HC Deb 18 March 1981 vol 1 cc395-402

11.53 Pm

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

I beg to move, That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment) Order 1981, which was laid before this House on 11 March, be approved.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

I understand that it will be for the convenience of the House if at the same time we discuss the second motion: That the draft Mineworkers' Pension Scheme (Limit on Contributions) Order 1981, which was laid before this House on 11 March, be approved.

Mr. Moore

The first order was considered by the Select Committee on Statutory Instruments yesterday, and no points were raised. It brings into effect, for workers redundant on or after the date of laying of the order, the improvements in the redundant mineworkers' payments scheme which the Government have decided should be made in the present circumstances of the coal industry. These should not, however, be regarded as any radical departure from the principles which have governed the scheme since it was first set up in 1968. It was set up then to reflect the particular circumstances of the coal industry, where it is a fact of life—and fully accepted in the most recent tripartite discussions by everyone concerned—that from time to time pits have to close; and while every effort is made by the National Coal Board to transfer men from these pits to continuing pits, some men—particularly older men with a lifetime of service in the industry—are likely to be made redundant.

In 1968 the Government of the time accepted that they had a responsibility to ensure that these men were treated decently, and since then successive Governments have reaffirmed their acceptance of this responsibility by extending the scheme both in duration and in scope. The Coal Industry Act 1980 extended the duration of the scheme to cover men made redundant up to 31 March 1984 and also extended the scope of the scheme to include those made redundant through cokeworks closures. The amendment No. 3 order which I moved in December brought these extensions into effect. Earlier in the year, in the 1980 No. 2 order, we had increased the lump sum provisions for younger men and introduced them for men aged under 35 for the first time.

Now, under the authority of the 1980 Coal Industry Act, we are introducing considerable further improvements. The lump sums are increased again—by an amount equal to double the payment received under the Employment Protection (Consolidation) Act, typically about £6,000, for men aged 50 to 54. Younger men will be getting extra payments on a fixed cash basis—£1,500 at age 40 to 49, £1,000 at ages 30 to 39 and a tapering scale for men under 30. These are all on top of the existing lump sum provisions. Workers aged 55 or over at redundancy will receive weekly benefit at about two-thirds of previous pay—with cost of living increases—for five years instead of three, or to normal retiring age if that is sooner. In addition, those aged 55 to 59 will receive for the first time under the scheme lump sum payments on a tapering scale linked to the Employment Protection (Consolidation) Act payments.

In addition, the order makes a few changes which are of an updating character. The earnings limit used in calculating the weekly benefit goes up from £120 to £130 per week from the beginning of the new fiscal year, 6 April, and some of the limits on other earnings and pensions which may be taken with scheme benefits are increased. The minimum benefit payable is also raised in line with the increase in mineworkers' basic pension. These changes will all apply from 25 March.

All this is, as I have said, a continuation of the review process which successive Governments have undertaken. The new terms will last for men made redundant up to 31 March 1984, when the present legislative authority expires.

The second draft order, upon which the Select Committee on Statutory Instruments has requested amplification, relates to the change in the nature of the mineworkers' pension scheme in April 1975, when it became an earnings—related, self-financing scheme, covering men employed in the industry at that date and also future employees. Just prior to that, in the final report of the tripartite coal industry examination in 1974, it had been pointed out that the past contraction of the coal industry presented a financial problem for a viable pension scheme because of the exceptional ratio of pensions to contributing members—about one to one instead of one to five.

In particular, there was a considerable deficiency in the pension fund in respect of men who had retired before April 1975. There were some 240,000 of these and, in addition, about 180,000 deferred pensioners who had left the industry but who could claim their pensions when they reached the age of 65. Because it would have been unfair to place this burden of the past upon the industry, the then Government agreed to contribute towards the deficiency attributable to these men, and in the National Coal Board (Finance) Act 1976 Parliament authorised a contribution of up to £18 million a year for 20 years. The Act also included provisions for increasing this annual payment where the deficiency had increased because of the need to keep the pensions of these men in line with the rise of the cost of living.

In 1975, those pre-April 1975 pensioners were receiving a flat-rate pension of £3.60 per week. In successive years, these pensions were increased to keep in line with rises in the cost of living. The increases had the effect of increasing the deficiency in the pension fund related to pre-April 1975 pensioners, and the annual Government contribution has consequently been increased in successive steps from £18 million to £41.08 million in the current year. These increases have been approved by the House in a series of orders in 1977, 1978,1979 and 1980.

Last September, the basic pension was increased from £7.37 to £8.92 per week in line with the rise in the RPI. We are advised by the Government Actuary that the consequent increase in the deficiency was equivalent to an annual payment of £8.2 million for the remaining 15 years of the support arrangement.

The Government therefore now seek the agreement of the House for the annual contribution to be increased by that £8.2 million, making the new annual contribution £49.28 million. The first payment of the increased amount to the National Coal Board needs to be made before the end of the current financial year, and similar amounts may be paid in future up to and including 1994–95.

I must emphasise that the increase that we are discussing relates solely to men who were pensionsers before April 1975 or had already, at that date, qualified for a deferred pension. We are not concerned at this point with men who became or might become pensioners after that date.

That Act also requires the Secretary of State to lay a statement explaining the considerations which have led him to conclude that the order should be made. The House will have noted that such a statement was laid with the order. I shall amplify slightly some of the points in this statement in view of the Select Committee query, which we shall, of course, answer in writing before the next meeting.

With regard to the current position of the National Coal Board, although the audited accounts will not be available until the summer, we have obtained estimates from the board of the likely outcome of its operations in the present financial year. We have examined these estimates in the context of our continuous monitoring of the board's operations.

The estimates, which in the nature of things are subject to some uncertainty, show that after payment of interest and taking credit for the expected level of Government operating, social and deficit grants, other than the increase here in question, the NCB will show a net loss of around £60 million in 1980–81. Payments of this grant in 1980–81 will reduce the loss to around £50 million.

As my right hon. Friend's statement points out, these are not circumstances in which the board could reasonably be asked to shoulder the burden of the extra £8.2 million. For later years, the position can be kept under review. The present order empowers, but does not compel, payment of the additional sum.

In the light of all these points, I seek the agreement of the House to the making of both these orders.

12.2 am

Mr. Alex Eadie (Midlothian)

The House will note carefully what the Minister has said in his outline statement seeking approval of the orders. He stressed, for example, that the principles are the same, based on the discussions that we have had in the past.

It was right and proper that the hon. Gentleman should mention how these matters come under discussion and scrutiny at the tripartite meetings. It was also correct to recall to the House that these principles and this responsibility have been accepted since 1968. It was also as well to recall that previously we approved a somewhat similar order, providing for an extension whereby we should have a responsibility to the coke workers and include them in the scheme.

We note the hon. Gentleman's statement that the lump sums will be increased. The age range factor will decide exactly what are the additional amounts on top of the existing scheme.

We note the hon. Gentleman's comments with regard to the dates on which the orders are to become operative, namely, from 25 March 1981 until March 1984.

We also note that the contraction of the industry has posed problems in relation to the pension scheme and how it should be funded. The hon. Gentleman drew the attention of the House to the way in which this had been dealt with in the past on approval of the House of Commons.

The Opposition, of course, welcome orders which, as the hon. Gentleman explained, increase the financial limit of the pension scheme.

We note what the order says about the National Coal Board's finances. It is unlikely to break even on the revenue account next year without financial support—the point that the Minister made about the Select Committee' s query. It cannot be expected to take on the additional financial contribution of £8.2 million.

The Opposition also note what section 2 of the Act states, that the Secretary of State has the permissive right, if not the mandatory right, to deal with such matters. That has been the way of all Secretaries of State when they first had to deal with these aspects.

Of course we welcome the enhanced redundancy payments to miners. This is social justice to miners who find themselves on the employment scrap-heap after giving long service to the mining industry. Unfortunately, too many give silent testimony, in appearance and in health, to the hours they have toiled in the darkness of the bowels of the earth. I doubt whether any hon. Members would seriously challenge these enhanced payments.

At this late hour I want to reply briefly, in measured tones, for we can return at a later date to the negotiations that are the main reason for the orders appearing before the House tonight. Many of my hon. Friends take strong exception to the way in which these enhanced redundancy payments have been described by some sections of the media. To add the miner's lump sum to his expected weekly pension and present it as a global sum has already given great offence in mining areas.

The Opposition do not regard redundancy payments as the only answer to the problems facing the industry, including the problem of pit closures. It is right and proper that miners who find themselves deprived of the right to practise their skill and expertise, acquired over the years, should be financially rewarded, particularly when, through no fault of their own, they face the prospect of unemployment for the rest of their working lives.

Miners are a proud body of men. They do not wish to be labelled as workers who, through accepting redundancy payments, have sold the jobs of their sons and their grandsons. They believe that the jobs in the industry are not theirs to take away for a financial inducement. The constructive answer to pit closures—indeed, the only answer, because mining is an extractive industry—is planned new replacement capacity carrying on with the investment, new pit sinkings, commitment to "Plan for Coal", and the bringing forward of "Plan 2000" for the whole industry.

I raise these issues because in too many areas recruitment to the mines has halted. Our school leaver sons are in the dole queues. That must stop forthwith. Recruitment to the mines should start immediately. Coal is the fuel not only of this century but of the next. Therefore, let us get on with it; let us say what we mean and mean what we say.

The Opposition welcome the orders and the way in which the Minister moved them. They give enhanced redundancy payments, which will be just reward for many miners. But I re-emphasise that they are no substitute for long-term forward investment in our great British coal mining industry.

12.9 am

Mr. Jack Dormand (Easington)

I join my hon. Friend the Member for Midlothian (Mr. Eadie) in welcoming these proposals. Without going into the details of the order, may I say that the amount appears to be about right, having regard to the special and unique circumstances of the coal mining industry.

I deplore the kind of publicity which has been given to the enhanced payments. I am delighted that the Minister is nodding his agreement about that. I am delighted that my hon. Friend commented on it, too. I come from the North-East. I find it very sad that the news media there has been publicising the fact that miners will be getting £35,000 from this kind of measure.

A number of things can be said about that. First, I suggest that it is not true. Perhaps the Minister will indicate that that is so. It is probably nearer the truth to say that the figure is about £20,000, or perhaps £23,000.

Mr. George Grant (Morpeth)


Mr. Dormand

Maximum, as my hon. Friend tells me. He is very experienced in these matters.

In addition, it has not been said in the news media that that is not a direct lump sum handout, and that the lump sum is much smaller than that and the rest is spread out, as with all other redundancy payments. No mention is made of the much lower payments which constitute the bulk of the redundancy payments. It is important that the Government should go out of their way to publicise the true position.

I make no apology for reiterating what my hon. Friend the Member for Midlothian has said—it is perhaps the most important part of this short debate—namely, that the real issue is that of the retention of jobs. As it happens, the jobs are usually in an area in which there is a dire shortage of employment in any case, such as the North-East, and the Northern region as a whole. We are talking about jobs for not merely the miners concerned but sons and grandsons. Perhaps I may declare an interest. My father and brother were miners. I have some knowledge of the industry.

In spite of all the disadvantages of working in the mining industry, not least at the coalface, many miners are proud of their calling and of their expertise and experience. That is something that we should not throw away lightly. The Minister has displayed great interest in the industry. He must know that, unless we can maintain that kind of spirit, there will be difficulties.

The National Union of Mineworkers and the mining fraternity as a whole are deeply suspicious of all Tory Governments. They have a particular reason to be suspicious of the present Government. A number of us said that when the Coal Industry Bill became an Act there would be difficulties and trouble. Unfortunately, that was manifested in the recent confrontation with the miners. We were delighted with the outcome. The Government were very wise to realise what a fundamental mistake they had made in the Act in requiring the industry to break even by 1982–83. On many occasions during the passage of that Act we said that that was a financial impossibility. If the proposed measures are used as an instrument for the reduction of jobs, this is a matter which will need further debate and perhaps further action.

We are talking about how the industry can continue to provide a certain number of jobs and to increase that number. I am not thinking solely in terms of the new coalfields. However, both the new coalfields and investment will make a big contribution.

To be constructive, I shall make two suggestions. First, the Government can and should provide incentives for the greater use of coal in industry. In the recent Budget Statement the Chancellor of the Exchequer announced that the Government would make £50 million available over a two-year period. That is only a small step, although I accept that it is in the right direction. If two or three companies, or at the most half a dozen, of the larger companies convert to coal—ICI springs to mind—the £50 million will be quickly used up. We are talking about a trifling sum. The coal industry is strong and viable and is being increasingly used. I hope that the Department will bring pressure to bear. I think that the Department of Industry will be responsible for administration, but the Opposition and the Department of Energy should make the strongest representations. Although we welcome the Chancellor of the Exchequer's statement, it will result in insufficient money to meet the needs.

I think that the Minister knows that I have a particular interest in coal liquefaction. On many occasions we have disagreed on this subject. The Government could do a great deal more. There are two pilot plants. My information is that the Government are not even contributing towards the construction costs of those two plants, despite the fact that the ECSC and BP are making contributions. In those circumstances, I should have thought that the Government would make a substantial contribution. The Reagan Administration are also committed to the reduction of public expenditure and are cutting research expenditure. Therefore, the field will be wide open for the United Kingdom to reap enormous benefits from the overseas sale of expertise, know-how and technology. In addition, I hope that in the not-too-distant-future much more coal will be used for that purpose.

I conclude by repeating my welcome to the increased payments. They are justified by the nature of the work. In addition no one more than the miner deserves recognition for what he has contributed to the country's industry, economy and well-being.

12.17 pm
Mr. John Moore

I shall respond briefly to the very constructive comments that have been made about the orders.

I completely share the views expressed by the hon. Members for Midlothian (Mr. Eadie) and for Easington (Mr. Dormand) about the ways in which the media first greeted the laying of the order. As I knew the way in which so many of these important issues are handled, I took particular care to ensure that the facts relating to the five-year coverage were made quite clear in the publicity. That coverage was capitalised on by the media. Of course, different conclusions were drawn from that publicity by those who sought to make different points. If the House endorses the orders, I shall seek to make the facts—which have legitimately been brought out tonight—clear. It is important that those who deserve the enhanced redundancy payments should get them without any of the nonsense that some of us are forced to read about in the media.

I do not want to go into detail about a particular case. We shall deal with the matter in detail in publicity. Every case varies, depending on the man's service to the industry.

A detailed point was raised concerning incentives for the greater use of coal. I entirely endorse what the hon. Member for Easington said. My right hon. and learned Friend the Chancellor of the Exchequer announced in the Budget a substitution scheme—coal for oil—in the boiler area, which will be under the organisation of the Department of Industry. The hon. Member for Midlothian rightly raised this matter yesterday in the Standing Committee on the Energy Conservation Bill, and I was happily able to respond positively on some of the details from the point of view of my Department.

This is not the appropriate time at which to discuss the question in detail. We referred to it as pump priming, and we hope to see that pump priming increase the consumption of coal by the industry very soon by about 2 million tonnes per annum. To all of us involved with coal, that is a very important figure.

Mr. lain Mills (Meriden)

My hon. Friend will, of course, realise that this is most welcome to most of those involved in the design and the engineering of coal fluidised bed boiler systems in this country.

Mr. Moore

I should like without further ado to draw the attention of my hon. Friend and of all other hon. Members present to the fact that in the same Committee yesterday we also discussed fluidised beds. The comments made from each side of the Committee were important in relation to the scheme.

I accept the point that the hon. Member for Easington has made. We must look at all these areas. The ECSC has also proposed a scheme to provide reduced interest loans to encourage boiler conversion. The Department of Industry is holding discussions with the ECSC about the details of the proposals, including the question of Government providing exchange risk cover. There is obviously no conflict between that and the scheme announced by the Chancellor of the Exchequer.

This is not an entirely appropriate moment at which to go into the subject of liquefaction, other than to say that there was another very senior level meeting this afternoon, which included the chairman of the National Coal Board, the chief scientist of my Department, the chief scientist of the NCB, and myself. It was adjourned because we are still in the midst of discussions. The hon. Member for Easington did not bring out quite the right facts, therefore I shall be happy to correspond with him in more detail about it.

The other main stand that came across, rightly, from the hon. Members for Midlothian and Easington was that redundancies are just one aspect—a sad one—of an extractive industry. The other side is that of the future of the industry, the investment in its long-term future, and the commitment that the Government are continually seeking to make. That investment in the future is the key that must be in the forefront of our minds when we concern ourselves with redundancies. It is on that note that I commend the order to the House.

Question put and agreed to.

Resolved, That the draft Redundant Mineworkers and Concessionary Coal (Payment Schemes) (Amendment) Order 1981, which was laid before this House on 11 March, be approved.

Resolved, That the draft Mineworkers' Pension Scheme (Limit on Contributions) Order 1981, which was laid before this House on 11 March, be approved.—[Mr. John Moore.]