§ The Under-Secretary of State for. Energy (Mr. Giles Shaw)
I beg to move,That the draft Coal Industry (Borrowing Powers) Order 1983, which was laid before the House on 1st July, be approved.The purpose of the order is to raise the limit on the National Coal Board's accumulated borrowings from £4,500 million to £5,000 million in accordance with section 1 of the Coal Industry Act 1982. The purpose of providing for such interim orders on borrowing powers is precisely to give the House from time to time an opportunity to debate the progress of the industry concerned. Therefore, I shall confine my remarks to a brief span in order that hon. Members may make their contributions.
I must begin by making it quite clear that the board, like any other nationalised industry, has exercised and will go on exercising its borrowing powers within the framework of external financing limits settled with the Government. This order does not change that position.
The National Coal Board's financial position and prospects are, as hon. Members know, serious. The board has been under great pressure in all its markets, both on volume and on price. The board's sales in 1982–83 amounted to just over 120 million tonnes, 2.25 million tonnes lower than the previous year. Even this figure was achieved only because power station stocks rose by 10 million tonnes. The prospects for this year are for a continuing reduction in sales. As a result, national coal stocks, both at the pithead and power stations are likely to reach around 60 million tonnes by the end of the year. That represents about six months' consumption at the current annual rate. This is a highly competitive market with little room for price increases if sales are not to be put at risk. Therefore, despite increasingly high levels of productivity and vigorous efforts by all parts of the board to contain costs, I understand that the board's accounts for the year will show a loss of £111 million after deficit grant of £374 million. As accumulated losses now exceed the board's reserves, my right hon. Friend the Secretary of State, has confirmed that he will continue to make advances to the board from the national loans fund.
The causes of that position are well known. Sir Norman Siddall and his colleagues have often explained them. He has made the point that 10 million tonnes of the board's capacity is responsible for a loss on revenue account of £400 million a year. The recent report by the Monopolies and Mergers Commission has only underlined what the board has often said. For example, the Commission estimates that if capacity were reduced by 10 per cent. and the reduction could be concentrated on those pits with the largest operating losses per tonne, the NCB's finances would be improved to the tune of £300 million a year. The root of the problem is simply that the industry is producing more coal than it can sell profitably and suffers a cash drain from its huge stocks of unsold coal. In addition, the continued operation of a relatively small proportion of heavily loss-making pits swallows up resources which could be used elsewhere. This is the stark economic reality that everyone in the industry must face.
In this context, I should like to take this opportunity to pay tribute to the realism and leadership of Sir Norman Siddall, whose term of office as chairman will come to an 720 end on 31 August. His notable, though brief, tenure of the chairmanship is only the culmination of more than 40 years' service to the coal industry. I know that the whole House will wish to join me in regretting that his health made it impossible for him to consider reappointment and in wishing him a long and happy retirement.
The Government's objective for the coal industry has often been set out. We wish to see a strong and viable industry, which can give customers secure supplies of fuel at competitive prices and can give its work force secure and prosperous employment. Within that over-riding objective, we look, as my right hon. Friend the Chancellor of the Exchequer has often said, for the earliest feasible return to economic viability. Mr. MacGregor's objective will therefore be to continue the task so ably pursued by Sir Norman and to focus the board's efforts on the earliest practicable return to profitability, on competing successfully in the market place and developing new markets for British coal, and on securing the highest possible efficiency and control of costs. That is the only prerequisite for providing stable and well paid jobs in the industry.
While the industry is moving back towards viability, the Government are ready to support the board, as they have done in the past. Last year, grants to the board of all types, including deficit grant, amounted to almost £520 million, and they are likely to be higher this year. Those grants, like the substantial amounts that have been paid in previous years, represent action by the Government to protect the industry from short-term fluctuations in demand.
Despite that high level of grant support, we have also financed a continuing high level of capital investment. The board's capital investment approval for this year will be some £800 million. That is a substantial figure compared, for example, with British Rail's capital expenditure of £337 million and that of British Steel of £217 million. As Sir Norman Siddall has said, expenditure at that level hardly shows any intention to destroy the industry. As a result of the £4,500 million that has been invested since 1974–75 under the "Plan for Coal", over £3,000 million, or two thirds, has been invested in the four years since a Conservative Government were elected in 1979 compared with £1.5 billion in the preceding five years under a Labour Administration.
Support on that truly massive scale is based on the firm expectation that the industry will return to economic viability within a reasonable time. That is why we back the industry on the scale we do. That is why we support the board in its determination to grasp the nettle of its longstanding losses. That is why in May this year we greatly improved redundancy terms to ease the social pressures. That is why we have extended the coal conversion grant scheme to help the industry find new customers.
The present order should be seen in this context. It is necessary to secure continued access by the board to borrowings out of which it can finance capital investment and working capital. As I told the House earlier, the present limit of £4,500 million was set by the Coal Industry Act 1982. On 30 April this year the board's total borrowings stood at £3,856 million. Because of the pronounced seasonal peak in the board's business, borrowings are expected to rise to £4,287 million in July and to £4,850 million in September, which is in breach of the limit. The order is therefore necessary to enable the 721 board to continue its normal operations. I am sure that the House will justify this confidence. I ask the House to approve the order.
§ Mr. Alexander Eadie (Midlothian)
It is customary to congratulate Ministers on making their debut speech from the Front Bench. I hope that we will hear much from the Minister with his responsibility for the coal industry. I hope that he will make much more optimistic speeches than the one that he made tonight finishing at the late hour of 12.28 am.
The hon. Gentleman probably set the tone for the debate. In his introductory remarks, he said that this was the opportunity for the House of Commons to debate the progress of this great industry. I feel that I speak on behalf of my hon. Friends in protesting at our being given only one and half hours to debate the industry's progress. That is a scandal.
The Minister said that the order will increase the coal board's borrowing limit by £500 million. Neither I nor my hon. Friends will oppose the idea that there should be more investment in the coal industry.
§ Mr. Eadie
In the memorandum attached to the order the Government say that the order is needed because oflower proceeds resulting from reduced demand and lower prices of competitive fuels and overseas coal.Will the Minister confirm that we have the cheapest deep-mined coal in the EC? Will he also confirm, however, that we cannot compete with overseas coal, which is primarily opencast coal, as it is sold below the cost of production and is subsidised to offset the impact of the recession in what could be broadly described as the Western world? I do not include the slave labour conditions of South Africa.
I hope that when the Minister introduces future orders dealing with the coal industry he will say that it is in the country's defence interests to have a strong, viable coal industry.
Stretching to the middle east and beyond are politically unstable regimes. Therefore, to reduce the industry, as the Minister's speech implied would happen, would be against the national interest. It is still a classic truth that a nation without access to energy, particularly indigenous sources, will wither from the industrial league of nations.
We have more than 300 years of coal with existing technology and perhaps 1,500 to 2,000 years of coal when technology improves, as it surely will, and coal is still cheaper than oil.
The Minister said that higher interest rates were a factor leading to a need for increased borrowings. It is strange that the order is needed because of lower demand. The Government have created that by their policies, which have also generated an army of unemployed people and the wholesale destruction of industry. Is it not strange also that the Government should refer in the memorandum to high interest rates?
The Government and Conservative Members generally describe all of the money that the NCB receives as a subsidy. Will the Minister spell out what the NCB has to pay in interest on its borrowings? Does he believe that the so-called subsidies are a good investment for the nation? The Minister mentioned £800 million. No doubt it, too, will be called a subsidy.
722 According to the Conservative party's reasoning, every industry receives a subsidy. I am glad that the Minister recognises that the Government are introducing order because of interest rates. I hope that he will remember that the NCB, like other industries, has had to pay interest. That is an elementary point, but, to listen to some hon. Members, one would think that the NCB was different and that every penny it received was a subsidy. I have described that attitude as "Thatcher's Law". The Prime Minister always describes the money that the NCB gets as a subsidy. It is strange not to apply the same argument to other public and private industries.
When the Minister discussed the external financing of the NCB, was any advice given about the other markets that will be available so that the problem of rapidly increasing stocks can be dealt with? What has happened about liquefaction? Will the order provide money to get the Point of Ayr scheme off the ground? In the past four years, we have had nothing but excuses on the liquefaction of coal and the Point of Ayr scheme. What is happening with the conversion schemes that the Minister mentioned? We are told that money is or is not available for that, but not much is happening. I understand that industry wants to go ahead but, for some reason, it is not proceeding at the pace that we were led to expect. Therefore, did the Minister discuss with the NCB any offers of Government help on coal to oil conversion schemes, which would do something to alleviate the problem of existing coal stocks?
What about coal gasification? Some interesting material on the subject has appeared on my desk. As a former Minister. I know that the technology is available to make synthetic North sea gas. The Minister would be constructive if he told what progress had been made.
Before approving the order, Parliament is entitled to be assured of the progress of the coal industry. We must be assured that the NCB, in conjunction with the Government, is organising the industry efficiently. To some extent the unions are accusing the NCB of not doing so as efficiently as it should. I have just attended the miners' conference at Perth. I saw no Ministry representatives present, and that was a pity.
The unions are accusing the NCB of violating long-established procedures on pit closures, because it seems that it is closing pits before the normal conciliation procedure takes place. That is serious. I refer, of course, to Cardowan in Scotland, about which there has been much publicity. May we be assured that the general organisation of the industry is as it should be? The industry has a long and proud industrial relations record. At one time my hon. Friends and I talked about industrial relations in the industry being the envy of the rest of British industry, but, according to the unions, a change has taken place.
It is alleged that the NCB is locking men out of the Polmaise pit in Scotland. Does that mean a change of strategy in the board's general organisation? Apart from an extra £500 million, should not the order call for a new industrial relations strategy? I hope that the hon. Gentleman will comment on these points because they are important.
The hon. Gentleman also suggested that the Monopolies and Mergers Commission's report substantiated the case for the increased sum for which he now seeks approval. The report has not been as well received by the coal industry as the hon. Gentleman seems to think. Its terms of reference are wrong and it will fall off its 723 pedestal. As the old saying goes, the wrong questions will produce the wrong answers. The unions even refused to give evidence to the commission because they recognised that the terms of reference were cockeyed.
It is right that we should mention anyone who gives great service to the coal industry, and the Minister was right to mention the imminent retirement of Sir Norman Siddall. It is only proper that we should mention someone who has given a lifetime's service to the industry and who is now ill. I do not want to criticise any of the Minister's generous comments. However, it is unfortunate that Norman Siddall will leave the industry against the background of a complete change in the Government's strategy. The previous Tory Government failed to sink a new pit and no new pit has been sunk in the short life of the present Tory Government.
The Minister knows that the appointment of Mr. MacGregor has not been welcomed in the industry.
§ Mr. Eadie
A written question was tabled asking how Mr. MacGregor's £1.5 million transfer fee would be paid. It seems that the Department of Energy will have to pay it by making economies within the Department. This means that the energy industry generally will have to pay the fee. It is a most unfortunate appointment. It is equally unfortunate that the Minister, who is making his debut at the Dispatch Box in his new capacity, decided to suggest the policies and the roles that Mr. MacGregor should pursue. When are we to have a chairman who is as unacceptable to the coal industry and the unions as Mr. MacGregor, I fear not so much for him but for the future of the industry.
I hope that the Minister will see fit to reply to the serious issues that I have raised, for there are many of my hon. Friends who still have coal dust in their lungs. We love the industry and we believe that its expansion will mean prosperity for the nation. We shall fight like tigers to prevent anyone massacring what we regard as our industry and the nation's industry.
§ Mr. Barry Henderson (Fife, North-East)
First, I must declare an interest as one who advises a small company in the private sector of the coal industry.
The House always listens with respect to the hon. Member for Midlothian (Mr. Eadie) when he talks about the coal industry, a subject about which he knows more than most of us. He has a great deal of practical experience. I cannot say that I agreed with all that he said, and some of what he did not say was of particular interest.
I was particularly interested in what the hon. Gentleman said about coal gasification, because if it had not been for the general election campaign, I would have gone to Westfield to see some of the advanced work being done by the Gas Corporation on coal gasification there. I also remember the hon. Gentleman speaking on a sad occasion on the Cardowan colliery, and his reference to it as a gassy pit. That is just one of the factors about Cardowan that should not be forgotten when there is an argument going on about whether it should remain open. Never mind the economics, which are bad enough, it is not a pit that most of us would like to see people working in in such danger.
§ Mr. Eadie
I am grateful for the generous comments that the hon. Gentleman has made, and I am not trying to score any debating points. I worked in the coal industry for 30 years, and all the pits in which I worked were gassy pits. Most of the pits in which miners work are gassy, so I hope that the hon. Gentleman will not hang his hat on the fact that the Cardowan pit is gassy.
§ Mr. Henderson
I shall not hang my hat on that fact alone. One of the troubles with some of the pits that are uneconomic is that they are often those that are the least attractive to ask a man to work in.
The order comes with a memorandum that says that the aggregate borrowings are increasing this year by £100 million a month between April and September, which is an enormous sum of money. It goes on top of the fact that in 1981–82 the Government granted aid to the Coal Board of £575 million, and the board borrowed a further £905 million. Those are enormous sums of money. The order comes at the same time as the Monopolies and Mergers Commission report on the National Coal Board, Cmnd. 8920, which is a devastating indictment of the ways in which the money provided by the Government over the years has been used in the national interest.
I think that it is in order for me to put on record what the commission has said, in careful, considered, judicious and judicial language, which has given all the more force to some of the points. For example, it says:The performance of the coal industry affects the whole of the United Kingdom economy".That is a point that the hon. Member for Midlothian is emphasising. It adds:coal represents 45 per cent. of the Central Electricity Generating Board's costs.On page 364, it says:On the information available to us, there is little possibility that the NCB will be able to operate without a deficit grant, let alone generate sufficient funds to finance any significant part of its own capital investment, before the end of this decade.The part that is most serious and most relevant to the order comes at paragraph 19.9, on page 365, which says:The Plan for Coal of 1974 was intended to produce over 40 million tons of new and modernised capacity to meet the expected increase in demand and to offset the exhaustion of old capacity. There has in fact been no increase in demand and closures have taken place at a much lower rate than envisaged. Nevertheless, until very recently the NCB has persisted with its development plans. We are concerned that these appear to have taken precedence over the statutory obligation to adopt a policy directed to securing that revenues shall not be less than sufficient for meeting all the outgoings properly chargeable to revenue account on an average of good and bad years. We have drawn attention in paragraph 9.111 to the circumstances in which much investment has gone into collieries which are either unprofitable or of doubtful profitability.That was not the purpose for which the funds looked for under "Plan for Coal" were to be used. Paragraph 19.11 states:even with the help of social cost grants, the financial aim set out in section 1(4) of the Coal Industry Nationalisation Act is unlikely to be achieved for many years…Paragraph 19.12 states:The NCB's present aim relating to output and demand seems to us to be undesirably vague.Then follows a section about the problems of over-capacity and high-cost pits. The Minister said that the 10 per cent. least economic pits lose the National Coal Board more than £300 million a year. Surely, if 10 per cent. of production is losing money on that scale, that is a great danger to the future of the coal industry.
§ Mr. Martin J. O'Neill (Clackmannan)
The hon. Gentleman is taking the level of subsidy as a criterion for the closing down of an industry. Will he comment on the fishing industry in his constituency which receives a massive subsidy in comparison to the small amounts of money that the Government give to the coal mines?
§ Mr. Henderson
If I am allowed, I shall be happy to expand on the fishing industry. Suffice it to say that the aid given to the fishing industry at a critical time last year was, if I recollect correctly, £50 million.
§ Mr. Deputy Speaker (Mr. Harold Walker)
Order. I hope that the hon. Gentleman will not widen the debate to cover the fishing industry as well as the coal mining industry.
§ Mr. Henderson
I am grateful, Mr. Deputy Speaker, for your protection. The National Coal Board was receiving £535 million each year for several years, quite apart from its borrowings which, as we see from the order, are rising to £5,000 million. That is a significant difference. I am sorry that the hon. Member for Clackmannan (Mr. O'Neill) raised such a trivial comparison.
Paragraph 19.17 states:The industry's case for investment in new capacity cannot be sustained if it is unable to close down older, uneconomic pits.The NCB and the Government, with their responsibility to supervise it, have been remiss in their duty in using funds provided by the House when, under "Plan for Coal", certain action was to be taken by the Government on behalf of the nation and certain action was to be taken by the people working in the NCB. One side has fulfilled all of its obligations; the other has not. It is time that we did something about it.
Paragraph 19.19 states:the major reason for the over-production and the continued existence of so much high cost capacity, resulting in the present grave financial position of the NCB, has been the failure of the industry to achieve the elimination of 'a broad average of some 3–4 million tons capacity a year' that was accepted by the NCB, the unions and the Government, in the interim report of the Tripartite Coal Industry Examination in 1974.The Monopolies and Mergers Commission states:The longer the problems are left the worse they will become.It goes on to say:In the meantime, much taxpayers' money would have been committed and the price of coal might have been kept higher than it need have been, unnecessarily increasing the cost of electricity to industry and thereby reducing the country's competitiveness in the world market.The NCB's failure to meet its obligation to improve its performance has done serious damage to our whole economy. The MMC, with its limited terms of reference, looked at only some of the board's operations. The one way to make improvements without substantial job losses would be to improve marketing at home and abroad. That aspect needs greater attention and we must look at introducing competition into the coal industry so that all sections of the community may benefit from a great industry which, I believe, has a substantial future.
I urge the Minister to look at the Telecommunications Bill as a possible model for obtaining improved organisation of the coal industry. I do not believe that the House should accept another order like the one before us unless there has been a substantial remedy of the fundamental failures that we have seen in the industry for too long.
§ 1.1 am
§ Mr. Allan Rogers (Rhondda)
It is with a great sense of honour and pride that I rise to make my maiden speech on behalf of the people of the Rhondda valley. I also do so with a great sense of sadness, because I am here as a result of the tragic death of my dear friend, the right hon. Alec Jones. I can say truthfully that I would much rather not be here.
Alec Jones served the people of the Rhondda valley in the House for 16 years. He gave his all for his friends and constituents. I am sure that a substantial part of my majority was an overflow from the reservoir of love and affection that Alec had created in our valleys. I only hope that I shall leave behind a similar residue.
Alec served his party and his country well, in the House and in Government as a Minister at the Department of Health and Social Security and at the Welsh Office. Recently, in Opposition, he was the shadow Secretary of State for Wales. During the election campaign in the Rhondda and since coming to the House I have heard nothing but praise for Alec's work and the warmth and regard of hon. Members, individually and collectively, have been an immense help to his wife and family in a very difficult period.
Following a long line of distinguished Rhondda Members, from Mabon to Alec Jones, I fully realise the heavy responsibility that I have inherited in representing an area which is still suffering, perhaps more than any other part of the United Kingdom, from the rundown of the coal industry. I have had some experience of representing the Rhondda, having served in the European Parliament for the past four years as the Member for South-East Wales. I hope to serve those people with the same diligence in this House as I have tried to exercise in Europe.
I have chosen this opportunity to make my maiden speech because of my interest in coal mining and general energy issues. To some people, the name Rhondda conjures up thoughts of derelict coal mines and the ravages wrought by the private companies. The hon. Member for Fife, North-East (Mr. Henderson) mentioned those companies. Perhaps he would like to return the coal industry to them. The Rhondda has improved substantially since it was left that legacy. Presently it will recover.
The Rhondda valley is probably the most spectacular of the valleys in south Wales. From the southern end of Porth to Blaencwm, Blaenrhondda and Maerdy the eye is constantly assailed by spectacular scenery.
The area was far more beautiful before coal mining started about 100 years ago. The beautiful oak forests were destroyed by the indiscriminate and thoughtless exploitation of the resource. The people of the Rhondda valley have to live with that. Whereas 40 collieries existed once, only two pits are now open and one of them is to close soon.
Many of the closures are due to geological problems and the exhaustion of reserves. That is accepted, but Opposition Members in particular know that many closures are the result of the lack of an effective energy policy for the United Kingdom. We hope that the Government will produce a rational plan for the development of energy resources. When better to plan such a policy than at a time of plenty, instead of it being an hysterical response to a crisis.
727 In a document accompanying the order the Department of Energy states that the National Coal Board needs an increase in external finance because of reduced demand and low prices of competitive fuel and overseas coal. Higher interest charges have also been a factor leading to a need for increased borrowing.
It seems not to matter that our mines are the most efficient in the world. It does not seem to matter that the output per man shift has increased continually since "Plan for Coal". That was not taken into account in hon. Members' obtuse mathematics.
The miners are suffering from success. The penalty of success in the mining industry is closure. Because of the Government's inability to keep energy demand at a reasonable level, the miners who have worked so hard to make the industry efficient and effective have to suffer the penalty.
I was intrigued by some remarks by the hon. Member for Fife, North-East, who has a fishing as well as a coal interest. He spoke of introducing competition to the coal mining industry. It is obvious that he knows nothing about the industry, but he has an obvious need to read chapter after chapter from documents.
I have a copy of the Coal industry Commission Act 1919, which I commend to the House and an interim report by the commission, chaired by Mr. Justice Sankey, who later became Lord Chancellor. The first world war was almost lost because of the incompetence of private industry in providing the necessary back-up for our soldiers in France. It was decided to set up the Royal Commission and its recommendations were substantial. It was said that the coalmining industry was too vital to the country to be left to private greed.
In 1919 the commission stated categorically:Even upon the evidence already given, the present system of ownership and working in the coal industry stands condemned, and some other system must be substituted for it, either nationalisation or a method of unification by national purchase and/or by joint control.It went on to state, illuminatingly:We are prepared, however, to report now that it is in the interests of the country that the colliery worker shall in the future have an effective voice in the direction of the mine.Even in 1919 Mr. Justice Sankey suggested that our indigenous fuel resources were too precious to our economy to be left in the hands of private industry.
However, that has been the sad history of nationalisation in Britain. One after another of our industries has had to be nationalised because it has been driven to bankruptcy in private ownership. Once the state has restored an industry to profit, the Conservative party wants to sell it off to make money for its friends. They cannot do that with coal mining, because the miners will not stand for it.
When Conservative Members quote facts, they should at least get them right. British miners can compete against the miners of any other country, and certainly against their European colleagues.
I shall give the House some comparative figures issued by Commissioner Davignon to the European Parliament committee on energy and research. He sets out the financial measures taken by member states to support coal mining output. I am sorry that the figures are in ecus. I should much rather be out of the Common Market so that we could measure them in sterling, but as Conservative Members wish us to remain in the Community they can multiply the figures by 0..58 to convert them to a decent 728 coinage. The Federal Republic of Germany's support in ecus per tonne is 7.97. In Belgium it is 31.68, in. France it is 36.4 and in the United Kingdom it is 5.81 Does the Conservative party expect the British miners to compete under that handicap? Is that a free market? Are they unfettered going into the areas in which we wish them to compete?
If the Minister does not believe that these are valid figures, I am prepared to argue them more forcefully. the figures show indirect measures, such as special depreciation, facilities for expansion, rationalisation for coal mining underground, expenditure on season tickets and — this is a new concept for NUM-sponsored Members—reduced holiday travel warrants for miners. Perhaps there is some benefit in staying in the Community.
The direct measures include investment aid, concession for initial innovation, miner's bonuses, aid to attract qualified personnel, pit head stock aid, aid for contingency stocks, aid for power station coal, aid to cover pit operating losses, and a separate category of coking coal aid.
I am sorry, Mr. Deputy Speaker, if I have broken with tradition by making such a maiden speech, but I am passionate about coal mining. I am the youngest of 12 children, and my father, who was a coal miner, was crippled in 1926 and did not have an opportunity to work until the war brought some jobs to my area of south Wales, so perhaps the House can understand my passion. My opinion of miners—it is a reasoned judgment—is that they are the hardest workers that one could come across and that they are a proud people. I am proud to represent them, the Rhondda valley, and to have succeeded Mr. Alec Jones.
§ Mr. Martin J. O'Neill (Clackmannan)
I am pleased to have the opportunity of following my hon. Friend the Member for Rhondda (Mr. Rogers) who made a moving and apposite speech, not just in paying tribute to his distinguished predecessor but in showing, on the basis of that contribution, that he has a distinguished career ahead of him in the House. The mixture of compassion, reason and erudition made it plain that we can expect some valuable contributions from him.
I am speaking in a coal debate for the first time because a readjustment of the constituency boundaries has brought Polmaise, a coal mine which is at the development stage, into my constituency, although since 1979 I have had the pleasure of having Castle Bridge mine in my constituency. When I was a prospective candidate my hon. Friend the Member for Midlothian (Mr. Eadie) invited me there. It was the only shaft sunk since about November, 1978.
I want to talk briefly about the Minister's complacency when discussing the future of mining. I had the experience of visiting Polmaise pit in Stirlingshire this morning. The men are not preparing the mine for increased production. They are being locked out by a management whose approach to industrial relations brings back all the worst memories that resulted in the Sankey committee report. The way in which the management of the National Coal Board in Scotland is handling the cut-down and closure does not bode well for the industry's future in Scotland.
It is not for me to enter a debate now about the possible closure of Cardowan, because the colliery review procedure has about six and a half months to be worked through. However, it would appear from the reports that 729 I received this morning from the delegate from that pit that the board seems to assume that the review procedure is unnecessary and that the men should be dispersed at the earliest possible opportunity. The indecent haste with which the Coal Board seems to be carrying it through has brought about some of the strangest happenings in recent memory. Men are being given an extra week's holiday to leave Cardowan and go to another pit. The disturbance money is being brought forward within days when normally such procedures take weeks if not months.
The problem arose in the Polmaise pit because there was an agreement between the National Coal Board and the unions which was confirmed in May this year during the general election campaign—although that has little significance—that there would be no transfer of men into Polmaise before any of the men from there had moved to the Longannet complex.
The NUM officials at Polmaise approached Mr. Wheeler of the Coal Board courteously last week to discuss the point that before any men came from an outside pit consideration should be given—I hasten to add that it was no more than consideration—to the agreement that had been entered into with respect to the men who had been transferred from Polmaise to the Longannet complex. Mr. Wheeler refused to speak to them. Following that, a certain situation was created—a lock-out. It has been said that there are allegations of a lock-out, but there are no allegations, only facts. The facts are quite clear. The men in that pit are prepared to go to work. They have been turning up, but have found the gates closed. That is intolerable because the men were expecting big pay packets before their holidays. It brings back distasteful memories of the board's tactics when it sought to close Kinneil colliery just before Christmas. It is now trying to do something equally distasteful just before the summer holidays in the Scottish coalfield.
I do not share the Minister's optimism and complacency, because I know that many of my constituents are very anxious about the future of the coal industry in Scotland, and are distressed at the tactics adopted by the board's management. We can only assume that it stems from national decisions taken in Hobart house. It has been suggested that many of the difficulties are attributable to the lack of demand for the product and to failures that can be directed towards the NCB. Unfortunately, the hon. Member for Fife, North-East (Mr. Henderson), in his copious quotations from the report of the Monopolies and Mergers Commission, forgot to look at page 374. Perhaps he did not get as far as that. Paragraphs 4.70 and 4.71 refer to demand forecasting and state:Comparison of the forecasts made in past medium-term development plans with outturn shows that the errors in the estimates of total disposals of NCB coal are somewhat greater than the NCB might have expected. A large part of the error can be attributed to over-estimation of demand for coking coal.The report goes on to say that that stems from plans adopted as a result of the British Steel Corporation's proposals.
If we are to talk about the funding and future of the coal industry, we must make it clear that the problems confronting the industry are not the creation of the industry, but are the result of the Government's failure to manage the economy adequately. Some of the difficulties simply result from the fact that the NCB has compounded 730 its problems, faced — as it is — with an increasingly depressed and depressing economic prospect for the United Kingdom as a whole. It thinks that it sees the writing on the wall for the industry, and is thus behaving in this way. Although we welcome any money that is put in the coal industry we regret the amount, the direction and the Government's lack of commitment to sinking new shafts and to taking advantage of the technological advances that my hon. Friend the Member for Midlothian supported when he was responsible for the coal industry.
Those of us who are in any way involved with the coal industry welcome the continuance of the NCB's borrowing powers. We recognise that the order is debated against a profoundly depressing background that does not bode well for the long-term future of those whom I and most of my hon. Friends represent.
§ Mr. Dennis Skinner (Bolsover)
We should discuss the NCB's borrowing powers in the context of the sort of borrowing that takes place in other industries. I do not want to develop any of the arguments about fishing, but there are many other examples, and it should not be assumed that because the NCB is borrowing, nobody else is at it.
The other day I read that agriculture received £1,300 million of support. I am not making a special point about that, but I do not hear many Tory Members—including the hon. Member for Fife, North-East (Mr. Henderson), who was complaining, and the Minister—spending too much time whining about the 73x00A3;1,300 million of support for agriculture. The reason is that we want to cut imports of agricultural products. We want to make sure that we produce as much as we can in this country. There may be arguments about whether money is used well, or whether the common agricultural policy is a mess, as it obviously is, but the principal argument about providing the money to establish the support to cut down the import bill is accepted by almost every hon. Member. It is only the mechanics that we quarrel about.
The same is true about money that is spent —although not in the same way—in the Common Market. We do not all agree on money going there. We heard the figure from the Prime Minister the other day—£3,800 million in net contributions over the past 10 years. We should compare that with the amount of the money that the coal board gets. Let us forget about the borrowing powers. This measure is about saddling the industry with a lot of interest as a result of the borrowing that has to take place. Compare it with the amount of money that goes to the Falklands. My hon. Friend the Member for Linlithgow (Mr. Dalyell) said that that is £3 billion. I know for a fact that the Government are spending £600 million this year. Then they talk about uneconomic pits. There are uneconomic things all over Britain, and the British taxpayer finds money, via the Chancellor of the Exchequer, to prop them up. This place is a typical example, coupled with the other place. How much money is used to subsidise this place? No one quarrels with that, because we need a parliamentary forum to pass legislation, or to try to stop it, although some of us could devise a better system, whereby we were not here at 1.30 am, fighting for the miners, or others. We need to spend the money. The same is true of many industries, organisations and establishments. So let us not single out the National Coal Board and the miners for this treatment.
731 When we talk about uneconomic pits, I can tell the Minister, the Monopolies and Mergers Commission, and all those clever people, that there are those of us who have worked in uneconomic pits for a year, and some of us were there for two or three years. Suddenly the strata and the geology changed, the water went, the gas was less than before, and the overheads were massively cut. Suddenly that pit, which had a high sulphur content and goodness knows what else, became economic and finished at the top of the league. The 10 per cent. of uneconomic pits are changing all the time. If we ask the Monopolies and Mergers Commission or anyone who knows a bit about the industry to list the 10 per cent. of uneconomic pits in, say, three months' time, we can bet our bottom dollar that they will be different from today's list. A few of them may still be the same, but the fact remains that the others change.
There is a pit in Derbyshire—Westhorpe colliery in the constituency of my hon. Friend the Member for Derbyshire, North-East (Mr. Ellis) — which was scheduled for closure in 1966 during a wave of pit closures between 1964 to 1966. Then it was suddenly realised that coal was running short. The coal from the colliery had a high ash content, and we were told that it had to close. Norman Siddall was in charge of area No. 1 in north Derbyshire—the very man that some people want to congratulate. I reserve judgment. Suddenly the cry was that Westhorpe — and all the others — had to be kept open. That was when the picture changed. When the oil boom was over, when companies in the Middle East were nationalised, the picture suddenly changed. The miners were wanted again.
Now we are going through a similar phase. I say to those who view this measure purely from the point of view of pounds, shillings and pence, "Take a longer-term view". I point out to the Minister that a Bill went through the House the other week that had some sense in it. Its aim, in trying to get all the oil and gas out of the North sea that we possibly could and to ensure that not a drop was left down there, was to allow the marginal oilfields to be exploited. The Government said that they would allow those marginal fields to be operated on the basis that the taxpayer would be asked to put more money in so that the oil companies would develop them. Labour Members want to do the same in a different fashion. We believe that the state should do it. But the general principle of ensuring that the energy available in the North sea is maximised applies in the same way to the marginal 10 per cent. of pits that the Minister is talking about.
This is the Minister's first appearance at the Dispatch Box. I spoke to his predecessor who is now the Economic Secretary—he has some fancy name. He said that he would look into the subject of concessionary coal for those who had seen the pits closed in the 1960s before redundancy entitlements came through. The Minister should listen carefully. Those people worked in the pits for 40 years and more. They were between the ages of 50 and 60 and they could not get concessionary coal at that time. That was true not only in Derbyshire in my constituency and in the Blackwell and south Normanton area, but also in Durham and Lancashire. The hon. Gentleman promised to look into the matter. He told us that it would cost £1 million. The department will pay MacGregor £1½ million out of its funds to get him down to the National Coal Board, yet it cannot find concessionary coal for this dwindling band of 70 and 80-year-olds and their widows. 732 I hope that the Minister has a note of what I am saying. It will be in Hansard the day after tomorrow. We want that coal for those who have served the industry well.
If the Minister wants to get rid of some of those 60 million tonnes of stocks that he mentioned, why not allocate part of the domestic fuel stocks to the pensioners for the winter? They do not need 60 million tonnes. Let them have a few extra bags to stave off hypothermia.
I have another idea. If there is all that coal at the pithead, tell the Central Electricity Generating Board that the miners, the miners' parliamentary group and the Labour party will get rid of standing charges for electricity providing that the coal is sold a little more cheaply. How is that for an offer? Can the Minister refuse that in order to reduce some of the 60 million tonnes so that the pensioners and disabled will not starve this winter?
I have many more things to say. The money will be used for borrowing. Some of it will undoubtedly find its way into more wages this autumn. There is now talk—quite apart from the board over-reaching itself at Polmaise and elsewhere in Scotland — of this fancy Dan from America with a tax fiddle of £1½ million, saying that there will be no pay increase for miners. I hope that the Government and Mr. MacGregor will not combine and overreach themselves to the extent that they tell the miners that they have nowt to come in their pay packets on a national basis this autumn. They will find that they have picked a nail up. I warn the Minister and Conservative Members, who are clamouring to get at the miners' throat because they have voted in ballots in a way in which they have interpreted as a sliding towards defeat, that that is not the case. Go a little too far and they will find that the miners will rally as they did in 1972 and 1974. I was told then that the mining industry had had it and would never return to unity. Suddenly, there was a flashpoint in 1972 and 1974 and it will happen again. It may be that I shall relish that moment, but that is another argument, not for tonight. I warn the Minister and the Government—do not go too far.
§ Mr. A. J. Beith (Berwick-upon-Tweed)
There are many things that more time would have allowed us to explore tonight, such as challenging the Government on whether they recognise that the competitiveness of the industry depends on investment, and investment depends on borrowing. That is what the debate is all about. We should have had the opportunity to challenge the Government on the marketing of coal. If there is too much coal around, the first answer must be to make better use of the coal available, selling it at home and abroad.
In the little time that is left to me, however, I shall refer to those more immediate aspects of the future of the industry which affect my constituency. There is a background against which my constituents view Government energy policy. They are faced with the prospect of having on the doorstep of two collieries a nuclear power station. It is part of the Government's commitment to nuclear power, which shows a remarkable confidence in the dubious accounting of nuclear power, which has been fully shown up by the Select Committee on Energy, alongside an inadequate confidence in the coal industry, the record of which is more clearly proven and in which figures are much clearer and easier to predict.
That is remarkably obvious at Druridge bay in my constituency, where the nuclear power station is 733 threatened to be built. Alongside the proposed site is the productive Ellington colliery, and another two miles down the road is another colliery now under a closure proposal, Lynemouth. Within my constituency there is a third pit, Whittle. A fourth colliery, Shilbottle, was amalgamated with Whittle just a couple of years ago, under schemes for resettling miners, which Conservative Members questioned at the time.
The hon. Member for Tynemouth (Mr. Trotter) criticised the National Coal Board for paying miners disturbance money to move from the Shilbottle to the Whittle colliery. I wonder whether Conservative Members will do the same again as the NCB attempts to amalgamate the Lynemouth and Ellington collieries. There is not much prospect of that amalgamation going through if it is subject to such an attack from Conservative Benches as the previous amalgamation was.
The Ellington colliery is a remarkable success story, which proves what investment can do in the coal industry. Lynemouth colliery was intended to be the same. In its time it was a showplace pit, but it has had beyond its share of bad luck in its time, ranging from the fire that it experienced to some of the geological problems that it now has. It has not been a lucky pit, and has not had the level of investment that Ellington has.
The miners at Lynemouth, who now have to consider whether to accept the amalgamation proposal, view it against the background of a headlong, unrestrained Government commitment to nuclear power right on their doorsteps. They view it also against the background of the appointment of Ian MacGregor to the chairmanship of the board and the threat that that poses to some of the pits to which some of them are to be sent if the closure goes through.
One of the features of the proposals that caused most anxiety at the initial stage was that not all the men who would stay in work, as opposed to those who would get redundancy or early retirement, were to be offered jobs at Ellington. Some of them were to go to other pits, which may on the face of it have a decent future, but may not have much of a future when Mr. MacGregor takes over the National Coal Board and the pressure for closure increases. It is important that the NCB ensures that there is a future for all the Lynemouth men at Ellington if it wants the amalgamation to go ahead.
The matter is still under discussion. Neither I, the Minister nor hon. Members should make the task of either side of the discussion any more difficult, but it would be easier if there were a clear guarantee that all the men who want to will be able to go to Ellington. If the National Union of Mineworkers reverts to its historic practice of always operating by secret ballot, the discussion could proceed in the best possible way. It was an unusual lapse from that practice that a lodge meeting at Lynemouth just over a week ago had an open show of hands vote on a closure proposal. There is no union with a better record of operating secret ballots than the NUM, which in its existing practice goes beyond what the Government wants to enforce on other unions. It is by traditional NUM democratic procedures and the usual consultation process that this issue should be examined.
The Government, in seeking to encourage the board to undertake measures that involve closure proposals, cannot divest themselves of the image that their nuclear 734 enthusiasm has created. They are bound to find that closure and amalgamation proposals such as those at Lynemouth and Ellington are viewed against that background. It is a difficult decision for the men to take, faced with this apparently massive commitment to nuclear power and with the threat that they understandably see in the appointment of Mr. MacGregor. They want to see much more commitment to the coal industry than has been demonstrated in what the Minister said tonight or in recent Government statements and decisions.
§ Mr. Frank Haynes (Ashfield)
I wish to take up one point that the Minister made about the mining industry. Why have the sales of coal fallen? We hear far too many explanations from the Government Dispatch Box for what has gone wrong in the mining industry. Since May 1979 the mining industry has taken a hell of a bashing from the Government by way of comments, which has not helped matters. The Government have attacked the NUM and the national president. That is all they do. At the same time they have attacked the trade union movement as a whole, which in turn affects the NUM.
I have been a member of the NUM for many years. I feel the things that are said by Ministers at the Dispatch Box and the comments made by Conservative Back Benchers. Why have the sales of coal fallen? Why is the electricity industry in its present position? What is wrong is that half of industry has been closed down by the Government's policies. Industry is not buying coal, but the miners are breaking output records at most pits. They do so regularly in my constituency at pits which, not long ago, the coal board said it would close.
A beautiful example is the Sherwood pit in the constituency of my right hon. Friend the Member for Mansfield (Mr. Concannon). I remember Sir Hubert Houldsworth, the then coal board chairman, deciding that Sherwood pit should close. I remember Lord Taylor of Mansfield, formerly the Member for Mansfield, appealing to Sir Hubert Houldsworth not to close the pit. The pit was unprofitable at that time. My hon. Friend the Member for Bolsover (Mr. Skinner) made the point that, in a short space of time, the circumstances at a pit can change. It may be uneconomic at one moment, but four months later the position may have changed. That was the case with Sherwood and it now makes a profit of about £6.5 million a year.
It is no good the Government saying that they have nothing to do with closing pits and that they leave that to the coal board. They have tied the coal board's hands behind its back. They are forcing the National Coal Board to take these decisions. Mr. MacGregor has his marching orders. We are not daft. We have worked in the mining industry for far too long. We know what is going on. Mr. MacGregor has his orders on pit closures.
I wish to tell the Minister, the Government and Conservative Members that there will be one hell of a fight from the NUM. It is no good saying that the NUM has had a ballot before. The mistake then was that closures were linked with wages. There will be a question on the ballot paper this time about pit closures. I wish to make it clear to the Government that things will be different this time. The lads at the pit realise what is going on. They will understand the issue of pit closures and they will realise that they are being put out of work by the way they are working—by the bonuses they earn, by the increased 735 productivity in the industry and by the stocks of coal that are costing the coal board a fortune because industry, as a result of Government policies, does not need it.
I could speak for a great deal longer—[Interruption.] —I nearly swore then. It is all very well for my hon. Friend the Member for Hemsworth (Mr. Woodall) to keep on at me, but I was squeezed out of one coal industry debate. I had been here all night and was not called, although my hon. Friend was.
§ Mr. Woodall
I am grateful to the Minister. My hon. Friend the Member for Rhondda (Mr. Rogers) made an excellent maiden speech which should have been heard in a much more crowded Chamber. He put his finger on the pulse. The problems of the mining industry have been created by its success.
I put just one question to the Minister. When energy experts are saying that North sea oil and gas will be in decline by the late 1980s, why are the Government considering installing a natural gas pipeline from the mainland to Northern Ireland? Why, when all the experts say that it would be much cheaper, would help the country, Northern Ireland and the mining industry if a coal-fired gas plant were installed in Northern Ireland, are the Government laying a gas pipeline?
§ Mr. Giles Shaw
With regard to the last point of the hon. Member for Hemsworth (Mr. Woodall), when I was responsible for those matters in Northern Ireland I recall that we had a large coal capacity. We then built a large oil capacity. The problem of supplying energy that is generated in Northern Ireland at a reasonable price remains. I suspect that the gas pipeline to which the hon. Gentleman referred is that from Kinsale in the south.
I thank the hon. Member for Midlothian (Mr. Eadie) for kindly welcoming me to these debates. I shall be glad to learn as much as I possibly can in as short a time as possible. I suspect that it is from people such as the hon. Gentleman that I shall learn important facts about the industry.
The hon. Member for Rhondda (Mr. Rogers) made an exceptional speech on a subject that he knows well—the coal industry in Wales. He spoke in a manner which was up to the high traditions that his predecessor ably demonstrated to the House. Those who knew his predecessor respected him greatly. I am sure that we shall hear much more from the hon. Gentleman. I wish him well.
The issues that have been raised fall into two parts. The first concern individual constituency problems relating to the closure or threatened closure of pits. The hon. Member 736 for Clackmannan (Mr. O'Neill) raised the difficulties at Polmaise. I agree that circumstances there are extremely unsatisfactory. He will know that the problems associated with the transfer of men from Cardowan has resulted in disagreement whereas agreement had been reached with the NUM. I hope that better thoughts prevail in a day or two.
Likewise, the hon. Member for Berwick-upon-Tweed (Mr. Beith) mentioned the transfers to Ellington from Lynemouth. I fully understand his point. It is vital that a long-term future be guaranteed to any transferee who is asked to move to another pit. However, the hon. Gentleman knows as well as anybody that the judgment of the time is the best that can be made. That must remain the view.
The second group of issues concern the NCB's financing and future. The Government's commitment to continue financial support for investment and for running costs, as the order makes clear, is complete. It is crucial that we support and develop an effective coal mining industry, based on the obvious fact that the resources available are substantial, will last much longer than most other resources at our command and, if efficiently mined, must produce a world-beating resource. We are really discussing, once again, the short-term problem of financing and the long-term problem of development. The two are interconnected because the problems that we face in deficit financing are clearly due to the difficulties of trying to sell coal at the price at which it is mined.
The hon. Member for Bolsover (Mr. Skinner) is quite right to say that there will be changes. Today's economic pits can become tomorrow's uneconomic pits. I guarantee to examine the issue of concessionary coal which he raised again today quickly. As my hon. Friend the Economic Secretary to the Treasury is here, I can say that I know that he will keep himself up to the mark in that regard.
We must arrange the affairs of the coal industry in such a way that investment can continue and the sale and marketing of coal can be expedited. There can be no question but that we can produce coal that can be more competitively priced. As a result, larger volumes will be sold, there will be greater viability within the industry and greater job security.
The House will surely agree to pass the order to lift the borrowing to £45 billion, as permitted by the Act. I welcome the debate, and I trust that the House will pass the order.
§ Question put and agreed to.
That the draft Coal Industry (Borrowing Powers) Order 1983, which was laid before this House on 1st July, be approved.