HC Deb 12 July 1982 vol 27 cc820-7 4.27 am
The Under-Secretary of State for Energy (Mr. John Moore)

I beg to move, That the draft Coal Industry (Limit on Grants) Order 1982, which was laid before this House on 18th June, be approved. The purpose of the draft order is to increase the limit on the aggregate amount of operating and deficit grants that the Secretary of State may pay to the coal industry. Under section 4 of the Coal Industry Act 1980, as amended by the Coal Industry Act 1982, the limit on the aggregate amount of those grants is £1,000 million, which may be increased by order to a maximum of £1,750 million.

Since the financial year 1979–80, deficit and operating grants amounting to £787 million have been paid cumulatively under the Coal Industry Act 1980, as amended by the 1982 Act, leaving £213 million available within the present limit. Further payments are scheduled for August and October, which would take the total of payments above this limit. The order would make available the further £750 million for which provision was made in the Act. That is intended to last until spring 1984.

The House may wonder why the order is needed so soon after the Coal Industry Act 1982 became law. We always recognised that the initial step in the Coal Industry Act 1982 from £590 million to £1,000 million was needed principally to complete grant payments in respect of 1981–82. This is reflected in my Department's Estimates for 1982–83, which are now before the House. As I said in answer to a question from my hon. Friend the Member for Edinburgh, South (Mr. Ancram) on 7 April, deferred operating and deficit grant of £198 million in respect of 1981–82 has been paid to the National Coal Board under the Act. Some £109 million of this was met from the Vote on account for Class IV, Vote 5, and for the remainder provision was made for a repayable advance from the Contingencies Fund pending parliamentary approval of the main Estimates.

It was always clear, therefore, that the order would need to be introduced before very long after the Act was passed, to keep grant payments on schedule during 1982–83.

I have explained that the £1,750 million available under the order is intended to last until the spring of 1984. The precise amounts that we intend to pay to the NCB in each financial year will be subject to parliamentary examination and approval in the Supply Estimates. Moreover, since new legislation on NCB grants and borrowing will be needed by the spring of 1984, Parliament will have a further opportunity fully to debate coal policy during the 1983–84 Session. In asking the House to give favourable consideration to an increase in the limit on operating and deficit grants payable to the NCB, I can give an assurance that the Government will monitor closely the board's performance. I and my colleagues intend to continue to keep the House informed of progress in coal policy.

In conclusion, there are few industries in Britain today with the potential and scope for improvement of the coal industry. But it is not the Government that will decide whether that challange is met and that opportunity seized. Only those in industry, working together, can assure their industry's future, their competitiveness and their jobs in the long term.

4.31 am
Mr. Alex Eadie (Midlothian)

I should have wished to deal with the implications of the order in more detail. I first heard of the issues that were to be discussed by the NUM and th NCB on 24 June and it is not surprising that their meeting did not last for long. I attended the NUM conference at Inverness. In deference to the wishes of the House, 4.30 am on a Tuesday morning is hardly the time to go into detail. However, we should return to these matters because they are important to the coal industry and to those who work in it. I shall confine myself to the election of the president of the NUM, which has drawn much comment in the media.

Last week in Inverness I read a Scotsman editorial, which stated: It is a strange world in which Mr. Scargill lives where everything is black and white, where negotiation is a sign of weakness, where strength is the arbiter and where concession becomes betrayal. Curiously, it is the world where the Prime Minister spends most of her time; indeed it could be argued that, because she has done so since she moved into Downing Street, she contributed to the sweeping victory Mr. Scargill enjoyed in the contest for the presidency of the NUM. That conjecture may entertain observers of the social and political scene, but it is less pleasing to imagine the two of them bumping into each other. I quote that article mainly because some people, including Conservative Members, have made comments on the president. However, to put the matter in context, a delegate told me that, although the Prime Minister had contributed to the large majority of the new president, Arthur Scargill is determined to fight for his class and the Prime Minister is determined to fight for hers. I do not know what will happen as a consequence. Only the future can tell.

The Minister has explained the reasons for the Government introducing the order. It is not so long ago that Parliament approved the Coal Industry Act 1982. The order refers to section 4(3) of the Coal Industry Act 1980 that the Opposition will one day wish to amend. It is a disgraceful Act. Section 3 of the 1980 Act dealt with the aggregate of grants covering deficit grants. Section 8 of the Coal Industry Act 1973 referred to coking coal grants and sections 2 and 3 of the 1977 Act dealt with promoting sale of coal to the Central Electricity Generating Board and stocks of coal and coke. The amount was not to exceed £525 million or £590 million by subsequent order.

Under the 1982 Act, the figure of £525 million was replaced by £1,000 million, with extra headroom available by order up to a maximum of £1,750 million. The order presented by the Minister raises the grant limit from £1,000 million to £1,750 million. The grants paid by the Government to the National Coal Board are approaching the £1,000 million limit. To use the phrase I have already employed, the Government wish to secure some headroom before the Summer Recess.

The money made available will be sufficient until the spring of 1984. When hon. Members debated the 1982 measure, the Minister said that the Government intended to introduce further coal industry legislation at about that time. There will no doubt be the opportunity for a debate unless the Prime Minister is tempted to go to the country. There is a great deal of speculation about that matter. Although the Prime Minister has said that she would be astonished if the election were to take place in October, that does not prevent an election from being called in November.

The 1982 Act dealt with only one specific aspect of the order. It gave borrowing powers of £4,500 million, with the possibility that this could be raised by order to £5,000 million. I hope that the Minister can confirm that the board's borrowings are sufficiently below £4,500 million for the Government to be able to postpone raising the limit. It is necessary because there is much discussion about it.

I know that the Government have stated from time to time that the aid that they give to the industry is excellent. I have quarrelled with the Minister before on what I describe as "Thatcher's law", by which one gives an industry the powers to borrow money, but the interest that it pays on that money constitutes a subsidy. That is a new and astonishing feature that has developed in this Parliament. We have reached the stage where the coal industry is paying about £3 per ton of coal in interest. That is different from subsidy—the capital that it borrows to modernise industry, and has to pay interest on, could not possibly constitute a subsidy. Some of the Prime Minister's right hon. and hon. Friends have not yet explained to her when a subsidy is not a subsidy, and they even seem to back her in this.

As to the grants and aids given to the industry, the unions have always claimed that they are, to some extent, subjected to unfair competition when compared with the EEC countries. I took some figures from the report of the national conference of the NUM this year, which I wonder whether the Minister would care to comment on. The report puts the case succinctly and talks about the financial aid that other EEC countries give to their coal industries.

Under the section related to current production, I found that Belgium gave £152 million, France gave £218 million, West Germany gave £1,009 million and the United Kingdom £456 million. Translated to pounds per tonne, we find that in Belgium it works out at about £24.93, France £12.47, West Germany £10.78 and the United Kingdom, as usual at the bottom of the league, with £3.65 per tonne.

The figures not related to current production, which are figures that the House does not often get, show that Belgium gives £380 million, France £817 million, West Germany £1,550 million and the United Kingdom £72 million. I regret having to put these facts to the House, but there is a tremendous amount of distortion about aid and assistance, although we are grateful for what we get. Even with all that massive aid, we still produce coal more cheaply than any other country in the EEC.

There are two points to be made about the order, among the many issues concerning the industry. First, there is a feeling that the Government have driven the National Coal Board to accelerate its new developments in black site areas, rather than in green field sites. The Vale of Belvoir was the classic example of how the Government hampered green field site development. That was a national scandal. We know the investment that went into that area, and not a dish has been washed yet—to put it in the language of the Scottish miners. It cost the National Coal Board several million pounds. The board prepared the plan, and as a consequence of the announcement of the Secretary of State for the Environment, the board had to go back to the drawing board. More investment will be needed, more money will be spent, and still not a dish has been washed.

I do not criticise black site development. In fact, I have always encouraged it. Perhaps, in a sense, I even started it. My philosophy was to encourage the search for new reserves in existing pits. However, black site developments will dry up, because coal mining is an extractive industry. Black site development and green field site development should go in tandem. I wonder whether the Department of Energy realises the injury that it is doing, not only to the coal industry but to the nation. The Government are driving the National Coal Board—I think, unwillingly—into concentrating on black site development.

Secondly, there is much anxiety in some coalfield areas that peripheral coalfield development is being practised and encouraged. The Minister has heard me say before that I tried to have the phrase peripheral coalfield development expunged from the thinking of the Department of Energy and, indeed, of the coal industry. It was mooted in the seventies that the coalfields of Scotland, South Wales, and those in the North-East in Durham, Northumberland and Cumberland should be contracted, and investment concentrated in what has been described as the centre.

I shall put a point to the Minister which, to some extent, justifies what I have said. It is a dangerous trend, which has caused dissatisfaction and anger in some coalfields. The latest investment figures show that 81 per cent. of investment was in what could probably be described broadly as the Yorkshire-Midlands coalfields. That means 19 per cent. investment for the other coalfields that I mentioned. If that is not a de facto policy of the peripheral coalfield development, I do not know what is. I hope that when the Minister winds up he will comment on that, because it has reached serious proportions. We are entitled to know the policy of the Department of Energy on coal production, not only on green field and black site development, but on where investment should be concentrated.

I have said for some time that, in discussing the coal industry, we are talking about the British coal industry. We are talking about the British coal industry and developing British coal, not about concentrating production in one or two areas. Coal is the nation's asset. Wherever coal lies, we have a responsibility to develop it.

I do not intend to oppose the order and I do not want to be churlish. We welcome any help, but because of the change in events we need a more detailed debate on the industry.

4.50 pm
Mr. Tom Ellis (Wrexham)

I do not wish to take up much time when we are all so tired, but in welcoming the order I wish to express some anxiety about the coal industry. I was a little worried about what the hon. Member for Midlothian (Mr. Eadie) said, because he seemed to indulge in special pleading. Enormous quantities of coal are stocked. The coal mountain makes the beef and butter mountains and the wine lake seem like nothing. About four months of coal is stocked ready for use.

Mr. Eadie

I hope that the hon. Gentleman is not saying that when I asked for investment in the industry in his area I was indulging in special pleading.

Mr. Ellis

I speak as the last of a long line. I am the only Welsh Member who was employed in the coal industry. I think of people such as Bevan, Griffiths and Dai Grenfell and I am conscious that I am part of a long and honourable tradition. I am sorry that I am the last, but I am worried about the coal industry in my area.

The reality is that coal stocks form the biggest mountain. We have four months' consumption in stocks and something must be done. We must accept reality and make the industry more competitive. That can be achieved by co-operation between trade unions, management and Government. The hon. Member for Midlothian did not stress the urgent need for that co-operation.

Part of the money to which the order applies is being used to produce coal burn artificially. Coal is to be burnt by the electricity industry which would not be burnt if left to commercial criteria. The industry should be able fully to use its capacity.

Most industries that produce above demand move to short-time working. Several factories in my constituency have had to do that recently. The coal industry is fortunate to be able fully to use its capacity. The people involved, including the president of the NUM, should appreciate that. Some of the president's recent actions are disconcerting. His first meeting with the chairman of the Coal Board was extraordinary. It was over in three minutes. When the chairman was asked whether the meeting was good tempered, he said that it was neither good tempered nor bad tempered because the meeting did not last long enough to have any temper.

In view of the coal industry's position, the president of the NUM should be doing his utmost to develop a close co-operation between his union and the industry with a view to putting the industry in a competitive position. I say that not to decry the claims of the NUM for increased wages for mine workers, because they are as entitled as anybody to that, but the recent increase in productivity in the coal industry was largely brought about in the face of the president's long resistance to the wage proposals that were eventually introduced. That does not seem to me to be facing up to reality.

I am not arguing that miners should be flogged to death for their earnings. The wages system in the coal industry is a difficult and subtle one. There is room, even now, for considerable refinement. I speak as somebody who, in the early 1960s, departed from the old system of what was then called the straightforward piece rate—partly piece rate and partly conceptual payments to make up for various deficiencies such as breakdowns, bad roofs, waterlog and so on—to put wages on a realistic basis.

The present wages system can be considered for the benefit of the mine workers, the industry and Britain. It is right that somebody should ask the president of the NUM to make clear his position and to show that he appreciates the fact that the coal industry has to live in the real world. We cannot subsidise it indefinitely.

One can argue that the industry has been partly maintained in its present position, rightly or wrongly—I am not making a value judgment—for political reasons. I would be the last to say that that should not be so. I was disappointed in what the hon. Gentleman said. We should try to face reality. I know that we cannot leave politics on one side, but we could buy coal from several sources in the world all with assured supplies and at considerably lower prices than we are paying for them. I simply record that as a fact and ask the president of the NUM and his colleagues to try to approach their jobs with the responsibility that that fact places upon them.

4.57 am
Mr. Frank Haynes (Ashfield)

I honestly wish that the hon. Member for Wrexham (Mr. Ellis) had gone home and gone to bed, bearing in mind what he has just said. It will not take me more than a few moments to say what I have to say.

The coal industry is competitive. The hon. Gentleman would not have spoken 12 months ago as he has done today. I am shocked at his contribution. Each time the mining industry and the people within it have been asked to make their contribution they have met that demand. I know that because I have worked in it, as the hon. Gentleman has, but he had a job in the office while I worked with a shovel. It is all right to chastise the president of the NUM—he has a job to do—but the hon. Gentleman forgets that decisions are made by the men, and not the president. He can make a recommendation, but in the final analysis the membership of the NUM makes the decision.

I remind the hon. Gentleman that the workers, the National Coal Board, and, as far as I know, the Government have always worked together in the interests of the nation. That is how it should be. I do not know where the hon. Gentleman has been, but most of what he was questioning we have debated in the House regularly, and agreed on many points concerning the mining industry. I did not want to speak, but I was drawn by the hon. Gentleman's contribution. The workers in the coal industry have pulled their socks up when they have been asked so to do. However, I must criticise the Government. The stocks are there because half of the industry has been closed. Nevertheless, the industry is competitive, the men are receiving their wages and the Government and nation are getting the output. That is why the coal is piling up. It is piling up just as much in the East Midlands as in Wrexham. Pits also close in that area. Most pits are breaking output records, yet we cannot sell the coal because industry does not want to buy it.

History will repeat itself. When the economy picks up and industry wants the coal, it will be gone. We shall be back in the same old situation. The miners will be called upon to increase productivity even further to meet the demand. Therefore, the hon. Member for Wrexham is wrong. The lads in the industry contribute whenever they are called upon. I am convinced that the new president of the NUM will give good leadership and that we shall all work together.

5.1 am

Mr. John Moore

With the leave of the House, I shall reply to the debate. I am sure that all hon. Members would like to spend a short time in bed. Therefore, I shall respond briefly to some of the points raised.

I reconfirm the figures mentioned by the hon. Member for Midlothian (Mr. Eadie). So far, £787 million has been paid cumulatively, leaving £213 million of the £1,000 million. Therefore, there will be more than enough for the autumn, but, as the hon. Gentleman rightly said, it would be wise to go to the full £1,750 million limit.

The hon. Gentleman also asked about the size of the borrowing limit. The provision in the 1982 Act enables it to be raised from £4,500 million to £5,000 million, by order. This is sufficient to meet its requirements until the financial year 1983–84. As of 18 June 1982, the board's borrowing was £3,292 million. As all hon. Members with an interest in the coal industry know, I share the desire to persuade the authorities to allow us to hold debates at more normal hours.

I turn to the hoary chestnut of foreign competition. This is not the time to go into the matter in detail, but in 1981 imports of British coal by France, West Germany and Belgium stood at 2.9 million tonnes, 1.8 million tonnes and 0.4 million tonnes—5.1 million tonnes in all. Yet the United Kingdom imported from these countries a total of only 100,000 tonnes. With the successful activities in our coal industry, we are exporting to countries whose subsidies go to stagnant or declining industries rather than to the developing and growing industries that we hope to see in this country. Unfortunately, I was unable to attend the NUM conference, because, for the first year out of four years, the invitation that has normally been extended to me was withdrawn. Obviously, I was saddened by that. I would have loved to attend, as I have done for the past three years. However, as I was unable to go, I cannot comment on the detailed points that have been raised.

I hope that all those interested will fight, not for a particular class, but for the success of our British coal industry. A successful coal industry will be achieved, as the new chairman of the coal industry, Norman Siddall, said at Inverness, by keeping the customers that we have and winning new customers. Surely, we should all be interested in that if we are interested in the future of coal. It is important to make the prices competitive and to get the coal to the new markets. I trust that the order, which increases the grant limits to the board, will help the board in that objective.

Question put and agreed to.

Resolved, That the draft Coal Industry (Limit on Grants) Order 1982, which was laid before this House on 18th June, be approved.

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