal Board and the industry as a whole all accept the challenge. We believe that if we continue to get help as we are at present we shall break even by 1986, but if we do not get the support in 1983 that we are now getting, what is to happen to the industry? I ask the Minister to answer that question. What will happen if the 852 industry is shown to be £100 million in the red and there are no grants? In those circumstances, obviously there will be very great embarrassment.
The Minister could then say one of three things. First, he could say that the industry is £100 million in the red, that there are no more grants, and that uneconomic pits are to be closed. Secondly, he could say that the industry must sell off some of its assets—as is happening in most other nationalised industries. Thirdly, he could say that the earnings of the miners must be reduced.
A fourth possibility would be for the Government to make further grants, but they are determined not to do that, so the Minister would have to adopt one of the three courses that I have mentioned. I warn the Government that the National Union of Mineworkers would not tolerate any of those three courses being followed. They would fight against them with all the power at their disposal.
When the lads come to the NCB, say, in 1983 for wage increases, if the NCB says that there is no money—"It in't in t'tin"—there will be trouble. It will make the winter of 1974 look like a parson's tea party. That is not a threat and it is not a promise; it is a certainty.
We need until 1986 the help that we are getting at present because of the borrowing that has been necessary to get the industry, shortly, into a profitable position. But if, as a result of following any of the three courses that I have mentioned, the NCB—due to circumstances beyond its control—is still approximately £100 million in the red in 1983, we hope that the Government will reconsider the question of grants.
I ask the Minister to make the position plain to the miners. If it is the intention, in a very gentle way, to kill the mining industry, I hope that he will tell us that that is the intention. Then the miners will know where they stand. When they know where they stand they can make the necessary decision—and it may hurt a lot of people. But I hope that the Minister will give the assurance that if we are still in the red in 1983 there will be some flexibility.
It was a great disappointment to hear that the NCB will be unable to borrow money from the EEC as in the past. The industry used to get from the European Coal and Steel Community about 853 $500 million equivalent a year. It is now to be reduced to $150 million. The Treasury has already written to the NCB to say that this avenue for borrowing money is to be practically closed. The NCB, therefore, is having to work in a different way from any other industry. If the NCB is to be prevented from borrowing money from the European Coal and Steel Community, there is no doubt that the industry will be put into a strait-jacket. We know that it is connected with the public sector borrowing requirement.
It is interesting to recall that the NUM, along with the NCB, was involved with the European Coal and Steel Community years ago. Joe Gormley chaired various committees, and still does. We have been closely involved with the Community and have been able to borrow money from it at very reasonable rates. Now, unfortunately, that door its being closed.
The regional grants are also being stopped. Labour and Conservative Governments have not applied for many regional grants in the past, but they are now to cease altogether. If the Bill is passed as it stands at present, no Secretary of State will have the opportunity to get those grants. It is a mean, nasty and brutish attitude to take, because the grants were intended to enable people in the industry to live a better life. It would seem that the intention is that once again they are to be condemned to live in rough areas, while the people represented by Conservative Members are able to live in the beautiful rural areas. That is what makes this such a horrid Bill.
A political party that forces the NCB, in one way or another, to close its mines,—especially as there will be unsatisfied needs that production could supply—does not deserve to survive. The NUM and the Opposition will do all they can to amend the Bill when we have a new Labour Government in the very near future.
§ Mr. Peter Hardy (Rother Valley)
I shall endeavour to make a short speech, but I feel that it is necessary to express a degree of despair about Government policy—not merely about their energy policy but about their complete disregard for the national need.
854 Earlier today we had a statement on agriculture, and the Bill shows the same sort of disregard of national requirements. I was called by Mr. Speaker, and I suggested that in Britain we were supine in our response to national need, whereas our Community partners vigorously pursued their own national interest. In the same way, they now vigorously pursue their national interest in terms of support for mining.
I deeply regret that the hon. Member for Bedford (Mr. Skeet) would not give way to me during his speech. I always listen to him with interest, and always become more and more convinced that there is a good case for presenting our speeches for publication, so that other hon. Members do not have to listen to them. However, I listened to the hon. Gentleman. One thing that he said will be of considerable interest to the mining areas.
The Secretary of State and the Under-Secretary of State have been reassuring the mining communities of Britain that the Bill will not prove to be a dreadful thing for them. Now the hon. Member for Bedford seems to have confirmed the. fears of those communities. He said that he felt that the miners might be led into false optimism. There is, indeed, a real divergence of view between the Government Front Bench and the hon. Gentleman. I hope that any divergence of view concerning the interpretation of the NCB's finances will be clarified by the Minister, because the hon. Gentleman's description of the NCB's contribution to its capital investment was something of a travesty. It would be appropriate for the Minister—
§ Mr. Skeet rose—
§ Mr. Hardy
No. I am not giving way to the hon. Gentleman. He did not give way to me. I hope that the Minister will put that matter in proper perspective. It was wrong of the hon. Gentleman to present such a travesty of an interpretation. Of course, we all know what the Conservative Party has done to the coal mining industry.
The position is desperate. The Conservative Government have been in power for slightly over one year, yet the damage has already been enormous. They have placed high priority on the cutting of public expenditure at almost any cost.
855 Money is being poured out on unemployment benefit, with all the social consequences which that brings. The social consequences of high unemployment in areas such as Wales, Scotland, the North-East and South Yorkshire are such that it is important that the industry should be given higher priority.
Fears about the industry are not restricted to the National Union of Mine-workers. They are felt by everyone connected with the industry—whether members of the NUM, its local leaders, members of the National Association of Colliery Overmen, Deputies and Shotfirers, to which my father belonged for many years, or the British Association of Colliery Management.
My hon. Friend the Member for Penistone (Mr. McKay) reminded me of the day when my father took me—I was a schoolboy—to Manvers Main colliery to see the vesting day. In those days one heard a certain amount of cynicism. I was only a boy, but I could sense a little of it. The managers of Manvers Main colliery were the managers after nationalisation. The flag changed, but the faces did not.
Over the past 33 years management has arisen from career opportunities. The service and support that colliery managers gave to the Conservative Party 40 or 50 years ago is no longer applicable. The members of the British Association of Colliery Managers do not pay the political levy. They are part of the trade union movement, but they are not part of the Labour Party. The association has made it clear from its professional understanding of the mining industry that it is critical not of the whole of the Bill—we are not critical of the whole of it—but of the straitjacket provisions.
I gather that the Secretary of State does not like the use of the word "strait-jacket". However, if the Government pursue lunatic policies they cannot object if we use such words.
§ Mr. Hardy
I did not suggest that the hon. Gentleman should wear a strait-jacket. I said that the Government were pursuing lunatic policies. Usually the hon. Gentleman supports them eagerly.
856 The British Association of Colliery Management argues that the industry is geared to change and innovation. Productivity is on a dynamic growth course. The position is far better than some Conservative Members believe. Morale is high and absenteeism is at its lowest level for 20 years. The momentum gathered from "Plan for Coal" must not be threatened.
The British Association of Colliery Management is not a Labour Party organisation, but it believes that certain parts of the Bill seriously undermine the growth of the coal industry. I hope that the Minister will take steps to change the present inflexible approach. The Government would show some sense if the Minister were to meet the industry on a tripartite basis in the same way as the previous Labour Government, if he spelt out to it the difficulties faced by the nation, which would not be ignored by the industry, and asked it voluntarily to respond, as it has done in the past. My hon. Friend the Member for Midlothian (Mr. Eadie) took part in all the meetings and knows that the recognition of reality is not a difficult task for the mining industry.
If a hard and firm target is set, which the National Coal Board is obliged to meet, the board will have to be prepared to meet it and there will have to be contingency plans. There will have to be a dedication of resources and energy to meet the target. There will have to be cautious, careful and excessively prudent arrangements for drawing in the horns of investment. I hope that the Minister will give an assurance to the NCB that the present inflexibility will not be allowed to deter research into the use of coal and the development of coal technology.
Britain is one of the world leaders in mining technology and engineering. The Government's present inflexibility must not be allowed to deter investment in projects such as Selby. The Minister knows that there is drama and glamour in oil rigs in the North Sea. He also knows that Selby is better than two of the best North Sea oil platforms and that it will remain so for at least twice as long as the best and most durable of our oilfields. It must be right for us to urge the Minister not to impose such regulations and rules on NCB finances, which 857 will threaten Britain's ability to cash in on the bonanza of coal, which will be 10 or 20-fold greater than the most optimistic estimate of our offshore oil resources. The assurance of flexibility is important. It would be better for the Government to reduce some of their rigidity and to give the industry the capital and the opportunity to maintain the dynamic growth that it is experiencing.
I do not want to be critical of the Under-Secretary of State. I have heard the hon. Gentleman pay a graceful tribute to the industry. I recognise that he has made enormous efforts to understand it. It would be better if some of his hon. Friends who do not understand the industry and who have had little contact with it were to follow his example. The hon. Gentleman's exposure to the industry should have equipped him to understand the nature, mood and mentality of those who work and live in the coalfields of Britain, to understand the miners and to appreciate that he can lead but cannot drive. It is the effort to drive that is causing a great deal of anxiety.
I have noticed the Government's inflexibility towards the coal industry. I do not see any inflexibility towards nuclear power. I have never attacked research and development into nuclear power. Britain must remain in high technology. We must ensure that future generations never face desolation. However, if the coal industry is to be placed in a strait-jacket, as is proposed in the Bill, it will be entirely wrong for us to leave no limitation and to be relaxed in our approach to the possibility of huge sums being devoted to investment especially in American nuclear technology.
If the Minister wishes to develop and generate a massive anti-nuclear campaign, the Government are going along the right road. By telling the coal industry that it must break even by 1983, in the present muddle of nuclear policy and nuclear decision-taking, and while they play about without limit or restraint along the American road, the Government are risking the grave embarrassment of Britain and the society within it.
I do not want to speak for too long—
§ Mr. Hardy
I have not taken anywhere near as long as the hon. Gentleman. I do not wish to take too long, because many of my hon. Friends wish to take part in the debate. They will be speaking as representatives of every part of the country and of every coalfield. There will be a unanimity of view. We wish to see the industry survive. It is in Britain's interests that it should do so.
I have referred to the Under-Secretary of State's service to the industry. He has visited it and publicly paid tributes to it. Will he maintain his close contact with it? Will he ensure that he is at least able to understand the need for swift arrangements when it is necessary for them to be made? Will he continue to be aware of deteriorating events, entirely outside the industry's control, which will increase the intolerability of the pressure that the Bill places upon the industry? If the world recession worsens, and if the appalling industrial wasting continues, will the Minister ensure that the National Coal Board will not be irreparably damaged? If that were to happen, our children and their children would suffer.
Reference has already been made to a one-legged Santa Clause. Few Labour Members believe in Father Christmas. However, we believe that the Prime Minister should be placed on top of a Christmas tree, so long as it was possible to remove the right, hon. Lady before the 12 days were over.
§ Mr. Hardy
There are those who buy disposable Christmas trees. I also believe in disposable fairies. Will the Minister ensure that he maintains his contacts with the industry and that he meets the industry's representatives frequently, to ensure that a swift improvement in arrangements can be made if the recession gives rise to further difficulties? Will the Government ensure that the effort required from the National Coal Board in order to meet the timetable does not prevent investment at the 220-odd collieries that have substantial reserves? Will the Minister ensure that he does not prevent investment in the development of 859 new collieries, which must be working by the 1990s?
Does the Minister accept that a carefully thought-out strategy will involve contingency plans to respond to any movement in the subsidies given by European countries? Does he accept that such a strategy will involve contingency plans in the event of the price of oil falling by a marked amount in real terms? There is anxiety that as the recession bites the price of oil will fall and cause temporary but serious consequences for world energy pricing. That could be disadvantageous to Britain.
Will the Minister keep a close eye on recruitment? Many coalfields, including my own, face appalling problems. Recently, I spoke in the Chamber about unemployment. I am president of the youth organisations in South Yorkshire. I am deeply distressed about our level of unemployment. The National Coal Board is the only significant employer in my constituency that is providing constant opportunities. I should hate it to be plunged into any temporary difficulty that would make it impossible for it to maintain that contribution. Without it, heaven knows what would happen! In South Wales, such a position may already have been reached.
Will the Minister explain to the Secretary of State that we do not think that he fully understands the length of lead times in mining development. He seems to imagine that the NCB can break even in two years' time. The Minister understands that lead times are enormous. That is unavoidable. Some of my hon. Friends went to the ceremony at Selby, when the first sods were removed. It was a great occasion, because for a decade or more we had argued that such development was essential. However, it will be 1984 or 1985 before full production is achieved. It will have been worth the investment. The Under-Secretary realises this. I am not convinced that the Secretary of State understands it.
I have asked the Minister to answer several questions. The most important question that has been asked was that which was asked by another hon. Member in relation to the travesty of media interpretation. Several of my hon. Friends were miners. They are perhaps too modest to say that the national media's main interest is in the comments and actions 860 of one or two miners' leaders. Such men are able, colourful and perhaps controversial.
§ Mr. Hardy
I do not wish to enter into a controversy with my hon. Friend. The hon. Member for Bedford probably takes an interest in the comments only of the colourful and controversial leaders. Recently, little attention has been given to reality. Despite the potential onslaught on coal, and despite the history of the past.10 or 40 years, the industry has been a national success. Our coal is not quarried; it is deep-mined. It is the most successfully deep-mined coal in Western Europe. Production by volume and by method is a success story. Last year, 4 million more tonnes were mined than in the year before.
The coal industry is a family industry. No outside entrepreneur, city slicker or wide boy from the South-East has taken charge of the industry. The achievements have been the achievements of a family. Those who lead the industry were developed and trained in it. From time to time cynical words may have been spoken. Sometimes, there may have been abrasive comments and actions. However, although cynical words may have been expressed in the industry, Britain's position is not disdained. Conservative Members may not have appreciated certain forms of the industry's determination. However the national need has been served.
Conservative Members always draw attention to miners' pay. The hon. Member for Bradford spoke about earnings of £100 a week. I would not go down a pit for £100; nor would the hon. Gentleman. Miners should be rewarded. This nation could have the greatest reward, and we shall be rewarded if our energy needs are met. That will be an important reward. However, our energy needs will not be met unless they are met by our principal present and future energy resource, namely, coal. Coal and the coal mining industry are too essential to be put in jeopardy by short-term calculations that seek to meet silly public expenditure targets.
§ Mr. Edward Rowlands (Merthyr Tydfil)
It is a pity that a Bill that deals 861 with borrowing powers and the industry's increasing financial requirements should lead to a Division. We must explain why we intend to divide the House and why we oppose aspects of the Bill.
This Bill is part of something else. It is part and parcel of a myopic financial view of the industry, and of its development. The industry is not being developed and expanded in the way that it could, and should be. It will suffer from artificial, cramping, financial limits imposed not in the interest of the industry's development, but for other reasons.
Our second reason for dividing the House is that many parts of the coal industry can already see the effects of the Government's policy. They can see the consequences of the Government's attitude. That attitude is not only reflected in this Bill, but in the Government's stand-off policy towards the industry and its problems. They hold that attitude at the very moment when the industry needs the maximum degree of support, sympathy, and effort and the co-operation of the NCB, the National Union of Mineworkers and the Government.
It has been suggested that we should strike notes of optimism and that we should preach the gospel of the industry's future. I share that view passionately. The Government's actions and indications have destroyed the optimism.
We have never talked down our industry or our coalfields. However, now we must talk about the profound issues which face the industry. I shall concentrate on the South Wales coalfield. Its situation reflects the way in which Government policy will work through and affect the industry. Our fear is that the South Wales coalfield will bear the brunt of the Government's Scrooge-like approach to the industry. Anger is beginning to come from the coalfield. People are asking what they can do because they cannot depend on the Government. They go to see the Secretary of State and are greeted with a "No". They do not even get a sympathetic "No". A strategy was being evolved. The Government, the NCB and the NUM started to think through the problems. They published their thoughts in a document from the tripartite group of the South-West coalfield sub-committee. It did not come to 862 final conclusions but described the problems and paved the way for thinking through to a solution.
The last four or five years have told a remarkable story. About £140 million of capital has been invested in pits, some like the one in my constituency which is nearly 100 years old. That investment has made it easier to get the coal out and to market it. As a result, productivity is rising. The cost of producing coal in South Wales is heavy because South Wales has an old and traditional coalfield. Seams are sunk as much as 600 feet down and a mile or two away from the base of a pithead. The last four or five years has been a period of modernisation and investment. With that has come change. The idea that miners are Luddites and opposed to change is nonsense.
The Secretary of State told us about the cruel period of the 1950s and 1960s. Even in the 1970s a dozen pits in the South Wales coalfield were closed by agreement. It was proved to the NUM that the coal reserves were unobtainable or could not be reached in meaningful quantities at reasonable cost. The plan resulting from the tripartite talks was that as the problems of an old coalfield developed and the costs grew, a new coalfield would be developed. The plan was that two major new investments should be made to give the coalfield a future. The first element of the plan was that the enormous Margam coalfield, on the fringe of the constituency represented by my hon. Friend the Member for Ogmore (Mr. Powell), should be developed. That coalfield has 100 million tonnes of coal. It is a marvellous coalfield. Clustered around it is a group of traditional pits which still extract coal. The idea was that in the next seven or eight years—
§ Mr. Rowlands
So many of my hon. Friends wish to speak that I shall not give way. I should like to deploy my argument. I listened patiently to the hon. Gentleman's half-hour speech.
By following the plan we could have tackled, gradually and sensibly, the problems caused by exhausted seams and geological difficulties in some of our older collieries. We could have transferred, socially, economically and industrially, 863 the experience of the individual miners and mining communities from the old coalfield to the new.
The second part of the strategy involved the development of the new Phurnacite plant at Aberaman. That would have given a long-term future to the pits that serve it. It would also have established continuity in the nation's need for smokeless fuel. From that plant comes the whole of Britain's smokeless fuel production. If it closes down we shall have to import £50 million worth of smokeless fuel.
That was the plan. We could have gradually and sensitively made the change. We could have ensured that we did not lose our skills and experience. We could have ensured that pits were not closed unnecessarily. We could have brought in new investment to coincide with the decline and closure of the oldest pits. That plan is now in grave danger. We need continuity of development, time and investment. The Government will give us none of that if they continue their policies, which are capable of destroying hope in the South Wales coalfield. The spectre of redundancies looms large.
Reference has been made to recruitment. For the first time South Wales has stopped recruiting young apprentices. That is how we shall lose our young miners and the tradition of mining communities. Many communities are faced with the prospect of valleys littered with derelict pits and pitheads, and the slag heaps that go with them. Why? Alongside the Government's policy have come bolts out of the blue which have damaged the prospects of our coalfield. The first was the action by the British Steel Corporation. Its decisions on capacity had a profound effect. More tragic was its decision to buy coal from America. It bought 1 million tonnes and thereby removed from the South Wales coalfield that amount of the market overnight.
I have heard firm stories that a BSC market man is in the United States considering buying more coal. That is a disaster for the South Wales coalfield. The Government say that it is nothing to do with them. We begged the Under-Secretary of State to take action on the Aberaman plant and the import of coking coal. We begged and pleaded with him. We did not have tea. We had sympathy but no action. The National Coal Board, 864 at great expense, sorted out a short-term deal with the BSC to save one half of its market with the BSC.
The Government argue that the BSC is entitled to buy coal at any price. They say that if it can purchase fast, cheap American coal, good luck to it. They say that the market is free and that they must not interfere. I wonder why that principle was not applied elsewhere in South Wales? A month or two ago the potato producers in South Wales were faced with the prospect of being flooded with cheap potatoes from other countries. That was an obvious advantage to the British consumer. Like a flash the Government intervened and said "We must limit the quotas and cut imports because they damage the long-term prospects of the potato producers". Why is it that the Government can act in such a situation, at the expense of British consumers, but not intervene to save the Welsh coalfield from the BSC decision to import coal from America?
In political and economic terms there is no difference between the two. However, there is not a single pit in Pembrokeshire, Croydon, Guildford or Finchley. There is not a single Conservative Member here with a coalfield in his constituency. There is, therefore, no political interest or clout. I do not wish to be cynical, but we cannot compete with American coal even if we close a dozen Welsh pits tomorrow, halve miners' pay, destroy the power of the NUM or emasculate the NCB. In West Virginia coal is scraped off the surface. It is shipped out in bulk. There is no way in which even the most efficient British coalfield can compete with such production.
We shall never be able to compete, but we should not therefore conclude that we have to become dependent on that coal. The British Steel Corporation is in grave danger of depending wholly on foreign imports. In theory, North Sea oil could not compete with southern European or Kuwait oil, as our production costs are much greater. However, I repeat that we must not depend on foreign imports for our energy sources. That is one lesson that the oil sheikhs should have taught us.
The strategy and plan of sensitive development in the South Wales coalfield will be destroyed by those imports. If 865 the Government continue to pursue a policy of short-term, myopic financial control over the coalfield, the consequences will be strange. The Minister is unlikely to broadcast this fact. The highest cost pits are the anthracite pits of West Wales. If the NCB is driven to make stupid, artificial, short-term financial decisions, the pits of Carnhedryn and Abernant, and the only anthracite coalfield in the country, will shortly have to be closed. That is no reflection on the miners or the board, but it is extremely difficult to get that coal. The cost is a heavy burden on the board's finances. It could be driven to the absurdity of having to close one of the most important and valuable coalfields in the United Kingdom. That illustrates the nonsense of the Government's myopic view.
It is sad that the Government spend much of their time portraying nationalised industries as beggars, crawling on their knees—industries which have to be rapped on the knuckles for suggesting that there should be higher financial limits. Every other European country is willing to give its coal industry increasing subsidies to maintain and develop coalfields. European countries allowed the industry to run down very badly, but at least they have learnt their lesson. The West Germans are determined not to forget it. The problem is that they cannot find miners, because the mining communities have disappeared. We are in grave danger of the same thing happening in South Wales.
While languidly draped over the Dispatch Box the Secretary of State had the gall to refer to the large number of pit closures in the period between 1966 and 1968. I was in the House at that time. As has been movingly described, the miners had then come to the conclusion that there was no future in the industry and that oil was king. They were convinced that they could not hope for better wages and that they had to accept rationalisation. The result was the closure of many pits in South Wales. We now realise that many of those pits should not have been closed, but we have learnt our lesson. In 1974–75 we produced the tripartite strategy and a plan for coal, involving investment development. The worst, oldest and geologically faulty pits were closed, but at the same time there was 866 development and expansion. The Government have put those plans in jeopardy. They are myopic, but even worse, they do not want to learn the lessons of the 1950s and 1960s.
§ Mr. Lawrence Cunliffe (Leigh)
I regret that the hon. Member for Bedford (Mr. Skeet) is not in the Chamber. He attempted a statistical slug-out over increases in productivity reflecting unit costs. In Committee he consistently distorted beyond recognition the facts, figures and image of our mining industry. It is claimed that Labour Members are too pessimistic about the future of our mining industry, but the Government are seeking to tie the hands of the NCB and the mining industry in the name of monetarism. I should relish the opportunity to deal with many of the incorrect points made by the hon. Gentleman, but I shall deal with only two.
The hon. Gentleman spoke of falling demand for British coal consumption. The recession that has occurred through the Government's actions has affected demand for coal. The Government continually tell us that industry must stand on its own feet, but demand has decreased and investment has been cut back. Every day there are factory closures, especially in the North-East and the North-West. National and local investors, and those from abroad, lack confidence in the Government's attempt to stimulate the economy, as they promised in their manifesto, in order to increase our standard of living.
It is a myth to claim that the British workman is responsible for the problems and that he is lazy and indifferent to his task. That is certainly not true in the mining industry, as has been proved by a magnificent year of profits, increased productivity, decreased absenteeism and increased exports. There is a tremendous spin-off from the mining industry to the rest of British industry.
We constantly use the slogan "Buy British", and it is the proud achievement of the National Coal Board that 98 per cent. of all the goods and materials that it uses are British made. We must learn that investment in one industry has major consequences in helping others to become more viable and efficient.
867 The Secretary of State referred to the Venice summit. He stressed the reaffirmation by Britain of the energy requirements to be met by the year 2000. We challenged the Government at the second sitting of the Committee and claimed that the Bill should be reappraised in the light of the summit meeting. We said that the Government should step back from the financial obstinacy that they were sustaining by being inflexible over the phasing out of operating grants.
The House must realise that we cannot turn back the clock, as the Government are attempting to do with the NCB's balance sheets. They intend to mark back the books, so that a break-even result can show a loss of £190 million. That is political chicanery, trickery and deception.
I am sure that the Government and the Prime Minister have failed abysmally to understand the magnitude of the problem of world energy requirements. They show a degree of indifference when they have to put their money where their mouths are. It was pointless for them to pay lip-service to a commitment to double coal production when they were imposing on the British mining industry the financial impediments contained in the Bill.
If the Government want to restore the confidence of men and managers in the industry they should pump greater investment and aid into the industry instead of merely talking about the possibility of reappraising the situation in the autumn. With all the drive and determination in the world, the NCB could not break even by the dates laid down in the Bill.
It has been said that we should make ourselves more competitive by increasing production and reducing unit costs, but many of our pits are uneconomic because of natural geological conditions and not because of any lack of effort by miners. It is ridiculous for the hon. Member for Bedford to compare unit costs and production norms in areas like the rich coalfields of Nottingham, with their 6ft. and 7ft. seams, with my part of the country, where we have small collieries with only 18in. seams, and where the men still have to crawl on their bellies and the pits have no mechanisation. Even so, they meet their production targets and, 868 since the new productivity deal, the men earn reasonable wages.
Those men come from mining stock and mining communities. The great danger, as my hon. Friend the Member for Merthy Tydfil (Mr. Rowlands) pointed out, is that if we are not careful there will be no mining stock left to go down the pits when we experience a resurgence of demand for coal. It is all very well to say that we need mobility of labour, but some miners in my part of the country have already moved four or five times from region to region. They have said "Enough is enough. We are not risking the education of our children and moving home again. We will go on the dole before we move." Passions and emotions of that sort are being generated in the region. Those men cannot be moved like industrial nomads whenever it suits some economic objective. It is an inhuman process at the best of times.
We acclaim the increase in the amount allocated to the pneumoconiosis compensation scheme, as do the miners. However, compensation cannot make up for the death of a miner whose family have seen the scourge of the disease and its effect on the body. Some of us believe that we should abolish the pneumoconiosis panels. The evidence of general practitioners, pathologists, and consultants who have kown and examined men for many years is rejected by the panels. One cannot convince the widow of a miner who was receiving a 60 or 70 per cent.—sometimes even a 100 per cent.—disability payment that a post mortem decision that her husband had chronic bronchitis is correct No rhetoric, persuasion or compassion can convince her that her husband did not suffer from the terrible disease of pneumoconosis.
I have had responsibility for rehabilitating many sufferers at NCB engineering services workshops. It is a thankless task to have to watch them deteriorate. It is a progressive disease that eats the lungs away, and even if we doubled the amount of compensation it would not ease the feelings of the widows and families who have seen their men suffer. I make a plea that at some time in the future we should consider a more human approach to some of the problems involved in this area.
British miners view the present situation with some anger and suspicion. The Under-Secretary satisfied the Opposition 869 with his reasonable approach to some matters in Committee, but it was obvious that he did not have much leeway and was in a straitjacket. Unless confidence is restored to the mining industry, backed by hard financial investment, better conditions and better remuneration, we shall never reach the commitment that we have made to double production by the year 2000 within the EEC terms and the Venice summit.
§ Dr. Roger Thomas (Carmarthen)
It is a great privilege to follow the oration by my hon. Friend the Member for Leigh (Mr. Cunliffe) who, with his expertise, made some telling contributions in Committee. His case tonight, proposed with conviction, was irresistible.
In the wake of the double blow of the recession of 1973 and the oil prices of 1974, the Government and the country turned back to coal after the unhappy record of the 1960s. Even though British mines could provide adequate supplies for our own basic needs, both the Central Electricity Generating Board and, in particular, the British Steel Corporation, have been allowed to import coal. Even during the early years of "Plan for Coal" which saw a major turnaround in investment in our indigenous industry, oil-fired power stations actually increased their proportion and contribution for pre-1973–74 decisions to be carried out. There was, about that time, a hesitancy in the Government's commitment to coal. I gather daily the impression that this hesitancy is fast returning. There is daily evidence coming to light to support this view.
The greater the output and commitment to coal, the less will be the demand upon our far from limitless supplies of oil and natural gas. It is natural and rational to insist that future power stations could be run on coal—and on indigenous coal at that. Plans to convert oil-fired power stations to coal should be expedited. This would mean that the depletion rate of offshore oil and gas could be handled far more effectively. The great boon to our economy would not be frittered away too hastily. This can be achieved only by a commitment to coal that is above the figure envisaged by the Government over the coming decade.
870 The Government have also deliberately loosened their grip and control over North Sea oil instead of extending their interests into allied oil processing industries, the result being a far more curtailed advantage for the British people. It is now clear that the Government are determined to streamline the coal industry so that it all falls within the category of well-designed, well-equipped, highly mechanised, high-productivity mining capacity. If that is the case, further contraction is bound to occur.
The Prime Minister, in her famous speech at Swansea last week, more or less told the Welsh workers—the Welsh miners were not excluded—that, if they wish to play a vital part in the industry, they will have to be prepared to be mobile. That mobility would not be confined to moving from pit to pit within South Wales but would mean being prepared to move to the geologically lucrative mines that extract coal east of the Pennines. This amounts, unfortunately, to a further piece of evidence that the Government do not really care for Wales. Neither do they appear to care very much more for the other long standing, less prosperous regions that contain the more perilous parts of the peripheral coalfields of the United Kingdom.
The slump of 1973 followed by the oil crisis of 1974 marked a turning point for our energy policy as much as for our economic policy in general. Nuclear power is said to be cheaper than power from coal-fired stations, but the CEGB is not fully forthcoming with the essential statistics on relative costs. Further comparison is difficult when the former is technically a continuous process and the latter are used for the variable part of the required load. A statement such as that from the chairman of the CEGB to the effect that up to the end of March 1978 the electricity consumer will have saved, through present nuclear capacity, up to £ 100 million, compared with the costs of alternative coal-fired stations, is hardly calculated to help the coal mining industry to assist this country to use its reserves of fossilised fuels to the full.
Yet, in a parliamentary reply on 23 April, the Department of Energy stated:Current research should enable disposal routes to be developed before the end of the century."— [Official Report, 23 April 1980; Vol. 984, c. 173].871 The operative word is "should". There is no element of certainty in the Minister's reply. It has to be taken on trust that the safe management and disposal of nuclear waste to which both the Government and the nuclear industry are giving their highest priority will provide that degree of total safety that our people deserve and demand.
In 1979–80, the domestic market apparently became the coal industry's second largest after many years of decline. Sales of domestic solid fuel appliances are certainly increasing as oil becomes prohibitively expensive. We have an advisory service second to none. Yet there is a mounting fear that coal supplies for these families, who have now been convinced that their homes should be heated by coal, will come from outside the British Isles. This is a distressing and despicable situation if it is allowed to develop.
In the anthracite areas of the South Wales coalfield, where geological unpredictabilities are gathering momentum, supplying new domestic and, to a lesser extent, industrial consumers will result either in importation or resorting to opencast methods of coal extraction, a method that is wholly unacceptable unless more concessions are forthcoming both in regard to the relative disturbances between blasting and occupied dwellings, the desecration of the countryside to resemble parts of distant planets, and we have the long overdue improvement of transportation, with more reliance upon rail and far less upon inadequate roads, both in quality and upkeep.
For the domestic consumer, energy is now a very costly item. The recent price increases have hit the low-paid and the pensioners very badly. Their fuel bills form over 12 per cent. of their living costs compared with a third of that percentage for those with higher incomes.
I remind the Under-Secretary, whose placatory tones and conciliatory nature we witnessed during the Committee stage, of his final contribution to that Committee stage, in which he said:I see no reason why I should not initiate a form of tripartite debate immediately"— [Official Report, Standing Committee B, 15 July 1980; c. 327.]This is something that we wish the Secretary of State to carry out.
§ Mr. Ray Powell (Ogmore)
Having listened to my hon. Friends I can safely say that although over past weeks we continually win the arguments we lose the votes. On the crucial issue of coal and energy and this Bill, the Conservatives have been able to field two supporting speakers whereas the Labour Benches could continue all night.
§ Mr. Powell
I have no wish to give way. Let me start first. The hon. Gentleman will have an opportunity to address the House. He may interject later. I am sure that he will have a lot more to interject before I have concluded.
I am the son of a miner. My hon. Friend the Member for Leigh (Mr. Cunliffe) referred to pneumoconiosis, which is covered in the Bill. An extra £7 million will be allocated in payment for pneumoconiosis sufferers in the mining industry. My father died from pneumoconiosis 25 years ago, but he was not compensated. My mother was one of the widows referred to by my hon. Friend who was searching for compensation. We are not going back to what happened 25 years ago, but we shall not progress favourably with the Government's proposals. Does the hon. Gentleman wish to intervene now?
§ Sir A. Meyer
I was merely going to say that, although I had to be absent for part of the debate, I expected that we would witness a truly united onslaught of all Members representing Welsh Labour mining constituencies. From what I have been able to make out, there have not been more than four Welsh Members present. That is hardly the overwhelming onslaught that we expected.
§ Mr. Powell
I am surprised that the hon. Gentleman should interject in that fashion. I have been here since the start of the debate. I went to the toilet, so I might have missed the hon. Gentleman then. He may have been in his place then. But he has not been here throughout the debate. Therefore, how can he know how many Welsh Members have been in the Chamber? Most of the Welsh Members representing mining areas have been in the Chamber tonight. They declared their intention of allowing most of the sponsored NUM Members to speak 873 first and then for others with mining interests, such as mine in Ogmore, to speak in the later part of the debate. I cannot see why the hon. Gentleman was so eager to speak. Five Labour Members still wish to speak.
§ Mr. Powell
I listened to the speech by the hon. Member for Bedford (Mr. Skeet), but I could not follow his argument. He reminded me of a colliery manager in the Rhondda, who used to hold his thumb in his waistcoat pocket and speak with an accent similar to the hon. Gentleman's, but he had never been down the mine.
§ Mr. Powell
I wonder whether he ever worked in a 2ft. 6in. seam. It would not appear from his accent that he had ever worked in a colliery.
The Minister stated that the Government could give the necessary assistance to sustain a viable local industry. The National Coal Board cannot live within these cash limits. The NUM said that it could not live within this financial strait-jacket. We know of the difficulties that the NCB and the NUM would have if the board had to live within this financial straitjacket.
We should be planning a fuel policy that will not only meet the requirements of today but will match the needs of tomorrow. It was easy for hon. Gentlemen to intervene when the Minister referred to the closures and rundown in the mid-1960s. Many Labour Members objected strongly. However, it is still reasonable for Opposition Members to refer to the coal industry that the Conservative Government inherited 14 months ago.
The United Kingdom coal industry is the largest in Western Europe and one of the most technologically advanced in the world. Annually, only 1 million tonnes of coal are produced by private enterprise, compared with 120 million tonnes by the NCB. Last year the industry saved Britain £5 billion in foreign exchange at current oil prices. It met 40 per cent. of Britain's energy needs. The right approach by the previous Labour 874 Government enabled productivity to rise by 8 per cent., which was matched by increased sales in 1978–79. Coal generated three-quarters of the nation's electricity. We have estimated reserves of 45,000 million tonnes—sufficient to last 300 years at current rates of extraction.
I have set out the success of the coal industry to the date when this Government took office. That was the state of the industry 14 months ago. I refer now to the worry, fear, and anxiety already created in the 14 months of this Tory Administration. My right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) referred to the reduction of demand as a result of recession. He asked for more power to be created by coal, not oil. That would be a major step forward, which would help to solve the problem in the coal industry. That was an excellent suggestion, which the Government should consider.
The demanning of Port Talbot alone will throw 8,000 steel workers out of work. The demand for coking coal will obviously fall. Four collieries in my constituency producing coking coal employ 4,000 workers, who will be in fear of losing their jobs. Those collieries are St. John's, the Wyndham and Western, Ogmore Valley and Falddu, in the Garus Valley. They are desperately attempting to break even or to make a profit. The closure of the collieries will mean the death of the valleys. We have seen this happen before in Wales. In the Rhondda, where I was born, there were 38 collieries in 1955. Now there is only one, and that is due to be closed.
The Welsh miners, particularly the South Wales miners, will fight and win, if not for themselves for their children and their children's children. They fear being out of work. What jobs can be offered to the miners in Wales?
§ Mr. Powell
I am coming to the point about moving. They have moved from Wales in the past. Slough was considered to be a Welsh town. People went from the Welsh valleys to Slough.
About 11,000 workers could be made redundant in and around Ogmore. We listened to the Prime Minister today saying that the Welsh unemployed should move elsewhere within Wales. My hon.
875 Friend the Member for Carmarthen (Dr. Thomas) referred to her speech on Saturday.
I was at the rally on Saturday. The Prime Minister must have seen the people only through the windows of her party's pavilion in Swansea, because her supporters ushered her in through the back door and out again by the back door. Yet when she did see the people through the windows she said that she was glad that they were not on her side.
§ Sir Anthony Meyer rose—
§ Mr. Powell
I do not intend to give way again. I know that the hon. Member for Flint, West (Sir A. Meyer) was at that conference. The Prime Minister said that she was glad that those people were not on her side. But 14 months ago she conned them into being on her side. She conned some of those trade unionists who were marching in Swansea on Saturday. She did not even bother to visit the industries and the factories that are going bust in Wales, though she was invited to do so by my hon. Friend the Member for Swansea, East (Mr. Anderson) and my right hon. Friend the Member for Swansea, West (Mr. Williams).
The Prime Minister did not accept the challenge. She was in and out of Swansea without so much as a farewell. She simply left the message that if the unemployed wanted work in Wales they must go and find it. My advice to my constituents—and I have 16,000 to spare—is that they should move to Finchley, because if we wish to move the right hon. Lady by the democratic process we should get rid of her there.
§ Sir A. Meyer
I am quite sure that the hon. Gentleman does not wish to be unfair. I know how fair-minded he is. However, the Prime Minister's comments about not wishing to have those people on her side were not directed to those taking part in the official Labour Party demonstration. She was addressing a group of extremely unruly members of the Socialist Workers Party. It was they who completely wrecked the Labour Party demonstration. I am quite certain that the hon. Gentleman would no more wish to have them on his side than would my right hon. Friend the Prime Minister.
§ Mr. Powell
I took it that the Prime Minister was addressing a Tory conference. I am given to understand that it was made up mostly of out-of-work civil servants. Whether she was addressing her remarks to them I do not know, but I understood that she was referring to the demonstration and the 10,000 trade unionists who were marching.
My right hon. Friend the Leader of the Opposition asked the Prime Minister today where the workers should move to within Wales. It was apparent that the Prime Minister did not wish the workers to move out of Wales. She wished them to move within Wales. The cry of Opposition Members was "Where in Wales will unemployed workers find jobs?"
§ Mr. Powell
My hon. Friend the Member for Bolsover (Mr. Skinner) refers to Shotton. I was about to refer to the percentage of unemployment in my area. Fourteen months ago Ogmore was a growth area. The unemployment figure was 3.8 per cent. There was the prospect of a new Ford engine works at Bridgend. That factory was intended to employ about 2,300 people and it was to receive a subsidy of £180 million. What has happened to that project within 14 months?
The factory will now require only 1,500 workers, and 500 of them will be redundant workers from Ford factories at Swansea and elsewhere. That means that we shall have only 1,000 new jobs in Bridgend despite the £180 million subsidy. Ogmore now has an 8.5 per cent. rate of unemployment. That means 4,500 people out of work according to last week's figure, and that total excludes 500 students. Therefore, the real total is 5,000.
The most disappointing fact is that 5,000 people are looking for jobs and the number of registered vacancies in the Port Talbot travel-to-work area is 50. There are 50 jobs, with 5,000 people seeking them.
Perhaps Ministers will tell us where the unemployed in my constituency will find jobs in Wales. They cannot go anywhere else. If they go to Shotton they will find that the unemployment figure there is 30 per cent. Unemployment figures are high all over Wales, with the exception of Carmarthen, which has about 3 per 877 cent. We asked today, where are these people to find jobs, not only in Wales but outside? The same situation exists practically all over the country.
My hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) covered most of the points that I wished to raise about the development at Margam. This is something that the Minister should reconsider. It is important to us in Ogmore. Port Talbot and the Neath valleys. If that mine is opened and investment is put in it could accommodate a number of colliers who are in areas that are oversubscribed. I share my hon. Friend's opinion about young people who cannot get jobs in collieries in Wales. There is not one vacancy for young people in the coalfields of South Wales at present.
§ Mr. John Evans (Newton)
I am sure that the whole House will recognise that this has been a truly remarkable debate, particularly because of the speeches that we have heard from this side of the Chamber from men who have spent their entire lives in the coal mining industry. They revealed their tremendous knowledge of that industry. We have had only two contributions from the Conservative Benches—an interesting contribution from the hon. Member for Sheffield, Hallam (Mr. Osborn) and a remarkable speech from the hon. Member for Bedford (Mr. Skeet), to whom I shall refer later. We also had a typically evil intervention from the hon. Member for Flint, West (Sir A. Meyer), who enjoys an odious reputation as a result of his interventions. It added nothing to the debate, but that is the sort of thing that we now expect from him.
I have a considerable constituency and personal interest in this debate. I have two collieries in my constituency, Parkside and Golborne, where 10 miners lost their lives in a dreadful pit accident last year. It is worth while putting on record that there is an additional price to be paid for coal by the miners—often with their lives. When some people discuss the mining industry, they overlook that fact.
I shall be brief because I know that my hon. Friend the Member for Bolsover (Mr. Skinner) wants to participate in the debate, but I feel that it is important to rebut the statement that the Secretary of 878 State made in opening the debate when he denied that the Bill was deliberately tightly drawn. The Under-Secretary is well aware of the serious difficulties that we had in Committee in attempting to put down amendments because of the tightness of the money resolution. It was drawn over-tightly to prevent the far-reaching debate that is necessary on the future of the coal mining industry. In a debate about an industry as fundamental as coal mining we need to know the targets that the Government want to set for coal production, not only for the short-term, but for the medium and long terms.
It is right to pay tribute both to the Under-Secretary and to the Chairman of the Committee for the way in which they responded to our speeches which, if I am honest, were sometimes not entirely in order. The Government accepted one minor amendment to clause 1 (1)—to delete the words "on one occasion only". That referred to the authority of the Secretary of State, with the approval of the Treasury, to increase the borrowing requirement by statutory instrument from £3,400 million to £4,200 million. That sums up the differences between the two parties and the inflexible approach adopted by the Government to the borrowing requirements of the NCB.
All the leaders in the Western world recognise that coal has a great future. The Under-Secretary will recall that we spent some time in Committee, both before and after the Prime Minister reported to the House on the Venice communique, discussing that matter. The communique recognised that the output of coal in the Western world should be doubled by 1990, from 600 million tonnes to 1,200 million tonnes. Because Britain has technically recoverable reserves of coal of 45 billion tonnes, we assumed that the Prime Minister would rush back to Britain to pronounce from the Front Bench on the wonderful future for the coal mining industry, its enormous reserves of coal, and the attitude of the world leaders. Italy and Japan do not produce coal. Therefore, to meet the agreed target for cutting oil consumption those countries will have greatly to expand their coal imports.
Hon. Members will recall that the Prime Minister adopted a cold and negative attitude to the questions that were 879 put to her about the Venice communique. She made it clear that the British coal industry would not play any part in the doubling of the Western world's coal output. To refresh my memory I read her answers. She gave a remarkable reply to my hon. Friend the Member for Rother Valley (Mr. Hardy), who referred to productivity in the coal industry. She said:I am very well aware of the substantial improvements in productivity in the coal industry, and I welcome them. With respect, such improvements have so far not been reflected in a lessening of the increase in price."— [Official Report, 24 June 1980; Vol. 987, c. 245.]That remarkable answer constrasts vividly with the Government's attitude, and especially with the attitude of the Department of Energy, to gas prices. Gas is another element of the energy industry. Despite the enormous profits that that industry has made over the past few years the Government have decreed that the price of gas should be increased, and that it should be increased further by another 10 per cent. in October. We asked how the market forces applied to the gas industry. We were told that a different set of market forces applied and that the price of gas should be increased in line with the price of oil.
It seems to be a "no win" situation when one element of the energy sector finds that its prices will be increased despite the enormous profits that it is making, whereas another and even more important element—the coal industry—finds that it is castigated because it has not lessened the increase in the price of coal.
I suspect that if the sums of the past few years were done correctly we would find that in real terms, taking inflation into account, coal prices have probably lessened somewhat. However, it is interesting to note that the right hon. Lady constantly carps about competitive prices and the need for the British coal industry to be competitive. No Labour Member quarrels with the necessity for the industry to be competitive. Indeed, no Labour Member would complain about any segment of British industry being competitive. But we must ask "Competitive with what?" That is where we always run into difficulties.
My right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) referred 880 to subsidies in EEC countries. He indicated that the subsidy was £34 per tonne in Belgium, £18 per tonne in France, £15 per tonne in West Germany and £1 per tonne in the United Kingdom. How on earth is British industry supposed to compete on equal terms with industries that receive subsidies of that order?
The hon. Member for Bedford, who unfortunately, has not resumed his place, referred to competition from South Africa. Do I need to remind the House that the South African coal mining industry is virtually serviced by slave labour? Is any hon. Member seriously suggesting that competition from South African mines should be considered fair competition? The same applies to competition from Eastern European countries. Every hon. Member, whatever his political views or beliefs, knows that competition from Eastern European countries simply cannot be measured in terms of fairness, because we do not know the base from which they start. We must always ask that question when we refer to fair competition.
The Prime Minister, the Secretaries of State for Energy and for Industry, and all of that ilk, constantly put British industry—certainly the coal mining industry—into a Catch-22 situation. They constantly say that if it wants to compete in world markets it must be competitive. But at the same time, particularly in relation to coal, they allow subsidised imports to come in which undermine the rejuvenation of industry. How on earth can one win in those circumstances?
The British coal mining industry has a right to compete on an equal basis. One would have expected Conservative Members who constantly proclaim their patriotism, to agree with that view although at times they do not seem to extend that patriotism to British workers. Unfortunately—this applies not only to the coal mining industry but to almost every other industry—we cannot achieve that equal basis from which to compete. Until such time as the Government come clean, I suspect that there will always be the cry for the necessity to have import controls in order to protect the British industrial base.
We also know that the cash limits that have been imposed on the industry are far too rigid and operate over far too short 881 a time scale. We all know that this industry requires massive capital expenditure. One cannot open a new colliery or start a new coalfield without masses of capital expenditure. The mining industry is publicly owned, and therefore its finance must come from the public purse. We shall reap the benefits in the years to come.
I do not think that any Tony Member, no matter how Right wing he may be, would dare suggest that the price of oil will fall in the future. We all know that the price of oil will continue to escalate. In his ridiculous comparison between coal and oil the hon. Member for Bedford suggested that the price ratio between oil and coal was narrowing, even though it is 14 per cent. in favour of coal at present. Yet we all know that after the next OPEC meeting the price ratio will again widen substantially.
We recognise that the increases in the borrowing limits are welcome, yet we know that they are unnecessary. The Opposition, the coal mining industry and the NUM recognise the sugar-coated pill that is offered to them. Part of the price that must be paid for the increased borrowing limits is colliery closures. The Government know that they will run into substantial difficulties when they attempt to embark upon that programme. We said repeatedly in Committee that no one in the industry or the Opposition would ever object to a mine being closed because its reserves had been exhausted. No miner wants to work down below and send up dirt and dust. We are talking about collieries which may now be uneconomic in narrow financial terms but which, in the foreseeable future, will be economic because of the ever-rising price of oil. Mistakes were made in the late 1950s and 1960s when mines were closed, yet if we could now open them at a reasonable cost they would be economic. They would produce coal economically. In the past they were classed as uneconomic in comparison with the price of oil.
There is a necessity for a healthy and expanding industry which, if given half a chance, will take its place by exporting coal throughout the world. The majority of the mining industry is in the development and assisted areas. Even Government supporters know that the northern 882 half of Britain is in a state of near collapse because of Government policies, yet here we have an industry which, given a chance, could expand. The mining industry, when it was expanding, was an enormous purchaser of materials on a vast scale. If that expansion were repeated today it would give a stimulus to other industries in the area. That is part of the policy which we seek to persuade the Government to adopt.
Like the hon. Member for Bedford, I am a supporter of the British nuclear industry. Hardly surprisingly, I have a personal interest and belief in the industry. In addition, 6,500 of my constituents work at the Atomic Energy Authority establishment at Risley. There is a great disparity between the Government's attitude to capital expenditure in the mining industry, where we are talking about the expenditure of £4.2 billion over the next few years, and their attitude to the expansion programme for the nuclear industry—with which I agree—where we are talking in terms of a £20 billion-plus expansion.
In those circumstances it hardly seems surprising that members of the mining fraternity tend towards the view that the nuclear industry is being allowed to grow at the expense of the mining industry. In view of the arguments of the hon. Member for Bedford, it appears that miners' fears are justified, especially when we consider Government policy on defence expenditure. We have already expended £920 million on the Sting Ray torpedo, yet we do not have a torpedo. We shall spend £5 billion on Trident. We are increasing the defence budget in almost every area to kill people, yet here we are discussing an industry that will create wealth and happiness for millions of people.
One of the other elements in the argument about energy supplies is the plight of the Third world. I do not have time to go into that. However, if we are ever to alleviate the sufferings of the people of the Third world, energy must play a large part in improving their lot. Surely, in that area alone, the expansion of the British coal industry is in their interests.
Despite the protestations of good faith by the Government, and especially the Secretary of State, they have managed to convey the feeling to the country that the 883 Bill is to be interpreted as cutting back on coal production and spearheading pit closures. The Secretary of State will have a difficult job during the next few months in trying to get it across to the mining industry that that is not the intention of the Bill. That is why I and my hon. Friends will vote for the amendment tonight.
§ Mr. Dennis Skinner (Bolsover)
I realise that the House wants to progress quickly, and I shall not delay it too long.
One of the things that needs to be said at the outset of my speech is that any Bill that reduces the ability of workers within the public sector must be set against the background of strategy which the Tory Government purport to follow—that of shifting the balance of power away from working class people and their organisations, principally the trade unions, to the bosses. That is putting the matter simply and bluntly, but it is the sort of philosophy that was pointed to by the Secretary of State for Industry before the Tory Government were elected. He made it clear that his main aim would be to shift that balance of power. His main argument was that during the course of the previous Labour Government, and other Governments before that—even the Government of whom the Secretary of State was a member when he messed up the National Health Service—the ratchet had moved too far the other way, and had to be pushed back. The Bill must be looked at against that background. It cannot be looked at in isolation by a "wet" such as the junior Minister, who may be described as a pleasant fellow who tries his best.
The Tory strategy on the Coal Industry Bill is no different from their strategy on all the other attempts—some successful—to decimate the public sector by cutting public expenditure, allowing prices to rip, allowing interest rates to rocket to the highest level ever, and reducing wages. We now hear the continuing cry of the Prime Minister and her Cabinet colleagues about the need to cut back on wages in order to squeeze inflation out of the economy. That is why this Bill has been described as an attack on the mining industry. However the Under-Secretary of State may reply to some of the questions, the plain fact is that the Government are trying to reduce the power of 884 miners and the mining industry by appealing to miners, and saying "We are not attacking you as we are attacking the rest." The only reason why they are not attacking the miners as they are attacking the public sector workers—local government, railway and civil aviation workers—is simply that on previous occasions the miners have been strong enough to take up the cudgels and knock this Tory Government flat on their back.
§ Mr. Skinner
The previous Tory Government. They are all the same.
In 1974, when the miners put the Tory Government out of office, we were on a three-day week. Now we have another Tory Government, and there is hardly any difference.
§ Mr. Skinner
It has become official Tory policy to throw people on to a three-day, two-day, one-day, and even a no-day week. The Government have even put forward a Bill to remove the earnings-related supplement. The miners will be affected more than some other workers in that respect. There are also attacks upon the miners' voluntary retirement scheme, by withdrawing the first 312 days of unemployment benefit. These are other attacks that are coming from the Tories. That is why I take this opportunity to attack the Tories once again.
Some people have the impression that a few of us on the Left wing of the Labour Party do not spend much time attacking the Tories. [Hon. Members: "Where are they?"] I cannot account for them, but I know what I am in business to do. [Hon. Members: "They have just walked in."] Yes, they have come to hear me.
The Tories were also elected to attack the principle of free collective bargaining. There is no doubt at all that a few blue collar workers were stupid enough to believe the Tories' propaganda in many constituencies, particularly in the South of England. They were carried away with some of the fanciful ideas put forward by the Tories. A few people 885 thought that perhaps they would find Utopia under the new axis of Thatcher and Murdoch. [Interruption.] Why do I mention Murdoch? Tory Members know who I mean—
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
Order. We must confine ourselves to the Coal Industry Bill.
§ Mr. Skinner
What I am attempting to suggest, Mr. Deputy Speaker, at the beginning of my contribution, is that we cannot look at the Bill in isolation from the rest of what the Tories are doing. It is an attack upon the working class. The Tories want to shift the balance of power away from the working class to their own class. That is why we have this Bill today.
But, quite apart from that, the Bill is barmy. The Government are hell-bent on trying to reduce the bargaining power of workers in the pits and hell-bent on changing and shifting the economy to their own way of thinking. Even set against that background, the economics of the Bill are crazy. We are dealing with the coal industry. It is no different from others around the globe, apart from a few exceptions such as those in America where open-cast mining takes place to a greater extent than here, so that the productivity is bound to be much higher. Not as many miners, as a percentage of the total, have to go down the pits.
We are looking at an industry that is extractive in nature. A pit is not like a factory which can be producing marsh-mallows one week and typewriters the next. Almost without exception, once pits have been closed, they are closed for ever.
Some of my hon. Friends from Wales have spoken tonight. I met them at the Welsh miners' rally a few weeks ago. When I looked at them and at the miners they represent in the Welsh valleys, I was taken back to the 1930s and to the occasions when Governments of all kinds were saying "Shut the pits, shift the miners, let them go to Coventry." Coventry then was the new Utopia. Cars were being built there and cars were the "in" thing. There was lots of manufacture and lots of engineering. People said "Miners are skilled and able to do a lot of hard work. Let them go to Coventry." They also went to Corby. Those 886 who went there were mainly from Scotland. There were all these new little havens for people on the move. The Tories are trying to do it again now.
§ Mr. Skinner
They were industrial gipsies. Where are the jobs now? Where are the towns that the Prime Minister talks about to which the miners will have to go if they are thrown out of work again in the Welsh valleys?
§ Mr. Skinner
Are they to go to Shot-ton, with 30 per cent. unemployed? Are they to go to the towns that have been producing cars? Are they to go to the towns that used to produce textiles but now produce hardly any textiles? Are they to go to towns in the Midlands which have known prosperity, relatively speaking, and which for decades have never known unemployment of the kind that we are witnessing now? Would they go to any of those towns? There are no jobs there. There is too much competition in any event. There is nowhere for these people to move to throughout the length and breadth of Great Britain.
The Bill has been introduced to reduce the ability of Britain to produce much-needed energy. We cannot turn off taps in the coal industry as in the North Sea and say "Let us run it down for a while. Let us leave it for five years. Let us slow it down." That cannot be done with the pits. Once they are shut, they are gone.
If the Minister is as right as he has been described by some—I do not know about these things—he should examine what he is doing. The coal industry has to be supported. Apart from the coal industry there is only one other major industry that has not been tackled by Governments by reductions and stop-go policies. I refer to the food industry. It has been argued for generations that we need food and more besides. It is considered spendid if we can produce more food to enable us to improve the balance of payments. All Governments, including the present one, say "Yes. We shall have intervention in the food industry. We shall intervene in every region, pump in money, take out money and put more in." It is exactly the same with the mines.
887 The mining industry must be considered against the background that I have presented. We must ensure that we have sufficient coal, not merely while we have a Tory Government, but for the next five years and for generations to follow. We do not have so much oil or gas in the North Sea that we can afford to shut down pits.
We hear so much nowadays about wind power, solar power and the liquefaction of coal. These are all splendid schemes, but we do not have them in operation. The chance of having them in abundance is negligible unless there is a massive breakthrough in technology. We must remember where we have enery in abundance compared with the energy resources of many of our major competitors.
We have the largest coal industry in Europe. Recently the Prime Minister went to Venice to meet all those wonderful people from Europe. That cost the taxpayer about £17,000 for the two weekends. The Government were not worried about spending money then. They were not talking about cutting expenditure during the Venice trips. The first trip cost £8,000 and the second £9,000. That was the cost of swanning along on the gondolas.
The right hon. Lady returned with a piece of paper. It was rather like another Tory Prime Minister who returned with a piece of paper in his hand. On this occasion it read "Double coal production". The miners were not exactly cheering. However, down in the pits in Bolsover and many other areas, especially in Wales, they must have said "That must be sensible. The Common Market has been a crazy set-up for us all. It has resulted in more imports. There have been £6 million worth of extra imports this year as opposed to an extra £2½ million during the last year of the previous Labour Government. However, here is a chance. Someone is saying something that is sensible. If they want to double coal production, that means that they will keep all the pits in Wales."
The Prime Minister put the tin hat on all that within days. She said "It did not really mean the United Kingdom. It meant doubling coal production generally but not here." After that she went to Wales and made her infamous speech. She insulted the Welsh people on their 888 own territory. She was saying, in effect, "Go on, pack your bags and go." The message was rather like that of Prime Ministers in the 1920s and the 1930s. I have news for Tory Prime Ministers. The youth of today are not as docile as their forefathers. The people in the 1920s and 1930s had never known other than intermittent periods of long unemployment. They had never been able to experience a system in which it was possible for everybody to have a job. However, for two decades after the Second World War it became apparent to generations that such a system was feasible. That was so until the late 1960s.
§ Mr. Skinner
There were never more than half a million unemployed. However, there are nearly 2 million people out of work now. The Minister should consider the Bill together with some of the speeches, detailed remarks and questions that my hon. Friends have put forward. The Minister said that he would be flexible in terms of deficit financing. I remember those words. Perhaps the Prime Minister has told him that he cannot use them again. I remembered those words, because they were very important. I said to myself "Christ Almighty, there's a gleam coming through this one."
The Minister should bear in mind that the coal industry can produce over 100 million tonnes, and has the capacity to double that figure. It would demand a tremendous effort and would take about 10 years to do. However, given the new coalfields in Selby, the Vale of Belvoir, and so on, it can be done. We must retain the pits in Wales and Scotland. We must ensure that we have sufficient markets in terms of electricity, the sale of domestic coal and industrial usage. If there were interdependence and interlocking between the coal industry, the steel industry and those that use coal and if we prevented the Government from throwing more people on the scrap heap, we should not only save the coal industry but in addition we should do something sensible for the nation. Many jobs could be saved, and the resulting spin-off would be beneficial to all.
§ Mr. Alex Eadie (Midlothian)
It has been said that there is one certainty about 889 the debate, and that is that we shall win the argument about the Bill. Any hon. Member with experience of our proceedings will accept that that is the logical conclusion. It has also been said that, although we will win the argument and the debate, we shall lose the vote. As we reach the end of this important Third Reading, it is important to set out the progress that has been made. What concessions or hope have the Government given us? After a day's debate on Second Reading, seven Committee sittings, and a day on Third Reading, the Opposition must consider that.
The catalogue of the Government's promises and assurances is very thin, but they should be listed so that the Minister can confirm them. Only two important promises have been made. Perhaps the Minister recollects that in Committee he replied to a debate on clause 1. On 1 July he gave a specific undertaking. He said that Government financial aid to the research and development pilot projects for the extraction of oil from coal would involve capital sums in addition to the ceilings in the Bill. That is one assurance that the Government gave but which we did not know about before the Committee stage.
Health is of great importance to the miner. The Under-Secretary responded to hon. Members who complained about the diagnosis for compensation, under industrial injury benefit schemes, for diseases such as pneumoconiosis, bronchitis, emphysema and other diseases associated with work underground. My hon. Friend the Member for Carmarthen (Dr. Thomas) made an interesting contribution. He is a doctor who is acquainted with mining diseases, and he was of assistance to the Committee.
The Minister said:If my right hon. Friend the Secretary of State agrees I see no reason why I should not initiate a form of tripartite debate immediately where the Government, the board and the mining unions can meet to establish whether, in this whole area of health, we should be examining other potential initiatives. That is a perfectly legitimate and reasonable intention arising from this debate. I do not, however, believe that it is for us to investigate the prospect of doing it in a proper form, such as tripartite discussions.He went on:I give a firm undertaking that I shall seek to ask the NUM and the NCB to form, with 890 the Government, a tripartite body further to examine the whole area."— [Official Report, Standing Committee B, 15 July 1980; col. 327–8.]I have spent some time on that matter because contributions have been made mainly by my hon. Friends from Wales. Diseases associated with work underground are prevalent in Wales. We are entitled to ask the Under-Secretary of State whether he has the agreement of the Secretary of State to proceed with the initiative that he suggested in Committee.
Reference has been made to the Phurnacite plant in Wales. That matter was raised in Committee by my hon. Friend the Member for Carmarthen. The Minister was non-committal and cagey, and many of us were very unhappy with his reply.
The House should understand why we attach great importance to the Phurnacite plant and the new Ancid process. Closure of the plant would directly affect 950 jobs and a further 4,500 mineworkers would be involved. That equals five pits.
The Minister said that he would bring the matter to the House as quickly as possible. The result is a written answer to my hon. Friend the Member for Aberdare (Mr. Evans) on 21 July 1980. The Minister rejects the idea of new capital investment for the new process, and is therefore, at a stroke, endangering 950 jobs and affecting 4,500 others. The Minister shakes his head. That gives us hope.
The written answer concludes: "After the most careful consideration, the Government have decided against giving special assistance, bearing in mind that there are other ways of securing the continued process of phurnacite."— [Official Report, 21 July 1980; Vol. 989, c. 35.]
What are those other ways? Will the Minister argue that I am exaggerating and that those jobs are not in jeopardy? If so, he should tell us what the employment prospects are.
When the Bill was first debated we were able to use in support of our argument documents from the mining unions and the sections of the press knowledgeable on energy matters. We could prove that no responsible body accepted the entire Bill. The provisions for revamping the balance sheet and extinguishing grants in three or four years were universally criticised. We could not then quote the views of management to support our case.
891 The Secretary of State said that he had great confidence in the management of the industry. The question that we want to ask is: does he ever listen to what those in mining management say to him? Is he aware of what the British Association of Colliery Management said about the Bill? There was no collaboration between us and BACOM, but its criticisms of the Bill are identical to those that we have made throughout the passage of the legislation.
By way of introduction, BACOM says:The financial objectives in the Bill are… too stringent, and cannot be achieved in the given timescale without seriously undermining the healthy growth of the coal industry".The Government presented calculations and told us about negotiations that had been carried out with the NCB in November. They had the audacity to present those to the House as being relevant in July 1980. We know how inflation has raged during that time. The Government believe that those are credible figures to present to the House and the nation. The financial objectives in the Bill are described by BACOM as outdated. It goes on:the economic situation has considerably worsened since the strategy was discussed and agreed with the NCB. To meet the Government's targets, the NCB would have to (a) raise the price of coal. But our price is already at the top end of the market.It describes the impossible situation facing the nation and those in the coal industry. On increased efficiency it says:By raising productivity and replacing old capital stock with modern equipment, the industry is already making better use of its resources.It makes most trenchant criticisms of the Bill and concludes on the question of strategic value and deficit grant:By asking the Coal Industry to break even so soon, the Government is putting no monetary value whatsoever on the strategic necessity of greater indigenous production. If security of supply within the UK, within the EEC and within the Western world is as important as the Government and Western leaders maintain, they should be willing to back their commitment with cash.It says that deficit grant is inappropriate and provocative. Some of my hon. Friends have suggested that the Bill is provocative to those in the mining industry.
The industry was starved of capital. That was one of the main planks of our argument on earlier stages of the Bill. We tried to point out to the Government 892 that their time scale was all wrong. The industry was starved of capital investment for more than two decades. We cannot expect that new reserves will start to come into production overnight.
The Secretary of State said that the Government expected "Plan for Coal" to pay off in the late 1980s. He is not suggesting in the Bill that the late 1980s is the time to discuss the whole question of trying to extinguish grants. To some extent the right hon. Gentleman fell flat on his face. He confessed to the House that it would be the late 1980s before "Plan for Coal" came to fruition. We ask him to believe in his words and take back this nonsense of trying to extinguish the capital operating grants in a period of three years.
I said on Second Reading that the Bill reeked of party dogma. As the Bill has proceeded through the House, it is a fair and objective comment to say that it has started to leak like a sieve. Every authoritative opinion has criticised the Bill's structure in the same terms as the Opposition have criticised it. The Bill has not had a good press. All unions in the industry, without exception, have expressed fears and misgivings as the Bill has proceeded through the House. Their protests have become increasingly loud. Management has been equally stringent in its criticism. It would be foolhardy of the Government to ignore this criticism.
It is a new experience to find management deciding to document its objections. In my 30 years in the industry I never encountered a management that documented its objections in such a trenchant manner. The Minister should examine the documentation. If he has already done so, we are entitled to hear his comments.
It is depressing to be confronted on Third Reading with the general philosophy and approach that "Whitehall knows best", together with the Tory Party doctrine. It is irresponsible for any Government to ignore the views of men and management who have the responsibility to produce what H G Wells called "bottled sunshine".
It is established that coal is a fuel not only for the twentieth century but for the twenty-first century. The nation should grasp that fact. The Government should take the lead. It is tragic that the Government should ask the House to support a Bill that could trigger off a 893 programme of pit closures and also reduce—a damnable effect—coal production in this country.
The new pits and the coal reserves will not be in production in the time envisaged in clauses 3 and 4. My hon. Friend the Member for Bolsover (Mr. Skinner) summed up the situation when he said that one can rarely reopen a pit when it has closed. Pits are not like factories. In the words of Rodgers and Hammerstein, "You can't pick up a petal that falls from a flower".
We think that our amendment offers the Government an opportunity to draw back from the crass folly involved in the clauses that we have highlighted during the passage of the Bill. Because we believe that it is in the best interests of the nation and of those who work in our great coal industry, we hope that some Government supporters who want to assist this nation will join us in our protest in the Division Lobby tonight.
§ The Under-Secretary of State for Energy (Mr. John Moore)
We have had an energetic, if not lengthy, Third Reading debate. It might be appropriate first to thank all those who have participated in both Second and Third Readings and in the arduous work of the Committee.
I automatically assumed that all who spoke in the debate had the future of the coal industry at heart and had no interest in domestic or national politics. But we had the benefit of the advice of and a pyrotechnic display by the hon. Member for Bolsover (Mr. Skinner).
I am somewhat surprised and a little depressed, having a genuine interest in the coal industry, to see how few hon. Members have read not only the Bill but the detailed debates in Committee. The astonishing statements by Opposition Members makes me wonder what they thought when they saw the Bill and whether they were able to communicate to the mining industry the nature of its fundamental features.
The first and most classic feature of the Bill is the capital commitment. The right hon. Member for Plymouth, Devonport (Dr. Owen), at the beginning of the debate, acted as though the Government were carrying out another example of, he 894 said, a squeeze on a nationalised industry. A squeeze? The capital commitment in the Bill is exactly the capital commitment in the previous Labour Govern-Government's 1979 White Paper at 1979 survey prices turned into today's money. It is exactly the capital commitment of "Plan for Coal" about which we have talked so much. The modest amount that is going in capital investment this year and for the next three years is £800 million. That is a substantial amount of money rightly going into a great industry. Let us recognise what it does. It confirms the previous Labour Government's attitude towards major long-term investment in the industry and it includes the investment outlined in "Plan for Coal" and this Government's commitment to it. Therefore, I have great difficulty in finding out what the Opposition want. They obviously want a great deal more money than is entailed by their own plans when in government.
Secondly, the Bill has a grant structure which is generous in its recognition of the past. But it is also tough in its sensible desire to move this great industry to genuine profitability.
The third important feature of the Bill—I shall come back to the remarks made in Committee by the hon. Member for Carmarthen (Dr. Thomas) to which others have referred—is that it is compassionate. It is compassionate in its improvement of social grants, redundancies and transfers in areas where there have not been genuine improvements since 1973. Rightly, it is compassionate towards widows of those who suffered from the dread scourge pneumoconiosis. These are some of the basic features of the Bill which I was astonished not to hear acknowledged and recognised in the debate.
My hon. Friend the Member for Bedford (Mr. Skeet) was a little unkind in part in his suggestion that there had not been a radical improvement in the coal industry's output since vesting day. I think that we should recognise the fundamental change that has taken place in the nature of the coal industry since vesting day. The significant fact is that in 1947 output per man year in tonnes per man was 266 compared with 469 in 1979–80. That is a major achievement in the coal industry and I believe that all of us who are interested in the industry would wish that to be put on record.
895 My hon. Friend the Member for Bedford asked a couple of detailed questions. He asked what we would do with the limestone slurry that would be formed. We were discussing the important developments in fluidised bed combustion, and we know that there is a great future for our coal industry in that area. I am told that the limestone slurry is associated with the need to remove sulphur from coal. Our coals have a modest sulphur content, and therefore, under existing clean air regulations in the United Kingdom there is no need to use this process.
In that context my hon. Friend asked how we would get capital costs down. Costs would fall as more systems are built, and fluidised bed systems are expected to be more suitable for relatively small industrial systems than for large power stations. I chaired a meeting of the tripartite research and development committee yesterday, and we looked at the potential not only in Comoil but in fluidised bed combustion techniques.
The hon. Member for Rother Valley (Mr. Hardy), who takes a detailed interest in the industry, asked some specific questions. I can confirm that if I am permitted to I shall maintain as close a contact with the industry as I have been able to maintain so far. Obviously, I shall keep a close watch on the key figures relating to employment in the industry.
The hon. Member for Newton (Mr. Evan) referred, legitimately, to the tightness of the money resolution. I, too, felt his dismay, and the dismay of hon. Members on both sides of the House, at some of the limits on our ability to discuss these matters in Committee and the difficulty of tabling amendments. I draw the attention of the hon. Gentleman to the fact that the money resolution is not more tightly drawn than the money resolutions to previous coal Bills. I refer specifically to 1977. I am not able to make decisions in that area, but we are only all fours with past experience.
The hon. Member for Penistone (Mr. McKay) drew our attention to his sad experiences with pneumoconiosis, and the hon. Members for Leigh (Mr. Cun-liffe), and for Ogmore (Mr. Powell) and in particular the hon. Member for Midlothian (Mr. Eadie), spoke specifically 896 about the problems of that disease. Let me remind the House that we have been able—it was pure justice, and I said so in Committee—to make a modest improvement in the Bill. That modest improvement relating to pre-1970 widows has been welcomed on all sides. That is what is being done here.
In Committee I said that I took the points made by the hon. Member for Carmarthen, who made a great and outstanding speech. I said that I would go forward and have discussions, and I have done so, with the approval of my right hon. Friend the Secretary of State. I am in consultation with the DHSS. This is an area where, if we intend to establish the right kind of tripartite forum, we must do it properly. I have taken the point, and I am pursuing it. I shall report to the House in due course. This is an area in which none of us would expect anything but the most generous treatment that the House can possibly mete out.
Other substantive and legitimate points were raised, and I do not seek to duck them. Again and again we returned on Second Reading, in Committee and in this debate to the subject of closures. The right hon. Member for Devonport and the hon. Members for Penistone, for Merthyr Tydfil (Mr. Rowlands) and for Newton again raised the issue. May I make the principal point clear? It is vital that the Government should reiterate it repeatedly, and I shall try to deal with the point raised by the hon. Member for Merthyr Tydfil.
The Bill is not a programme for closures in the industry. Let me illustrate that fact in two clear ways, especially for those who were not involved with our work in Committee. Some people outside the House argue when they examine the capital investment in the industry, that money is going into great new super pits and that other areas without such prospects are not in receipt of similar investment.
I give the following illustrations to support my view. First, the capital investment programme for the industry assumes £272 million a year in 1979 survey prices. That means that roughly half of all the continuing capital investment will go into existing production. That is the crucial feature of the discussion. Secondly, and most importantly—it can 897 be seen in the detailed figures—the Bill specifically assumes a pattern of closures similar to those of the recent past. On Second Reading I drew attention to the fact that the Opposition, while in government, committed massive capital investment to the coal industry under "Plan for Coal". At the same time, they recognised that there would be closures and openings—but not the problems of the 1960s or the late 1950s.
It is important to get this on the record. The 50 pits that closed in that period were part and parcel of a long-term investment programme. Let me give the figures for two crucial clauses in the Bill which were not discussed this evening. They illustrate how, in practice, the closure pattern is expected under this legislation to be similar to that of the past year under "Plan for Coal".
Clause 6 tackles the social grants relating to pit closures. The new limit in clause 6 is £170 million, up from £60 million. Too much fear has been spread on this subject, and this data should help remove that fear. First, where does this increase come from? It relates mainly to the longer period covered—the period of seven years as against three. Of the £170 million increase, £140 million comes from that. Then there are new classes of relevant expenditure based on the assumption that the closure pattern will be the same as for the past year. That accounts for £15 million. The remaining £15 million relates to inflation assumptions.
§ Mr. Eadie
I know that the Under-Secretary does not wish to mislead the House, but there is no argument between the Government and the Opposition about the proposed capital investment and the question of the new reserves in "Plan for Coal" beginning to pay off. There is general agreement that the industry needs investment. Is the hon. Member not misleading the House in saying that the pattern is the same? The pattern is not the same. In clauses 3 and 4 he proposes to extinguish the operating grants, and if this is carried out it will mean pit closures.
§ Mr. Moore
When the hon. Member was in office he looked at the removal of operating grants. These grants were never seen by his Government as a per- 898 manent feature of the coal scene. It is our positive attitude towards the coal industry that assumes that that industry, in the new world in which it will exist, will be able to break out of the trap of grant relationships with the Government. That is not just in clause 6. It is in clause 7 as well on the payment to redundant workers, where exactly the same assumptions are applied.
§ Mr. Rowlands
I accept that the Under-Secretary is answering a major point, but I should like clarification. Will he give an assurance to hon. Members representing South Wales constituencies that the sort of average pit-closure programme of the last four or five years and the assumptions in the Bill will be the same? Our basic point is that the assumptions have changed dramatically, particularly in South Wales. We are talking not about being able to handle a small number of pit closures over a six or seven-year period, but about a much larger number of closures over a shorter period. This is extremely important, because no one wants to—
§ Mr. Speaker
Order. I was hoping that the hon. Member would come to a conclusion. This is a very long intervention.
§ Mr. Moore
What I am trying to say is that the Government are not in the business of trying to decide on the detailed management of the coal industry. That is not our job. The Government have said two things: first, that this is not a closure programme for the industry; secondly, that we must put in a set of assumptions on redundancy, social grants and payments relating to closures. These are assumptions of what the industry feels will fit into Government strategy. That should remove the fear of total closures from the minds of hon. Members.
The right hon. Member for Devonport and the hon. Members for Merthyr Tydfil and Midlothian raised the question of Phurnacite. Many hon. Members expressed concern about that issue. I was asked a question on Monday by the constituency Member concerned, and I feel that it is a matter of courtesy to answer him. It is simply not true to make the assumption that the Government's refusal to advance non-commercial investment—investment that the board would not seek to invest in that plant—will mean that the plant will be doomed. If we are 899 talking about job implications, I draw the attention of Opposition Members to the fact that the proposed permanently noncommercial Ancit process assumes a massive reduction in the numbers employed at that plant. The two batteries referred to during the debate would employ 70 men, while more than 300 are currently employed on the batteries.
The assumption that the plant will close is wrong. The NCB is in urgent discussion with National Smokeless Fuels, the Alkali Inspectorate local authorities and the trade unions to determine how best to continue production while minimising the environmental problem. I was asked about my attitude towards the in-specorate, it is an independent body and must operate independently within its statutory powers.
We are, rightly, talking about a coalfield in South Wales that has received more than £150 million in investment during the past five years. We are not talking about a disaster for the Phurnacite plant, but about potential, continued production—a matter which is now in the hands of the board.
Many hon. Members raised the problem of imports, including the right hon. Member for Devonport, and the hon. Members for Merthyr Tydfil, Carmarthen, and Newton. I want to put that subject into perspective. The import position in 1979 was 4.38 million tonnes. We also exported coal. Therefore, for 1979 as a whole, the coal industry was 97.62 per cent. self-sufficient. As I said on Second Reading, the coal industry has nothing to fear from imports. The Government do not see any future for Britain as a trading nation if we impose artificial barriers to trade, especially for coal. We do not consider imports to be a long-term threat. We believe that the great bulk of our needs will be supplied from the domestic market. If we are competitive, there will be opportunities in overseas markets. The crucial provision is that the industry must be competitive.
I recognise the special problems of coking coal during a major world steel recession, and in a world where Britain has difficulties in adjusting to that major client of the coal industry. The answer is not to restrict imports but to help the coal industry to adjust in the transitional period. We have already done that with a coking coal grant. In specific 900 answer to a question from the right hon. Member for Devonport, may I say that the British Steel Corporation and the NCB are currently discussing next year's position. When they have completed their discussions, we expect them to come to the Government. We assume that, in the overall pattern of grants, there will be a further coking coal grant. I cannot be more clear. That is the legitimate way to help the coal industry in its difficult transitional problems.
§ Mr. Skinner rose—
§ Mr. Moore
I should like to give way, but I have very little time.
Another key and crucial point made by hon. Members throughout the debate, was in relation to foreign support. The right hon. Member for Devonport, the hon. Members for Penistone, Merthyr Tydfil and Newton, and my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) all raised that point. They talked about the relative treatment of overseas coal industries compared with our own. We have discussed this question at considerable length.
§ Mr. Skinner rose—
§ Mr. Moore
We discussed this at considerable length on Second Reading. Countries expecting to participate in the major growth in world coal are not countries which are seeking to subsidise their coal industries. The United States, Australia and Canada are examples. The subsidies exist in countries which are not seeking to compete with our coal industry. For those who are interested in the details—
§ Mr. Skinner
On a point of order, Mr. Speaker. A few moments ago the Minister gave some figures with regard to imports which related to 1979. During the debate my hon. Friends were simply asking for the import figures—
§ Mr. Speaker
Order. The hon. Gentleman cannot pursue his argument with the Minister on a point of order.
§ Mr. Moore
Perhaps I can help the hon. Member for Bolsover. Clearly because of the major radical difficulties experienced by the coal industry in 1978–79, and the urgent need for an added coal 901 burn in this country, it is expected that the 1980 figures will be greater because the CEGB instituted long-term contracts. No one has denied that.
I turn to the subsidy pattern. It seems to me that we must distinguish between our belief in a future, growing coal industry, where its coal markets are in competition with other fuels—such as substitute natural gas and the liquefaction market and in the area of industrial usage—and those parts of the coal industry which are static or declining. In the belief that our coal industry will expand, we must have an industry which is competitive in those areas.
Whatever the deliberations in this House, the coal industry is much more than the legislation we have been discussing. The coal industry represents a key resource in the ground, as well as the skills and abilities of the men who mine it. In the belief that they desire an industry that is capable of fulfilling the challenge of the future, the Bill establishes the framework to give the industry the investment to encourage it to profitability and to treat with compassion the burdens of the past. It is in that belief that I commend the Bill to the House.
§ Question put, That the amendment be made.
§ The House divided: Ayes 236, Noes 279.