COAL INDUSTRY BILL

HC Deb 17 June 1980 vol 986 cc1377-478

Order for Second Reading read.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Mr. Speaker has selected the amendment in the name of the Leader of the Opposition.

5.5 pm

The Secretary of State for Energy (Mr. David Howell)

I beg to move. That the the Bill be now read a Second time.

This Bill is an expression of the Government's confidence in the future of coal and in those, both management and men, who work in the coal industry. Coal's prospects have never been better. We believe that the industry now has the opportunity to secure for itself a prosperous and good future based on new market opportunities and efficient and competitive production. We believe that the National Coal Board can now be set on a course which will give it full scope to take advantage of the new opportunities which will be open to it in future.

It must be recognised that in the past there was undoubtedly a feeling that the coal industry was no more than a survival, doomed to irreversible decline and early extinction. This view is utter rubbish. Nothing could be further from the truth. Coal is our greatest single natural resource. Our total coal resources are about 200 billion tonnes and the NCB's estimate of operating reserves at existing mines and those in the planning stage totals about 10 billion tonnes. Over time, about 45 billion tonnes are thought to be suited to extraction by existing technology and its developments—that is, over 300 years' worth of production at current rates. By any standards, this is a secure, indigenous source of energy.

As oil becomes dearer and supplies more vulnerable and less reliable worldwide, and as our own offshore oil and gas resources decline in the 1990s, as they are bound to do, I am confident that there must be new opportunities and a new demand for coal. That is the reason why we have put coal, along with higher energy efficiency through conservation, and with nuclear energy, at the centre of our energy policy.

Coal, however, has one special advantage which is not open to nuclear power. Nuclear power, for the foreseeable future at least, will be used only for the generation of electricity. Coal can look forward to new markets. First, there is reason to expect that new opportunities will be open for coal in the industrial and commercial markets. Looking further ahead, probably 20 years to the next century, rather than this, provided that coal can meet these market requirements at competitive prices, we can look forward to exploiting the potential of coal as a source of liquid and gaseous fuels and of chemical feedstocks by way of different processes of gasification and liquefaction. As these new markets open up for coal, the industry can hope to move away from its present overwhelming dependence on sales to the electricity industry.

Mr. Dennis Skinner (Bolsover)

Will the Secretary of State also understand that there is another factor in relation to pits which does not play a significant part in most of our manufacturing industry? During a world recession or a recession in this country the coal industry can suffer to the extent that pits must close. With the massive imports coming in at present—6 million tonnes a year—and with the recession, pits cannot be put out of action one year and then be expected to open up again the following year when the market expands. In order to ensure that the pits are available to produce later, they must be kept open now. That means importing less and saving the Welsh and other coalfields in order to take advantage of all these wonderful things that the Secretary of State talks about in the future.

Mr. Howell

I recognise the hon. Member's feelings. The strategy that I shall explain in my speech is designed to secure the best future for the coal industry as a whole. I shall come to some of the details later. The hon. Member has made some fair points and I shall address myself to them.

The future therefore holds major prospects for the industry. For its part, the British industry has many reasons for confidence in its ability to face these long-term opportunities. As benefits work through from the substantially increased capital investment since 1974, which my party supported, under "Plan for Coal ", there are encouraging signs that the long decline in deep-mined output and in productivity has been reversed. In 1979–80 deep-mined output showed an increase, taking one year on another, for the first time since 1963 if the years affected by industrial disruption are left out of account. Output per manshift showed a further improvement and, thanks to a remarkable improvement in attendance, output per man-year rose by 4½ per cent. The industry's relations with its suppliers in the mining machinery industry are in many ways a model, and British mining machinery leads the world. Above all, there is the greatest expertise and dedication at all levels of the industry, and there is a long tradition of constructive discussions between management and unions, and, where necessary, of tripartite discussions between management, unions and Government, which must be the foundation for continued co-operation in future.

The Government's strategy for the coal industry, which is embodied in the Bill, has been developed with these points in mind. It has three essential parts.

First, we shall continue to support the board's capital expenditure on projects that will produce efficient capacity. Coal is an extractive industry, and, like other extractive industries, must constantly renew its capacity as faces or pits become exhausted. That is inevitable in an extractive industry if it is to stay in tune with the modern world and meet the challenges of tomorrow. Today the National Coal Board is in the middle of replacing old, often worn-out, uneconomic capacity with new, high-yielding faces and collieries, creating a new industry out of the old one. Over £1,000 million has been invested since 1973. The 10-year capital investment programme is now past its half-way stage and reaching a peak. The latest public expenditure White Paper, published just before the Budget, shows provision for capital expenditure by the National Coal Board of £600 million in last year's values over each of the next four years.

In respect of the board's capital expenditure the Bill does two things. Clause 1 increases the limit on the board's power to borrow from the present £2,200 million to £3,400 million, with provision for a further increase to £4,200 million. Since the board's borrowings were £2,080 million on 7 June, I must tell the House that that increase is now needed. I would expect that the new level would be sufficient to last the board for about three years, depending on its success with other parts of the financial strategy. Thereafter Parliament will have the opportunity for a further review of progress before authorising further increases.

Mr. Eric Ogden (Liverpool, West Derby)

What rate of inflation has the Minister used to calculate that the sum will last three years?

Mr. Howell

The figures make allowances in 1979 money in constant terms. What the rate of inflation will turn them into we shall have to wait and see. I said that the £600 million was the annual investment in 1979 money.

Clause 2 of the Bill is also relevant to capital investment. It opens the way for me to make deferred interest loans to the board to finance expenditure on capital projects with long lead times, as are often found in extractive industries. If the board takes advantage of that possibility, it will be able to match the interest payment on its major projects more closely than at present to those projects' earnings. That provision is a new departure in nationalised industry finance, which we have tailored, after careful consideration, to the special position of the coal industry. I must make it clear, however, that, under these loans, interest will be deferred, not forgone, and that we shall not be asking the taxpayer to bear an additional burden. The provision is intended to give the National Coal Board flexibility in the timing of its payments, as must be right in this kind of industry. It is not—I repeat not—a concealed subsidy.

The second part of our strategy is a new financial target for the National Coal Board. If there is one single thing on which we must be clear today it is that our coal industry can take advantage of the opportunities open to it only if it is efficient, competitive, profitable and free from dependence on Government subvention. I make no apologies for saying that the only long-term and lasting foundation for the coal industry—indeed, for any industry—is profitability. Only if it can compete in the market and make its own way can the industry provide good pay and conditions for its employees, offer its customers long-term secure supplies and make the contribution to the economy that we can reasonably expect. Ever-growing dependence on Government aid is no basis for a secure and prosperous future in any industry. It is simply a way of taking a whole industry down a blind alley.

In recent years, the industry's reliance on Government finance has been growing. The board last made a profit before operating grants in 1976–77. In that year, its return on capital was 12 per cent. and at the year's end its borrowings stood at £694 million. Since then its position has worsened. Last year the board broke even only after operating grants totalling £192 million, its return on capital was minimal, and by 31 March its borrowings had risen to £1,983 million. Immediately after last year's election, we began a thorough review of the board's financial position. It was clear, despite encouraging signs of increased productivity and output, that we could not go on as we had been going.

Therefore, after an exhaustive review, undertaken in conjunction with the board, of the industry's position and prospects, we decided that the time had come when the board must be set a firm financial objective, and that, for the reasons that I have earlier discussed, that objective should take the form of a phased return to independent financial viability over a number of years.

Mr. Frank Haynes (Ashfield)

Will the right hon. Gentleman give way?

Mr. Howell

This will be the last time that I give way. Many hon. Members who have great experience in the industry wish to speak, and we started late.

Mr. Haynes

The Minister is emphasising profitability. Many Ministers, including the Prime Minister, also emphasise profitability. The Prime Minister's attitude is that if something does not pay, it must be closed. Is the Minister saying that there should be pit closures or that the board will be forced to close pits because of the Government's financial limitations?

Mr. Howell

I am saying that coal will be a profitable industry. We are moving to a position of vast energy scarcity throughout the world. Energy industries will, therefore, be profitable. Coal is an extractive industry. Like any such industry, progress involves closure of the uneconomic parts and expansion of the economic and profitable parts.

Mr. Tim Eggar (Enfield North)

Assuming constant real oil prices, can my right hon. Friend confirm that it will be possible for the NCB to become profitable by 1983–84 without raising the real cost of coal supplies to its major customers, particularly the Central Electricity Generating Board?

Mr. Howell

That will be for the National Coal Board to work for. However, the competitive advantage of coal over oil has increased and is greatly increasing. In 1978 it was .85 to one. It is now .65 to one. That allows room for radical improvement.

I have, therefore, set the board the financial objective of returning to profit, on a historic cost basis after interest and social grants, from 1983–84 onwards. In the meantime, however, we shall support the board by continuing to pay operating grants. Over the four years 1979–80 to 1982–83, the Bill allows those operating grants to total up to £525 million, with provision for an increase to £590 million if necessary. It is, however, essential that, as the board moves back to profitability, the operating grants should taper off, year by year, according to a pre-determined plan. We have fixed maxima for each year as follows : for 1980–81, £135 million ; for 1981–82, £109 million; for 1982–83, £28 million. All those amounts are in 1978–79 prices and will be adjusted by the Government to each year's values. They exclude social grants, which we shall continue to pay.

We also propose changes in the way in which the operating grants are paid. We shall stand by the existing arrangements which we inherited for grants to support stocks of coke and to secure extra sales of coal to the South of Scotland Electricity Board, and may give further specific operating grants within the total limits of operating grants for each year which I have just mentioned, if exceptional circumstances arise which make them clearly appropriate. But the bulk of operating grants to the board will take the form of a single, explicit, deficit grant, which will be paid, up to the maximum levels which I have just announced for each year, to offset the deficit arising on all the board's operations and shown in the consolidated profit and loss account of the board and its subsidiaries.

The board will show the deficit grant, as such, in its proper place in its revenue account. That is the same structure of grants as we provided for 1979–80, in isolation, before the Bill was brought forward, and I am convinced that the change will make for better accountability and will enable the industry's progress towards financial viability to be seen clearly.

Clause 3 gives me the power to pay the new, explicit deficit grant, clause 4 sets new aggregate limits for the grant and for other operating grants, and clause 5, repeals the power to pay the regional grant, which has been used only twice in the past five years, and is no longer required under the new financial regime.

I turn to the third part of our strategy. Coal is an old industry in the process of constant renewal and has rightly been described as our bridge to the future. Individuals have given their whole lives to the coal industry and some communities are wholly dependent on it.

It is completely right that the Government should help the industry in its unique circumstances to cope with the strain of changing from an old industry to a new and expanding one, and help individuals who would otherwise bear an unfairly large share of the transition. We shall, therefore, continue the established social grants—including a substantial contribution to the deficiency in the mine-workers pension scheme in respect of men who retired before 1975 and including our contribution to the social cost of pit closures and to the cost of the redundant mineworkers payments scheme. Clauses 6 and 7 extend the time limit set in previous Acts and raise previous financial limits for that purpose.

In addition, I am glad to propose a number of further improvements in the social grants. First, when a pit has to close it is often possible to place numbers of the men—sometimes all of those who want to move—in work at a nearby colliery. Clause 6 will widen the basis of the Government contribution to the costs of the disturbance allowance and the retention money which the board will be paying to encourage the men to stay in work at the new job.

But increasingly there will be a need for trained and experienced men, perhaps from far afield, to man up the new faces and new pits that are being constructed. So it is in everybody's interest that men who have been made redundant should be given financial inducements to move their homes and take up re-employment at the new pit rather than remain unemployed at their old locations. The board will, therefore, offer a disturbance allowance of £2,000, generous removal allowances and retention payments. Clause 6 will enable those payments to rank as relevant expenditure "so that they can qualify for Government grant.

The enhanced transfer payments will be made in addition to the normal redundancy payments which the man receives when he is first made redundant. The board believes that they will be attractive enough to enable it to transfer the men with the skills and experience which will be absolutely essential to the operation of the new pits of the future.

Of course, grant will not be paid on the wider range of allowances until parliamentary authority has been obtained—which implies approval of the relevant Estimates and the passage of the appropriate reference in the Bill. But, subject to that having been achieved, we propose then to contribute to the board's expenditure on these items as from today.

Second, we have also looked again at the level of redundancy payments, and decided that the time has come to improve the lump sums for men under 55 who become redundant. My hon. Friend the Under-Secretary will explain the details when the House debates the Redundant Mineworkers and Concessionary Coal (Payment Schemes) (Amendment No. 2) Order 1980, later tonight.

Third, clause 7 deals with the redundant mineworkers payments scheme for men employed at coke ovens and coking plants, and so ends the unacceptable anomaly whereby the Government contribute to good redundancy payments for men who mine coking coal but not to those who work at the board's coke ovens and are equally affected by the decline in demand for coke.

Last, I know that the whole House will welcome clause 8, which proposes an increase in the limit on Government contributions to the industry's pneumoconiosis compensation scheme from £100 million to £107 million. The purpose of the increase is to enable the widows of pneumoconiosis victims who died before 1970 to receive an improved lump sum by way of compensation. In taking this step we are following the precedent of the Pneumoconiosis (Workers Compensation) (Payment of Claims) Regulations which my hon. Friend the Under-Secretary of State for Employment introduced last December, and which were generally welcomed. We shall remedy in an equitable way an anomaly which has long woried both the board and the unions, and rightly so.

In conclusion, I turn to the Opposition's amendment. First, let me deal with the reference to : the extra finance … needed for the early retirement scheme ".

I presume this refers to the effects of clause 5 of the Social Security (No. 2) Bill when it comes into force on 1 April next year. My right hon. Friend the Secretary of State for Social Services made clear that that does not affect the redundancy payments scheme. On the other aspect, we have begun discussions with the NCB about the rather complex ways in which the Bill might affect it and until the discussions are completed it is too early to say precisely what the effects will be. However, I can assure the House that the men will not suffer from the application of clause 5 of that Bill, since the basic payments to which they are entitled will remain unchanged. However, it should be added that for the first year, from April 1981, there might be some income tax effects, depending on the circumstances in each case.

As for the major part of the amendment, I can understand concern about the pace of growth facing the industry and the pace of change and the strains which that will impose. I understand the points that the hon. Member for Bolsover (Mr. Skinner) raised at the beginning of my speech about capacity and meeting import challenges, both for coking coal, where there is a serious problem, and for steam coal, where the coal industry has nothing to fear if it keeps on its present path.

However, when I read the amendment I have to ask whether the Labour Party in Parliament has caught up with the real world and the prospects for energy or whether it has been too busy on other things. The amendment seems to be arguing that by phasing out grants we shall be putting production at risk. Production depends on investment. It is the lesson that surely has been learnt. Investment has never been financed by grants, not under any Labour Government, nor under any Conservative Government. The industry's capital investment has always been appraised on a commercial basis and financed by advances out of the National Loans Fund.

I invite the House to compare the approach of the amendment with the approach in the Bill. The amendment is defensive, and fearful. It looks backwards. It asks the House to think of a coal industry fixed in its present shape and permanently dependent on Government grants. These grants are to be given, apparently—to go by the motion—just to emulate our European neighbours, all of whose coal industries are static or contracting.

By contrast, our approach, accepted by the National Coal Board and the unions in broad outline at the latest tripartite meeting I held with them, is a viable, profitable industry, accepting change and determined to make it own way in a competitive market.

The Government firmly believe that the future market for energy will open new opportunities to the coal industry. The policy embodied in this Bill is to equip the industry to take advantage of these opportunities. The choice of means must be for the board to decide, after discussion with the unions and all those who work in the industry. I do not pretend that the task will be easy, but I am confident that it is attainable and sure that it would be wrong not to go along this path now. The industry has many things going for it and has many factors on its side.

The benefits of past investments in "Plan for Coal" are now coming through. Output and productivity are rising. Above all, the industry has the men and I believe the spirit and the will to succeed. For all these reasons, I and, I believe, many of my Friends, whatever mood may exist on the Opposition Benches, are full of confidence in coal's future. I am glad to have the opportunity of moving the second reading of the Bill that will mark the next step in its progress.

5.31 pm

Dr. David Owen (Plymouth, Devonport)

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 Second Reading to a Bill which, by phasing out Government grants at a time when coal producing countries in Europe are increasing their national support, puts the National Coal Board under severe financial pressure to accelerate pit closures, putting at risk the planned indigenous coal output targets which are a vital part of the national energy policy of self sufficiency, and makes no provision for the extra finance now needed for the early retirement scheme. The Secretary of State's speech dealt almost exclusively with the profitability of the coal industry and the need for the industry to pay its way in three years' time. The central charge that we make against the Bill is that the financial targets were first discussed and negotiated with the National Coal Board in August last year and that events since then make it extremely doubtful whether the coal board can live within those targets. We fear that the Secretary of State is putting the National Coal Board in the same sort of straitjacket in which the British Steel Corporation was placed with appalling consequences.

We fear that, given the Secretary of State's monetarist attitudes and given his personal animus against the public sector, in almost all forms, he will stick rigidly to these financial figures regardless of what happens and that we shall face a number of short-term choices that are extremely dangerous.

It is noticeable that the Secretary of State, throughout his speech, did not mention the overall strategic necessity for this country to move into self-sufficiency in all aspects of energy. No mention was made of the fact that the board, under considerable prompting and pressure from the European Community, has decided to revise upwards its output forecasts so that by the end of the century the National Coal Board is now aiming to produce 200 million tons a year, an increase of 30 million tons on the previous target of 170 million tons. It is a vital national interest that these targets are fulfilled. To the extent that the Bill follows the increased investment that successive Governments have wanted, we welcome it. Our fear is for the short term. There are now substantial grounds on which that fear is justified.

Before moving to the basis of the next three years, I should like to ask the Secretary of State what his intentions are in relation to the current financial year. The right hon. Gentleman made a speech in which he paid generous tribute, in which I am sure both sides of the House would wish to join, to the extraordinary success of the coal industry in the past year, ending at the end of March. He drew attention to the increased output of deep-mined coal for the first time since 1963, to the productivity and to the whole record, amounting to a formidable achievement, following six years of steady investment and stability in the industry.

I understand that the right hon. Gentleman is now considering using the powers that he possesses to direct the National Coal Board so to arrange its accounts that one of its most successful years ever, when it has been using a system of operating grants, will show an overall loss. I hope that the Secretary of State will consider the matter carefully before he jigs the finances of the National Coal Board, effectively retrospectively, to show a loss in this financial year.

The right hon. Gentleman should at least wait until his legislation passes through all stages in the House before changing to a deficit grant system for future years. Nothing could be more damaging to the morale of the industry, after a successful year, than to find that, through a juggling of the figures, it faces an overall loss and that it starts upon the challenging period of the next three years' financial arrangements against an overall loss.

On the actual financial arrangements, the changes in the financial position since the August strategy review are formidable. It is amazing, in a way, that the Government sought in August last year to compel the board, given the likely outcome over the forthcoming financial year. Even in August, most financial commentators and even the Treasury believed that many of the key assumptions of this strategy would be wrong. Inflation in August was already higher than the 14 per cent. budgeted for in the strategy. At that time, it was 15.6 per cent. Since then, it has been rising steadily.

The changes can be summarised briefly. There has been an economic downturn, overall, that has resulted in a loss of projected sales approaching £50 million. There has been a substantial change of markets. The British Steel Corporation, for example, has taken much less coking coal than previously. The board has had to sell coal in lower priced markets, losing £35 million. There has been a rise in the costs resulting from higher national insurance that the board has had to meet, amounting to £12 million.

We do not know what is the likely outcome for inflation on a year-on-year basis. It will certainly be substantially higher than 14 per cent. It is inconceivable, in my view, that it will be less than 17 per cent. I fear that it will be much higher. For every 1 per cent. point of the rise in the cost of living, the cost to the National Coal Board is an extra £12 million.

The cost of imports is falling due to the high exchange rate. The board has intervened to try and preserve some of the coking coal market. There has been a grant that is due to expire in December this year. If that is not continued for subsequent years, the effect in South Wales will be devastating. The cost of the grant is increasing all the time because of the change in the exchange rate. The massively high interest rates affect the National Coal Board just like other forms of industry.

The strategy budgeted for interest of £211 million in 1981–82. It is now expected to reach £295 million. That is a change in just one financial year. If the Secretary of State wishes to hold any credibility for these financial targets, they should be revised in the light of the dramatic financial changes undertaken since they were negotiated with the board. It is unfair to put the board into a financial straitjacket. Even before the House has agreed to it, we can see that the figures do not add up. The Minister must show that he is prepared to re-enter into negotiations with the board and to fix more credible fingures. At least the House would then be being asked to accept figures based on a degree of reality.

How we deal with the board's finances goes wider and covers the whole question of the nationalised industries. The postwar habit of successive Governments, try- ing to make the public sector ape the private sector, has not been successful. The Secretary of State says that he wishes to treat the National Coal Board as a private sector company operating in the market. Whether or not we accept that there is a free market is energy—and I do not—it behoves the Secretary of State to put both constraints and easements on the National Coal Board similar to those operating in private industry. Nationalised industries do not have the same access to capital markets as private industry and, in particular, to the sources of finance which specialise in long-term, high risk borrowing. The coal industry must borrow from the National Loans Fund on unattractive terms. It is also asked to self-finance an increasing part of its investment.

Clause 2 allows the Secretary of State to make loans to the National Coal Board. Provision is made for the board to defer interest payments on projects with long lead times. That introduces some degree of flexibility, but we have not yet been told to what extent. It is nowhere near as flexible, for example, as public dividend capital. British Airways, British Shipbuilders, British Aerospace and the British Steel Corporation each have some public dividend capital. Other industries have been allowed greater flexibility in borrowing abroad and have used that facility successfully. Why must the board be stuck with the high interest rates of the National Loans Fund? If it is to be treated like a private industry, why cannot it have the same flexibility to borrow at lower rates?

The NCB does not have access to sterling finance from banks, bills of exchange or acceptance. It does not have the same freedom to choose the timing and repayment terms of loans that private industry has. That freedom is rigidly circumscribed by the National Loans Fund and that is why the Treasury likes it.

The NCB is not able to lease equipment. Leasing costs only 60 per cent. of the cost of borrowing to buy equipment. The board cannot lease any underground mining equipment and yet the coal industries in the United States and Australia, with which the NCB has to compete, are able to lease mining equipment. The Post Office and the British Gas Corporation are able to use the United States' commercial paper market with its low interest rates. Such freedoms are not given to the NCB.

If profitability is the only criterion, the NCB must be treated as if it has access to the same flexibilities as the private sector. We do not believe that profitability should be the only criterion for the NCB. A balance must be struck in financial targets as well as the output targets. The failure to strike any balance is the most severe indictment of the strategy. We recognise that any industry must have financial targets. If they are administered flexibly no one objects to them. There is some advantage in operating under an overall guidance.

The National Union of Mineworkers wishes not to have to depend upon Government support. Everybody in the industry believes that the coal industry can achieve that. What is at dispute is the rate at which it can move and the constraints under which the industry currently operates. A public sector industry has added responsibilities. We are extremely anxious about unemployment throughout the country. In some parts, unemployment is savage. South Wales has been struck a severe blow because of the rundown in the steel industry. South Wales is experiencing severe unemployment and many job opportunities for school leavers are being lost. On top of that, through no fault of theirs, the people of South Wales have to cope with the loss of the coking coal market that would result from a decline in steel output anyway. That difficulty is magnified by imports.

The Government have a social responsibility. Extra financing should be made available to the BSC so that it can continue to buy coking coal from South Wales. I have never wanted an argument between the BSC and the NCB or between steel workers and miners. But there is an overall social responsibility. The Government must balance the cost of attracting industry to South Wales against the cost of closing pits. We all accept that exhausted seams should be closed but anthracite pits which produce coal for the domestic markets should not. That might not be economic, but what is that cost when compared with the cost of redundancies and closures and of introducing new industry to the region? The Secretary of State said that regional aids were used only twice. My right hon. Friend made an important decision to make regional aids available to the coal industry, as to other industries.

In other areas we worry that the financial constraints on the coal industry will act against the medium to long-term interests of the industry. Where is the financing for some of the schemes which we believe to be necessary? There is no guarantee of finance for the liquefaction plant in North Wales.

The domestic coal market is short of smokeless fuel. More and more people are turning to a supplementary source of heat in their homes. They are opening up their fireplaces and wanting to burn smokeless fuel. What is to happen to the Phurnacite plant in Aberavon? Over 1,000 jobs are at stake. What is to happen to the five pits involved, employing about 4,000 people? Is anything to be done about bringing in a new technique such as anthracene?

Coking plants such as that in Mex-borough are under threat of closure. Does that make sense when there is a shortage of smokeless fuel? Are we to import smokeless fuel? The import strategy is not satisfactory. On a number of occasions in the last year the Secretary of State has used the threat of imports. He is wrong to say that the coal industry is declining throughout Europe. It is projected that the West German coal industry will expand.

The Secretary of State cannot go to the Council of Ministers, put his name to declarations of intent to increase coal production, and take part in an interventionist policy in the European Community which allows substantial support for an industry to preserve self-sufficiency, and at the same time preside over the total abolition of all forms of Government support for the industry. Government support for the coal industry is only £1 a tonne whereas they pay something like £24 a tonne in Belgium, between £14 and £15 in France and £11.9 in the Federal Republic of Germany.

If some of those Governments are as committed as the right hon. Gentleman to the forces of the market and to profitability and can intervene to assist their industry because of an overall strategic requirement to expand coal output, I cannot for the life of me understand why even the right hon. Gentleman might not be able to swallow some of his monetarist principles on behalf of the strategic interest and energy self-sufficiency requirement of this country and give it a far higher priority than hitherto.

There are some other points I would wish to make about this Bill. There are parts of the Bill which we thoroughly welcome. We welcome investment and we welcome the stability given to the industry that has been agreed by successive Governments. We welcome some of their social provisions for pneumoconiosis and other diseases. On the overall question, were it not for the fact that we have lived through a year with the Secretary of State for Industry—whose financial views are identical to those of the Secretary of State for Energy—presiding over the emasculation of the steel industry and with appalling social consequences to boot, we might have more confidence that the right hon. Gentleman would use the powers that he will take in this Bill with flexibility and more social concern. It is because we have not got that confidence and because we believe that the Government's strait-jacket will be applied around the coal industry and will result in decisions taken over the next two or three years which we shall all regret and will damage the long-term strength of the industry that we believe that the amendment that I have moved better represents the sensible strategy for this vital industry.

5.53 pm

Mr. Patrick McNair-Wilson (New Forest)

I support the Bill because it represents yet another milestone on the road to the essential investment that this industry must have. At the same time, I must make it clear that I have grave reservations about whether the industry can meet the targets that my right hon. Friend has set out for us today.

Most hon. Members know of my interest in the industry, and I well recall winding up, from the Opposition Benches, the debate on the Coal Industry Bill 1965, which, 15 years ago, set out to bring about the contraction of the industry, to which many Labour Members—some of whom, unfortunately, are not now here—were so strongly opposed.

Only six years ago the engines were asked to go smartly into reverse, and having contracted the industry we were told that it had to be expanded rapidly because those who had, rightly, pointed out that we needed security in the supply of energy wanted to see that industry expanded again. We have seen this industry operate by fits and starts over the last 15 years, and I am afraid that I regard the short and medium-term future of the industry as rather bleak.

I know that it is fashionable to talk about the glowing prizes that lie ahead for the coal industry and about the replacement of coal as the chemical feedstock instead of oil, but let us be honest. Coal is not an easy product to use in this form. It is a difficult, solid hydrocarbon to break down, and I am sure that, as my hon. Friend the Member for Bedford (Mr. Skeet) reminded me a moment ago, the realisation of those glowing forecasts is a long way off.

We have to face the fact that what the coal industry needs more than ever is a period of four or five years with an act of faith by the Government. I do not believe that in the short run we can turn this industry into one of the most profitable in Britain, but that does not alter its strategic importance. We must recognise that we are entering—indeed we are well into—a period of recession. The figures issued today by the Central Statistical Office show that the recession effects everyone. It certainly affects those who supply fuel. If one looks at the demand pattern for the coal industry, one sees that it is very depressed.

The steel industry will not be in any hurry to expand its iron-making capability. It has shown that it will have to contract substantially, and as a result I guess that it will go for the electric melting of scrap rather than for making substantial quantities of iron. If the steel industry were prepared to expand its iron-making capacity, the 5 million tonnes that it requires from the coal industry can, I believe, be met from British pits. There is a quarrel about the quality of coking coal, and we are all aware of that. If the figure were much higher we might run into problems, but I believe that the medium volatile coal, is available to meet that demand.

I hope that the talks which have, I believe, started between the National Coal Board and the British Steel Corporation will continue to ensure that we really can work out a deal whereby we can use British coking coal in the manufacture of iron. Let us be honest about it : we are already seeing great congestion in the ports from which imported coal is coming. There is congestion in the ports at Hampden Road, Baltimore and New South Wales. It is in everyone's interests for the steel industry to try to buy British coal, if only for security of supply.

Mr. Jack Dormand (Easington)

Perhaps the hon. Gentleman will tell the House why he thinks the British Steel Corporation is so reluctant to take his view, when in my own area in Durham there have been experiments that have achieved the right blend. Surely there is much more to the problem than getting the blend right.

Mr. McNair-Wilson

The hon. Gentleman is right, but he must recognise that there is a substantial price differential. The British Steel Corporation wishes to keep its business alive as strongly as it can, so it tends to bring in imported coking coal. There are substantial differentials—between £10 and £18 a tonne, delivered to this country.

The problems of importing coking coal from the cheapest sources of supply and getting it to the corporation's mills and blast furnaces can create the situation that I have described, which is congestion at the ports and problems of transportation. There are swings and roundabouts here, and I should like to see the board and the corporation try to work out a viable package whereby at least that 5 million tonnes which the corporation would wish to buy would come from British pits.

If we look at electricity business, we do not find an altogether rosy picture. The CEGB is committed to take about 75 million tonnes from the NCB, given certain provisos with which, I am sure, hon. Members are familiar. With electricty demand substantially depressed it is not easy to see that figure increasing.

Here I should like to make a suggestion, because we have a lot of oil-fired capacity. We have a large oil-fired station at Fawley in my constituency. I should like to think that we would consider the possibility of burning in these stations a mixture of oil and pulverised coal, to step up the demand for coal. I believe that this can be done. If one mixes light oil with coal, one can make a substance not entirely dissimilar to bunker C, which is a sort of treacly mixture and which will burn perfectly adequately. That would at least provide an opportunity to increase the electricity market, but at the moment we have a market here for 75 million tonnes.

Finally, we have the industrial market. Everybody talks optimistically about this market increasing substantially. At the moment it is about 12 million tonnes, but people talk of it going up to 40 million tonnes. I sincerely hope that it does. With new furnaces, such as the fluidised bed, we may see industry converting swiftly, but at the moment we are talking of a market from the big customers of approximately 90 million to 100 million tonnes.

The domestic coal market is far from happy. I am one of those referred to earlier who have opened up a chimney to burn coal once again. What a pity that under the previous Labour Government and—dare I say it?—under this Government we have not made more progress with the building of chimneys on houses and that the review that has been going on in the Department of the Environment since Adam was a lad has not been concluded to get this done. I regard the domestic market as a substantial growth market for the industry. When we consider that more coal goes out in the concessionary coal scheme than is sold on the domestic coal market, we can see what a long way there is to go to increase the availability of coal to the domestic consumer.

I want to relate this matter to the financial situation. The coal industry has a limited demand pattern of about 100 million tonnes, and it is unlikely to increase substantially. We are probably all right for the current financial year, but with the recession continuing—this is a world-wide phenomenon; it is not peculiar to this country—I see 1980–81 as the last of the good years for the short run, and I see the following three years being extremely difficult. We are not being realistic if, in that difficult period, we expect the industry overnight to break even, because I do not think that that is possible. We should merely be raising false hopes.

We must recognise that this winter the coal miners will make another wage claim. Based on the OPEC oil price, they obviously have a strong hand to play. It must be for them to decide how far they wish to play that hand. As some of the hardest working people in the community, I am sure that they will weigh all the factors in the balance. Nevertheless, given that inflation will probably be in the 15 to 16 per cent. bracket this time next year, and for perhaps some time to come, it is asking too much to hope that we shall meet a financial break-even point in 1983–84. I think that it would be wise to have a more flexible approach. I am sure that the industry wants to stand on its own feet, but it takes a long time and a great deal of money to develop new coalfields. It is not a question of switching on and off. Therefore, whilst I foresee another energy crisis in future, I have to say that in the immediate future we shall probably face an energy glut rather than a shortage.

In the short term it will be disturbing if we make the industry, upon which we shall have to rely towards the end of the century, take perhaps shortsighted and over-dramatic decisions to try to meet some arithmetic target. I believe that common sense and national self-interest should dictate that pragmatism and realism, rather than arithmetical precision, should be the guiding principles.

6.4 pm

Mr. Jack Ashley (Stoke-on-Trent, South)

The Government have just heard a very clear warning from one of their own supporters. The hon. Member for New Forest (Mr. McNair-Wilson) said that he had reservations about whether the industry could meet these targets. The Government ought to note that warning very carefully. The hon. Gentleman underlined what was said by my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen) about the dangers of putting a straitjacket on the coal industry by imposing stringent targets on the National Coal Board. I hope that the Minister will take on board the points made by my right hon. Friend.

When a Conservative Back Bencher says that we need an act of faith by the Government, things have come to a pretty pass. The hon. Gentleman said that he supported the Bill, but the misgivings that he expressed were a serious warning which the Government should note. The last thing that we want is the trauma that we had in the steel industry being repeated in the coal industry. I hope that the Government will take full account of the proposals put forward by my right hon. Friend about the bonuses and the flexibilities as well as the penalties being given to the NCB.

I want to concentrate on one narrow aspect of the coal industry which is of grave concern to all mining areas. I refer to the impact of mining causing subsidence and tremor damage. This is causing more trouble and heartache in mining areas than any other factor.

Thousands of people in mining areas are seeing their houses collapsing. Walls are cracking, ceilings have holes appearing in them and foundations are being wrecked by subsidence. This is a serious matter for many people. It is a matter of great concern and financial loss. It also affects the health of many people in my constituency.

The legislation on subsidence is faulty in this respect. First, the National Coal Board has only to make houses "reasonably fit" after they have been damaged. What a marvellous phrase to insert in legislation—"reasonably fit". The NCB should restore those houses to their former standards and not simply make them "reasonably fit".

Secondly, the NCB does not have to pay full compensation or the depreciation in value for houses damaged by subsidence. It does not have to pay the difference between the sale price of a house damaged by subsidence and one not so damaged. It is remarkable that anyone owning a house damaged by subsidence should lose and not have proper compensation as a result of the activities of the National Coal Board.

According to present legislation, the NCB does not have to compensate for loss of earnings or for inconvenience caused by repairs to property or for the stress caused to those whose houses are damaged by subsidence.

Under existing legislation—this applies to no other area of life—the NCB is guilty of causing subsidence in a mining area until it can prove its innocence. The normal burden of proof is reversed, and that is as it should be. That is a valid provision. Yet there is no provision for full compensation.

Under some existing court procedures on subsidence the reverse is the case. Those whose homes have been damaged must be able to prove that the damage was caused by subsidence. If they prove that, they receive full compensation. It is a confused position. There are two different provisions—one is the present subsidence legislation, and the other is the High Court order. Under one provision, a person does not have to prove damage but does not receive full compensation, and under the other he must prove damage, but when he does he receives full compensation.

We should amend existing legislation to ensure that a person whose house is damaged by subsidence does not have to prove a case of damage against the National Coal Board. It should be assumed that it caused the damage. In addition, the householder should receive full compensation. The amended legislation should require the NCB to restore his house to its former standard and not simply to make it "reasonably fit". The NCB should be required to pay full compensation, including depreciation in value, and to pay the extra costs involved, such as loss of earnings, inconvenience to the householder during repairs and stress caused by subsidence.

In some areas earth tremors are triggered by mining. Yet there is no legal provision to cover damage caused in that way. In Stoke-on-Trent between September 1975 and September 1977, there were no fewer than 1,068 earth tremors. During that time houses were rocked, chimney pots were dislodged and roof tiles were thrown from the roof. A great deal of damage was caused to many houses, and many people were gravely disturbed. Although some damage was visible, it was not possible to assess the damage to the foundations. The people in Stoke-on-Trent were very worried.

The first essential is to stop the tremors, and that is the responsibility of the National Coal Board. In 1977 we were given an assurance that it would review its mining plans, and pay special attention to the orientation of coalfaces to avoid future earth tremors wherever possible. The earth tremors have started again in Stoke-on-Trent, and I want to know what is being done to stop them. It is a legitimate and important question which affects thousands of people. I hope that the Minister, when he replies, will be able to give me some assurances.

The second provision that I wish to see included in the Bill is a new legal provision to ensure that those whose houses suffer tremor damage receive full compensation, as required for subsidence damage. There should be full consequential loss, full compensation, and payment for time off work, inconvenience and distress.

I would like each hon. Member to imagine his reaction if a juggernaut smashed into his home and caused great damage. He would not be satisfied if he was told that his house would be made reasonably fit. Nor would he be satisfied if he was told that some effort would be made to pay some compensation. He would want his house restored to its former standard, and he would demand full compensation. What is good enough for hon. Members is good enough for those whose homes have been damaged by subsidence or earth tremors. I hope that my suggestions will be acceptable to the House.

Mr. Deputy Speaker (Mr. Bryant God-man Irvine)

Mr. Speaker has asked me to mention that it was his intention to announce that from 7 o'clock speeches will be limited to 10 minutes.

6.15 pm

Mr. Iain Mills (Meriden)

Many hon. Members may not associate my constituency of Meriden with coal mining, but there are three large pits in that area. I have come to know, like, welcome and cherish those pits. Therefore, I am grateful to you, Mr. Deputy Speaker, for calling me to make a contribution in this important debate.

I wish to say how glad I was to hear and how welcome is the statement that my right hon. Friend the Conservative Secretary of State has stopped the coming and going, and the stopping and going, on the green light. I welcome his expression of confidence in the industry. I am sure that my constituents, especially those who work in the pits, will be pleased that we now have decision in place of vacillation. All should welcome the expression of confidence that coal will be at the centre of our future energy policy.

We have had many interesting experiences in Meriden, the most recent being the expansion of Dawmill near Coventry, where mining takes place in that famous Warwickshire thick seam that runs under Coventry. The pit is now proving so successful with the new drift that production is to be doubled. I can see the realities of the Government's policies on coal as they affect pits in my constituency.

There are two other pits in my constituency, one of which is of medium age and the other dates back to the last century. I have an unusual, if not unique, spread of ages, and therefore of problems. There is an interesting spread of people working in the pits. Much as I welcome the traditional closed, tremendously bouyant and self-able community in the pits, the closure of much of the motor industry in the Midlands has resulted in new people entering the pits. That must be welcomed. Their additional skills, and their learning of the traditional mining skills, must make a contribution to widening the base of employment.

It is splendid to know that coal is now near the centre of our energy policy, but if it is to be the corner-stone of our future policy, and if it is to give secure employment to those that I have mentioned—not only in my constituency, but in others—we must ensure that the markets truly expand.

As this is a wide-ranging debate on policy, I wish to take the opportunity to say how much I hope—as I am sure many other hon. Members do—that industry will accept the long-term running advantages of the fluidised bed system in all sizes of factories. In my constituency we are trying hard to encourage the small factory looking for a £500 type of operation, whose traditional choice was gas, to consider seriously the fluidised bed system. While the capital costs are higher than the alternatives of gas and oil, the long-term costs must be of great benefit to any well-run factory. I am sure that that sort of market could expand and allow us to use our liquid hydrocarbons in more appropriate ways. I urge the Government to use all appropriate means to encourage the expansion of coal in small and medium-sized factories.

We need to provide a secure future overall wherever we can, but we must accept that in providing security overall there is the inevitability of change, and it is not just in coal and the pits that change is being seen in our country today. I welcome the clauses in the Bill that will allow more flexibility of investment by the NCB. We must recognise that "Plan for Coal" has not proceeded under previous Governments in anything like the way in which it should have done, so flexibility is essential if we are to see the right projects chosen.

The long-term future of any industry in Britain will depend very much on the ability of the management and the people employed to accept change. The experience of those in many other older industries has been equal to, if not worse than, that of those employed in the coal industry. The coal industry now has a guaranteed expanding market. It is guaranteed in the sense that it is a cornerstone of the Government's policy.

In other parts of my constituency—indeed, it was my previous employment before I came to this House—there is the heart of the motor industry and the motor component industry. In my constituency, in the centre of England, we really see and feel the problems of declining industry. In the measures announced tonight the coal industry is, perhaps, enjoying more security than the car component and car manufacturing industries, which contain many private enterprise companies that are having to face the rather severe crunch, as has been seen by the redundancies announced recently in Lucas, Dunlop and many other companies.

Those concerned have no real guarantee of a future, and the problems of change to them are even more difficult. The British coal industry is leading technology. We have the knowledge and ability and we make the machinery that is welcomed throughout the world. Our car and car component industry is now desperately trying to find the same sort of technological lead so that it, too, may innovate out of problems.

Therefore, without trying to dodge the issue that there will be change, we must realise that it is not only in the coal industry that change will occur. The measures in the Bill to provide for problems of redundancy are to be welcomed. One may say that they are not generous enough, but they are certainly splendidly generous in comparison with those of other industries, and it is an enormous initiative to the good. At my advice bureaux in my constituency, miner after miner comes to ask for my help to fight for better conditions, particularly for those who, in the old Warwickshire pits, such as Kingsbury, were made redundant between the ages of 50 and 55 and now see, as the only return for the pounds that they put into their pension fund, pennies each week. This will be a continuing problem, so I welcome the provisions in the Bill aimed at assisting those miners who must face change.

We should be positive and say that change does not mean just redundancy and unemployment. As I understand it, part of the objective of the Bill is to encourage mobility. Mobility is often difficult, particularly in closed communities where the lads do not want to move. However, if in some way the Bill contributes towards overcoming that problem, it will indeed be welcome.

I must offer two slight warnings. I am concerned about the timing of this issue. I should be glad to hear the Under-Secretary's comments. I am sure that hon. Members on both sides of the House will go into this matter in more detail.

The second warning is that, however we segment and organise the NCB's activities, I know that in my constituency and others there is great concern that opencast mining operations will be seen as a cheap and easy way of providing for the nation's resources, and that these, which may be legitimate in some areas, should not in any way result in the closure of deep mining pits locally. In saying that, and in using as an example the Orchard site near Dordon, where it is proposed to opencast, I urge the Government very strongly to take social and environmental conditions into consideration in local pits of this sort, where opencast can savage the ground, and if it is seen reduce employment by closing marginal pits nearby, it will be a sad day.

Following those few words of some slight doubt, I must say that the Bill seems to be an excellent step forward in providing those employed in the mining industry and the pits, certainly in my constituency, with the assurance that the Government believe that coal is a great asset and that they intend to use it for the nation's future energy resources in the best way that they can. I applaud the Government's initiative.

6.24 pm

Mr. George Grant (Morpeth)

It is about five years since the coal industry was the subject of a major debate on the Floor of the House. That is not without significance. In the late 1950s and throughout the whole of the 1960s the mining industry was decimated—from 600,000 men to 200,000 men. It was much debated in this Chamber at that time, when the decision was to close pits and to import cheap oil. In 1972 and 1974, because of the situation in the industry, the miners went on strike because they had drifted so far in the wages league. When the Labour Government came to office in 1974, they immediately set up the tripartite talks. It was from those talks that "Plan for Coal" arose, setting out a plan for the industry to produce 200 million tons of coal by the year 2000.

During these years of decline, the industry was kept short of capital investment. Morale in the industry was at rock bottom. Since the setting up of the tripartite talks, it is remarkable how the situation has changed. Confidence and morale in the industry today are high. In 1979–80, for the first time in a year since 1963, there was an improvement in coal production—109 million tons. During the first nine weeks of 1980–81, there has been a 5 per cent. increase on even the good performance of 1979. Attendance figures in the pits are showing new records, and the same applies to safety matters.

The Secretary of State says that the Opposition must be out of touch with the industry in view of the theme of the amendment. If anyone is out of touch with the industry, it must be him, because the amendment is in line with the feelings of the National Union of Mineworkers. In phasing out grants and in trying to put the NCB in a break-even position by 1983–84, the financial targets will be impossible to achieve. The time for achievement is too short. In addition, I remind the House that coal stocks, distributed and undistributed, are 2 million tons more this year. They now stand at 29 million tons. Despite the extra coal won, there were 2 million tons more coal on the ground than there was last year.

The fear throughout the mining industry is that as a result of the Bill there will be an acceleration of pit closures. I remind the Secretary of State that mining areas are like families. When one gets hurt, everyone feels it. Therefore, after what the industry went through in the 1950s and 1960s, there is a fear that the same thing will happen again.

The phasing out of regional grants may not appear important to the Secretary of State, but we are members of the EEC, and who can say that by depriving the NCB of regional grants, in the not-too-distant future areas such as my own Northumberland and Durham, and South Wales in particular, will not be debarred from receiving European grants because the Secretary has phased them out in his own national Government?

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

That is nothing to do with it.

Mr. Grant

Feelings in South Wales are running high. An area director recently spoke about 12 pit closures that would not be subject to the review procedure. All the employees of the South Wales coalfields were up in arms, as was the National Union of Mineworkers.

Recently, Labour Members of Parliament met the Coal Traders' Association. One of its complaints was that it could not get anthracite in sufficient quantities and that it was having to import it, yet there is a desire to close anthracite pits in South Wales. The price of the anthracite that is imported by the Coal Traders' Association is more than the price that is paid for it from the National Coal Board.

If the financial structures of 1978–79 are replaced by the structures that the Secretary of State now recommends, instead of the board being in a break-even position it will face a loss of about £79 million, but to meet the targets that the Secretary of State is setting it will have to show a profit of £216 million. These attempts to put the board in such financial strictures can only breed unrest, and they will affect morale and output. I warn the Secretary of State that if he thinks that the National Union of Mine-workers will step aside and allow pit closures to accelerate because of these policies, he is mistaken.

The EEC recently agreed that there was a need to double coal production. The world coal study group, which consists of 16 major industrialised countries, recently said that there was a need to treble coal production by the year 2000, and that steel production should be increased 10 to 15-fold by that year. That is interesting, but, as a member of the EEC, we should consider the financial year 1978–79. In that year France subsidised its coal industry to the tune of £14 a tonne. West Germany subsidised its coal industry to the tune of £12 a tonne, and the United Kingdom subsidised its industry by £1 a tonne, and I understand that the figures for France and West Germany were surpassed last year. I should have thought that in these difficult times, and looking to the future, the Government would seek to stimulate and expand coal production, and that morale in the rnining industry would be important to them.

In answer to a parliamentary question on 21 April from the hon. Member for Bedford (Mr. Skeet) on coal bum, the Under-Secretary of State said : In 1979 United Kingdom power station coal burn was about 89 million tonnes … and could lie between 65 and 78 million tonnes in 2000."—[Official Report, 21 April 1980 ; Vol. 982, c 30.] Where does the "Plan for Coal" fit into those figures? I should have thought that the Government would seek to expand the coal industry, not contract it. I hope that the Government are not relying on bridging the energy gap by a rapid expansion of nuclear energy. The public would not stand for a rapid increase in nuclear power stations. Proposals to build a nuclear power station in my area will be met with stiff opposition from everyone.

The Secretary of State said that miners would not be affected by the ramifications of the Social Security (No. 2) Bill. While miners might be affected only by having to pay income tax according to individual cases, the National Coal Board will have to pay the social security and unemployment benefits. That applies to early retirement payments, the redundancy scheme and the sickness and pneumoconiosis schemes. Although the cost has not been accurately estimated, the board has said it will probably be about £50 million.

I have expressed my fears about the Bill, but I welcome parts of it. I welcome the increased borrowing powers that are given to the National Coal Board, the provision for deferred interest loans, the increase of contributions to the pneumoconiosis scheme, and the inclusion of coke oven and coke plant workers in the miners redundancy scheme.

Bearing in mind the political upheaval in the Middle East and the escalating world oil prices, and in the interests of the British mining industry and the British economy, I ask the Government to consider a number of matters. The industry's planning must be based on clear production targets, and the financial framework that is required to achieve those targets must embrace continuing Government support, at least until the completion of the "Plan for Coal" is in line with general EEC practice. The research and development efforts aimed at securing new markets must be greatly increased, with a clear Government commitment to the use of new technology and unambiguous support for the construction of the proposed liquefaction and gasification plants. Medium-term coal supplies or sales must be safeguarded by the introduction of effective controls of coal imports and by the construction of new coal burning plants.

What I have said will probably not change the vote in the event of a three-line Whip tonight, but I hope that the words of Labour Members, who are seriously concerned about the industry, will be considered in Committee.

6.38 pm

Mr. Jocelyn Cadbury (Birmingham, Northfield)

I am glad that the hon. Member for Morpeth (Mr. Grant) shares my optimism about morale in the coal industry, but I cannot agree with his view of the Bill.

I shall speak in support of the Bill, but first I should like to say a few words about the importance of coal in the United Kingdom energy strategy. Coal occupies a fundamental position in supplying Britain's energy needs, and we are fortunate in having about 300 years' reserves. By contrast, our brief period of self-sufficiency in oil is likely to come to an end by about the turn of the century, and we shall no longer be able to rely on the OPEC countries to fill the energy gap.

Although the Government have rightly put new life into our nuclear industry, that is a long-term development and we are unlikely to be producing more than 20 or 25 per cent. of our electricity from nuclear power by the year 2000. Therefore, we are assured of a reliable supply of coal. At the same time demand for coal is certain to become stronger as we progress through the remainder of the century and as the price differential between oil and coal continues to widen.

At present about 80 per cent. of our electricity is generated from coal-fired stations. Current projections indicate that the consumption of coal by power stations will grow in the 1990s. Sales of coal to the industrial market are likely to increase substantially by the end of the century. That trend will be encouraged by new developments such as the fluidised bed combustion system. Before I came to this place I was fortunate enough to work in a factory which was, I believe, the first plant to install such a system. That was a chocolate factory. Nevertheless, it was in the forefront of technology in that respect.

I do not share the scepticism of my hon. Friend the Member for New Forest (Mr. McNair-Wilson) about the applications that coal has for producing petrochemical products. With the price of naphtha following the increased price of oil, there is no doubt that coal will become, and is becoming, an attractive feedstock for the chemical industry.

As oil supplies begin to decrease, it will become economic and essential to begin to produce oil synthetically from coal. The South Africans already do that on a large scale. The Coal Board is currently working on a project to develop the production of oil from coal at the Point of Ayr colliery.

With all these developments ahead, the demand for coal can only become stronger. It is true that the coal industry has suffered some setbacks in its attempt to retain its share of the coking coal market. The decision of the British Steel Corporation not to use the board's coke for its Redcar plant was a severe blow to the coal industry, which had invested a large amount in coal mining equipment in pits in the North-East. Apart from that single setback, the outlook is for an expanding coal industry with a bright future. Coal has an assured future in Britain. We have a highly successful industry. In recent years performance has been extremely encouraging. That is partly due to the fact that the investment that has already been made in "Plan for Coal" is beginning to pay off. It is also due to the bonus scheme. The output of coal has increased by almost 9 per cent. from the first quarter of 1979 to the first quarter of 1980.

Productivity schemes have succeeded in increasing productivity by about 5 per cent. from 1979 to 1980, have helped to reduce absenteeism and have reduced the number of disputes. There has not been the rise in accidents that was predicted by certain union leaders, notably by Arthur Scargill. Although it is difficult to make international comparisons, it is probably true to say that we have the most efficient deep mining coal industry in the world. It is against the background of a successful industry that we should examine the Bill.

The Bill aims to build on success, first, by increasing substantially the borrowing powers of the National Coal Board. It takes account of the fact that the industry is entering the years of peak investment under the "Plan for Coal" programme. The new borrowing powers will enable the board to invest £600 million a year, which is a real increase over preceeding years.

The fact that the Government are prepared to back the National Coal Board to that extent at a time of general financial stringency is a sign of their determination to bring "Plan for Coal" to fruition and to raise productivity in British mines to the highest possible level.

The second way in which the Bill will assist the NCB's investment plan is contained in clause 2, which enables the Secretary of State to make loans to the board through Parliament. That means that the Secretary of State can tailor the type of loan to the specific needs of the industry. That is important, because the lead times in mining are extremely long. The average time for developing a mine is about 10 years. The Selby mine will take about 14 years to reach peak production.

I have no doubt that the freedom to defer interest payments on loans will be of great assistance in easing the board's cash flow in the early stages of investment projects. It does not amount to a subsidy but it will go some way towards removing the financial straitjacket which normally has to be endured by nationalised induustries.

Thirdly, unlike Labour Members, I consider the decision in clause 5 to end regional grants to be a positive step forward to clear and honest accounting. The regional grants were never related to regional assistance. They have been used mainly for cosmetic purposes to hide deficits wherever they have occurred, It is better for the morale of both management and men if they can see clearly where losses are occurring. It is equally important if they can monitor progress towards reaching break-even and profitability. Clause 5 is an expression of confidence by the Government that progress can and will be made to end losses. The conflicting view that the Opposition appear to be taking is a policy of defeatism.

In my experience, one of the most elementary aspects of an open style of management is to provide employees in any enterprise with accurate information on how well they are performing. There is no reason why that should apply to miners any less than to workers in other industries.

It is worth re-emphasising what my right hon. Friend the Secretary of State said, namely, that regional grants have had only a marginal effect on the balance sheet. They have been paid in only two of the past five years. On each occasion they represented only 2½ per cent. of turnover.

I turn to the fourth and most important aspect of the Bill to which I wish to refer, namely the overall financial strategy that my right hon. Friend has adopted for the coal industry. It is the switch from targets of output to targets of profitability that is at the heart of the Bill, and I welcome the change. I support the plan to break even by 1983–84, for three main reasons.

My first reason is that profitability is the single best measure of efficiency in any industry. It is a better yardstick than output alone. Secondly, I am convinced that subsidies perpetuate inefficiency. They do that mainly because they undermine the determination of management and men to improve performance. Employees prefer to work in a successful enterprise and in one that is capable of standing on its own feet. The Bill demonstrates the Government's belief that the National Coal Board can achieve self-sufficiency. That must be good for the men working in the industry.

Thirdly, by 1984 "Plan for Coal" will have been in operation for 10 years. It should by then have reached fruition. By that time the industry should have developed a solid base of well-equipped high productivity mines. Labour Members should ask themselves whether the public are not entitled to expect the industry to have achieved break-even after such enormous investment.

There is understandable concern about the implications of pit closures in terms of the 1983–84 break-even target, but I believe that there is a difference between the well-tried consultative approach that the NCB has developed in recent years when it has closed pits, and what I call the monolithic top-down approach of the British Steel Corporation. The latter approach was unfortunate. It is one reason why the BSC has had industrial relations problems. The board has been wiser and more sensible in its approach. It also is important to take into account that although some pits are closing down, new pits are being developed in Yorkshire, Nottinghamshire and Leicestershire.

The mining industry is dynamic, like any other industry. Old pits must die, but the difference between now and the 1930s, and indeed the 1950s and 1960s, is that new, highly productive pits and faces are being developed, albeit in different areas. It should be remembered that the post-war running down of the coal industry took place under both Labour and Conservative Governments. Indeed, the Labour Governments of 1964 to 1970 saw the loss of 200,000 jobs, and 249 pits were closed.

Mr. Albert Roberts (Normanton)

I heard a similar speech made in 1954 in this Chamber when the then Minister for Fuel was Geoffrey Lloyd. He painted a golden horizon for the future of the mining industry. Three years later, coal was being stocked at 10s. a ton.

Mr. Cadbury

I thank the hon. Gentleman for his contribution. This has not been so much a party matter. Both parties in the past have been responsible for closing pits. My point is that we are now making progress and actually going forward. That is what the Bill is all about.

My last point relates to transfer payments. It is obviously right, in view of the changing pattern of the industry and the fact that pits are closing in some areas and opening in others, that we should give the maximum assistance to miners to make moves. The Bill not only maintains the level of transfer payments, but makes them more flexible. A particular improvement which I welcome is that people who have already left the industry through redundancy may qualify for a grant if they resume mining in another area. This seems to me to be both socially desirable and an effective way of attracting skilled personnel back into the industry.

I bellieve that the Bill is an expression of optimism and confidence in the future of the coal industry. Surely it is time to throw off the gloom of the 1930s and to look forward to a prosperous, highly productive coal industry that will play a fundamental role in meeting our energy needs in future centuries.

6.53 pm

Mr. A. J. Beith (Berwick-upon-Tweed)

The optimism of the Government and some of their supporters about the Bill belies the fact that its presentation has brought to a head a great deal of anxiety in the coal industry. There is feeling that the policy behind it means unrealistic targets and accelerated pit closures which will be irreversible.

Even the good features of the Bill—and there are useful parts of it—cannot take away the impression that has been created that the Government have embarked upon a course of action that will increase difficulties in the industry, by the unrealistic nature of the targets, and will bring about closures for which we shall pay a high price when we try to increase the production of coal. This is against a background of very good management in the industry, of excellent improvements in productivity at the coalface and, as many Members point out, a generally improved state of confidence and morale throughout coal mining. Some of it has been achieved with the aid of measures which this Bill will weaken or get rid of.

My hon. Friend the Member for Colne Valley (Mr. Wainwright) has drawn attention to pits in his constituency which are at the margin of profitability but which will be shown to be much more profitable in future years as they are affected by rising prices of oil. The NCB in my own constituency has so far confounded the critics who have suggested that collieries like Shilbottle and Whittle have no future by increasingly investing in them and developing them as one unit, and showing that they see a future for them. Many of those areas, like the one in my constituency where the National Coal Board is a major employer, are areas where there is no alternative employment and no realistic way in which the jobs provided by the industry can be replaced.

It is hard to see in this Bill any guarantee against situations developing in some parts of the coal industry which will be all too much like Consett. One has only to look at the situation in a steel town like Consett to realise what will happen in some of our mining areas if we become involved in another pit closure programme.

I am bound to be worried, given the hostility that my hon. Friends and I have to the scale of the Government's nuclear energy programme, that their attitude towards nuclear power colours their attitude to the coal industry. I feel that they do not want to see the energy gap filled by coal to the extent that we believe it can be.

It is inevitable that, when the Central Electricity Generating Board wants to place a nuclear power station in the middle of the Northumberland coalfield, people in the industry and outside it should see that as an insult to the prospects and potential of coal in electricity power generation.

I share the hostility expressed by the hon. Member for Morpeth (Mr. Grant) to the Druridge Bay nuclear power station proposal, standing as it does in an area of extensive deep mining, an area which has also borne a considerable amount of the burden of opencast mining, and looks like doing so in years to come.

The international competitors of this country are clearly ready to make substantial subventions to their coal industries on a scale which we are not even able to contemplate or which has even been suggested in this debate. The Government should listen to the voices from all sides in this debate which say it is unrealistic to take away forms of aid which seek to shelter the industry through an important transition period, when it has shown itself prepared to make good use of the benefits which it may receive.

I echo what the hon. Member for New Forest (Mr. McNair-Wilson) said when he pointed out how extraordinary it is that successive Governments, while not giving sufficient encouragement to the coal industry, have at the same time cut its throat by hitting its domestic markets very hard in the matter of the household use of coal. They have destroyed much of the coal industry's domestic markets and put council tenants in houses which they cannot afford to heat and which are not satisfactorily ventilated. The sooner we make sure that we build houses heated by solid fuel and undo some of the damage that has been done by converting all-electric houses, the better. By bringing solid fuel back to these properties, as certainly one of my own local authorities is trying to do, we shall do good both for the industry and for the tenant.

I refer to a point which the Government seem rather annoyed and irritated should have been raised in the debate at all. It is the effect of another piece of legislation regarding the early retirement scheme. There is bound to be irritation expressed because a great deal of uncertainty has been created, initially for the men working in the industry, latterly for the industry itself, and for the NCB, by the Government's apparent total confusion on the matter.

I tabled a question on 22 April to ask what would be the effect of the Social Security (No. 2) Bill and its proposals to abate unemployment benefit on the early retirement scheme. The Minister said that he would let me have a reply as soon as possible. That took until 15 May, when the Minister said that there would indeed be an abatement of unemployment benefit for retired miners, and that officials from the Department of Health and Social Security had been in touch with officials from the Department of Energy about this and other matters.

I tabled another question in June on the same subject which was answered on 12 June—answered by the hon. Member for Croydon, Central (Mr. Moore), who I presume is to reply—asking what discussions had taken place with the NCB and whether it was envisaged that the scheme would be continued in such a way that the income of miners taking early retirement was maintained. The hon. Gentleman replied that consideration of the relationship of the Social Security (No. 2) Bill to the early retirement scheme was "at an early stage". That was in June after the Bill has gone through this House and is now well through the other place.

Is it surprising that both the NCB and miners should be extremely concerned that a matter of considerable importance and on which another piece of legislation has such a profound effect should be of so little urgency to the Government that, after months of inquiry from many hon. Members in questions and correspondence, they say that matters are still "at an early stage"? They can still give no clear indication of how they are to maintain the scheme.

Mr. J. D. Concannon (Mansfield)

It is as well to stress that when this was brought up in the Social Security (No. 2) Bill the Minister at the Dispatch Box "passed the buck" back to the Minister in the Department of Energy. Total confusion has reigned, bringing confusion to the coalfields and to the miners themselves.

Mr. Beith

I very much agree with the right hon. Gentleman. Not only should we be anxious about that point, but we are bound to view with some scepticism the introduction of further new measures for miners who leave the industry early or who have to travel to other areas if we have such a lack of confidence in the ability of the Government to maintain such schemes through the various legislative adventures in which they become involved.

If this is to be the experience, and if early retirement is to be a model for some of the other schemes, the Government must face the situation more squarely. We cannot fool about with people who have spent a lifetime underground in the mining industry and say to them "Here is a scheme under which you will be able to retire early. You will be guaranteed benefits" and then allow them to spend months in considerable uncertainty, not being sure whether those benefiits will be continued, and, if so, how.

If people are to be encouraged to take advantage of the various schemes and the successors to them, matters must be managed a great deal better than this. This is no way to treat the industry or those who work in it. It is hardly surprising that this and other factors undermine confidence in the Government's intentions. The mining industry has great opportunities. It has shown by the efforts of its workers and management that it is pepared to take them, and it deserves a better Government attitude than this.

7 pm

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

The hon. Member for Berwick-upon-Tweed (Mr. Beith) is wrong when he indicates that nuclear stations are an insult to the coal industry. After all, the CEGB stations use 70 per cent. coal. There is no way of producing cheap electricity from expensive coal.

Mention was made of the £1 tonne subsidy in the United Kingdom compared with the high figures in Europe. Let us be perfectly consistent about this. The production of coal in Belgium is only 6.4 million tonnes ; in France it is 18.5 million tonnes; in Germany it is 95 million tonnes, compared with our 120 million tonnes. Let us get the figures in the right order. It is true that we have the cheapest coal in the EEC, but British coal is one of the most expensive in the international coal market. Let us be absolutely clear about that.

Reference was made to the WOCOL report. I am afraid that more coal for power stations, in EEC terminology, means more South African, Australian and Polish coal. Even if projects were carried through, it is doubtful whether a subsidy of £6.35 per tonne would be enough to enable British coal to succeed.

The Minister said that the phasing out of coal grants would put coal output at risk. Let me make this perfectly clear. In my judgment, markets determine targets—not vice versa. Clause 6 could be one of the greatest advantages to the coal industry. The elimination of uneconomic pits through exhaustion and closure is certainly the key to the future prosperity of the board. It is in that connection that clause 6 become so relevant.

Properly managed, the productivity of the industry could be transformed, resulting in a more favourable cost structure. The actions of the NUM on the scene is not reassuring. After all, if a target has been established—whether it be 135 million tonnes, 170 million tonnes or 200 million tonnes by the year 2000—it depends upon what the mines will produce. If we take the OMS of the new mines in 1978–79, these work out at 4.80 tonnes. If we take the figures planned on completion of the new mines, this is over 10 tonnes per man shift.

Let us deal with one or two of the facts to which I hope the Minister will refer. On the basis of 44 cwt per man shift, there are only four mines out of 38 in South Wales that qualify. In South Wales in 1979 there was a loss of £18.9 million. Only two mines out of 30 in the North-East would qualify. Area loss was £20 million in 1979. Only two mines out of 19 in Scotland qualify. There was a loss of 12.2 million tonnes. There are only seven mines out of 22 in the western area that qualify. The area loss in 1979 was 24.8 million tonnes.

Do not the Opposition realise that if there is a higher rate of productivity at Selby, the Vale of Belvoir or in new mines in which there is high productivity, the unit costs will come down? The mines will be more profitable and more people will be employed. It is as easy as that.

Mr. Allen McKay (Penistone) rose——

Mr. Skeet

I am sorry. My speech falls within the 10-minute band. I should be delighted to deal with the hon. Gentleman on a future occasion, but I am afraid that Mr. Deputy Speaker will rule me out of order.

The inability of Governments to tackle this problem has dogged the industry for years. Admittedly the colliery review procedure exists, but even though declining mines have been identified, little has so far been achieved. The mines closed in 1979 accounted for only 1.8 million tonnes. In fact, since the Coal Industry Act 1977—the last Act to deal with this industry—15 collieries have been closed, 12 due to exhaustion of reserves, two, at Granville and Hylton, due to insurmountable geological difficulties, and one at Blaenavon because of safety requirements. Those closures affected the jobs of 6,000 miners, two thirds of whom were redeployed in the industry. Therefore, the National Coal Board's record does not appear to be unreasonable.

Due to the difficulties of the BSC, a further six to 12 collieries—nine producing coking coal—employing about 8,000 miners may have to close. That is in Wales. However, uneconomic performance over an extended period of years does not fall within the accepted closure criteria.

The Tymawr-Lewis-Merthyr mine in the Rhondda Valley has no possibility of substantially improving production, due to its high cost structure over a considerable time. Its demise would seem, in my judgment, to be warranted. Much will have to be achieved if the National Coal Board is to be rendered viable. Surely it is here that the miners can see their future—not in maintaining forever unprofitable pits. Why can they not see their future based on trying to make the industry more profitable? That is the purpose of the Bill.

I shall devote my remaining remarks to operational and social grants. Between 1973–74 and 1980–81—that is, a period of eight years—operational grants averaged £64 million per annum, including the deficit grants. However, if one compares them with social grants, one sees that the operational grants were much more modest. As I understand it, at the moment there is no question that the social grants will be abated in any way. In 1973–74 to 1980–81—that is, again, eight years—the social grants averaged £96 million per annum, including the regional grants. They are made up of social costs—redundancy payments, travel and removal expenses, subsidised housing—regional grants, pneumoconiosis compensation, Government contributions to the mine-workers' pension fund and the redundant mineworkers' payments scheme.

This is the point that I want to make to the House. Three specific items—the staff superannuation scheme, which is carried by the National Coal Board, the mineworkers' pension fund and the redundant mineworkers' payments scheme—together cost the Government £52 million per annum and the National Coal Board £50.8 million. All three are so constituted that they will continue to grow with time. The staff superannuation scheme imposes a considerable burden on the National Coal Board and demonstrates the folly of index-linked pension schemes in times of high inflation. It is only by moving to a pay-as-you-go system that savings will be made. Pension schemes represent the largest charge against revenue after wages and materials.

According to a report in the Financial Times on 24 July 1979, the National Coal Board paid to some 254,000 former miners and their widows a total of £328 million, including National Health Service contributions. The National Coal Board is paying more former than present employees. Heavy contributions payable by the board to cover deficiency payments in the staff superannuation scheme figure at about £20 million per annum and will be advancing. Surely, if economies have to be made, might not the board consider moving on to a pay-as-you-go scheme?

The mineworkers' pension scheme provides a better example. The Government contribute to the deficiency in respect of pre-1975 pensioners. In 1978–79 the Government contributed £36 million, and the National Coal Board contributed £30.8 million. That makes a total of £66 million. On 1 September 1978, 252,843 members contributed £47 million. However, the National Coal Board and the State both contributed. In standing contributions, the National Coal Board provided £45.42 million. The contributions of the National Coal Board and the Government to the deficiency of the fund totalled £65.98 million. That totals £111.40 million. I therefore conclude that for every £1 that members contribute, the National Coal Board and the Government contribute £2.3. The National Coal Board can ease its financial problems by changing the way in which it finances its employees' pensions. Present arrangements devour capital at a rate that the board cannot afford.

Finally, I wish to deal with the redundant mineworkers' payments scheme. There is an order before the House. The scheme is funded by the Government, and in 1979–80 they were committed to spending £16 million. Due to the improvement in lump sum payments, that amount will rise to £26 million.

I am unable to discuss the many mysteries of the Bill, due to a shortage of time. It is a good Bill, which should be encouraged. As my hon. Friend the Member for New Forest (Mr. McNair-Wilson) said, we may not have enough time to implement it. That depends on several factors. We have made a courageous start. The Selby and other fields have had to be phased forward. The scheme in the Bill may also have to be phased forward. However, it should be noted that the miners want to be free from Government control. The sooner that we can do that, the better. If a target has been established, it is right to establish that target now. We may find that we are pushed slightly off course——

Mr. Deputy Speaker

The hon. Gentleman's time has expired.

Mr. Skeet

May I conclude my sentence?

Mr. Deputy Speaker

Either there is a 10-minute rule, or there is not. I am afraid that the answer is "No".

7.12 pm

Mr. Lawrence Cunliffe (Leigh)

The National Union of Mineworkers has said that it would like to be financially independent. However, it has also said that independence must be given over a rationally phased period. The Opposition have repeatedly and clearly said that if industry is given incentives, and is allowed to use its initiative, it will create the type of financial conditions that all parties would welcome.

Sometimes, planning and intervention are necessary. Indeed, every industry occasionally finds that planning or intervention is imperative. I congratulate the hon. Member for New Forest (Mr. McNair-Wilson) on his remarks. He said that the mining industry involved an act of faith. He envisaged a more realistic approach, and had more vision and foresight than the Secretary of State for Energy. The Secretary of State said that the Bill represented an expression of confidence. However, at the same time he has imposed financial restrictions. That undermines the confidence that has been built up within the industry.

It is ironic that not all parties have acclaimed the industry's magnificent performance during the past year. There has been a remarkable improvement in productivity and in the industry's ability to meet its financial objectives. There has been a reduction in the amount of absenteeism. Morale has improved and the industry's public image has improved.

Given the industry's performance over the past three months alone, I was disappointed that the Secretary of State did not congratulate both management and labour on an 8 per cent. productivity increase. Since this time last year, productivity has increased by 2.5 milion tonnes. The industry's employees would like some encouragement. It is not true that regional grants are the beefed-up finances of a particular firm. Some collieries were kept open because regional grants were made available in areas of deep depression and high unemployment. In my constituency three pits were merged into a major mining complex with the help of such grants.

Although jobs were shed, several hundred jobs were saved. That was a magnificent operation. Efficient centralisation took place, and jobs were saved. As a result, a magnificent complex now produces coal in large quantities.

The NUM does not relish certain parts of the Bill. The financial restrictions have stimulated anger and resentment among the miners. Given the long history of Conservative Governments, they understandably suspect that the Government have ulterior motives when presenting such Bills. Some—perhaps a minority—have said that clauses 1 and 2 mean that the Bill is not so much a coal Bill as a colliery closure Bill. I hope that the Minister will reassure the miners that that is not so. However, I am not convinced that the Government's intentions are honourable.

It may be claimed that 80 per cent. of the Bill is good. Indeed, that has been said not only by miners' representatives, but also by the president of the NUM. However, miners believe that certain irresponsible and irreconcilable parts of the Bill place the industry in a financial strait-jacket. That is ironic, because the industry is viable and can meet its produc- tivity targets. The Government's policy is a crazy form of monetarism. Even Milton Friedman would not advocate financial interference when an industry was performing well. Last year there was a certain amount of industrial recession. In the next few years, there will be a still greater recession. The mining industry and the board will not find it easy to reach their financial target. Certain factors are outside their control.

If the Minister wants an expression of faith, and if he wishes to inspire confidence in the industry, he must introduce other measures. Like other hon. Members, he knows that there is unfair foreign competition. Energy subsidies are being given. What will the Government do to stop such unfair trading? Miners feel extremely aggrieved about such subsidies. We cannot always argue that we should keep a stiff upper lip and fight by the Queensberry rules while our competitors take advantage of us. I hope that the Minister will comment on that.

The Yorkshire Post printed an excellent article in a special report on world energy. The Secretary of State showed a certain amount of indifference and lethargy when he was asked whether Britain would face the energy challenge. He said : Britain faces failure in its bid to beat the energy problem if everyone relies on the Government We on this side of the House would accept that without any scruples if that is the kind of attitude that is developing. The Minister went on : Britain's salvation will come from ingenuity and enterprise, but there is nothing very bold or imaginative about the financial restrictions in the Bill. In fact, the opposite is the case. The restrictions will discourage the board from reaching its financial objectives.

The Minister then said : If we look to Government planning, people will be disappointed. That is a crazy comment. It amounts to the fact that the Government will not give leadership and will not take the initiative on these issues. They want to opt out of the general economic policies. The question must arise whether the Government are prepared to intervene at all.

We have discussed the closure of collieries. I take the line taken by Herr Guido Brunner, the EEC Commissioner, who is no friend of the Labour Party. He states quite specifically that Europe will need more coal and therefore we should avoid closing mines. He suggests that we must switch immediately from oil-fired electricity generators to coal-fired generators. He points out that it is often more expensive to close a mine and then reopen it than to keep it running for some time, apparently at a loss. As oil becomes increasingly more expensive, marginally profitable mines and even unprofitable ones will become profitable. That is the line that we should take. That is what the Minister should be saying to the mining industry today to give it encouragement.

There is a great future for coal mining in this country and it is up to the Labour Party to expose the Government's indifference and platitudes, and to challenge them to express confidence by much more positive action. I hope they will agree to amend the Bill which takes away initiative from the board and makes it subject to market mechanisms so that it cannot possibly reach its target within the period set down in the measure. That was made clear by the hon. Member for New Forest. It is rather peculiar that we have had more sense, realism and vision from the Back Benchers in this debate than we have had from the Secretary of State.

7.23 pm

Mr. John Hannam (Exeter)

I join the hon. Member for Leigh (Mr. Cunliffe) in his first remark, if not the latter part of his speech, when he congratulated the coal industry on its recent wonderful productivity record. I recall my right hon. Friend the Secretary of State having expressly congratulated the coal industry in his opening speech. I do not know why the hon. Member failed to hear that.

Having taken part in all the coal debates since the early 1970s, and having experienced all the frustrations of supporting an industry which never seemed to be able to escape the shackles and the bonds of Government and political interference, I now welcome the Government's declaration of confidence in the future of coal, which is inherent in this Bill.

Over the years I have argued for higher investment in new plant and pits plus a great deal more research into new technologies. I was also involved with hon. Members on both sides of the House in the campaign for the pre-1970 widows pneumoconiosis compensation and I am extremely pleased that the Government have agreed a lump sum payment scheme which brings the coal industry widows into line with the slate workers' widows. I also welcome the improved redundancy payments and the inclusion of coke workers in the scheme.

I return to the whole question of confidence in the future of coal. I underline my right hon. Friend's comments about the basic optimism now pervading the world about the future of coal, although I recognise the short-term problems. Consumption of coal in the world needs to triple by the year 2000, and the international steam coal trade needs to increase by as much as 15 times if the world is to achieve even fairly moderate economic growth. That is the forecast of the WOCOL coal study which has just been completed by 80 experts from 16 major coal countries. Also, the EEC Council of Ministers' report, which has just been presented, shows the same kind of optimism for coal in the future. That report forecasts a doubling of coal consumption in Europe by the year 2000 and a production increase of nearly 60 million tonnes—coming mainly from British and German coalfields.

Coal consumption in the Community increased last year by 6 per cent. Most went on power generation and steel coking plants. The opportunities for our United Kingdom industry look assured in the medium and longer term with the Community looking to us to provide the major part of that 60 million tonnes increase in production. It looks to us to provide 46.4 million tonnes by the year 2000.

The Commission goes on to state that in order to achieve these worthwhile targets for production and consumption, substantial capital investment will be required, as will good wages, attractive working conditions and the closure of uneconomic pits. The Commission therefore recognises that there must be continuing closures of uneconomic pits. I fully accept the argument, often deployed within the industry, that as energy prices rise so the economic marginality of pits will change. That happens in the oil industry or any other extractive industry. From my experience of the NCB, it takes due account of that factor before putting forward any proposals for closures.

Having said that I strongly take issue with those Labour Members and members of the NUM who resist every attempt to close pits, regardless of the losses being made or the conditions of work in the older pits. When one considers that the average age of our pits is around 80 years, and only 13 per cent. of our national output comes from pits sunk since the Second World War, and that more than half of the pits currently in use were sunk before 1914, one realises that in the interests of the miners themselves and the industry as a whole we should ensure the carefully linked approach of new investment and the phasing out of old uneconomic pits.

When the 1973 oil price crisis hit us it became obvious that the rundown of the coal industry in the 1960s had to be reversed. The then Conservative Industry Minister, Mr. Tom Boardman, whom I served as Parliamentary Private Secretary, set up the "Plan for Coal" strategy which was adopted in 1974. This strategy will produce results in terms of increased output in years to come. Already in the pipeline since that "Plan for Coal" was initiated, are four new mines and 119 projects at existing collieries. That was the figure at March 1979. That adds up to 33 million tonnes of new capacity. Together with the four new planning applications in the pipeline for Leicestershire and Staffordshire, this will provide all the 42 million tonnes of new and replacement capacity which was envisaged in the original "Plan for Coal". We are very near to achieving the targets laid down.

I welcome this opportunity to congratulate Mr Boardman on his Birthday Honours List elevation to the peerage. His knowledge and experience will be of great value in another place.

In the context of the Bill I reject the accusation that the Government are embarking upon a programme of pit closures. That accusation has been made during the progress of every coal Bill since the 1970s. I understand the historic feelings arising from the 1960s when the industry was run down and when, under a Labour Government, 249 pits closed and 200,000 jobs were lost. I can understand the background fears of Labour Members that their Government might do it again. But that is certainly not the case under this Government or under the provisions of this Bill. For years our strategy has been the sensible use of investment and efficiency, creating good pay and productivity and a competitively priced commodity.

I believe that, in the context of rapidly expanding world consumption of coal in the next 50 years, there should be no fear of contraction. The coal industry has the opportunity to regain its pride of place as our number one energy industry.

European coal markets will appear, as French and Belgian mines contract. Although, temporarily, there will be cheap coal from Australia and other parts of the world, if we continue to improve our productivity and quality, the price and quality advantages of British coal will reassert themselves. World oil reserves are running out, but United Kingdom coal reserves can give us about 300 years of supply. I contend that the coal industry is set on an exciting path. The Government are right to expect the industry to set its sights at becoming financially viable in a few years.

However, there has to be flexibility in the timing of that objective. The right hon. Member for Plymouth, Devonport (Dr. Owen) appears to accept in principle the argument for profitability but is concerned about the time scale, as was my hon. Friend the Member for New Forest (Mr. McNair-Wilson). If I have a reservation about the Bill, it is that, given the difficulties of world recession, it may not be possible for the board to break even by 1983–84. However, that proviso applies to all current industrial planning. If the economy experiences a worse recession, lasting longer than we expect, the board must have extra time to achieve its financial objectives. I am sure that the Government will build that flexibility into the programme.

We are facing a period of coal expansion, where the gap between coal and oil prices is widening and not contracting. It is, therefore, welcome for the Government to place faith in the ability of the miners and the industry. This morning, on the radio, Sir Derek Ezra clearly refuted the Opposition's allegations. He stated : Our position on the closure of pits is very clear and will not be changed by this Bill". The editorial in the Financial Times yesterday got it all wrong.

Mr. Skinner

Sir Derek Ezra is a Tory.

Mr. Hannam

It appears that anyone other than Mr. Scargill is a Conservative in the opinion of the hon. Member for Bolsover (Mr. Skinner).

The article in the Financial Times con tained three errors. First, it stated that The Government were eliminating subsidies of £255 million in three years. How ever, that figure includes social grants, which are continuing. The second error is that the article stated that the Bill was in advance of the "Plan for Coal" improvement in output. That is incorrect. Although the new pits in Leicestershire and Stafford are subject to intensive planning inquiries, the bulk of "Plan for Coal" improvements have already started at the 119 older pits. Thirdly, the argument in the editorial that we are about to replace unfair——

Mr. Deputy Speaker

Order. The hon. Gentleman's time has, unfortunately, expired.

Mr. Hannam

I should like to support the Bill.

7.33 pm

Mr. Michael Welsh (Don Valley)

As has been said, it is the timing in the Bill that is wrong. In Committee that factor must be given serious consideration. A break-even time between 1986 and 1990 may have been sufficiently flexible.

I oppose the Bill as it stands. It concerns investment and the future of the mining industry. Investment and grants are the life blood of the mining industry. The mining industry is the life-blood of our country. It will be more so towards the end of the century. An efficient mining industry is vital to Britain's future. With that in mind, the Bill leaves much to be desired.

The Government appear to want to move from grants to loans. That is strange. In a letter to Commissioner Brunner on 4 October 1979, the Minister stated that we should go beyond the proposals and : provide aid for all forms of production investment and do so by way of grant. He went on : I have in mind a scheme for grants totalling 250 million EUAs a year. We would get the biggest share, because we would be the biggest producer.

The effects of the proposals in the Bill could be disastrous for the mining industry. Switching from grants to loans to finance the NCB's deficit in a period of heavy capital spending could have serious effects on the industry. The NCB has been carrying out a major development programme, involving annual capital expenditure of between £500 million and £600 million, in order to meet the coal output targets that Governments have set. Increased borrowing would tremendously increase interest charges. That is why it is not possible to break even in a short time. A borrowing increase of £1,000 million would increase interest charges by £150 million.

The loss of grants and increased interest charges would cause large accounting losses. The Minister wants below-the-line losses. He could then say "Here is a nationalised industry that cannot pay for itself." I hope that I am wrong, but that seems to be the Minister's reasoning. Those large accounting losses could be reduced only by large scale closures of unprofitable pits. As a result we should lose irreplaceable carbon fuel reserves and create unemployment in areas that already have high unemployment ; for example, Wales and Scotland.

There is only one shaft in this country—all the shafts put together. Closing one pit reduces overall shaft capacity. However efficient the other pits are, without that shaft capacity production cannot be increased. Productivity can be increased but not production.

Closing pits may give rise to industrial trouble. Yorkshire is a moderate area. I am a Back Bencher and do not have much power. However, if pits are closed in Yorkshire, Yorkshire will take on the Government. We will strike. That resolution is on the books at Barnsley. If the Government throw down the gauntlet, we shall accept it and do battle. The miners will no longer tolerate being industrial gipsies. They want a good life where they are. They are willing to work hard and produce coal. It is the Government's job to see that investment is at hand so that they have the tools to do the job. If pits are closed, unit costs increase to pay for the total investment. That is frequently not taken into account.

In fairness to the NCB, it made a request for public dividend shares as half of its borrowing requirement. That was rejected by the Government. The extension of the use of grants to cover deficits, as well as other specified items, is of little value. The aggregate grants are due to be held up until 1982–83 at a figure below current annual levels. They will be no good to the industry.

It seems strange that the country that produces the cheapest coal in Europe should be faced with such a Bill. Figures have been bandied about, but the figures that I have for 1978 show that we produced coal at £24 per tonne and that it cost West Germany £40 per tonne. Direct and indirect aid to our industry totalled £1.40 per tonne and Germany was receiving £32 per tonne in such aid. It is said that we may have to close pits, even though we are producing the cheapest coal in Europe. The EEC said in October that we must increase production and maintain subsidies for the industry. The Bill does othe opposite to what our EEC colleagues want the Government to do.

The Bill is already out of date. Hon. Members have commented on the other disciplines of the Government that put extra burdens on the NCB before the Bill was produced. The Social Security (No. 2) Bill will add another £100 million to the NCB's burden before this Bill becomes law. I received a letter on 15 May from the Department of Health and Social Security saying that the cost to the NCB would increase and that the matter would have to be discussed by the Secretary of State and the board.

Another important factor is that the Secretary of State for the Environment has stopped virtually all council house building. We were hoping that councils would provide houses for miners in areas where new pits are being developed. But no money is to be provided for such house building and that is another discipline which interferes with the Bill. The NCB will have to pay for its own houses. The mining industry has no wish to be dependent on the Government or anyone else, but we believe that we should be treated on equal terms with our colleagues in the EEC coal industries. That is the least that we deserve.

Unless there is some liberal thinking by the Secretary of State in Committee, the Bill will be a recipe for unrest throughout the coalfields of Great Britain. I do not desire that and the miners do not desire that. Let us hope that the right hon. Gentleman will change his mind in Committee so that we can bring forward a Bill that is acceptable to the mining fraternity and to the House.

7.43 pm

Mr. John H. Osborn (Sheffield, Hallam)

May I first make it clear that I support the Bill and respect the judgment of my right hon. Friend the Secretary of State on how fast to go forward? Much of the debate has been concerned with whether we are going forward fast enough or too fast. I wish to make one or two comments in looking to the future and I hope that they will not be too critical.

I should like my hon. Friend the Under-Secretary who is to reply to the debate to bear in mind that our relationship with the EEC and the way in which it can help is all-important. I congratulate my hon. Friend on having gone round the pits, certainly in the area near which I live, and gained the respect of those who manage and work in the pits. He knows what advice to give to the Secretary of State.

Like the hon. Member for Don Valley (Mr. Welsh), I come from South Yorkshire, though in deference to the hon. Gentleman I should say that I come from Sheffield where there have been many closures because coal has run out. That is one of the main difficulties that would face any Government.

I have been in a position over the past 25 or 30 years to employ miners' sons who had no intention of going into the mining industry, but I am glad that the image of the industry is improving, particularly in the new pits that provide security for the future. The risks in mining compare with those of workers in the North Sea. I have many friends who work on oil rigs where the life is particularly challenging.

Though I speak from a European point of view, because of my current work in the Council of Europe and my previous membership of the European Parliament, I was in Washington last week when I discussed with those interested in energy some projections for doubling and trebling the extraction of coal, the shipment of that coal to ports which are, as has already been pointed out, congested and the opportunities not only for exports, but for supplying the Eastern seaboard from the Middle West.

I was also involved with the American Academy of Sciences over the impact of the water table on mining. My information is that the activity in Australia and South Africa is equally vigorous and I regret that such a vigorous atmosphere in the world is in contrast to the measure before us, which is a Bill of the old type.

I accept that the NCB's borrowing powers must be increased, but I should like the coal industry not to have to turn to the Government for any more money, but to finance its activities from other sources. That point came out when the right hon. Member for Plymouth Devon-port (Dr. Owen) regretted some of the financial restrictions placed on the board.

There is another aspect that I should like my hon. Friend the Under-Secretary to bear in mind. Earlier this month, I attended a meeting of the Western European Union where I pointed out that in the Community we were interested in the security of supply of food, materials and energy. The most economical source of supply is not necessarily the most secure. I mean that in the economic, rather than the defence or military, sense. In a confrontation, North Sea oil would be vulnerable. If we can supply energy from our own resources, the Community will be stronger. It already imports 55 per cent. of its energy through imported oil and that figure could rise to 75 per cent. after enlargement.

Of course, if the cheapest source does not give security of supply, we should look to where supplies are secure. In the coal projections with which I was concerned some time ago—namely 300 million tonnes per annum for the Community—about 50 million tonnes would have been imported. Who would supply that requirement? My previous speech in the House was in the debate on the appointment of the new chairman of the British Steel Corporation. His former company, AMAX, includes mining coal among its many activities, including mining scarce minerals.

Many of the oil companies in America and elsewhere in the world are extracting oil, gas and coal and are even supplying nuclear power. That free enterprise coal, provided by public companies, whether from America, Australia or elsewhere, could be coming into this country at two-thirds of our pithead price. Our industry would face that sort of competition.

About 10 years ago the NCB needed a Bill such as that before us to obtain money to go into North Sea oil. What a pity that one or two of our coalfields were not sold to oil companies so that they could deal in coal as well as in oil, bringing both industries to the United Kingdom.

I found in the United States a vigorous approach to making the best of what is now a seller's market. I hope that the NCB will take advantage of the opportunity, will extract itself from the clutches of any Government and will gain the independence of its overseas competitors.

There has been reference to subsidies. As time is short, I do not wish to dwell on this matter for too long. German and French coal is much more expensive than British coal. Despite big subsidies, British coal is still in a most competitive position. I hope that the Minister will make an observation on the coking subsidy which is a matter which concerns the steel industry.

When the Danish electricity industry is looking for coal, it wants the cheapest—Polish, American or Australian. It denies itself to some considerable extent the opportunity of obtaining coal from nearer at hand, namely Great Britain. This is a strong bargaining point that the Minister could produce in his talks with Commissioner Guido Brunner. The aim of the common agricultural policy was to give Europe independence in food. This country is the biggest importer. The concept of a common energy policy would give Europe greater security, and independence in energy. Germany imports 35 to 38 per cent. of its natural gas from the Soviet Union. Would it not be better if there was a premium on that imported gas, as there should be a premium on imported coal from other sources?

This country has a card that we can play from a position of strength in the Community. I hope that this will be borne in mind. We have a commodity that others want to buy. I hope we take advantage of that situation.

We are talking of production of 170 to 200 million tons of coal by the turn of the century. There is the opportunity of liquid fuels from coal. Reference has been made to the fluidised bed. One of the key experiments was in conjunction with the United States of America. I talked last week to the chairman of the Congressional science and technology committee, Mr. Don Fuka who came to Grimethorpe, Sheffield, to see the first international energy agency project on fluidised bed combustion, involving American, Japanese and European money.

We have the opportunities in Yorkshire, in the Selby field, to reach higher rates of output and higher productivity. The question arises whether one can expect greater automation and mechanisation in the pits and reduced manpower. There are still those who have reservations about going underground. What has not yet been considered is the possibility of exploiting some of the fields under the North Sea. They involve high cost and difficult access. There is even the possibility of underground gasification, although I have my reservations whether even if it is technically possible, it is commercially possible.

I welcome the fact that the Secretary of State has looked forward. Whatever the Bill's limitations the House must make possible the opportunity for the National Coal Board to stumble towards independence. Hon. Members must decide in Committee whether the pace is too fast or too slow. I look forward to the day when the board is more independent. I hope that my right hon. Friend understands the reasons.

7.54 pm

Mr. Frank Haynes (Ashfield)

It is a privilege to be speaking in a most important debate on the coal industry. Many hon. Members on the Opposition side had a pick and shovel in their hands many years ago, but also they have been pioneers of mechanisation in the pits. They were prepared to accept automated machines at the coalface. That was unsuccessful. The machines had to be taken out.

Government Members have mentioned the question of change. The miners are in the forefront of accepting change. They will endeavour, in many ways, to improve their lot and to play their part in improving the economy.

Many parts of the Bill are acceptable. There are, however, certain clauses that are totally unacceptable. I should like to pay a compliment to the Under-Secretary of State for the visits he has paid to the industry. He has visited my county of Nottinghamshire. Praise has been poured upon him for coming to see the problems and how he can help. I applaud his action. That is his job. I cannot, however, accept his support for the Bill. The miners stick together. They will protect one another. They will protect themselves against this Bill.

Belvoir and Selby have been mentioned. Those pits will not come on stream for 10 years. When the production stage is reached, very few employees will be involved compared with the number now employed in mines.

I served for 30 years in the pits. There are eight pits in my constituency. Some of them are in difficulty. One pit is closing at this moment. The decision aroused opposition. A carrot was dangled by the National Coal Board. The same carrot is now dangled in this Chamber in an attempt to persuade people to transfer to different pits. The carrot dangled is money. The Secretary of State should be aware that many people working in the mining industry in my constituency are sick to death of moving from pit to pit. Some have been involved in four or five moves. They do not want any more.

The mining industry can produce the coal that is necessary. Management and representatives of the NUM meet regularly to discuss problems at pit level and to see how difficulties can be overcome in the interests of mining coal. The difficulty is that management continually says that equipment cannot be replaced. There are constant breakdowns but equipment cannot be replaced due to financial considerations. Production is lost. This problem will no doubt be known to the Under-Secretary of State as a result of his visits.

I liken the Bill to the Secretary of State for Industry when he put forward his proposals for the steel industry. I liken it, too, to some of the comments made by Ministers, including the Prime Minister in the House. Their approach is to say "If it does not pay, close it."

The Secretary of State, in introducing the Bill, has painted a glorified picture. Many hon. Members have spoken of confidence in the industry. There is a lot of confidence in the industry, from management down to the last man in the pit. The results prove it. I fear, however, that with the introduction of the Bill the NUM membership has got the message. Its members will stand firm. They will not accept pit closures. They have gone through this before. There have been demonstrations, but they have not gone to the lengths that they would have liked. I am afraid that they will do so on this occasion. I warn the Secretary of State that in Committee he must listen carefully to the Opposition on the clause relating to pit closures. He has admitted that there will be pit closures in the new scheme of things. Ghost towns will be created in the mining districts.

The NCB can often soak up labour from closed pits. Not long ago a notice board was established at the end of each pit lane advertising jobs. The boards are no longer there. The NCB has its full complement of manpower. Where will the men be transferred to?

Hon. Members have mentioned shaft capacity. Many of my hon. Friends know what mining is about because they have worked in the industry. Once 100 per cent. capacity is reached, that is it. It cannot be increased further unless a shaft is made larger. That takes time and money. We must be sensible and think through what we are doing.

I welcome many parts of the Bill which are in the interests of the economy and those who work in the industry. However, a couple of clauses are totally unacceptable. Our amendment has been criticised. I am convinced that the Government will get the message loud and clear from the people who work in the industry.

I was amazed that the Secretary of State should mention only the National Coal Board, as if there were no trade union movement in the industry. Not once did he mention the National Union of Mineworkers or the National Association of Colliery Overmen, Deputies and Shot-firers. The members of those unions will take the brunt of the proposals in the Bill. I hope that the Government will in the interests of sanity change their mind and withdraw the unacceptable clauses. It would be insane to ruin an industry on which the nation's economy is based.

Reference has been made to nuclear energy. Some of us are frightened to death by the way in which some Conservatives in the sticks are talking about nuclear energy. We are not ready for that yet. We must make a lot more pro gress on safety. The Government have not convinced people——

Mr. Deputy Speaker

Order. The hon. Gentleman's time has expired.

8.5 pm

Sir Anthony Meyer (Flint, West)

I welcome the Bill, as have hon. Members on both sides, with minor reservations. In spite of the weasel words of the Opposition's amendment, it is evidence of the Government's determination to support the coal industry, as have recent Governments of both parties. The industry is the one incontrovertible basis for optimism about the country's future. As my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) said, it is one sphere in which the country can take a lead in formulating an effective European energy policy. I hope that we shall move towards establishing a common energy policy.

Unlike my hon. Friends the Members for New Forest (Mr. McNair-Wilson) and for Bedford (Mr. Skeet), I have no expertise in these matters, but there is a coal mine in my constituency—the Point of Ayr—to which my hon. Friend the Member for Birmingham, Northfield (Mr. Cadbury) referred. I do not suppose that anybody there votes for me, but there are few places in my constituency that I visit with more pleasure.

The workers there have a splendid record of productivity, industrial discipline and output. They speak in glowing terms of the Under-Secretary of State, who made an excellent impression on his recent visit. He impressed the workers with his unshakeable faith in the coal industry. The prospects for that colliery are bright. A promising new seam is being worked which stretches under the Dee Estuary. The new experimental plant is situated there, and ultimately the new production plant for deriving oil from coal will be placed there. My constituents are grateful for the decision to site the two plants there.

In some ways the coal industry is unlike the steel industry, with which I have also been involved to some extent. Like steel, coal is internationally competitive. Unlike steel production, there can be no argument about the vital need to maintain a high level of coal production. There is room for argument about how long basic steel making can be maintained in Britain except for purely strategic reasons, but there is no room for any such argument about the coal industry. Whatever the advances of technology, there will be need for coal for decades or centuries.

Coal is more like water than steel. It is free, but one must pay for one's bucket. The problem is how to get the stuff out of the ground. That is one of the reasons why I am unhappy about proposals for new opencast coal mining. An application is being considered in the delightful village of Northop, which will be completely wrecked if the application for opencast mining is accepted. I have opposed the application on environmental grounds and on the ground that every new opencast operation diminishes the pressure on the Government to invest in the real stuff—the coal underground—and to provide incentives to the miners. Opencast coal is easily won by contractors using great earth-moving equipment. Deep mined coal requires an investment in men. We neglect that investment at our peril.

How do we best handle the courageous, cussed men with their awkwardly long memories, particularly of grievances? In spite of talk about the Government not having an incomes policy, they necessarily operate an incomes policy in the public sector. They are nervous because of the ability of the National Union of Mineworkers to win large wage increases by flexing its industrial muscle. I am not sure that it is either wise or credible to threaten coal miners with the consequences of market forces. Coal miners suspect, with some justice, that the laws of economics may be suspended in their case, as they have been suspended before. I believe that in this area, perhaps uniquely, the Government would do well to demonstrate a degree of faith in the good will of the men who carry out this dangerous and vital occupation.

Of course there must be a limit to the extent to which the taxpayer can meet demands for wage increases that are unmatched by production and the extent to which uneconomic mines can be kept open, but I feel strongly that with this industry the Government would be too wise to err in the direction of faith rather than in the direction of careful calculation. I derive confidence from the presence of my hon. Friend on the Front Bench, and I look forward keenly to his reply.

8.10 pm

Dr. Roger Thomas (Carmarthen)

Unlike my hon. Friend the Member for Ashfield (Mr. Haynes) I have only one large anthracite colliery in my constituency. However there are many square miles of rural West Wales that have been desecrated by opencast mining and by a mean reluctance to rehabilitate large parts of the countryside.

I wish in particular to speak to clauses 7 and 8 of the Bill which I feel, if amended, could modestly and moderately be transformed into totally worthy and humanitarian measures.

It appears from what the Secretary of State said at the opening of the debate that efforts will be made to eliminate the considerable anomalies that still affect many who, for technical and other rather petty reasons, have hitherto been disqualified and found themselves outside compensation schemes.

Within closely knit communities, as in the mining valleys, those who fall outside certain arrangements are naturally aggrieved and great discontent is aroused. Even with the Minister's reassurances all is not well or satisfactory. The advent of formidable antibiotic and anti-tubercular drugs, and the vigorous treatment of the other cardio-respiratory complications of dust disease of the lungs—such as pnemoconiosis, with its conversion of healthy lung tissue into large fibrotic coal-laden masses—has meant that those disabled by the effects of working underground survive far longer than they did before.

This means that they are now able to develop intercurrent conditions affecting other organs of the body. They are now quite likely, in the meantime, to develop heart circulation insufficiency and coronary disease just as they are as likely as anybody else to develop carcinoma in varous organs of the body. But it has to be realised that when such misfortunes need and demand surgical treatment the prognosis of a successful outcome to surgery is grossly diminished in a person whose heart and lungs, as well as his general resistance, have been weakened by years in the dust-laden bowels of the earth.

I have to say, sadly and not without considerable bitterness, having looked after men—comparatively young men—breathless to the point of having no real or positive existence, gradually going downhill despite all our medical supportive measures, that when these long-suffering people the they are found, at autopsy, to have developed an intercurrent cardiac or carcinomatous condition. In such cases, however much pathological evidence there is of the progressive effects of dust disease, the cause of death is, primarily, placed upon the comparatively new and newly discovered condition.

The man's dependants are then denied all monetary compensation. A bitter wrangle develops, and sometimes these battles take on an unsavoury character. Far too little emphasis, or recognition, is given to the evidence of those doctors who have helped the sufferer along over the years—sometimes for two or more decades—of ill health. In the 25 years I spent in the anthracite mining valleys of West Wales I have found myself upset and frustrated by medical appeal tribunals as men I knew, who gave their lives for their industry and for their country, were found to have died of a condition unconnected with the industry.

The result is that their widows and near dependants are offered miserly sums of monetary compensation even though, during their lives, these men were getting reasonable compensation for a progressive disability. Nothing causes more bitterness than for a widow, having witnessed years of progressive hell, to discover that for all that suffering she is not eligible for compensation.

We must legislate so that when dust disease is discovered during life, compensation must be automatic after death. Anything short of that is tantamount to gross injustice and is a slur upon the brave men whose prime desire, so often, is to the knowing that their widows and near dependants are cared for. If what I hope and suggest comes about the cost will be far more than what is allowed for in the Bill. However, a miserly attitude can be countered only by an intense sense of moral indignation.

We are far behind the continental mining industries in the fairness with which we treat our miners. Far too few people have any idea of the conditions that still prevail in many of our pits which are geologically difficult to work and very nearly completely worked out. The age of massive mechanisation and the total absence of hard slog has certainly not arrived in many pits in South Wales.

After 30 or 40 years' work in low seams the physical toll upon the human frame is enormous and progress towards honourable and early retirement cannot be made quickly, or generously enough. Still, we are moving in the right direction even though it must be admitted that expertise is often lost. Something far more valuable is gained, however, in that miners are now allowed to retire at an age when they are fit enough to enjoy their leisure time and their favourite pastime in the same way as the stockbroker and the City gent.

8.18 pm

Mr. Jack Dormand (Easington)

I greatly enjoyed the speech of the hon. Member for Flint, West (Sir A. Meyer), who has now left the Chamber. He spoke about his objections to opencast mining but, having heard the speeches in the debate, I would have thought that one of the things that he would mention was the fact that the Coal Board derives great profit from opencast coal mining.

I wonder what the hon. Member for Flint, West, thought of the speech of his hon. Friend the Member for Bedford (Mr. Skeet), who, with his usual knowledge, addressed the House and provided a mass of financial statistics. The hon. Gentleman reflected the Government's attitude that the principal issue—and if I may say so we heard a naive speech on these matters from the hon. Member for Birmingham, Northfield (Mr. Cadbury)—is the financial structure. I am sure that many hon. Members who have spoken will not deny that.

I had the pleasure of speaking at the Durham miners' summer school at Stirling university last week, and I can tell the Secretary of State that if he thinks that the Bill is welcomed by the mining fraternity he is in for a rude shock, not only because of the points made in the powerful speech of my right hon. Friend the Member for Plymouth, Devonport (Dr. Owen), but because of the practical experience of some of my hon. Friends.

Those who come from mining families and live in mining areas have long memories about the ups and downs of the coal industry and are entitled to be suspicious of any Tory legislation relating to the industry. I have attended every mining debate since I entered the House in 1970 and spoken in most of them, but I have not heard such a chilling speech as that by the Secretary of State. His reputation as a hawk and a monetarist is fully confirmed by the manner in which he addressed the House and the content of his speech.

The most important boost that the industry has ever received was the 1974 tripartite agreement, initiated by the then Labour Government, of which the most valuable aspect was the emphasis on investment in the industry. It was not so long ago—some Conservative Members have referred to this—that coal was regarded as a not very important commodity. It was not the "in" thing. But I have read two articles this week which describe it as black gold. That is the kind of new emphasis that is being placed on coal. The most important assurance that we could have from the Government today is that the high investment of recent years will continue. I am glad to see the Under-Secretary nodding assent.

I refer the hon. Gentleman and the Secretary of State to a report of an investigation which has been reported in the press lately from the Massachusetts Institute of Technology—perhaps one of the most highly respected academic institutions in the world—and which, among other things, said that anything from one-half to two-thirds of the increase in world energy demand should be met by coal for the rest of this century.

I refer the Minister also to the report of the Select Committee on European Communities in another place, which said : There is the prospect of a disastrous energy shortage, which will either cut back economic standards in the Community or necessitate severe conservation measures. It is thus essential that coal be developed to the maximum possible extent, and a deliberate decision to do this should be made soon, before it is too late. I have referred to those two reports because they completely contradict what was said by the Secretary of State and by Government Back Benchers about the differing emphasis on the production of coal and the financial straitjacket, which is probably the most appropriate word to be used in relation to the Bill.

The proof of the wisdom of adequate investment and a more flexible financial attitude can be seen in my area. I am sure that it applies to the rest of the country, but I know the North-East well. Production in the 29 pits in the North-East area now exceeds 2 tonnes per man shift. Indeed, my constituency had a record output of 3.26 tonnes per man shift.

I have no doubt about the difficulties that will be encountered by the board in breaking even by 1983–84. In 1979 the loss was £19.4 million. As the Secretary of State said, 1980 showed a small profit. However, to require the board to break even by 1983–84 shows a complete lack of understanding of the nature of the industry.

The House has been informed—and it is in the Bill—that there will be a single deficit grant. What will happen if the board does not break even? That point has not been mentioned by the Secretary of State. Perhaps we shall hear something about it from the Under-Secretary of State when he replies to the debate.

I could suggest what might happen. First, there is likely to be—I had better moderate my language—a row. Indeed, some of my hon. Friends have referred to this matter. I could go on about that. The main effect will be on morale. A number of hon. Members have spoken about the high morale in the industry, and I can confirm that, but this will break that morale. Therefore, I hope that the Government will have second thoughts about it.

I am concerned also that there might be too strict control of expenditure by the board. It would be reasonable for the board to do that, but what concerns me even more is that there might be a reduction in output, and that is the crucial thing that this single deficit grant might affect

I hope that we shall hear from the Under-Secretary about the assistance that European countries receive for their coal industries. My hon. Friend the Member for Morpeth (Mr. Grant) gave some figures, which I shall not repeat, but, to use an Americanism, we get peanuts for our industry.

I add my concern about the possible effect of improved redundancy and transfer payments. If the money to be paid for transfers is anything like that reported in The Guardian yesterday, those inducements will be hard to resist, because miners have an extremely difficult, hard working life.

I should like to say a few words about closures—I have had experience of a closure in my constituency within the last nine months—which might put some clothes on the statements that have been made today. Nine months ago the board proposed to close a pit in my constituency. The miners objected to the closure. All the workmen at that pit were transferred to a nearby colliery. That was a good move for the board, because it met the wishes of the union and the miners to reinvestigate the position. I am happy to report that that pit is not only working again, but is breaking records. That is the kind of thing that the Government in particular, and the board to a lesser extent, should consider. When closures are possible, we must have consultation to the enth degree before they are announced.

The Bill says nothing about one aspect of the industry that is completely underrated, under-developed, under-financed and under-discussed, namely, the development of by-products from coal and coal liquefaction in particular. I regularly write to the Under Secretary and ask him questions about that matter.

The two experimental projects in operation at Stoke Orchard, and the two pilot plants in North Wales, are inadequate. They are a measure of the Government's pusillanimous attitude towards research. There is a lack of both urgency and interest. I hope that the Government will rethink their policy and include a provision in the Bill——

Mr. Deputy Speaker

Order. The hon. Gentleman's time has expired.

8.30 pm

Mr. Allen McKay (Penistone)

I am pleased to follow my hon. Friend the Member for Easington (Mr. Dormand) because he put his finger upon a number of salient points about colliery closures. Before I became a Member of the House, I knew of a colliery that was closed as a paper exercise prior to the consultation period. It was losing a great deal of money at that time, but it is now operating efficiently and profitably and has another 20 or 30 years of life. About 14 years ago I was given the task of solving an industrial relations problem at a colliery which the Government and the NCB had decided to close. It was a task that I could only win. That colliery is now creating record after record each succeeding week.

When we talk of economic problems at a pit, I ask the question "What do you mean by economic?" If decisions are taken on the basis of a period of weeks, months, or years, a horrible mistake could be made if the colliery is closed. That decision could bring devastation to the area in which the colliery is situated.

The hon. Member for Sheffield, Hallam (Mr. Osborn) said that the oil industry should take an interest in coal. In America the oil industry is taking an interest in coal, but it happens to be Australian coal in which it is investing. For a number of years I have believed that there should be one energy industry covering oil, electricity, gas and coal. It is ridiculous that these industries are in competition with each other then they are all supplying energy to Britain.

The hon. Member for Bedford (Mr. Skeet) said that there should be a pay-as-you-go scheme for pensioners and that we should dispense with index linking. That is hardly appropriate when there are more pensioners than there are workers. There appears to be a policy that, if there is a financial problem, the best action to take is to shoot the pensioners and then the problem will be solved.

I agree with the remarks made about the Under-Secretary. He visited a number of collieries and created a good impression. He visited the colliery at Elsecar where I started work. That pit is probably coming to the evening of its life. I commenced my employment as an outbye worker, and finished it as an electrical engineer. The hon. Gentleman also visited Grimethorpe area headquarters where I worked as the manpower officer before I came to the House. I would return to the industry if, for some reason, my stay in the House was not for as long as I would wish it to be.

The Under-Secretary disappointed my union when he made arrangements to speak at a meeting but, for some reason, did not turn up. I had told a number of people that he was a good fellow, even though he was a Tory. They were disappointed that he did not come to speak to them. Now that he is taking part in the debate on a Bill which will decimate the industry, he will tarnish his reputation a little further.

I have seen the industry move from private ownership to nationalisation. In 1947 there were 958 pits with a manpower of 704,000. In 1979 there were 223 pits, with a manpower of 235,000. The 10 years between 1960 and 1970 were a vicious period. During that time we lost 400 collieries and virtually saw the end of the NCB. We saw the loss of the divisional structure of the NCB and the merger of areas. Through those turbulent years the miners held their cool and their temper, and continued to work as never before. We passed through that period with few disputes, despite the extent of the closures. The tonnage lost in disputes between 1950 and 1959 was 16 million, but during the closure period of 1960 to 1969 the loss was only 12.2 million. That demonstrates the way in which the miners co-operated with the events taking place in the industry.

I wish to say to the Secretary of State, the Under-Secretary and Conservative Members that there must be no return to the 1960s. The mood in the coalfield is that, rather than go under as we did in the 1960s, we shall fight—and we intend to fight together. Therefore, all these matters must be looked at very closely in Committee. We need a very strong coal industry. Other countries recognise that they need strong coal industries and they are increasing their national support for those industries. The House of Lords has recognised what is happening and has asked for a strengthened industry for the future.

We cannot completely oppose all the clauses in the Bill, because it allows the industry to continue to invest and it increases the transfer allowances. However, hon. Members should make no mistake about the transfer allowances. People are fed up with transferring from colliery to colliery. I have been ashamed to be interviewing people transferring from collieries as I have interviewed them on similar matters three times before, because during that period we have closed about 18 pits, transferring the men or making them redundant, offering early retirements or whatever. Therefore, I know that they have come to the end of a period, and that no longer are they willing to move around.

The Bill seems to put cash limits on the industry. We have a right to be suspicious about that. We are all agreed that the timing must be closely examined. If we are asking the industry to become viable in terms of profit in three years' time and if we are to close uneconomic pits, we must ask where the replacement coal will come from. There is no way in which we can replace the coal that we shall lose from the pits that we are closing.

We went through the period of Schuman's marvellous ABC theory, in which the C pits would close and the men would go to the B pits, which would become as profitable as the A pits. What was forgotten was that, irrespective of incentive, one can beckon a man but he can say "Sorry, mate, I ain't coming." That is exactly what could happen under this Bill. We shall be losing mining capacity.

The Bill abolishes regional grants. I accept what the Minister seemed to imply—that this will not interfere with EEC grants. But it lumps together all the grants—social, operational, CEGB burn and stocking. I understand that it will be shown in the accounts as a deficit grant. That will mean that the NCB's accounting system never shows a profit. There is nothing worse to put in the face of miners, when they are trying their best, as they have done for a considerable time, than the thought that they are not paying their way.

There are items outside the NCB's control which must be considered. There is the economy as a whole. The CEGB, like other bodies, is subject to monetary policies and will not be stocking the amount of coal that it used to stock. Therefore, the stocking cost will fall on the NCB. Inflation and high interest rates will also affect the NCB. Therefore, if we tie the NCB to these cash limits, in order to meet the Government's measures it will have only three choices. The first is higher productivity. But how one achieves that I do not know, because during the last 10 years 83 per cent, of coal output has been mechanised. How does one increase that mechanisation? There must be a breakthrough into another sphere if we are to increase the amount of coal produced.

Therefore, one looks at price increases. If one increases the price, one gives a further twist to the inflationary spiral, and it only helps to bring in more imports. Therefore, one falls back on the third choice—the closure of uneconomic pits. That closure will fall very heavily on Wales and Scotland.

I am fortunate in that I am probably living in an area which is viable, after a very large investment programme, and it looks as though it is set for the next 25 years. However, as has been said, what affects one pit will affect all, particularly with a programme such as this. Each man will look to his colleagues and will support them when they are in trouble. Therefore, if the Government think that they can get away with it as they did in the 1960s, they had better think again.

We must also take into account the provision for the early retirement scheme that has been included in the Social Security (No. 2) Bill. In answer to a written question on 29 April the Minister said : The consequences of the proposed changes are complex, and their effect on a number of coal industry schemes is still being studied."—[Official Report, 28 April 1980; Vol. 983, col. 350.] The miners are worried about what will happen to their pension and redundancy schemes. One of the steel holders in my constituency is already telling shop stewards that he is having to reduce his pension scheme contributions in order to make up for the loss in earnings-related supplement that is no longer being paid——

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. I am sorry to interrupt the hon. Gentleman, but he has spoken for 10 minutes.

8.41 pm

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

I shall not attempt to cover ground that has been adequately covered by my hon. Friend the Member for Penistone (Mr. McKay), and I hope that the Government will take my remarks in an advisory capacity rather than as a threat or a warning.

The Bill is causing great concern throughout the mining industry. I welcome the speech of the hon. Member for New Forest (Mr. McNair-Wilson) which was informative and realistic, and I hope that the Government will take note of it. I also welcome the remarks of the Secretary of State. He paid tribute to the mining industry and said that he had confidence in the management and workers. I particularly welcome that, because 18 months ago, when I made my maiden speech, I had cause to refer to a speech made by the right hon. and learned Member for Surrey, East (Sir G. Howe), who is now Chancellor of the Exchequer, in which he referred to the miners' bonus scheme as bogus. The remarks of the Secretary of State today have put paid to that notion.

The main concept of the Bill is obviously the two-year break-even period. I do not believe that any hon. Member—including Ministers—really believes that the National Coal Board can break even within that short period. That being so, we are forced to turn our thoughts to the Government's motives. Surely, if we believe that it is not realistic to expect the industry to break even over that period, there must be a motive behind the Government's proposal.

There are other aspects of the Bill that concern me. It gives the National Coal Board the right to defer interest payments from inoperative pits such as those at Selby. I believe that the pits at Selby should become operative and that they could be beneficial if the arrangements were administered by a Labour Government. I am not convinced about the flexibility of the present Tory Government. They have not stated any period of time during which the interest payments can be expected to be made. It would be interesting to know the effect on one year's operations. Perhaps the Minister can give some information on that. The Bill does not allow the National Coal Board to borrow public dividend capital. It requires it to take out a national loan over 15 years. Why? If we bear in mind that the National Coal Board saved £6.1 million last year by borrowing in other areas, we can appreciate the concern of the board about the provisions of the Bill.

The Bill abolishes parliamentary power to make regional grants, but if the Bill does not allow regional grants we can hardly expect the EEC to allow them. The Bill lumps the present grants together. It seeks to replace the present system of two grants, described as the social grant and the operational grant, with a deficit grant. I can envisage headlines each year stating that the National Coal Board has made a further loss. If it is the Government's intention that the industry must break even and go on to make a profit, there will be pressure on the NCB to increase its prices or to close pits. One of the main fears of the mining industry is pit closures.

I was pessimistic about the Bill before the debate began. I became depressed when listening to the Secretary of State. I could see the ghost of the steel industry staring the mining industry in the face. If that is what the Government are holding before us, they will be well advised to rethink their policy.

Those in the mining industry are becoming fed up with the Government's policies. I have had first-hand experience in the industry over many years. It was my duty to move in immediately a colliery was designated for closure. I spent years in the areas of the Scottish and Durham coalfields. I saw the effect on families who had lived in the one village all their lives. They had to decide whether to leave their village to move across the country. Everyone must accept that a coal mine must close when it is exhausted. However, it is a different cup of tea when the decision is based on economics and the mine is not exhausted.

There is a feeling in some sections of the industry that the Bill has been introduced in an attempt to limit the so-called muscle of the National Union of Mine-workers. It is considered to be politically doctrinaire. It is thought that the Government are attempting to run down the mining industry and to restrict its industrial power.

I assure the House that rank and file mining workers are responsible men. They support democratically elected Governments as much as anyone else. They will fight to preserve those Governments. However, democratically elected Governments must not deceive them. If that happens—I do not want to use the language of strikes—the miners will be annoyed. They will fight to preserve their standard of living and the industry in which they work.

I comment briefly on two articles that I noticed in the press. The Minister may refer to them when he replies. The first article appeared in the Financial Times and is headed : What to do with coal". Part of it states : 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 break-even target. It will either have to accelerate the closure of uneconomic pits or to raise prices. The Minister may care to comment on another article that appeared in the same paper which is headed Private stake in £1 billion North Sea pipeline planned". It says : Private capital may also eventually be invited into the whole or part of the National Coal Board's interests. The Minister will probably be prepared to refer to that.

Giving a friendly word of warning in conclusion, I quote an experience I had 40 years ago in the coal mine. An elderly gentleman was picking coal off the face with a pick. In those days there was no mechanisation. It was an hour's walk to the coalface and an hour back. On this particular day the under-manager arrived in what we called "the hole". The old gentleman was wiping the sweat from his body at 12.25 pm. The under-manager arrived and asked him what he was doing. The old gentleman replied : "I have just come out five minutes early to wipe myself down." The under-manager said "It is 12.20, not 12.25. This is a true story and not a gimmick. The old gentleman took his watch from his pocket, put it on the ground and trampled on it, breaking it—to my amazement as a young man of 15, and to the amazement of the under-manager. His words to the under-manager were "I do that to everything that tells me a lie."

Let that be a warning to the Government if they are lying in this.

8.53 pm

Dr. David Clark (South Shields)

After listening to the lucid and compassionate speech by my hon. Friend the Member for Carmarthen (Dr. Thomas)—a speech based upon his experiences in the anthracite valleys of South-West Wales—and contrasting it with the sterile and monetarist speech by the Secretary of State—and I am sorry that he is not here to deal with what I have to say—I am once more convinced of the Tightness of the Socialist cause. They exemplify the differing approaches of the two sides of this House, not only to the Bill, but to all industry and to all life.

As I listened to my hon. Friend the Member for Carmarthen, I thought about a compatriot of previous years, Nye Bevan, who described this country as one "built on coal, surrounded by fish", and added that even an economist could not deny that. When I contemplate what the EEC has done about fishing to confound Nye Bevan's comment, I wonder whether this Government, by the introduction of this Bill, will in the long term help to confound Nye Bevan's comment relating to coal.

I do not want to be churlish. I welcome various parts of the Bill, but I come back to the main thrust of our opposition to the Bill. Our main disagreement is that it replaces the time-honoured production targets by purely financial targets. As has been said repeatedly, there is extreme concern about the 1983–84 breakeven point. It is easy to set break-even points, but it is extremely difficult when one cannot take account of the other variables involved.

We see what is happening to our regions. Much has been said about Wales and its problems. I come from the North of England. One in five of the men in my constituency is without a job—as I shall never tire of telling this House until the situation improves. I become very annoyed when I hear people talking about financial targets, realising that the main employers in my constituency are mining, shipbuilding and local government.

I am surprised that Government supporters are not more concerned about statements made by such moderate people as Joe Gormley, who was quoted in the "Miner" recently as saying that the Bill threatened the morale and output of the coal industry. There are few industries in which the co-operation of the labour force is as vital as it is in the coal industry. We are threatening to damage the industry at a time when we should be expanding it. We are doing this at a time when the world coal study has recommended and predicted an expansion in the use of coal—I am sure that that day will come—and at the very time when we should be co-ordinating our research and spending more effort and money on all aspects of mining techniques to enable us to mine further under the sea.

The pit in my constituency goes out about five miles under the sea, which causes problems, as the Minister is aware. We need a vast amount of money with which to research the particular technology of mining, let alone the other technologies of gasification and liquefaction, which have been mentioned in the debate.

I want to deal briefly with the short-term aspects. It has been estimated that if the world coal study is right, the demand for coal and the shipment of coal will be such that another 1,000 ships of roughly 100,000 tonnes dead weight must be built. The Minister will understand my interest in this matter. Thanks to the controversial Polish deal, we still have a viable shipbuilding industry in this country. If the philosophy advanced by the Government Front Bench today had been applied to the shipbuilding industry five years ago, there would not have been a shipbuilding industry today. That is why many of us are sceptical about financial constraints and ties.

If one foresees the ripple effects on the demand for ships and steel, one can forecast the requirement for the skills of the boilermakers. We still have these skills in the traditional regions, and we can do the job as well as the workers in any other country. We are all anxious that the coal industry should not be allowed to decline.

We are concerned about what is in the Bill and about the way in which its provisions may be applied. When I heard the Secretary of State introduce the Bill, all my fears were confirmed. We are dealing with a Government who are hooked on a monetarist policy, which, to me is patently wrong. We are dealing with an industry which is a bridge to the future and which has a future. I know that the Minister will agree. However, the future will not be easy, especially in the next few years. It seems to me that the Bill fails because it creates doubts and uncertainty. Furthermore, it threatens the output and the morale of the miners in the pits.

When history passes judgment, this Government and this Bill will have been found wanting. The Government are trying to measure our future energy demands, not by what is needed on a long-term basis, but by short-term monetarist financial constraints, purely to satisfy an economic theory advanced by Professor Friedman and accepted, hook, line and sinker, by the Government.

8.59 pm

Mr. Alec Woodall (Hemsworth)

Even at this late stage I welcome the opportunity to speak in this important debate. The Government have heard a lot of advice and threats about clauses 4 and 5. Hon. Members are concerned about making the industry viable by 1983–84. Last year, the national executive committee of the NUM presented a pay demand to the National Coal Board. In response, the board opened its books. Those books showed the full financial implications of the demand, and the amount of money that would be available to meet it. When the numbers had been worked out quickly on calculators, it showed that the board's response was equivalent to 2 per cent. My hon. Friend the Member for Easington (Mr. Dormand) earlier used an Americanism, and said that that was "peanuts". Whatever wage demand the NUM may put forward in 1983–84, there will not be enough money in the kitty with which to meet it.

Mention has been made of the financial problems that will face the board. That is why the NUM is worried. There will be serious trouble. The NUM does not want that. It would rather have a system whereby reasonable demands can be put forward in expectation of a reasonable response. After the steel strike, we know that at a time of inflation, 2 per cent. is peanuts. It is not acceptable. My hon. Friend the Member for Penistone (Mr. McKay) spoke about the financial aspect which the National Coal Board and other people could not see. The board will soon face that problem.

In Yorkshire there is a serious problem of colliery waste disposal. As the Minister must know, the three county councils in Yorkshire and Humberside county council, have joined together to devise a scheme to help the National Coal Board with colliery waste disposal. Unfortunately, the scheme—which was launched a year ago—was costed at £180 million. The scheme would have prevented the National Coal Board from taking 80 acres of good Yorkshire land every year for colliery dirt. Where will that money come from? If that sum is put on the National Coal Board's shoulders it will only add to its problems. I beg the Government to reconsider that problem.

Reference has been made to our membership of the EEC, and of its attitude to energy and coal. I have an EEC background report, dated 30 April 1980. It states: Community production costs are well above world prices, and would not find markets without various aid to producers and consumers through forms of national subsidy. Although the EEC accepts that we are the prime energy producer in the Community, we have turned our back on the EEC and refused to subsidise the coal industry. The Government should wake up and realise that the coal industry will not be viable in 1983–84, and that there will be insufficient money in the kitty to carry out the necessary development of new fields and pits. What type of response can the NUM make if it puts forward a responsible claim and is offered a paltry 2 per cent.? It must be borne in mind that the industry will have to meet the effects of inflation. An inspired guess might be that inflation will be down to 15 or 16 per cent, by next year.

If the Government have not got the steel industry's message, they should have done. The same position will face the coal industry. The Government know what that means. We do not want trouble. The miners do not want trouble. We want a fair reward for our efforts. Last year, the Labour Government said that they would not give a blank cheque, and that the board could go into deficit financing in order to give miners a reasonable reward for their efforts. The productivity bonus scheme was put into action. Everyone heaps praise on the industry for its high output, productivity and reasonableness.

I warn the Government that if, when the miners make their demand after the conference which will be held in two weeks' time, they receive an offer of 2 per cent., boy, there will be trouble, and a lot of it. I urge the Government to think hard, and then think again. There are many hidden costs which the Coal Board will have to meet, and the less money there is in the kitty the more trouble there will be from the miners over their wage demands. I beg the Government to think again on this matter.

9.5 pm

Mr. Alex Eadie (Midlothian)

I am very glad that my hon. Friend the Member for Hemsworth (Mr. Woodall) managed, by his endurance, to speak in the debate. I am sure that the whole House welcomed the fact that by his diligence he was able to get the opportunity to speak.

The Government will be well aware that the unions have welcomed the provision in the Bill dealing with investment and social costs. It was reported in the last issue of the "Miner" that there was mounting anger about other provisions in the Bill.

There seems to be a general consensus developing in the House, judging by the contributions that have been made—there can be no doubt that everyone wishes the industry well—because there is great concern about the scale and time scale of financial viability. It is becoming obvious that the Government have got it wrong. Therefore, I wish to concentrate my remarks on this matter and to develop the argument. The House of Commons is about argument and discussion and if a Bill goes into Committee, the Government must be prepared to listen, however dogmatic they may appear to be at times.

We certainly welcome the fact that the Bill contains a commitment to carry on with the investment in the industry. It would have been the height of folly for any Government not to have done that. In fact, it would have been utterly irresponsible. I believe that the Government know the progress that the industry has made this year.

I wish to put on the record some of the industry's achievements this year. They have been referred to in the debate, but only in a sketchy way. Not enough has been said to the country about the progress that has been made. The amount of deep-mined coal is up by 3.8 million tonnes, to a total of 109 million tonnes. This is the first increase over a previous year since 1963. The productivity of all mine workers is up by 1.5 per cent. and in the last three months it has been 4 per cent. higher, making overall output per man shift 2.27 tonnes. There was record-breaking productivity at the coalface—more than 9 tonnes per man shift since last November. Attendance at work improved by an average of six shifts per man over the year. One million more man shifts were worked. There were 29 fatal accidents, compared with 72 in 1978–79 and there were slightly fewer serious reportable accidents. Recruitment improved by 6,000 and manpower wastage—those leaving the industry for all reasons—fell by about 1,700, despite 7,700 mine workers choosing to take early retirement.

I wanted to put those facts on the record because to some extent they are essential to my argument. We achieved that result because of the Labour Government's strategy of pouring investment into the industry and reversing the trend of a couple of decades.

The object was to create a new modern technological industry from the old industry. To use the language of the miner, miners were not prepared to break their backs to wrest mother nature's treasures from the bowels of the earth. When I was in the pits, and at various meetings, I said that it was the fairy tale of fairy tales to suggest that hard work never killed anyone. That is generally said by those who have never done a hard day's work. The cemeteries surrounding mining villages refute that remark.

Miners and their leaders have put up with much abuse during the past six years from those who thought that the new investment should have instantly paid off. The industry was starved of investment and the morale of miners was badly undermined. Coal production cannot be turned on and off like a tap. When morale has been sapped for years, it cannot instantly be built up. Those factors are central to our criticism of the Bill.

The Bill's philosophy and final intention should be considered. My hon. Friends have made it clear what they think of them. Two aspects are important. First, I am sorry to say that it is difficult to avoid the conclusion that there is a change in the main thrust of the Government's energy policy. Nuclear power is taking greater precedence. That industry will not have the same financial constraints imposed on it as the coal industry under this Bill.

Secondly, the Bill reeks of the dogma of market forces. The proposal to attain financial viability within three years is ill conceived. Some Opposition Members have even expressed serious doubts about the philosophy. The grants to the industry will cease after three years, with the exception of social grants. That approach is entirely wrong. It is far too inflexible. The board's market or technical ability to implement "Plan for Coal" or even "Plan 2000" is irrelevant. Planning constraints are the problem.

The Vale of Belvoir inquiry took about six months and has just been completed. The decision is not yet public. The inquiry has cost the NCB about £1½ million in planning consultancy and legal fees.

I am sure that hon. Members have seen reports of the inquiry. I understand that the Duke of Rutland has amended his decision to lie down in front of the bulldozers if they enter the site. It was reported in the press that the Duke has said, though I do not know on what authority, that if coal is mined in the area he and his ancestors will come back to haunt us.

If the Government persist in their policy of extinguishing grants, two substantial consequences will result and the House must consider them seriously. The first is pit closures. If the NCB does not achieve its target within three years, while it is shackled by cash limits, it will be told—if it needs telling—to have an accelerated programme of pit closures. That is a serious step for any Government to contemplate.

The second consequence flows from the first. The Government will be pursuing a policy of reducing coal production. Hon. Members have stressed the need to stabilise coal production and for the industry to produce coal for the nation. If the Bill is implemented, we shall be talking not about a replacement policy but about a pit closure policy.

It is an act of sheer vandalism to reduce coal production when all the coal-producing nations of the world are calling for increased production. It is against the national interest to make the people of these islands more vulnerable in energy provision. We know that the parts of the world where most of the energy is produced are tortured by so much political uncertainty.

It is significant that, though the Government talk about financial viability, their policies are piling costs on the industry. My right hon. Friend the Member for Plymouth, Devonport, (Dr. Owen) analysed the situation facing the NCB. About £50 million has been piled on the NCB because of the general economic situation.

Mr. Skeet

Will the hon. Gentleman give way?

Mr. Eadie

No. I have too much to say.

A further £35 million has been piled on as a consequence of the NCB having to deal with the question of sales and the British Steel Corporation.

Mr. Skeet

Will the hon. Gentleman give way?

Mr. Deputy Speaker

Order. The hon. Member for Bedford (Mr. Skeet) has heard the hon. Member for Midlothian (Mr. Eadie) say that he is not giving way.

Mr. Eadie

Some hon. Members looked a little sceptical when one of my hon. Friends said that the NCB has calculated that there will be an increase of about 14 per cent, in its costs. My right hon. Friend the Member for Devonport said that the board was lucky if it was getting away with an increase of 17 per cent. My right hon. Friend also pointed out another significant aspect of Government policy. Every percentage point on the rate of inflation costs the NCB about £12 million. The Government talk about financial viability, but they are piling further costs on the industry. Interest, even if prices in 1978–79 were level, will be £295 million in 1981–82, £240 million in 1980–81 and £183 million in 1979–80. Government policies are piling costs on to the industry. Some of the calculations that have gone into the Bill indicate that Government thinking on finance has become out of date since the publication of the Bill. I hope that the Minister will say whether the costs that we have outlined are accurate or inaccurate.

The Bill seems to be in the hands of accountants because accountancy runs through it. I wonder, incidentally, how much coal was produced by the accountants who drafted the proposals. There is a proposal in the Bill for the National Coal Board to write the records in the annual report differently. I hope that the Minister has not acted before receiving parliamentary approval. The Bill still has to undergo parliamentary scrutiny. I should like an undertaking from the Minister that until he receives parliamentary approval this proposal will not be implemented.

We understand that the grants, in the compilation of the board's reports, will come under the heading of deficit financing. However well the industry performs, its balance sheet will continue to show a loss. One can imagine the holiday that the media will have when the balance sheet and annual report of the National Coal Board are published. I can already see the headlines. This will have a shattering effect on morale in the industry. However well the miner performs, the industry, according to the balance sheet, will continue to be shown in deficit. I wonder whether the Government have considered the damage that will be done to our standing overseas when the headline "British coal industry in the red" appears.

In his opening speech, the Secretary of State paid proper tribute to the expertise of British mining engineers. Their reputation is world-wide. If, however, the accounts are to be published in the manner that the Government intend under the Bill, what will happen to the £200 million worth of exports on which we depend? What will happen to the people working in these industries who depend on those exports? The Government have got the matter wrong. Great damage will be caused to the industry.

Mr. Eggar rose——

Mr. Eadie

I am sorry; I am not giving way.

I should like to ask the Minister about coal imports. The Under-Secretary of State, who will be winding up the debate, has said about imported coal : We cannot necessarily rely on the long-term continued availability and low price of imported coal. We in Britain are not alone in taking this line. As recent International Energy Agency studies have shown, the potential importance of coal is increasingly recognised everywhere. The Opposition could not have put the matter any better. That statement does not pursue the logic of the Bill or what we are told is happening. Perhaps the Minister, in his winding-up speech, will give some information about coal imports.

We read in the press that the Central Electricity Generating Board is planning to increase coal imports and that it has received Government sanction to do so. Has the South of Scotland board received a similar green light? The House and the industry are entitled to that information. It is central to the Government's case.

What about the agreement on coking coal? An agreement involving 900,000 tonnes of coking coal expires at the end of the year. That is relevant to South Wales. What did the Minister mean when he referred to defending imports?

The debate is not only about the well-being of the coal industry; it is also the well-being of the nation. Energy is a life-giver to the nation. Without it we die. The contraction of the coal industry has repercussions outside the industry. In the last financial year the National Coal Board spent more than £1,000 million on goods and services. The board has a "Buy British" policy which other industries should have. Almost all the NCB's spending took place in Britain.

The board spends money in Britain on shaft sinking plant hire, haulage ropes, supports, machinery, electrical goods, locomotives, transformers, ventilation plants and all types of general services. That expenditure provides work and wages for people outside the industry. Other industries depend on coal for their livelihoods.

Successive Governments have made promises to miners and have failed to keep them. The miners have suffered enough. It is time to call a halt to anything that smacks of uncertainty. The nation was brainwashed into believing that coal was a redundant fuel. Because of that propaganda, many people still believe that to be so.

I do not know who drafted the Bill, but I have a feeling that some of the same hands were involved. They compiled a brief to me when I went to the Department of Energy in 1974. They said that coal would never be a viable proposition. I described the men of yesteryear as the undertakers. That description fits them today.

The Government said that they wanted to unite the nation. If the Bill remains unchanged, it will create conflict. That view is endorsed by my hon. Friends. The miners and their leaders have said that they will stand and fight against any contraction of the industry. Not only do the miners and their leaders voice anxiety about the Bill's implications, but the Bill has not had a good press. The Scotsman, which by no stretch of the imagination can be described as a friend of the miners, said : The coal industry, consequently, is a prime example of the risks that Mrs. Thatcher is taking with the country's industrial heart in her unswerving pursuit of monetarist purity. We shall therefore challenge the Government in the Lobby tonight. They have got it wrong and it is my earnest wish that they appreciate that before it is too late.

9.30 pm

The Under-Secretary of State for Energy (Mr. John Moore)

Before I deal with the debate may I endorse the words of the hon. Member for Morpeth (Mr. Grant) who, quite rightly, said that we should have more full day debates on our great national coal industry? It is an industry of key importance and it is sad that it has been so many years since we had a full day's debate. I offer my thanks to those hon. Members who have been, perhaps, foolish enough to make kind references to me. I hope that they will make them at the end of this half hour.

It is difficult to respond to an outstanding debate such as this in half an hour. The debate has ranged widely over the industry and though I shall do my best I apologise in advance to those hon. Members whom I cannot answer in detail. I shall obviously get in touch with them in writing. We shall also have the opportunity to investigate points in greater detail in Committee.

Let us look briefly at the industry. The picture of the industry is not as dismal as has been painted by some hon. Members. I was pleased to hear the wise and intelligent references from both sides of the House to the strengths of the coal industry as I believe that it is a most exciting energy industry on the brink of an outstanding future.

There is much common ground throughout the House when we congratulate the coal industry, especially on its outstanding achievements of the past year. I join with all hon. Members who have voiced congratulations in thanking the men and the management on behalf of the House as I have so often done in public. This has been an outstanding year. Everyone has spoken of high production and of the crucial aspect of safety. I took the points made by the hon. Member for Carmarthen (Dr. Thomas) and shall pursue them later. He spoke of health problems in the industry, which are an important and crucial issue. Even though he was quite right to say that we must look at those problems in detail let us not forget the enormous success of the safety record of our deep mine industry.

Beyond that we should also acknowledge that, despite the steel strike and the fundamental cutback in BSC, we are already looking to 1980–81 as a year moving very much in the same direction as 1979–80. The picture for the industry is looking good. I stress that point before I endeavor to reply to the debate. With coal, our largest indigenous energy asset, it is crucial to develop a strategic fram-work for the industry.

We believe that that framework is embodied in the Bill.

I take on board many of the comments that were made about the degree to which some hon. Members believe that the framework is inflexible. Nobody in the energy world—the post-ayatollah and post-1973 world—would begin to think that the last word has been said in terms of any particular energy decisions. One cannot make such an inflexible statement. Equally, one should not look at a framework by assuming that it will fail. One should endeavour to establish a framework and recognise its potential for flexibility. All of us would, I am sure, wish our coal industry to succeed. It is important, therefore, that I tackle the points raised tonight to show why I believe them to be basically invalid in terms of the potential success of the industry. I believe that the Bill charts the final stages along the industry's path to profitability.

Before I do that I pick up one or two specific points before dealing with general matters. Specific points raised, for example, included the problems of subsidence, and I will come back to that in detail. We have recently conducted further reviews into subsidence in conjunction with the board. I hope to deal with the matter in more detail later and if I can respond to hon. Members in private I shall do so.

The point raised, rightly, by the right hon. Member for Plymouth, Devonport (Dr. Owen) at the beginning of the debate and raised also by the hon. Member for Morpeth and my hon. Friends the Member for Flint, West (Sir A. Meyer) and Birmingham, Northfield (Mr. Cadbury) concerned the question of liquefaction. Clearly, a crucial stage has been reached in national development and clearly we hope to take decisions. The hon. Member for Midlothian (Mr. Eadie) will understand that it is a matter of timing and that the decisions must be taken outside the framework of the Bill in terms of potential.

Equally in regard to Phurnacite, the right hon. Gentleman legitimately asked about the problem relating to the project in the constituency of the hon. Member for Aberdare (Mr. Evans), whose diligence on that matter I publicly acknowledge. I am still in the process of having discussions with the National Coal Board. It would be premature to make a statement now. Therefore, I hope that I may leave it at that at this stage.

Beyond that, the debate has gone around six basic areas : closures, imports, whether we are arguing about an industry with production or profitability goals, the question of deficit or regional grants, the question of the relative aid that other countries give to their coal industries and the crucial question whether the strategy is too quick and too hard. Perhaps I may address myself to those six fundamental areas and try to cover them within the time allowed.

Mr. Beith

I am sure that it would be widely appreciated—it is probably an accident on the hon. Gentleman's part not to have mentioned it—if he would refer more definitely to the early retirement scheme to which reference has been made by many hon. Members.

Mr. Moore

I draw the hon. Gentleman's attention to the specific statement made by my right hon. Friend, which I think cleared that point in toto for the miners and showed that discussions were still going on with the board regarding its implications. I should like to leave it there, because I think that it is satisfactory. I shall go into more detail in Committee. I am sure that all hon. Members will be happy with the conclusion.

Many right hon. and hon. Members have referred to closures. With my limited experience of the industry, I understand the reality and fear because of the past. The suggestion that the Bill is a closure programme for the industry is untrue. However, the issue needs tackling and understanding to see why this idea has got into so many people's minds. Many hon. and right hon. Members have legitimately referred to the fear of the past. That is understandable when one considers the mentality of the industry itself. Since 1947 it has seen 908 pits closed. It is understandable with that kind of pattern until 1974—when it was closure, closure, closure, not openings—that there will be fear and suspicion. But I should make it clear that the fundamental commitment in the Bill is to an investment programme—a commitment to the continuation, not the destruction, of this industry.

Let us look specifically at the fear expressed by hon. Members in the debate about our specific strategy, assuming that we all agree that the world of the pre-1974 mining industry will not happen again in this country. First, it fails to note the nature and character of this long-term extractive industry. Openings and closings of faces and of pits are part of the permanent scene.

Since 1974 when there was the joint commitment to the new "Plan for Coal", there has been a massive injection of capital into the industry each year. What happened in the years 1974, 1975, 1976, 1977 and 1978? In those years 50 pits were closed—an average of 10 per year. There was no assumption then by the Labour Party that there was a closure programme in the industry. It is part and parcel of the programme.

Let me try to get across the second point which is crucial to the debate on investment in this industry. The strategy to 1983–84 is not just for new pits. It commits £272 million per year or about 50 per cent, of all capital investment in existing production. That is not a strategy for closures.

I draw to the attention of the House the words of the chairman of the National Coal Board on the radio this morning. He said : Our position on the closure of pits is very clear and will not be changed by the Bill. I appreciate that we have to face the reality of the special situation regarding coking coal. No one who looks at our great national coal industry could do otherwise. But this part of the industry has had to come horrifyingly to grips with the reality of the fundamental change in demand from the British Steel Corporation.

Let us get the matter into proportion. If we are talking about 1980–81 as a whole, we are talking about 4 per cent, of our total NCB production. Nobody would want that to be anything other than larger, but that is the size that we are discussing. How do we seek to make adjustments over a period of time? Subject to ECSC rules, we hope to continue coking coal grants within our overall grant position. We have covered that point with the ECSC.

In answer to those who asked specifically about this year and next year, discussions are now in progress between the BSC and the NCB for 1981. Their past negotiations covered the whole of 1980.

Let us consider the positive side of this great industry. The hon. Member for Easington (Mr. Dormand) knows the North-East very well. What happened in the coal industry during 1979–80 regarding coking coal capacity in that area? It was able to put much of its coking capacity into the CEGB steam market—although at a cost. That year showed the best productivity figures. By the end of 1979–80 the North-East had 13 per cent, of its total capacity in coking coal.

I reiterate quite clearly, as we have a tripartite agreement, that all closures are subject to the established colliery review procedure at area level between the NCB and the NUM. The union has the right of appeal to the NCB at national level against any closure decisions. That process has not changed, and will not change.

Let us consider the question of imports. With respect to those who are worried about that subject, we must put the facts into perspective. We are not talking about imports flooding into Britain. In 1979 we imported 4.38 million tonnes, or 4 per cent. of our consumption. I will not pick out each of the figures for the past five or six years, but in 1975 we imported 5.07 million tonnes. We were also exporting during that time—and more last year than in 1974, when we exported more than 2 million tonnes. In other words, our net self-sufficiency for 1979 was 97.62 per cent. Have we any other great national industry that could say that? We are not talking about imports flooding in.

The Government's view of the future is clear. The United Kingdom coal industry will continue to meet the great bulk of demand in Britain. As many hon. Members have said during the debate, we are not alone in that view. The world coal study took the same view. It predicted that a half to two-thirds of the world's additional energy needs in the next 20 years will be met by coal. That will require a two and a half to three times increase in world coal production. The question that we should be asking ourselves again and again, when we consider the coal industry is not the defensive protective question but how we seize part of that expanding world coal market.

Last year, the problem in the industry was one of supply. Even then, in a world recession, imported steam coal was price competitive only at power stations close to port facilities. Let us consider the European Community to the end of the century. Last year it imported 60 million tonnes of steam coal, and by the end of the century it will be importing 300 million tonnes. Therefore, the investment in our strategy for coal is to ensure that we are competitive enough to seize that larger market. A successful strategy should give us export opportunities, not the fear of imports.

A key feature of the strategy is the discussion about whether we are arguing about the industry, about profitability, or about production targets. Despite the clear failure of planning with arbitrary targets, which has been discredited by eastern European experience, I understand the attitude in the mining industry. Anybody who saw the events up to 1974 could not do anything but understand the degree to which the industry needed targets to cling to and goals at which it could aim. It wanted to show that the nation was committing the capital to reshape the industry into a new industry for the future.

That commitment is clear. It stretches across both sides of the House. We make that commitment clear in the £600 million-worth of investment in that industry for the next four years.

The return is certain. We know what the returns are, not just on new investment, but on old plan-for-colliery pit investment. Our latest assessment suggests that those returns, even on the worst, most pessimistic price and cost assumptions, will be 32 per cent. [Interruption.] No one would deny the past. Surely all that we are talking about in this debate is how we confirm that past with success for the future.

The two key weaknesses in the arguments that the Opposition adduce for the production view of the future are, first, that failure to attain goals, as the hon. Member for Midlothian rightly said, is seen as a failure by the miners and the mining industry. Anyone involved in the detail knows full well that, quite the reverse of what the Financial Times said, "Plan for Coal" saw for 1985 about 120 million tonnes of production. That is now seen as about 112 million tonnes.

If one is looking to see where it has failed, one sees that it has not failed in the investment, as the hon. Gentleman will know, in the long-life pits. They are ahead of plan. There will be about 108 million tonnes production, as opposed to 100 million tonnes that had been foreseen. It is in the new mines, where the figure now expected is about 4 million tonnes, against the expectation of 20 million tonnes.

Mr. Dormand

Will the Minister give way?

Mr. Moore

I have a lot to try to get across.

The hon. Member for Midlothian was quite right to say that planning delay is part of the whole process of our democratic debate, but the degree to which it is then blamed upon the mining community is a key flaw in the attachment to production targets.

The second feature is that production targets regardless of demand are a recipe for trouble, especially when the growing long-term demand will be competitive with other fuels as we go into the industrial markets and the SNG markets. Let us not write off the great excitement of the industrial uses of coal—11½ million tonnes last year, and I hope at least 45 million tonnes by the end of the century. That is a major increase in the industrial market. Therefore, it is crucial in our legislation to get across and create a profitable industry that can meet markets competitively.

There has been enormous and understandable confusion in the debate on the part of many who do not know the intricacies of coal industry grants and about the Government's proposals concerning deficit and regional grants. It is important to make one or two points clear. If I may, with the time limitation, I should like to come back to other details later.

First, why were regional grants introduced, and what were they? They were introduced by the former Conservative Government in section 9 of the Coal Industry Act 1973, for the process of assisting the Board in moderating contraction of the coal mining industry in Great Britain ". That was in the Act, as a Bill in 1972, when we did not see the changed world for coal. The grants have been paid only twice, as has been said so often in the debate, in the past five years. The regional grants were essentially used in the same way as we now propose to use deficit grants. We have covered this point with the European Community. The problems of the regions, the problems surrounding the burdens of the past, are and will continue to be the difficulties covered by social grants, as they have been, and these we are enhancing and continuing beyond the planned strategy.

People may ask "Why change if it is a matter of nomenclature, and if the grant structure actually stays the same?". This is a crucial psychological judgment. I believe that the coal industry has an enormous future, a great future, but I believe that the confusion that exists in the minds of the public and in the industry because of the complex nature of the grants prevents people from believing that the industry has the potential for profitability. Believing that, we believe that the industry—and I have such respect for it, having seen it just for a year—will accept the challenge when it understands just how easily it can reach profitability.

Throughout the debate, rightly, there has been constant reference to foreign comparisons.

Mr. Ogden rose——

Mr. Moore

I think that this is a legitimate point that has been raised. Many hon. Members on both sides of the House have said that while we are moving to a position in which we hope, within the strategy, to be out of the subsidies in operational terms, other industries are being provided with greater subsidies. Throughout the debate no hon. Member has referred to the expanding coal industries of Australia and the United States, where subsidies are not associated with that expansion.

There are two aspects to the question. The first aspect is legitimate. Do we take full advantage of Community aid? Yes, we take full advantage of all available forms of Community aid, missing no opportunity to investigate the opportunities for that aid. The second aspect that has been raised many times is that of whether we should follow the West German and French route of increasing subsidies to their coal industries. That point was raised by the right hon. Mem- ber the Devonport, the hon. Member for Easington, the hon. Member for Berwick-upon-Tweed (Mr. Beith) and the hon. Member for Leigh (Mr. Cunliffe).

We must recognise and reconcile ourselves to the fact that those countries have huge complex subsidy systems. The size of the subsidy for West Germany for 1975 was approximately £500 million, and by 1979 it was approximately £1.6 billion for the full year. They are huge subsidies for an industry that produced 95 million tonnes of coal in 1974 and only 93 million tonnes in 1979. The coal industry in France received £300 million in subsidies last year, and produced only 18 million tonnes of coal. Both countries support static or declining coal industries.

It is important that hon. Members look at the French example. In 1974, France used 45 million tonnes of coal and imported 20 million tonnes. Its coal intake is increasing. The estimate for this year is 53 million tonnes, and of that 53 million tonnes, it will import 35 million tonnes. But the industry is declining and more jobs are being lost. Yet it is being subsidised more heavily. Subsidies are ultimately a blind alley. They must not guarantee inefficiency. We must help to make the coal industry competitive and profitable if we are to seize new markets. I ask the Opposition whether they still believe that profitability should be the ultimate goal. During the Committee stage of the Coal Industry Bill in 1979 the hon. Member for Midlothian said : it is right that the Government should be able to provide operational assistance when necessary. But it is surely very satisfactory and indicative of the health of the industry if it can meet its financial objective without the need for operational grants."—[Official Report, Standing Committee A, 29 March 1977; c. 170.] I agree entirely. I now turn to the key question——

Dr. Owen

The Under-Secretary has been speaking for over 20 minutes and he has not yet addressed himself to the central issue about which his right hon. and hon. Friends and many other hon. Members spoke. Can he justify the three-year straitjacket and the break-even points, and will he attend the Committee proceedings of the Bill having revised the figures in the light of changed economic circumstances since August last year?

Mr. Moore

I appreciate that intervention by the right hon. Gentleman, because I was about to comment on the crucial point that he raised. "Too quick, too tough" seems to be a definition of what the right hon. Gentleman is saying. It has been argued by many hon. Members tonight that the Bill is a straitjacket, but it is not argued by those who have the faith in the industry's ability that Conservative Members clearly have. We are not talking about a three-year programme. We are talking about a 10-year programme—"Plan for Coal"—from 1974–84. Happily, "Plan for Coal" always had as its objective a profitable coal industry. That has not changed in any way, and we are now six years into "Plan for Coal". The results are not simply in our mind. They are there on paper. The investment in the industry over the last six years is now paying off. The incentive agreement system seems to be working. The men are doing well. They are earning good money, they are working more shifts, and absenteeism is down. That is exciting and positive.

The right hon. Member for Devonport suggested that we were presenting an inflexible framework. It is a four-year framework, not a six-month framework. It is a framework that reflects the reality of the world's changed scene. I remind Labour Members of the reality of the coal-oil ratio, which they seem to have forgotten. It is the good side of the difficult position that the recession presents. In 1973 the coal-oil ratio was 1.03. In 1978 it was slightly better, namely, 0.85. It is now 0.65. That is a radical improvement, and we should welcome it. It gives opportunities to our coal industry. We have not talked very much about the potential change of the world market and the degree to which industry is now seeking prospects and opportunities for coal.

Many hon. Members have talked about the new deferred interest provisions within the Bill. Why did the Opposition, when in government, not recognise the need to introduce such a radical change in the financing provisions of the National Coal Board? It is said to be a way of loosening the supposed strait-jacket. Much will depend on the projects, but the scheme could be worth £30 million to £40 million a year.

I acknowledge the comments of my hon. Friends the Members for Meriden (Mr. Mills) and for Northfield, who rightly said that the scheme was an indi- cation of the Government's flexibility. Conditions have been difficult in the past year. On the other hand, how many hon. Members on both sides of the House have said that morale is staggeringly good in the industry? We cannot have it both ways. Morale cannot be staggeringly good if at the same time we are told that the industry has no prospects and no chance.

What are we talking about? What is the massive burden which, in three or four years, at the end of a 10-year programme, will prevent our great coal industry from attaining success? What is the enormous burden that seems to obsess so many Labour Members? Total grant for this year is 4£ per cent, of the £4 billion turnover. Is that percentage, which will decline to nothing by 1982, to prevent our coal industry finding its future? Of course it is not. It is a relatively small proportion of the industry's great future.

It could well be assumed by outsiders that the Opposition had not been in Government for the past six years and had never had the opportunity to make the changes that we have discussed. The Bill illustrates classically the divide between the Opposition and the Government.

The coal industry has a choice. It can sink back into the past in fear, without confidence and hoping at best, as so many Labour Members have assumed, for stagnation, with its decline masked a little, but inevitable. There are those who see it bolstered by subsidies but entering into a decline marred with bitterness and strife, a decline into the world of State handouts and dependence, a vision of ultimate failure and hopelessness.

The Opposition have made clear their choice for the coal industry's future. It is a timid, hesitant and frightened group that sit opposite the Government Benches. There is no will, no imagination and no faith on the Opposition Benches when it comes to recognising the potential in our great coal industry.

In the Bill the Government see a different future. They see a new industry, with great assets, great opportunities, expanding markets and—I should have thought that this was crucial to hon. Members opposite—the security that success for coal will give to our miners and to our country. The Bill recognises the burdens and obligations of the past, but it has faith in our coal industry's future, and

it is in that spirit that I commend it to the House.

Question put, That the amendment be made :—

The House divided : Ayes 229, Noes 291.

Division No. 364]	AYES	[10 pm
Abse, Leo	Field, Frank	Meacher, Michael
Adams, Allen	Fitch, Alan	Mellish, Rt Hon Robert
Allaun, Frank	Flannery, Martin	Mikardo, Ian
Anderson, Donald	Fletcher, Ted (Darlington)	Miller, Dr M. S. (East Kilbride)
Archer, Rt Hon Peter	Foot, Rt Hon Michael	Mitchell, Austin (Grimsby)
Armstrong, Rt Hon Ernest	Ford, Ben	Morris, Rt Hon Alfred (Wythenshawe)
Ashley, Rt Hon Jack	Forrester, John	Morris, Rt Hon Charles (Openshaw)
Ashton, Joe	Foster, Derek	Morris, Rt Hon John (Aberavon)
Atkinson, Norman (H'gey, Tott'ham)	Foulkes, George	Morton, George
Barnett, Guy (Greenwich)	Fraser, John (Lambeth, Norwood)	Moyle, Rt Hon Roland
Barnett, Rt Hon Joel (Heywood)	Freeson, Rt Hon Reginald	Newens, Stanley
Beith, A. J	Garrett, John (Norwich S)	Oakes, Rt Hon Gordon
Benn, Rt Hon Anthony Wedgwood	George, Bruce	Ogden, Eric
Bennett, Andrew (Stockport N)	Gilbert, Rt Hon Dr John	O'Halloran, Michael
Bidwell, Sydney	Ginsburg, David	Owen, Rt Hon Dr David
Booth, Rt Hon Albert	Gourlay, Harry	Palmer, Arthur
Boothroyd, Miss Betty	Graham, Ted	Park, George
Bottomley, Rt Hon Arthur (M'brough)	Grant, George (Morpeth)	Parry, Robert
Bradley, Tom	Grant, John (Islington C)	Pendry, Tom
Brown, Hugh D. (Provan)	Hamilton, James (Bothwell)	Powell, Raymond (Ogmore)
Brown, Robert C. (Newcastle W)	Harrison, Rt Hon Walter	Prescott, John
Brown, Ron (Edinburgh, Leith)	Hart, Rt Hon Dame Judith	Race, Reg
Buchan, Norman	Hattersley, Rt Hon Roy	Radice, Giles
Callaghan, Rt Hon J. (Cardiff SE)	Haynes, Frank	Rees, Rt Hon Merlyn (Leeds South)
Callaghan, Jim (Middleton & P)	Healey, Rt Hon Denis	Richardson, Jo
Campbell, Ian	Heffer, Eric S.	Roberts, Albert (Normanton)
Campbell-Savours, Dale	Holland, Stuart (L'beth, Vauxhall)	Roberts, Allan (Bootle)
Canavan, Dennis	Homewood, William	Roberts, Ernest (Hackney North)
Cant, R. B.	Hooley, Frank	Roberts, Gwilym (Cannock)
Cartwright, John	Horam, John	Robertson, George
Clark, Dr David (South Shields)	Howell, Rt Hon Denis (B'ham, Sm H)	Robinson, Geoffrey (Coventry NW)
Cocks, Rt Hon Michael (Bristol S)	Howells, Geraint	Rodgers, Rt Hon William
Cohen, Stanley	Huckfield, Les	Rooker, J. W.
Coleman, Donald	Hughes, Mark (Durham)	Ross, Ernest (Dundee West)
Concannon, Rt Hon J. D.	Hughes, Robert (Aberdeen North)	Ryman, John
Conlan, Bernard	Hughes, Roy (Newport)
Cook, Robin F.	Janner, Hon Greville	Sandelson, Neville
Cowans, Harry	Jay, Rt Hon Douglas	Sever, John
Crowther, J. S.	John, Brynmor	Sheerman, Barry
Cryer, Bob	Johnson, James (Hull West)	Sheldon, Rt Hon Robert (A ton-u-L)
Cunliffe, Lawrence	Johnson, Walter (Derby South)	Shore, Rt Hon Peter (Step and Pop)
Cunningham, George (Islington S)	Jones, Rt Hon Alec (Rhondda)	Silkin, Rt Hon John (Deptford)
Cunningham, Dr John (Whitehaven)	Jones, Dan (Burnley)	Silverman, Julius
Dalyell, Tam	Kaufman, Rt Hon Gerald	Skinner, Dennis
Davidson, Arthur	Kerr, Russell	Smith, Rt Hon J. (North Lanarkshire)
Davies, Rt Hon Denzil (Llanelli)	Kilroy-Silk, Robert	Soley, Clive
Davies, Ifor (Gower)	Kinnock, Neil	Spearing, Nigel
Davis, Clinton (Hackney Central)	Lamborn, Harry	Spriggs, Leslie
Davis, Terry (B'rm'ham, Stechford)	Lamond, James	Stallard, A. W.
Deakins, Eric	Leadbitter, Ted	Steel, Rt Hon David
Dean, Joseph (Leeds West)	Lestor, Miss Joan (Eton & Slough)	Stott, Roger
Dempsey, James	Lewis, Arthur (Newham North West)	Strang, Gavin
Dixon, Donald	Litherland, Robert	Straw, Jack
Dobson, Frank	Lofthouse, Geoffrey	Summerskill, Hon Dr Shirley
Dormand, Jack	Lyon, Alexander (York)	Taylor, Mrs Ann (Bolton West)
Douglas, Dick	Lyons, Edward (Bradford West)	Thomas, Jeffrey (Abertillery)
Douglas-Mann, Bruce	Mabon, Rt Hon Dr J Dickson	Thomas, Mike (Newcastle East)
Dubs, Alfred	McDonald, Dr Oonagh	Thomas, Dr Roger (Carmarthen)
Duffy, A. E. P.	McKay, Allen (Penistone)	Thorne, Stan (Preston South)
Dunn, James A. (Liverpool, Kirkdale)	McKelvey, William	Tilley, John
Dunnett, Jack	MacKenzie, Rt Hon Gregor	Torney, Tom
Dunwoody, Mrs Gwyneth	Maclennan, Robert	Urwin, Rt Hon Tom
Eadie, Alex	McNally, Thomas	Varley, Rt Hon Eric G.
Eastham, Ken	McNamara, Kevin	Wainwright, Edwin (Dearne Valley)
Edwards, Robert (Wolv SE)	McWilliam, John	Wainwright, Richard (Colne Valley)
Ellis, Raymond (NE Derbyshire)	Magee, Bryan	Walker, Rt Hon Harold (Doncaster)
Ellis, Tom (Wrexham)	Marks, Kenneth	Watkins, David
English, Michael	Marshall, Dr Edmund (Goole)	Weetch, Ken
Ennals, Rt Hon David	Marshall, Jim (Leicester South)	Wellbeloved, James
Evans, loan (Aberdare)	Martin, Michael (Gl'gow, Springb'rn)	Welsh, Michael
Evans, John (Newton)	Mason, Rt Hon Roy	White, Frank R. (Bury & Radcliffe)
Ewing, Harry	Maxton, John	White, James (Glasgow, Pollok)
Faulds, Andrew	Maynard, Miss Joan	Whitehead, Phillip
Whitlock, William	Wilson, William (Coventry SE)	Young, David (Bolton East)
Wigley, Dafydd	Winnick, David
Willey, Rt Hon Frederick	Woodall, Alec	TELLERS FOR THE AYES :
Williams, Rt Hon Alan (Swansea W)	Woolmer, Kenneth	Mr. Hugh McCartney and
Wilson, Gordon (Dundee East)	Wright, Sheila	Mr. James Tinn.
NOES
Adley, Robert	Elliott, Sir William	Lennox-Boyd, Hon Mark
Aitken, Jonathan	Emery, Peter	Lewis, Kenneth (Rutland)
Alexander, Richard	Eyre, Reginald	Lloyd, Peter (Fareham)
Alison, Michael	Fairbairn, Nicholas	Loveridge, John
Amery, Rt Hon Jullan	Fairgrieve, Russell	Lyell, Nicholas
Ancram, Michael	Faith, Mrs Sheila	McCrindle, Robert
Arnold, Tom	Farr, John	Macfarlane, Neil
Aspinwall, Jack	Fell, Anthony	MacGregor, John
Atkinson, David (B'mouth, East)	Fenner, Mrs Peggy	MacKay, John (Argyll)
Baker, Kenneth (St. Marylebone)	Finsberg, Geoffrey	Macmillan, Rt Hon M. (Farnham)
Baker, Nicholas (North Dorset)	Fisher, Sir Nigel	McNair-Wilson, Michael (Newbury)
Banks, Robert	Fletcher, Alexander (Edinburgh N)	McNair-Wilson, Patrick (New Forest)
Beaumont-Dark, Anthony	Fletcher-Cooke, Charles	McQuarrie, Albert
Bell, Sir Ronald	Fookes, Miss Janet	Madel, David
Bendall, Vivian	Forman, Nigel	Major, John
Benyon, Thomas (Abingdon)	Fowler, Rt Hon Norman	Marland, Paul
Benyon, W. (Buckingham)	Fox, Marcus	Marlow, Tony
Best, Keith	Fraser, Rt Hon H. (Stafford & St)	Marshall, Michael (Arundel)
Bevan, David Gilroy	Fry, Peter	Marten, Neil (Banbury)
Buffen, Rt Hon John	Galbraith, Hon T. G. D.	Mates, Michael
Biggs-Davison, John	Gardiner, George (Reigate)	Mather, Carol
Blackburn, John	Gardner, Edward (South Fylde)	Mawby, Ray
Blaker, Peter	Garel-Jones, Tristan	Mawhinney, Dr Brian
Body, Richard	Gilmour, Rt Hon Sir Ian	Maxwell-Hyslop, Robin
Bonsor, Sir Nicholas	Glyn, Dr Alan	Mayhew, Patrick
Boscawen, Hon Robert	Goodhart, Philip	Mellor, David
Bottomley, Peter (Woolwich West)	Goodhew, Victor	Meyer, Sir Anthony
Bowden, Andrew	Goodlad, Alastair	Miller, Hal (Bromsgrove & Redditch)
Boyson, Dr Rhodes	Gow, Ian	Mills, lain (Meriden)
Braine, Sir Bernard	Gower, Sir Raymond	Mills, Peter (West Devon)
Bright, Graham	Grant, Anthony (Harrow C)	Miscampbell, Norman
Brinton, Tim	Greenway, Harry	Mitchell, David (Basingstoke)
Brittan, Leon	Griffiths, Peter (Portsmouth N)	Moate, Roger
Brocklebank-Fowler, Christopher	Grist, Ian	Monro, Hector
Brooke, Hon Peter	Gummer, John Selwyn	Montgomery, Fergus
Brotherton, Michael	Hamilton, Hon Archie (Eps'm&Ew'll)	Moore, John
Brown, Michael (Brigg & Sc'thorpe)	Hamilton, Michael (Salisbury)	Morgan, Geraint
Browne, John (Winchester)	Hampson, Dr Keith	Morris, Michael (Northampton, Sth)
Bruce-Gardyne, John	Hannam, John	Morrison, Hon Charles (Devizes)
Buchanan-Smith, Hon Alick	Haselhurst, Alan	Morrison, Hon Peter (City of Chester)
Budgen, Nick	Hastings, Stephen	Mudd, David
Bulmer, Esmond	Havers, Rt Hon Sir Michael	Murphy, Christopher
Burden, F. A.	Hawkins, Paul	Neale, Gerrard
Butcher, John	Hawksley, Warren	Needham, Richard
Butler, Hon Adam	Hayhoe, Barney	Nelson, Anthony
Cadbury, Jocelyn	Heddle, John	Neubert, Michael
Carlisle, John (Luton West)	Henderson, Barry	Newton, Tony
Carlisle, Kenneth (Lincoln)	Heseltine, Rt Hon Michael	Onslow, Cranley
Carlisle, Rt Hon Mark (Runcorn)	Hicks, Robert
Chalker, Mrs Lynda	Higgins, Rt Hon Terence L.	Oppenheim, Rt Hon Mrs Sally
Channon, Paul	Hogg, Hon Douglas (Grantham)	Osborn, John
Chapman, Sydney	Holland, Philip (Carlton)	Page, Rt Hon Sir R. Graham
Churchill, W. S.	Hooson, Tom	Page, Richard (SW Hertfordshird)
Clark, Hon Alan (Plymouth, Sutton)	Hordern, Peter	Parkinson, Cecil
Clark, Sir William (Croydon South)	Howe, Rt Hon Sir Geoffrey	Parris, Matthew
Clarke, Kenneth (Rushcliffe)	Howell, Rt Hon David (Guildford)	Pattern, Christopher (Bath)
Clegg, Sir Walter	Howell, Ralph (North Norfolk)	Patten, John (Oxford)
Cockeram, Eric	Hunt, David (Wirral)	Pawsey, James
Colvin, Michael	Hunt, John (Ravensbourne)	Percival, Sir Ian
Cope, John	Hurd, Hon Douglas	Pink, R. Bonner
Cormack, Patrick	Irving, Charles (Cheltenham)	Pollock, Alexander
Corrie, John	Jenkin, Rt Hon Patrick	Porter, George
Costain, A. P.	Jessel, Toby	Prentice, Rt Hon Reg
Cranborne, Viscount	Johnson Smith, Geoffrey	Price, David (Eastleigh)
Critchley, Julian	Jopling, Rt Hon Michael	Proctor, K. Harvey
Dean, Paul (North Somerset)	Joseph, Rt Hon Sir Keith	Pym, Rt Hon Francis
Dickens, Geoffrey	Kaberry, Sir Donald	Raison, Timothy
Dorrell, Stephen	Kershaw, Anthony	Rathbone, Tim
Douglas-Hamilton, Lord James	Kimball, Marcus	Rees, Peter (Dover and Deal)
Dover, Denshore	King, Rt Hon Tom	Rees-Davies, W. R.
du Cann, Rt Hon Edward	Knox, David	Renton, Tim
Dunn, Robert (Dartford)	Lamont, Norman	Rhodes James, Robert
Durant, Tony	Lang, Ian	Ridsdale, Julian
Dykes, Hugh	Langford-Holt, Sir John	Rifkind, Malcolm
Eden, Rt Hon Sir John	Latham, Michael	Rippon, Rt Hon Geoffrey
Edwards, Rt Hon N. (Pembroke)	Lawrence, Ivan	Roberts, Michael (Cardiff NW)
Eggar, Timothy	Lee, John	Roberts, Wyn (Conway)

Sainsbury, Hon Timothy	Stewart, Ian (Hitchin)	Waller, Gary
St. John-Stevas, Rt Hon Norman	Stokes, John	Walters, Dennis
Scott, Nicholas	Stradling Thomas, J.	Ward, John
Shaw, Michael (Scarborough)	Tapsell, Peter	Warren, Kenneth
Shelton, William (Streatham)	Taylor, Robert (Croydon NW)	Wells, John (Maidstone)
Shepherd, Colin (Hereford)	Taylor, Teddy	Wells, Bowen (Hert'rd & Stev'nage)
Shepherd, Richard (Aidridge-Br'hills)	Temple-Morris, Peter	Wheeler, John
Shersby, Michael	Thatcher, Rt Hon Mrs Margaret	Whitelaw, Rt Hon William
Silvester, Fred	Thomas, Rt Hon Peter (Hendon S)	Whitney, Raymond
Sims, Roger	Thompson, Donald	Wickenden, Keith
Skeet, T. H. H.	Thornton, Malcolm	Wiggin, Jerry
Smith, Dudley (War. and Leam'ton)	Townsend, Cyril D. (Bexleyheath)	Wilkinson, John
Speed, Keith	Trippler, David	Williams, Delwyn (Montgomery)
Speller, Tony	Trotter, Neville	Winterton, Nicholas
Spence, John	van Straubenzee, W. R.	Wolfson, Mark
Spicer, Michael (S Worcestershire)	Vaughan, Dr Gerard	Young, Sir George (Acton)
Sproat, lain	Viggers, Peter	Younger, Rt Hon George
Squire, Robin	Waddington, David
Stanbrook, Ivor	Wakeham, John	TELLERS FOR THE NOES :
Stanley, John	Walker, Rt Hon Peter (Worcester)	Mr. Spencer Le Merchant and
Steen, Anthony	Walker, Bill (Perth & E Perthshire)	r. Anthony Berry.
Stevens, Martin	Walker-Smith, Rt Hon Sir Derek

Question accordingly negatived.

Main Question put forthwith pursuant to Standing Order No. 39 (Amendment on Second or Third Reading), and agreed to

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).