§ Order for Second Reading read.
§ 4.6 pm
§ The Secretary of State for Energy (Mr. Peter Walker)
I beg to move, That the Bill be now read a Second time.
This is an important debate because we are talking about a substantial extension of the financial requirements of the National Coal Board. The external financing limit of the NCB will be well over £1 billion for the year 1983–84. In that year both the deficit and social grants of the NCB will be about £650 million—on average, £50 per week for every person employed in the coal industry. Even after those grants, it is expected that there w ill be a loss of almost £200 million by the NCB. Therefore, it is important that we review the present situation and take the action that is necessary so that the finances of the NCB are provided for and its activities continued. We should also make judgments on the need for improvements in productivity and performance and review the scope of the industry.
In 1973 I introduced the Coal Industry Act of that year, which the National Union of Mineworkers described as the most important and beneficial Act for the coal industry since the original Act resulting in nationalisation. When I did that I was optimistic about the future of the coal industry and its importance to our energy resources. Ten years later I am again responsible for energy, and I emphasise the immense importance of the coal industry for long-term energy supplies in this country and western Europe. We have important and good coal reserves. Our coal mining machinery industry is as good, technologically, as any in the western world. Therefore, that area of energy provision is of considerable importance to us.
I am sure that on reflection hon. Members on both sides of the House and those who represent mining constituencies will be concerned about the dramatic adverse features of the NCB's finances, reflected in the necessity for the Bill to be introduced. When the Labour Government came into power in 1974, they produced "Plan for Coal" after a dialogue with the NCB and the NUM. They envisaged that that important plan would ensure that the mining industry had a strong, successful and viable future. If one reads the debates that took place in the House at that time and those that took place when the strategy was reviewed in 1977, one sees that there was on both sides of the House an expression of hope and confidence.
Basically there were three major provisions in "Plan for Coal". One was a substantial investment programme of considerable proportions. The second was that there would be a reduction in the capacity produced by the least economic pits. The third was that there would be a substantial improvement in productivity as a result of the enormous investment programme that was to take place. Anyone reviewing the scene 10 years later will find that of the three basic ingredients — the investment programme, the reduction in economic capacity and the improvement in productivity — the only one that has 735 been completely fulfilled—indeed, more than fulfilled—is that for which the Government have responsibility: the investment programme.
The investment programme has been substantial by any standards. To give the House the figures, during the immediate period 1974 to 1979, following the publication of "Plan for Coal" by the Labour Government £1,472 million was invested in the coal industry—a substantial sum, and up to what had been promised in "Plan for Coal". In the period since then, 1979 to 1983, when the Conservative Government have been in power, investment in the coal industry has been £3,511 million. During the whole period of the Conservative Government the investment has run at more than £2 million a day.
§ Mr. Walker
To use a phrase, some chicken. The totality is considerable. The hon. Member for Bolsover (Mr. Skinner) may be under the same wrong impression as the National Union of Mineworkers has been under. The NUM pointed out in a letter to me that in its judgment we had not fulfilled the investment programme outlined in "Plan for Coal". The NUM stated that we had invested £4,600 million when, adjusted for inflation, we would have needed to invest £6,500 million. That was the view held by the National Union of Mineworkers. I was able to correct that view, because obviously someone had done the sums incorrectly. When adjusted for inflation the figure that has been invested is not £6,500 million, which was envisaged in the Labour party's "Plan for Coal", but £7,150 million. Therefore, by any criteria and any standards, and adjusted for inflation, the investment programme has been more than was envisaged in the original "Plan for Coal". During the entire period of the Conservative Government it has been at the rate of £2 million per day.
§ Mr. Roy Mason (Barnsley, Central)
As the Minister is praising the Government's efforts in maintaining the investment programme in "Plan for Coal", surely he also recognises that within "Plan for Coal" there was a desire for increased output per man-shift, which has been achieved, and an agreement that there should be a reduction in absenteeism, which has also been achieved. This has been achieved with the British coalmining industry producing deep-mined coal with fewer subsidies than its western European counterparts.
§ Mr. Walker
In reply to the right hon. Gentleman I shall examine the next two areas. I have mentioned investment which, by any measurement, has been higher than envisaged in "Plan for Coal". That has gone on under this Government to a greater extent than under their predecessors.
In productivity, the right hon. Gentleman points out that improvements have taken place per man-shift. Indeed, in the last 12 to 18 months, prior to the ban on overtime, improvements were taking place. "Plan for Coal", laid down by the Labour Government and revised in 1977, envisaged an improvement in productivity of 4 per cent. per annum. In the first 10 years, 1972–73 to 1982–83, the 736 total increase in productivity was 4.7 per cent. Instead of 4 per cent. per annum over a 10-year period, there was an improvement in productivity of 4.7 per cent. Therefore, the second main criterion in "Plan for Coal" has by any standards been disappointing.
§ Mr. Walker
I am using the criteria that the Labour Government used in "Plan for Coal". I am using the figures that they used which envisaged an overall improvement in productivity of 4 per cent. per annum. What has been achieved is 4.7 per cent. over a decade. That is the difference.
The second area where a major difference takes place is that "Plan for Coal" envisaged that there would be a reduction in existing capacity of 3 million to 4 million tonnes a year. Obviously investment would bring on new capacity, which it has done and is continuing to do. In practice, during the 10 years of "Plan for Coal" the reduction in capacity has not been achieved, the rate of reduction has been about half what was proposed.
The "Plan for Coal" was put forward enthusiastically by the Labour Government, with their close association with the mining industry. The Labour Government were willing to invest considerable sums, and they genuinely expected reductions of the most ineffective capacity, as well as improvements in productivity. Of the three major factors in "Plan for Coal", only the investment factor has been more than achieved. Progress in the other two areas has been disappointing.
As to the future of the coal industry, it could not be expressed better than in the comments of the then Secretary of State for Energy when the whole position was reviewed in 1977. When the coal industry and the National Union of Mineworkers asked the Labour Government to guarantee a market of 170 million or even 200 million tonnes a year the comment of the Labour Government was:The coal industry has in its own hands the opportunity to shape its long-term future. It has the reserves and the technology to make a major contribution to meeting our long-term energy needs. How much reliance we shall be able to place on coal in future will depend on the industry's success in deploying those assets so as to keep coal competitive with other fuels.That was the refusal of the Labour Government to accept a specific target and a decision that, having made the investment and having agreed the potential for productivity, that is what could be achieved.
§ Mr. Stanley Orme (Salford, East)
The original "Plan for Coal" was published against a different economic climate than we are facing today. What about the collapse of demand? What about what has happened to the steel industry which matches knock for knock what has happened to the coal industry?
§ Mr. Walker
That is right; and the coal industry with other industries has suffered from the problems connected with the world recession. However, one could argue that in such an adjustment of world demand for energy and coal, there was every justification for a substantial reduction in the investment programme. That is the only 737 element of "Plan for Coal" that has been maintained, while improvements in productivity and the closure of the least economic pits simply did not happen. One could also argue that during a world recession there is more justification for reducing the number of least economic pits.
That is the background that has created severe financial problems for the National Coal Board. On 11 July I had to tell the House that, on the basis of its 1982–83 accounts, the board's accumulated losses were greater than its reserves, and that it was technically insolvent. The board had stated its intention of remedying the serious financial position and achieving a return to viability, and I made it clear that advances to the board would continue to be made out of the NLF and that the Government would continue to make avaiable adequate funds to enable the board to meet its obligations.
Beyond the end of 1983–84 new powers are required if our support for the board is to continue. That is the purpose of the Bill, which makes provision for the powers that are needed to support the industry for a further two years. Thereafter, new provisions will be needed. I do not envisage the board's need for support ending after two years, but it will be timely when new provisions are laid before the House in two years' time for the Government and the House to review the board's progress up to that point.
§ Mr. Skinner
I hope that the Secretary of State is not going to make great play of the insolvency, as he calls it, of the National Coal Board, because for most of the period during which he says there was a lack of productivity he, along with Jim Slater, was organising Slater Walker trusts all round the world. That company went bankrupt, and the Labour Government, while trying to deal with "Plan for Coal" and many other matters, had to bail out that bankrupt firm which he had milked so successfully many years before — [HON. MEMBERS: "Withdraw."] The Government used taxpayers' money to bail out that property skeleton. The Minister should be ashamed of himself for attacking both the miners and the Labour Government for providing investment to the British coal industry.
§ Mr. Walker
The hon. Gentleman becomes more pathetic and stupid as time goes on. He mentioned a company with which I was connected, but, as he knows, I had no connection with that company for many years before it was in difficulty. His attitude towards miners is one of the most damaging that any Member of the House could have, because he continually fails to tell them about the reality of the position. He tries to use them as a political instrument for his Left-wing views. I know of few hon. Members who do more damage to the miners' cause than does the hon. Gentleman.
Clause 1 provides for loans to the board from the National Loans Fund to continue to a new limit of £6 billion. At the end of September 1983 the board's borrowing stood at £4,122 million. Clause 1 provides for an interim limit on loans of £5.5 billion, which may be increased by order to £6 billion. Therefore, the House will have a further opportunity to review the industry's progress before the higher figure becomes effective.
Clause 2 provides for a limit of £1.2 billion on the amount of deficit grant which may be paid to the board in the financial years 1983–84 to 1985–86. That limit may be increased by order to £2 billion. It also provides for the 738 repeal of some sections of the Coal Industry Acts 1973 and 1977 which are no longer needed. The grants made under those sections were completed in the 1982–83 financial year. All future payments of revenue grant support to the board other than social grants will take the form of payments made to reduce or to remove the group deficit of the board on its revenue account.
§ Mr. Dick Douglas (Dunfermline, West)
What discussions has the right hon. Gentleman had with the Secretary of State for Scotland about the relationship between the South of Scotland Electricity Board and the National Coal Board, especially with regard to the contract that was announced last week which substantially reduces the coal won and imperils many mining jobs in my constituency?
§ Mr. Walker
I have not discussed that matter with my right hon. Friend the Secretary of State for Scotland since last week, but I shall draw the hon. Gentleman's remarks to his attention.
Clauses 3 and 4 extend for a further two years the powers to make social grants to the board and payments under the redundant mineworkers payment scheme. Those grants and payments have been made for many years, as have grants for pit closures—a rather alarming title for grants which provide reimbursement of half of the board's expenditure on a variety of payments for redundancy and transfer—and support for concessionary coal provisions, which were first introduced in 1965. The redundant mineworkers payment scheme was introduced in 1967 and was extended to include concessionary coal under powers taken in the Coal Industry Act 1973—an Act which I was proud to take through the House. In the debate on both the Coal Industry Acts brought before the House by this Administration, my hon. Friend the Financial Secretary to the Treasury, who was then Under-Secretary of State for Energy, made it clear that the powers to make those grants and payments would be continued after their expiry date of 31 March 1984. This Bill continues for two years in line with the other financial powers.
The present position on expenditure under section 7 of the Coal Industry Act 1977, which I must bring to the attention of the House, demonstrates all too clearly why the higher limit on such expenditure is needed. The present limit of £300 million covers payments under the redundant mineworkers payment scheme and payments to the board in support of the provision of concessionary coal, as introduced in 1973 and as extended earlier this year. The limit of £300 million covers payments made between April 1978 and March 1984. The limit was set by the Coal Industry Act 1982. At the time it was expected to suffice, but since then there have been improvements in the terms of the scheme embodied in the amended order debated in the House on 22 March, and redundancies have increased. During the first half of the financial year 1983–84 there were more than 10,000 redundancies of men on colliery books, compared with 8,100 in 1982–83 and 9,300 in 1981–82. For those reasons I now expect that payments under section 7 will reach the £300 million limit in early December. It is not likely that the Bill will have received Royal Assent by that time, but I am sure that no hon. Member would wish payments to redundant mineworkers to be halted or curtailed until the Bill becomes law. Accordingly, I propose to continue payments under the scheme using money already provided within the Vote 739 upon which the scheme's expenditure is carried. Higher provision for the Vote will be sought by means of a Supplementary Estimate in the spring.
§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
Is the Secretary of State aware that, even after the March uprating, some miners who have worked in the industry all their lives, but who have unfortunately become severely disabled, have not received their full entitlement of redundancy payments, although that was the will of the House in March?
§ Mr. Walker
We are considering the matter now, and I promise the hon. Gentleman that there will be a careful examination of it.
§ Mr. Michael McGuire (Makerfield)
The right hon. Gentleman mentioned the money that is provided for concessionary coal. May I draw his attention to a problem that my hon. Friend the Member for Bolsover (Mr. Skinner) and others have mentioned from time to time—the many men, and the widows of some men who have died, who left the coal industry because they suspected that they had pneumoconiosis. They were not certified as suffering from it at the time. They left the industry and worked sometimes only for a short time in other jobs. If the company for which they worked had a scheme for examining the health of its workers, or if they were so ill that they were sent to the doctor, those men eventually came before the pneumoconiosis medical board and were awarded compensation. I have met some widows, and I recently met a constituent who was certified as 100 per cent. disabled because of pneumoconiosis. He had spent all his working life in the coal industry and had left it for only two years before he was found to be suffering from pneumoconiosis, but he receives no concessionary coal. Will the Minister try to make some small concession for those people, because it would be appreciated by many widows of men who gave a lifetime to the industry and by many miners who are now suffering from pneumoconiosis?
§ Mr. Deputy Speaker (Mr. Paul Dean)
Order. I hope that interventions will not develop into speeches.
§ Mr. Walker
I note what the hon. Member for Makerfield (Mr. McGuire) says, but a vast amount of money is spent on concessionary coal schemes. Perhaps we should consider a redistribution of the money to meet the problems involved. The overall scheme is generous. The redundancy scheme is not related to the aspect that the hon. Gentleman has just mentioned.
§ Mr. Alec Woodall (Hemsworth)
Clause 4 on payments to redundant workers increases thelimit on the amount of such payments from £300 million to £1,200 million.By how many more do the Government expect to increase the number of redundant miners from 1984 onwards?
§ Mr. Walker
The number of redundancies that have taken place so far is higher than was originally expected and estimated. The terms of the scheme have been substantially improved. As the hon. Gentleman knows, this is done by a pit by pit examination. It is done in full consultation with the National Union of Mineworkers. Younger miners have had alternative jobs made available 740 to them, and some of the older miners have had redundancy payments which, by any standards in this country, are generous and reasonable.
§ Mr. Walker
I repeat what I said earlier. The "Plan for Coal" of the Labour Government envisaged that the reduction of existing capacity would be twice as fast as the reduction that has taken place. I deplore those who suggest that it is monstrous to have pit closures and that closures should be opposed, when the record of pit closures since the war shows that pit closures have taken place at a faster rate under Labour Governments than under Conservative Governments. In the past 10 years when Labour Governments have been in power the average number of pit closures has been about 27 a year. In the past eight years of Conservative Governments pit closures have taken place at the rate of 10 a year. I recognise that great problems are connected with any pit closure, but it is absurd for the Labour party to pretend that if it was in power there would not be pit closures when all the time it has been in power there have been substantial pit closures.
§ Mr. William O'Brien (Normanton)
May I remind the Minister that pit closures have taken place where there has been seam exhaustion and where it has not been possible to work a pit? That has been accepted by the National Union of Mineworkers. Will the right hon. Gentleman assure the House that there will be no compulsory redundancies for younger men in the industry? We have had assurances in the past, and even MacGregor has suggested that there will be no compulsory redundancies. Will the Minister give an assurance that there will be no compulsory redundancies in the mining industry?
§ Mr. Walker
That depends on the success of the coal industry in the coming period. The hon. Gentleman suggested that the time for pit closure is when a seam is exhausted. The plan agreed by the Labour Government in 1974 and 1977 of closures at the rate of 3 million to 4 million tonnes a year of existing capacity was based not on pits where seams were completely exhausted, but on the least economic pits being closed and the new investment programme opening pits. The future of the industry is dependent on the time when plenty of young miners can be recruited on good pay and conditions, but that depends on the industry being economic and efficient, as was envisaged by the Labour Government in the "Plan for Coal". While I am responsible for the industry, my objective will be to achieve that purpose. It will be achieved only with a recognition that it is not in the interests of future young miners to keep inefficient and uneconomic pits open. It is very much against their interests.
§ Mr. John Home Robertson (East Lothian)
Does that mean that there are likely to be more redundancies at modern productive pits such as Monktonhall in the constituency of my hon. Friend the Member for Midlothian (Mr. Eadie)? What consultations took place before those redundancies were declared?
§ Mr. Walker
The procedures for pit closure are agreed with the National Union of Mineworkers. When I met the miners' leaders, they asked me to guarantee that the board will continue the existing procedure on pit closures. It is the view of the board that that should take place.
§ Mr. Alexander Eadie (Midlothian)
The right hon. Gentleman must be better briefed if he is to suggest that the redundancies at the Monktonhall colliery in my constituency took place after consultation with the National Union of Mineworkers. I must tell him that there was no consultation, which was one of the causes of an eight-week strike.
§ Mr. Walker
That was a matter not of closure, but of achieving productivity that had been agreed and negotiated previously. That was the issue, and the hon. Member for Midlothian (Mr. Eadie) knows it well.
Clauses 5 and 6 deal necessarily with the interpretation, citation and extent of the Bill.
We are debating a massive further injection of money into the coal industry. Any suggestions, cheap propaganda, gibes or phrases about the Government wishing to destroy the coal industry or to make miners redundant on a large scale for the joy of doing so are nonsense. The facts and the figures that I have given to the House this afternoon prove that. In the history of this country no other Government have invested anything like £2 million a day in capital investment in the coal industry or, indeed, any other industry. We have seen to it that the most up-to-date equipment is installed. I gave approval for developing the Selby coalfield, which will be one of the most successful major coal seams in the country.
I judge now from my position as Secretary of State for Energy that the coal industry has a considerable and important future. Young miners must be able to earn good wages. I am pleased to say that, during the Government's period of office, miners' earnings, compared with average earnings in manufacturing industry have improved, not declined. We have recognised the important and difficult job that miners carry out. Therefore, I urge the House to accept the Bill and to give it a Second Reading. I also hope that, when we next discuss the finances of the National Coal Board, we will have made the progress that such massive investment requires and deserves.
§ Mr. Stanley Orme (Salford, East)
We shall want to examine in some detail the points made by the Minister about the coal industry, not least his attitude to "Plan for Coal" and the long-term future of the industry. While the Bill deals specifically with the borrowing powers of the National Coal Board — and for obvious reasons therefore, the Labour party will not oppose the Bill tonight—we shall in Committee want to debate the problems of the industry and raise major matters affecting future energy policy. When my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) winds up, he will have further points to make about the Bill and our attitude to it.
At the outset I wish to pay tribute to my hon. Friend the Member for Midlothian (Mr. Eadie) who hopes to speak later in the debate. For the past 14 years he has played a prominent part in the Labour party, both in government and in opposition. He is well respected by his colleagues in the House and the National Union of 742 Mineworkers. I pay tribute on behalf of the Labour party to the work that he has done; and may he long continue to play a part.
There is a crisis in the coal industry today and, in our view, that crisis is completely unjustified. The relationship between the miners and the Government has deteriorated since 1979. The Secretary of State spoke of actions that he took in 1973, but he must realise that there is a world of difference between then and now. The then Government did not have to deal with 4 million unemployed. Manufacturing industry had not been destroyed to the degree that it has been in the past four years of Conservative rule. We were then living in an entirely different era, and in our view the present conflict is completely unnecessary. "Plan for Coal" is still the soundest policy. It should be pursued again and we should return to a tripartite approach to the industry.
As the Minister said, the purpose of the Bill in clause 1 is to provide the Government with the opportunity of increasing the borrowing powers of the board; in clause 2 to increase the deficit grant limit; in clause 3 to increase grants in connection with pit closures; and in clause 4 to increase the scope for payments to be made by the Government to redundant workers.
I deal first with clause 4, which deals with the redundant miners' payment scheme. It is like increasing the death grant so that the coal industry can have a decent funeral. Instead, we need money to keep the coal industry alive. It is a Government, not a board, scheme, although it is administered under central Government control by an agency operated by the NCB on behalf of the Department of Energy. As the sum includes payments to those made redundant during the financial year, may we be told how the Department made the assessment and what redundancy figure has been used for that exercise?
We must discuss the Bill in the context of the Conservatives' overall policy since 1979. In the two previous Coal Industry Acts, for 1980 and 1982, along with the targets of external financing limits, their policy has had two objectives. The first has been to reduce the number of schemes under which the coal industry received grants from the Government to facilitate increased pit closures. The second has been to reduce the payments over the years to make the NCB ultimately self-financing.
As the House knows, that policy has been in trouble since February 1981 because of the depressed state of the economy and the run-down of the manufacturing sector of industry against a background of increased fuel costs. We have the detailed figures of losses and Government grants, and recently we have had the hostile report of the Monopolies and Mergers Commission saying: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.Yet the Government expect the NCB to stop receiving deficit grants by 1986. This inconsistency must mean further closures and cutbacks. Or is it just one more promise that cannot be kept?
The Government do not say why the NCB figures look so bad. A major factor is that the NCB has had to make enormous interest payments to the Government. In 1982–83 the NCB paid £366 million in interest; in 1981–82, £341 million; and in 1980–81, £256 million. 743 Therefore a high proportion of the grants paid to the NCB are repaid in the form of interest payments for previous borrowing.
§ Mr. T. H. H. Skeet (Bedfordshire, North)
Is the right hon. Gentleman mindful of the fact that the NCB has not paid interest on £865 million because that was written off?
§ Mr. Orme
The burden of interest payments could be removed by introducing legislation on capital reconstruction, which could be of great benefit to the industry and the nation. After all, the debts of British Airways will be written off as soon as it suits the Government to sell that industry to their friends; capital reconstruction can then take place. Why, then, can it not take place now in the mining industry?
It can be strongly argued that the strategy of which the Bill is part will result in more pit closures. The way in which the grants have been organised strengthens that view; the time period is extended for grants in connection with pit closures and for payments to redundant workers.
However, the main reason for fears about closures is the fact that the report of the Monopolies and Mergers Commission provided details of the enormous losses of many pits. The report pointed out that high-cost pits imposed a heavy burden on the industry's finances, but it failed to attribute that to the falling demand from industry. In particular, the disastrous state of the steel industry has made the coal industry so depressed. We are now paying the concealed price for closures in the steel industry. Tomorrow we shall pay the concealed price for closures in the coal industry. Where will it end?
The depressed state of the economy—the direct result of Government policy—is making more and more pits vulnerable, and therefore to define an uneconomic pit becomes increasingly difficult. That is because the level keeps changing; as there is less demand for coal, so—as we have seen at Monktonhall, a profitable pit—people are made redundant, not because the coal has run out but because of the scale of the economies.
The subsidies per tonne to the British coal industry are the lowest in western Europe, and production costs are also the lowest. I therefore urge the Government to move away from their policy of confrontation. In particular I urge Mr. Ian MacGregor not to take action in the coalfields that could damage the industry. I hope that he will not follow at the NCB the path he followed at the British Steel Corporation, which resulted in 100,000 steel workers being put in the dole queue.
In other words, I hope that Mr. MacGregor will not try any practice of having ballots—[Interruption.] I put it to Conservative Members that this is a matter for the union concerned. [HON. MEMBERS: "No".] It is not a matter for Mr. MacGregor, and if he wants to have real conflict in the coalfields, that is the way to go about it. I urge him to be extremely cautious.
Another major factor causing uncertainty in the industry is the lack of a long-term energy strategy. Recent reports from the Sizewell B inquiry highlight that. There does not seem to have been any assessment made by the Government as to whether extra capacity is needed. The electricity industry appears to be pre-empting the results of the inquiry. I hope that the Minister will assure the House that he will not allow orders for hardware to be 744 placed in advance of the outcome of the inquiry, which we hope will be to reject the building of the pressurised water reactor.
A further example of the lack of Government strategy is the scale-down of the development of the liquefaction pilot plant at Point of Ayr, which is particularly disappointing. Will the Minister put more investment into that development, because that is where investment is needed? The industry is taking seriously the long-term interests of the nation. It is a shame that the Government do not do the same. When the Secretary of State spoke of "Plan for Coal" and the investment programme, he did not point out that the three factors that he took are not even. The investment is a long-lead programme, because, as the Minister knows, it takes years to develop. Therefore, we cannot equate each factor with the other on an equal basis. Therefore, the investment programme and its development are crucial, not for this decade but for the next.
Lack of planning is evident in the recent different announcements on privatisation by members of the Government. It is significant that the Secretary of State had nothing to say about this today. It is unbelievable that privatisation of the coal industry could be contemplated. In a parliamentary reply on 4 July 1983, the Secretary of State for Energy appeared to rule this out. Since then, we have had a major speech by the Financial Secretary to the Treasury, on 1 November, which said that the privatisation of the coal industry is a serious option. Does the Secretary of State endorse the views of the Financial Secretary or will he again assure the House that the Government will take no such steps? Does he endorse his reply of 4 July or does he accept the Financial Secretary's statement of 1 November? We are entitled to a reply because the right hon. Gentleman is the Secretary of State, not the Financial Secretary.
§ Mr. Peter Walker
When I last spoke, I said that if the National Union of Mineworkers or any other such group of workers approached me as to the possibility of privatisation, I should carefully consider it.
§ Mr. Orme
That is no answer—that is an evasion. The Secretary of State is obviously not prepared to take a stand on this issue. Privatisation would be disastrous for the industry, allowing uncontrollable market forces to govern an already fragmented energy policy. It would threaten health and safety in the industry, and threaten jobs and the unions. We are always being told how good the private capital market is at financing industry. However, the City will not even finance Inmos, the firm that makes silicon chips and is Britain's best chance of a winner since the jet engine—we all know what happened to that. What chance is there that the City would bother to take an interest in the coal industry? It is more interested in lending its money abroad to countries such as Mexico, Brazil and Argentina.
The Labour party will oppose any such policies at every stage. We support the stand of the National Union of Mineworkers against such proposals. Coal is vital to the British economy and must remain in public ownership in the national interest.
§ Mr. Woodall
Would my right hon. Friend care to point out that the traditional enemies of the miners before 1947 were the colliery owners, and even after 1947 it took two or three decades to wear away that continual irritation between the miner and the boss? Even now, when we have 745 unanimity in the industry, with the unions and Coal Board trying to work together, there is the threat from the Conservative party, which wants to go back to the good old days when miners were scared to death of colliery bosses.
§ Mr. Orme
I agree with my hon. Friend, and he will recollect that the interest charges on compensation were a heavy burden, and have remained so for a long time.
Another important factor to consider when debating the coal industry and its future is the fact that the United Kingdom is virtually at its peak production of North sea oil. From now on, it is downhill all the way. The balance of payments is collapsing already because we import too many manufactured goods. We shall need all the coal we can dig if we are to avoid more deflation and more unemployment. The coal industry will become central to our energy needs.
§ Mr. Orme
Marketing and imports are also vital to the future and should be considered as part of any future energy strategy. By far the most important market for the NCB is the Central Electricity Generating Board. In 1982–83—these figures illustrate the point clearly—the NCB produced 105 million tonnes while the CEGB consumed 81 million tonnes. Recently the agreement has been renegotiated to cover a minimum of only 17 million tonnes a year. Therefore, the NCB is trying to widen its market, but moves to convert to coal are proving to be a fiasco. The arrangements for the boiler conversion grants finish at the end of the year, as the Secretary of State is aware. While the Bill does not deal specifically with this matter, it is important for the industry to know whether the Secretary of State is considering an extension of this scheme.
Concern has been expressed to me by my hon. Friends, and not least by my hon. Friend the Member for Rhondda (Mr. Rogers) about the import of special coals. Can the Secretary of State confirm that 340,000 tonnes of anthracite was imported in the year 1982–83 to meet the domestic shortages? Will he further confirm that the British Steel Corporation last year imported 2 million tonnes of coking coal? What is he doing to ensure that such levels of imports are reduced, and that the products of British mines are used, especially by the nationalised industries? This is central to the demand for coal, and, not least, it is linked to the rundown in the steel industry.
§ Mr. Michael Fallon (Darlington)
Is the right hon. Gentleman aware of the fact, reported in the annual report of the NCB, that the two types of coal to which he has referred, high grade metallurgical coking coal and various types of anthracite, are imported because they are not produced here?
§ Mr. Orme
My information from the Coal Board is that if it had the finance and the facilities, the coal and the anthracite are there and could be mined.
We need clarification on all these points. I am glad that the Secretary of State has returned from China to take part in the debate on the Cabinet's decision on gas and electricity prices, which will affect the cost of energy and the demand for coal. From what we are told in Cabinet leaks, electricity prices are still negotiable. Increases in both gas and electricity prices are unnecessary and are a brutal cut in public expenditure that will cause tremendous 746 hardship to the least well-off in our society. The Secretary of State might be able to provide some clarification, because last year electricity profits, after interest had been paid, were £332 million. Neither the electricity industry nor the gas industry wants any price increase. However, the Government are proceeding with this policy because their public expenditure cuts are necessary to make way for tax cuts. This is completely unacceptable.
We are deeply worried about the industry, with its precious national assets. My hon. Friend the Member for Hemsworth (Mr. Woodall) referred to our 300 years supply of coal. This is something that many nations do not have. A country with the physical resources of oil, gas and coal should have an energy policy that will create wealth for all the people, and a successful coal industry is central to that demand. Unfortunately, the Government appear to be working to weaken, rather than strengthen, their energy policy. We shall fight to defend the industry and for an energy policy that is acceptable to the British people. We shall continue to put that case in the House.
§ 5.1 pm
§ Mr. Andy Stewart (Sherwood)
It is my privilege and honour to be the first Member of Parliament for the new constituency of Sherwood. It is, without doubt, one of the few constituencies that do not need to be placed geographically. On a few occasions I have had to say that it is not in Scotland, and I cannot imagine why. Sherwood forest is the home of Robin Hood, an original Conservative, who protected people from excessive State taxation and who was helped in times of stress by his lovely lady, Maid Marian. It must be an advantage to mention an eternal maid in one's maiden speech. I am almost the last of the new Members to address the House, and I remind those who have already spoken about the story of the race between the hare and the tortoise.
The Sherwood constituency was formed from the former constituencies of Newark, Carlton and Ashfield, whose Members are in the House today. I thank them. on behalf of their previous constituents. They are my hon. Friend the Member for Gedling (Sir P. Holland) who is master of the quango hunt, with numerous kills to his credit, and we wish him many more; my old Nottinghamshire county council colleague, the hon. Member for Ashfield (Mr. Haynes), who is renowned for his convictions, political philosophy and compassion that come straight from the heart; and lastly, but not least, my Member of Parliament and Friend, the hon. Member for Newark (Mr. Alexander) to whom the new Back- Bench Members will be eternally grateful for highlighting their plight to the House when he found them working from the cloakroom floor. The esteem in which these hon. Members were held by their constituents was duly reflected in their majorities at the June election.
My constituency starts north of Nottingham, being equally divided by the A614. The rolling bunter-sand lands are farmed by some of the country's most expert farmers. A week's drought is a crisis that is overcome by skilful cropping and irrigation. The population, with the exception of the 22,000 inhabitants of Hucknall, live in small towns and villages. One name that is synonymous with Hucknall is Rolls-Royce, where one of that company's many famous inventions, the "flying bedstead", was designed and built. This, in turn, has given us the world-famous Harrier fighter aircraft. 747 Sherwood is a constituency that is steeped in history and is visited by thousands of tourists every year when they go the ancestral homes of Lord Byron of Newstead Abbey and the Savilles of Rufford. Standing in the middle of the constituency is Sherwood forest and the legendary major oak.
It is appropriate during the debate on the Coal Industry Bill that I should speak as the Member for the largest mining constituency in the United Kingdom with 10 collieries, two major workshops and two area headquarters with a total of about 15,000 employees. The output from this part of the Nottinghamshire coalfield is 8,400,000 tonnes representing 8 per cent. of the national coal output. This highlights the record of efficiently produced coal and a profit that gives the rest of the industry an example to follow.
Efficiency must be judged against a yardstick. Two pits —Monktonhall near Edinburgh and Bilsthorpe near my home—are each producing over 1 million tonnes under almost the same geological and working conditions. The similarities stop there. The operation at Monktonhall requires 2,800 men; Bilsthorpe has 50 per cent. fewer workers, with 1,400 men, making production costs, at £28 a tonne, the same as for open-cast mining.
Hon. Members may be excused if they think that the difference between the two is the work force—that is not so; they are almost one and the same, but 68 per cent. of the men in Nottinghamshire are transferees, the majority being Scots and Geordies. Where does the difference lie? I suggest that it is an attitude of mind. Men who, like many of us, reach to new horizons, came from worked-out pits that were often difficult and dangerous. They came looking for new prosperity for themselves and their families, without prejudice from the past. This new wealth from their efforts has enabled them to become home owners—almost 52 per cent. —in their villages and in commuter villages in the neighbourhood. This welcome social mix has made many people in Nottinghamshire aware of the needs and complexities of the coal industry.
With the difficulty about wages, unsolicited advice by people with no knowledge of the industry does more harm than good, and I ask the chairman of the National Coal Board, Mr. MacGregor, to be patient and not to depart from the usual procedures on wages negotiations. At the weekend, I received information from the coalfields and the clubs that the men will demand a ballot on the wage offer sooner rather than later. I thank my right hon. Friend the Prime Minister who, in answer to a question on Thursday, made it clear that the Government's position is that the industry is not for privatising. This reduced the scaremongering by people who should have known better to the level of nothing more than "another secret document revealed".
Private investment in the support industries is taking place in Nottinghamshire. The small proportion of work being done by private contractors is beneficial to the industry. The Government's record on investment in new capacity exceeds the targets in "Plan for Coal" that was introduced in 1974 by the Labour Government and supported by the Conservatives with a proposed investment of £6,500 million by 1985. This target has already been exceeded by £600 million. These new pits, that are worked by the young technocrats who are now 748 being recruited with qualifications that are fit to take them on to higher education, will ensure production records and will follow the examples set by the miners of Sherwood. These men know that our and their prosperity, including the prospects of the unemployed, start with coal at a price that produces low-cost energy, giving this country's manufacturers the edge over their foreign competitors.
On my fact-finding and educational visits to the collieries in my constituency, I found that mining is a young man's job. I ask my right hon. Friend to reduce the official retirement age for underground workers further at the earliest moment and to ensure that those whose services are no longer required receive adequate severance payments.
Many who might come into this category have not shared in the industry's recent prosperity or the right to home ownership because of their age, but they were the backbone of the work force when the industry was being written off as unnecessary during the 1960s.
Yesterday I visited the "black diamond" of Sherwood —Thoresby colliery—the most efficient pit in Europe. It produces 2 million tonnes per year with an operational profit of £28 million. It is my view that our coal industry has a great future. It will have an even greater one if it is manned by men of vision such as the men of Sherwood, who returned a Conservative candidate as their first Member of Parliament.
§ Mr. Frank Haynes (Ashfield)
I congratulate the hon. Member for Sherwood (Mr. Stewart) on his maiden speech. Although he is a member of the National Farmers Union, he has certainly started to get a grasp of mining. He had some idea of the problems faced by the industry, but I cannot say that for the Secretary of State.
My hon. Friend the Member for Bolsover (Mr. Skinner) —[HON. MEMBERS: "Where is he?"]—mentioned Slater Walker. That was an episode not long ago during the Secretary of State's career. The Secretary of State also served for a time in the Department of the Environment. Last week we were told from the Dispatch Box that he was in China. He does not have a clue about mining. I put that to him straight.
I have served for 35 years in mining and other Opposition Back-Bench Members have served for donkey's years in mining. The problem is that Conservative Members have had their connections with the management of industry. Many of them have been directors of this, that and the other company and have been associated with firms that have failed. Yet the Government suggest that they know how to deal with the future of coal mining.
I am convinced that the Government are preparing to sell off the coal industry. If one studies many of the public industries that have been sold off or are being prepared to be sold off by this Administration, it is plain that this industry is being lined up for similar treatment. The miners are being led to the slaughter by the Government.
The problem is so great that a meeting took place recently between all the bodies within the mining industry to study the position and to draw up a formula for the defence of mining. The management of the National Coal Board participated in that meeting for the first time. The bodies included the British Association of Colliery Management, the NUM, the Colliery Office Staff 749 Association and the National Association of Colliery Overmen Deputies and Shotfirers. They all agreed to stand four square behind the mining industry.
If we study the many suggestions made by the Government, the future of mining appears to be pretty bleak. The Government have an energy programme that will involve a hard core of nuclear power stations, the PWRs, which have not been proved in the United States. We have decided to buy them because the United States no longer wants them. The Minister nods and laughs, but that happens to be true.
There was the Three Mile Island incident in the United States where thousands of people were convinced that they should leave the area, but still the Government are prepared to install PWRs here.
I picked up a copy of last night's Nottingham Evening Post in the Tea Room today in which there is an amazing report headed:City would not survive N-war says top report.A Government report predicts that if there was a nuclear explosion we would have
A coal-based economy with steam-engines back in use.If that is what the Government say, why are they going down their present path? The National Coal Board is not making the decisions; the Department of Energy is telling it what it should do. Mr. MacGregor has his marching orders. I will pay his fare back to the United States—provided, of course, that he does not go on Concorde.
Although the Government have made their plan, they say that we would return to coal and steam if there were a nuclear war. If we continue to tread the Government's path, I am convinced that we shall return to the days, not long past, when we went cap in hand to the middle east for its oil. The middle east would hold us to ransom, as it did before.
My hon. Friend the Member for Hemsworth (Mr. Woodall) correctly said that beneath our feet there is enough solid fuel to last for 300 years. Robin Hood has been mentioned in relation to Sherwood, which is a beautiful area. There is a great deal of coal there in high-production units.
The Secretary of State criticised and savaged members of the mining industry for not pulling up their socks and putting in a real effort. Not many days ago in the House, I said that there are pits in my area that regularly break output records. There are similar pits throughout the country. Why does the Secretary of State criticise mining and the people involved with it? The reason is that he knows nothing about it. It is high time that he went round the mines, as the Under-Secretary does, see what it is all about.
We have record breakers who will continue to be record breakers, but if the Government continue with their policy of further pit closures the unemployment queue will be increased. Robin Hood, unlike the Government, helped people in need. There are many sections of the population who are not being helped by the Government, particularly the disabled. I hope that the Government will support the Emphysema Compensation Bill on Friday. The Bill will affect the many miners who have been seriously injured in the pits. I maintain that Robin Hood was a true Socialist. He was certainly not a Scottish Conservative.
If we examine the facts and figures as presented by the Government, we learn that the costs of erection, installation and the rest incurred in providing a nuclear power station are nearly three times those of a coal-fired 750 power station. The Government tell us that money is not available to undertake certain projects. At the same time, they are prepared to support the present programme of building nuclear power stations. That is one method by which the Government are preparing to sell off the economic pits to the rich.
I wish to deal with the problem of uneconomic pits. A classic example is the Sherwood pit in the constituency of my right hon. Friend the Member for Mansfield (Mr. Concannon) which many years ago was uneconomic owing to geographical difficulties. The chairman of the National Coal Board at that time wished to close the pit. The Monopolies and Mergers Commission report on the National Coal Board shows that the Sherwood pit is now making a profit of £6.5 million annually. That shows how circumstances can change within the mining industry. A pit may be uneconomic one year and later become economic and make its contribution to the nation.
Conservative Members are wrong to say that the mining industry has failed the nation. The industry has made its contribution by making a profit every year since the first day of nationalisation. My right hon. Friend the Member for Salford, East (Mr. Orme) made it clear that the industry's problem is caused by the interest repayments which have crippled the coal mining industry.
The NCB recently closed a pit in my constituency which had plenty of reserves. It is no good the Secretary of State or any other Minister saying that the pit 'was exhausted. Down the road in the constituency of my hon. Friend the Member for Bassetlaw (Mr. Ashton) another pit was working the same seam. Nevertheless, the pit in my constituency was closed. My constituency once had nine pits but now it has only five. The NCB continues to close them while the lads working in the remaining pits continue to break output records. The Government must be much fairer to the mining industry and to those who work in it. I hope that in the not too distant future the Government will change their attitude towards the mining industry.
I welcome the investment in the mining industry, but it is not sufficient. If the Government examined other nations' coal mining industries they would realise that those nations put more into their mining industries than we put into ours. At the same time, our coal mining industry is expected to be competitive. In Germany, subsidies are paid right, left and centre, but that is not the position in England. It is known as investment. Investment is used to look for further reserves, mine those reserves and provide the necessary equipment. The tightening up of available money has prevented management from ordering equipment to enable the mines to keep working 24 hours a day. Machines churn out coal 24 hours a day. Hon. Members do not work 24 hours a day in the House, but the lads at the pit work such hours. Pits work for 24 hours a day to provide the energy requirements of the nation. Given the opportunity, they will continue to do so, but not if they are to be subject to the Government's proposals.
I believe sincerely that the Government are preparing the destruction of certain sectors of the industry and at the same time paving the way for those who have the money to move in, take over the economic pits and line their pockets. Members of Parliament who wish to get their fingers into that pie will be unable to do so, and I welcome that. I do not believe that the Government are giving the coal mining industry the opportunity to prove itself beyond all doubt in the interests of the nation and its future energy requirements.
§ Mr. T. H. H. Skeet (Bedfordshire, North)
I listened with considerable interest to my hon. Friend the Member for Sherwood (Mr. Stewart), who made a distinguished and excellent speech. I am certain that in future we shall hear from him many more good speeches on the coal industry. After all, my hon. Friend's constituents include 15,000 miners, most of whom, I daresay, returned my hon. Friend to the House. The Opposition must bear that fact in mind. The hon. Member for Ashfield (Mr. Haynes) said that he spent 35 years in the mining industry and knows all about it, but he has not learnt the lessons of the industry's current position. He has not considered the position facing the coal industry in the world.
The hon. Gentleman referred to the incident at the Three Mile Island nuclear power station in the United States, which caused not one death. He made no reference to the fact that in the past 80 years 30,000 Pennsylvanian coal miners had lost their lives as a result of mining accidents, and that in Appalachia, in the United States, 57,000 coal miners suffer from black lung disease. I emphasise that the Three Mile Island incident did not cause a single death. We must be cautious when we refer to nuclear power. I do not wish to discuss that matter as you, Mr. Deputy Speaker, would rule me out of order.
I wish to explain the coal industry's position. Coal production in 1982 was 125 million tonnes but consumption was only 110 million tonnes. We must remember that we have a saturated market. There are insufficient buyers and overcapacity in the industry. Another significant indicator is stock levels. Today there are 58 million tonnes of stocks compared with 34 million tonnes five years ago.
The truth is staring us in the face. If only the Labour party and the miners would realise that it is no use producing all that coal if there are no buyers. If it cannot be sold abroad or at home, it goes into stock and remains there. [HON. MEMBERS: "What about the jobs and the men?"] I shall deal with all those aspects in due course. On the international market thermal value 250-therm steam coal, 15 per cent. ash and 1 per cent. sulphur, deliverable cif to north-west European deep-water ports, is £23, or $35, per tonne, on the spot market. The price ranges from £23 per tonne to £26 or £32 per tonne for higher qualities. Naturally, the impact on the German economy is substantial. The German industry is heavily subsidised and the Germans must now decide what to do about the present predicament. The same applies to France. Other countries are beginning to face the facts. When will the United Kingdom begin to face facts?
§ Mr. Peter Hardy (Wentworth)
As a passionate supporter of the European Community, the hon. Gentleman will be aware that the Community has imported coal of that quality from South Africa. Does he expect us to believe that it is appropriate for Europe to allow its own coal industries to disappear so that it may buy cheap coal from a dubious source while at the same time expecting British farmers to support a common agricultural policy which achieves exactly the result for other countries that a common energy policy could achieve for Britain?
Is it wise for Europe to develop such a reliance on imported coal as the hon. Gentleman suggests?
§ Mr. Skeet
No, Sir. The Select Committee report puts it rather well: 752In 1981, for example, the losses incurred in 30 of the Board's older collieries totalled some £228 million, equivalent to 90 per cent. of the industry's operating deficit in that year.If a few totally unprofitable pits reaching the end of their natural life were closed, the industry could become viable, but if we try to retain those pits the industry will never be viable. [HON. MEMBERS: "How many pits?] Perhaps I may continue as most of the points will be rounded up later in my speech. The Trans-Natal Coal corporation has said:Coal stockpiles of consumers are full to overflowing worldwideand:export prices are not expected to improve before 1985.If world prices are not expected to improve that will not be to the advantage of the United Kingdom. It will be even more difficult to sell our coal internationally, so if we cannot sell it at home we shall be in dire trouble.
When the 1980 legislation came before the House the Government said that it was designed to reduce the operating grants and to return the industry to viability by 1983–84. The Secretary of State said today that the industry would be viable in two years' time. Personally, I should like to believe that, but I cannot.
According to my calculations, between 1973–74 and 1982–83 capital investment in the industry totalled £4,260 million. The grants poured into the industry totalled a further £2,118.9 million. When one adds to that about £865 million in write-offs, one realises that more than £7 billion has been poured into the industry in that period.
Let us consider what could have been done with £7 billion. Between 1976 and 1982 £3 billion was spent on North sea exploration, which has added 5 per cent. to the gross national product. North sea oil provides much income for the nation. Yet the United Kingdom is in debt. The National Coal Board is the Mexico or Brazil of the British economy.
Let us take another example. Between 1977–78 and 1983–84 overseas aid was £5.9 billion. The sum in question could have been spent helping to lift the standard of living of people in other countries. Does that not commend itself to Labour Members?
I am a reasonable man. I wish to help the mining industry. I have recommended that the Vale of Belvoir project should be assisted. I have recommended help for Selby, which currently has great problems with water. I hope that such projects will be a success because I believe that they are potentially profitable.
The Monopolies and Mergers Commission report shows that north Nottinghamshire has an output per man-shift not of 2.2 tonnes but of 5.12 tonnes at Thoresby, 4.13 tonnes at Welbeck, 4.16 tonnes at Ollerton and 3.88 tonnes at Sherwood. If our entire coal industry could achieve outputs of that magnitude, and we are moving towards that situation, the industry would become viable very rapidly. As I understand it, that is precisely the Government's policy.
§ Mr. Woodall
Does not the hon. Gentleman support the Vale of Belvoir project because the National Coal Board promised to transport the colliery waste to Bedfordshire to fill in the empty clay pits there, thus making that land more attractive and viable?
§ Mr. Skeet
As I have said before, if the NCB is prepared to pay the transportation charges — [HON. MEMBERS: "Ah!"] The Bedfordshire local authorities cannot be expected to pay them as the material is coming 753 from another area, but if the board will pay the charges we should be only too glad to receive the colliery waste. It would fill in the knot-holes and provide more agricultural land. It has been our consistent policy to try to assist the coal industry in any enterprise that we consider would be profitable.
I shall be brief, as hon. Members on both sides should have the opportunity to put their views, but I should refer to one or two minor matters. There is much talk of closures. Hon. Members will recollect that there have been closures in shipbuilding, steel, refining and petrochemicals. In the United Kingdom, as in France and Germany, those industries have been scaled down to a suitable size to make them viable. Why should the United Kingdom mining industry be exempt? Why are we told that no pit should be closed until the reserves are exhausted? If pits are entirely unprofitable—with production costs at £60 or £70 per tonne they will never make a profit—the only solution may be to close a few of them. However, it is entirely for the National Coal Board to make the selection.
I recently attended a conference at which it was said that in Germany it had been decided to cut back Ruhrkole capacity by 10 million tonnes to about 80 million tonnes per year to make the industry viable. Mine closures are not new to the United Kingdom. In 1965 to 1970, in the era of Lee, Marsh, Gunter and Mason there were 263 closures. During the era of Varley and Benn, between 1974 and 1979, there were another 32 closures.
§ Mr. Lofthouse
To what extent does the hon. Gentleman suggest that the mining industry's production capacity should be cut back? How many men would then be needed in the coal industry to produce that capacity?
§ Mr. Skeet
I shall make my suggestions later. There are 141 loss-making collieries. I would certainly not accept closures on that scale. It involves a sizeable manpower figure. I should have thought that closure of 30 pits is a maximum. Such closures will have to be achieved through negotiation and the number actually closed might be only 20. That would make the industry competitive.
There have been transfers of miners from one part of the country to another. For example, when production at the Vale of Belvoir starts in earnest, men will be transferred there from other parts of Leicestershire. I dare say that if another major pit is opened in Wales, men will be transferred there from other pits that are going out of production. That makes good sense.
§ Mr. Skeet
The hon. Gentleman has put a figure on it. I am not doing that. I am prepared to look up the figures involved. Some job losses will be carried by natural wastage. The Government have given a guarantee to younger miners that they will be kept in employment. [HON. MEMBERS: "Where?"] Can Opposition Members tell me of one industry in which employees are given a better future than are miners? Top salaries in the mining industry are much higher than in any other industrial undertaking.
§ Mr. Skeet
There are jobs. I am complaining about the ossified attitude of Opposition Members. They are backing the National Union of Mineworkers in its call for the banning of imports of coal and its demand that there be no closures unless pits have been exhausted.
My final plea is for hon. Members to be reasonable. It is not the Government's money but taxpayers' money that is involved. We have poured millions of pounds into the industry and we are not getting a satisfactory return on it. As I understand it, the Government are trying to make the industry economic. I should have thought that, rather than oppose that move, the Opposition would earnestly support it.
§ Mr. Jack Dormand (Essington)
I shall be brief, as many of my hon. Friends wish to speak.
What the Secretary of State said was as ominous as what he did not say. He did not address himself at all to the industry's problems today. He referred frequently to what was happening in 1973. My right hon. Friend the Member for Salford, East (Mr. Orme) properly told him that what appertained a decade ago is not true for 1983. My right hon. Friend did not get a satisfactory reply. Perhaps there is not one. If there were more time, I should have enlarged on that point.
The hon. Member for Bedfordshire, North (Mr. Skeet) made his usual tirade against the coal industry. I have never heard a more irrelevant speech on the coal industry. He simply fails to recognise the social implications of the state of the industry. Why should we be surprised—he is the epitome of Tory economic theory and of capitalism. For him, if the industry is not making a profit, that is that. I come from as hard hit an area in county Durham as anyone. We have had our share of pit closures. Their effect on the community is devastating, not merely for the industry but for those who depend on it.
I hope that we shall hear no more facile criticism of miners which we so often hear from Conservative Members. Whatever improvements there have been in the mining industry, a coal miner's job remains a dirty, dangerous and disagreeable one. The Labour party needs no lectures from Conservative Members on it. No one recognises the problems that face the coal industry more than the miners. However, those problems require deeper scrutiny than they are normally given.
The large stocks of coal are frequently referred to. Several factors have created those stocks. No one should criticise miners' performance. I shall refer to performance in the north-east. The region's 20 collieries finished the 755 year ending 31 March in record breaking style. They bettered their weekly productivity record by 1 per cent. by producing at a rate of 2.33 tonnes per man-shift. They also increased the annual average by 1 per cent. to 2.09 tonnes per man-shift. Moreover, the weekly record has been broken twice since March. Therefore, there can be no question of miners in the north-east resting on their laurels. That applies to miners who work in other coalfields.
We can say with confidence that the miners are playing their part in increasing productivity. It is a pity that the Government have not played their part. I accept that there has been substantial investment in the industry —it it is implied in the Bill—but the Government's disastrous economic policies have created an industrial desert. In huge areas, speaking geographically and figuratively, the country is an industrial desert. If that were not the case, there would have been much greater use of coal. If we had had the expansionist policies that are advocated by my party rather than the results of the cripplingly restrictive monetarism of the Government, the coal industry would have been in a much happier state.
Too little effort has been put into promoting the sale of coal. There must be a change to the use of coal in coal-rich countries such as Britain and in the rest of the industrial world. The potential for coal use in the industrial sectors of the 24 OECD countries would be as high as 1 billion tonnes a year by the year 2000. I take my figures from Lord Ezra. I hope that the House will recognise him as sufficient authority. Such coal use would represent a growth of 5 per cent. a year on present consumption of 343 million tonnes a year.
I welcome the Government's 1981 innovation to provide grants to firms that want to convert to coal. However, the original scheme was too narrow. I am glad that it has been improved. No one can be satisfied with the results so far. The Government must examine the scheme more closely to assess where it fails and to determine how improvements can be made.
As the Minister knows, I always try to be constructive. Let me make three suggestions. First, I suggest that the grant should be increased from 25 per cent. We hear rumours that it will be decreased. If that is true, we should be told about it, and I hope that the Minister will do so when he replies to the debate. Second, the scheme should be extended beyond December 1983. Third, and perhaps most important, the scheme should apply to the whole public sector. The scheme would be much more effective if it took in the extra demand for coal, for example, in schools, hospitals and public buildings.
One could not say that the CBI was exactly affiliated to the Labour party, but let me quote its view on the matter. I quote from one of its documents:From a long term energy policy point of view we believe that it is in the national interest to encourage the use of coal. Therefore, in order to maintain the impetus which the coal firing grant scheme"—that is the scheme that I am talking about—has created, the CBI would welcome additional funds being made available when the present allocation expires. In addition to acting as a useful incentive to decision making both schemes would help towards widening the market for coal".When the document says "both schemes" it is referring to the ECSC loan scheme, of which I am sure the House is aware. I hope, therefore, that some attention will be given to this matter.
756 Before he became chairman of the National Coal Board, Mr. MacGregor said that when he became chairman he would launch a sales drive. I have not seen much evidence of it. I hope that he has not forgotten that promise, because it is of the greatest importance to our industry. I am pleased to see the Minister nodding his head. It may well be that the CEGB and the big industrial users of coal are looking for bargain prices from the NCB. As a one-off sale, that might be a good idea, at least in the immediate future. In any case, the chairman of the NCB should concentrate on that aspect of his work, not on how many pits he can close. I repeat that the need for a new dynamic sales drive, including exports, is crucial in dealing with the industry's present problems.
These matters also relate to the Venice summit of 1980. We do not hear too much about that these days. I remind the House that the Heads of Government of the seven leading industrial nations of the West, together with representatives of the EC, met to attempt to reach agreement on a co-ordinated restructuring of energy demand. The aim was to free their economies from excessive dependence on oil, because that would mean a substantial increase in the use of coal. We are therefore entitled to ask, after three years, what contribution this Government have made to that end. There has been a dearth of information on this subject, and many of us suspect that the Government are dragging their feet. I suggest that the Minister should make a comprehensive statement in the near future about the British Government's contribution to the targets that were set by the Venice declaration.
There are two matters that I frequently raise in the House. Some people may regard them as peripheral, and to some extent they are, bearing in mind the major problems that now face the industry. However, I do not apologise for mentioning them again. The first is the effect of coal production on the environment. It seems obvious to most people that special measures should be taken in coal-producing areas to protect the conditions in which the inhabitants live. The matter is so important that the powerful Flowers committee was set up to study the issue, and its report is the strongest possible argument for action to be taken to counteract the effects of producing coal. The Government have done almost nothing to implement the committee's recommendations, although I hasten to thank the Under-Secretary of State for giving money to set up at least the machinery to clear the blackened beaches in my constituency. He did that when he was at the Department of the Environment. He visited the beaches with me, but I have to tell him that it will be a long time before we see the golden glory of those beaches again. However, at least a beginning has been made, and none of his tight-fisted colleagues in the Government saw fit to deal with the problem. I hope that that praise does not go to the hon. Gentleman's head, because much remains to be done.
The Flowers report is a frightening document but it demonstrates with boldness and great clarity what has to be done. I urge the Minister to convene regular meetings with his ministerial colleagues to monitor what is being achieved in the face of these great problems.
§ Mr. Skeet
The hon. Gentleman is making a most interesting speech. To deal with sulphur dioxide from coal would involve an expenditure by the CEGB of no less than 757 £4 billion, and that would put up the price of coal considerably. Further, it would be extremely expensive to remove nitrous oxide and carbon dioxide.
§ Mr. Dormand
The hon. Gentleman again demonstrates his typical view of these matters. I have lived in a coal-producing area all my life, and those of us who live there say that it is the responsibility of society as a whole. It is not a matter for individual industries. On this, it is clear that we fundamentally disagree, but that is how a Labour Government, after the next election, will tackle the problem.
To finish what I was saying, the Minister will find that precious little has been carried out so far, and I hope he will agree — I hope that the hon. Member for Bedfordshire, North will also agree—that the rest of the country owes a debt to the people who have to live in such an environment.
The other matter that I want to raise—I was pleased that my right hon. Friend the Member for Salford, East touched on it in his speech— is the need for greater attention to the liquefaction of coal. We very much appreciated the work done by my hon. Friend the Member for Midlothian (Mr. Eadie), who used to speak on coal matters on behalf of the Opposition. This was one of his main interests. By "greater attention" I mean two things: first, more resources; and second, a much greater determination on the part of the Government to develop what is, after all, an exciting project.
This is not the occasion on which to argue the case for liquefaction of coal. Indeed, the case has already been made, and I think that the Government accept the principle, judging by what they have done so far. However, they are guilty of being doctrinaire in the matter. They insisted on private capital being put into the project and then, when the promises of such capital were withdrawn, the project was slowed Sown. The hon. Member for Clwyd, North-West (Sir A. Meyer), who has Point of Ayr in his constituency, may agree with that, at least in principle. I do not say that there are no problems, but they are far from insuperable. What is lacking is the will to press on with the development. The National Coal Board is enthusiastic, as the Minister knows, but rightly insists that more money and encouragement should be given by the Government. The time could not be more opportune, in my view, for this country to take the lead in a process that will be commonplace by the end of the century. Clearly there is much to be said for being the first in the field, particularly when a comparatively small sum of money is involved. I look forward to questioning the Minister many more times on this matter.
The Bill recognises some of the continuing needs of the coal industry. Not only are the policies important, but the way in which they are carried out is of the utmost importance, and it is fundamental to their success that the Government and the NCB retain the absolute confidence of the miners. Those of us who are privileged to live among them, and who come from mining families, know that they are among the most responsible members of society. Their record over generations shows that they have made a substantial and vital contribution to the well-being of the nation. Many of them have paid a high price in broken health and broken limbs in making that contribution. It is therefore only just that the needs of their industry should be properly recognised.
758 The appointment of the present chairman of the NCB was one of the Government's most savage acts. His threats about pit closures are based to a large extent on the fact that he has no allegiance to this nation. Before long he will disappear from our shores with a large transfer fee in his pocket. He will have £1.5 million safely tucked away. If the Government do not act quickly, he will leave behind him in the mining communities a trail of devastation unparalleled in the history of the industry. I hope that the Minister will heed the many warnings that have been and will be given by Opposition Members today. The country owes a great debt to mining and the miners, and it is up to the Government to ensure that that debt is paid.
§ 6.1 pm
§ Mr. Francis Maude (Warwickshire, North)
Many Conservative Members now represent constituencies with substantial mining interests.
§ Mr. Maude
My hon. Friend the Member for Sherwood (Mr. Stewart), who represents the largest coal mining constituency in the country, made an excellent speech. My constituency contains the whole of the Warwickshire coalfield. There are four pits employing some 5,500 men. Despite the fact that two of the pits are nearing the end of their lives—though they have not yet reached that point—I am happy to say that overall the coalfield is profitable. The miners in my constituency are concerned that there should be investment in the future of the industry and, in particular, in the development of the south Warwickshire prospect. That profitable new development could replace the aging pits in the north of the coalfield. Above all, however, the Warwickshire miners are hard-headed, moderate and realistic. They know in their hearts—and they are not afraid to say—that uneconomic pits are dragging down the whole coal industry in Britain.
The hon. Member for Ashfield (Mr. Haynes) said that the performance of pits can vary from year to year. That is correct. It would be folly to close a pit on the basis of one year's performance, and it is absurd to suggest that the chairman of the NCB would do any such thing. He will consider the performance' of pits over the past few years. Among other things, he will consider the way in which the work force has co-operated in developing new working practices to make the pits more profitable.
The miners in my constituency know that the development coin—the investment coin—has two sides. Money must be put into new fields and existing pits must be made more profitable, but, on the other side, old and uneconomic pits have to be closed. We have been asked how many pits must be closed. The number need not be very large. It need not be anywhere near the 252 pits closed between 1964 and 1970 by the Labour Government.
§ Mr. Lofthouse
Could the hon. Gentleman tell the House how many miners were made redundant during that period?
§ Mr. Maude
The hon. Member can find that figure as easily as I can. Nearly half the number of pits that existed in 1964 had been closed by 1970.
Producing coal is not an end in itself. Opposition Members occasionally talk as though it is desirable in itself that men should go underground to raise coal that is not 759 needed, as though it is a wonderful thing to have a vast stockpile of coal. Coal mining is not a social service. It is an industry that exists to raise from the ground coal that people want to buy. If no one wants to buy the coal, there is no point in bringing it to the surface.
§ Mr. Jack Thompson (Wansbeck)
Does the hon. Gentleman agree that one of the reasons why we have huge stockpiles of coal—there is now 55 million tonnes and the figure is growing all the time — is that we are spending far too much money in importing fuel? That is the source of the problem. We have not developed techniques for burning coal more efficiently. If money had been invested in such activities over the years, we might not have huge piles of coal. It would have been used.
§ Mr. Maude
The hon. Gentleman must be aware that we export twice as much coal as we import.
The whole House is committed to the future of the coal mining industry. The hon. Member for Easington (Mr. Dormand) mentioned the possibilities of the liquefaction of coal. There is no doubt that that has an enormous future.
This country must have a coal mining industry. The Bill provides for enormous investment in the future of the coal mining industry. It is astonishing that the Second Reading of a Bill which will greatly increase investment in the coal mining industry should be used by the Opposition as an opportunity for attacking the Government. One Labour Member has referred to the Bill as being the result of monetarist policy. The Government are to invest over £1 billion a year in the capital future of the industry and to subsidise it to the extent of £600 million a year in operating and other grants. Anyone who considers that that is monetarism must be standing on his head.
"Plan for Coal" made clear what the future of coal might be. That future has not come about, but it is absurd to suggest that that is the result of inadequate investment. My right hon. Friend the Secretary of State has made it clear—his figures are beyond dispute—that the amount that this Government are investing in the coal industry is more than was suggested in "Plan for Coal", which was the product of a Labour Government.
The right hon. Member for Salford, East (Mr. Orme) talked as though, through the Bill and other measures, the Government are weakening the industry. That proposition does not bear examination. What could be more enervating than that the investment available to the industry should be poured into pits producing coal at more than twice the price at which it can be sold? There are plenty of pits where coal is produced below the selling price, and many more which are producing it at or just below the selling price. Some pits in America with equivalent geology are producing equivalent amounts of coal with half the number of men, and those men are earning the equivalent of £28,000 a year. It must be the profitable pits and those which are near break-even point which attract the investment. It is the height of folly to pour money into uneconomic pits to produce coal, which is not needed in any event, to swell larger and larger stockpiles. That is throwing money away. I am astonished that that idea should attract any support.
The hon. Member for Easington referred to criticism of the miners by Conservative Members. I have not heard one word of criticism of the miners by my right hon. and hon. Friends. We have the greatest respect for the coal miners 760 of this country. When we visit coal faces in the pits in our constituencies, we have the opportunity to appreciate fully the difficulties and dangers of the job. Despite mechanisation and the undoubted improvement in conditions, the dangers are still enormous. There is a miner in my constituency whom I know well. He works in one of the most modern and best pits in the country, in Warwickshire. He recently suffered an accident in which he lost an eye. We do not talk glibly about how easy conditions are. We know that mining is difficult, disagreeable and dangerous, and we agree that miners should continue to be the highest earners among all our industries.
§ Mr. Woodall
Did not the hon. Gentleman hear the Secretary of State say that in the past 10 years miners had increased their productivity by only just over 1 per cent.? If that is not a criticism, what the hell is? We know from the figures that output per man-shift has increased by far more than 1 per cent. year after year, and is now at its highest level ever.
§ Mr. Maude
My right hon. Friend the Secretary of State did no more than state the facts. In "Plan for Coal" it was expected that productivity would increase by 4 per cent. per annum. The hon. Gentleman knows as well as we do that in the decade since "Plan for Coal" was produced, total productivity in the industry has increased by slightly more than the annual figure predicted. That is a criticism not of coal miners, but, to some extent, of management in that industry. In many pits, coal miners have played their part in improving work practices.
The right hon. Member for Salford, East spoke about Mr. MacGregor and the possibility of a ballot being imposed on the coal mining industry. Who would not agree that the proper body to hold a ballot on the present pay offer is the National Union of Mineworkers? We would be delighted if that were to happen, but the fact is that it has not happened so far, and there is no prospect of it happening at present. What are Opposition Members doing to persuade their friends in the NUM to hold such a ballot? The miners in Warwickshire are getting fed up with an overtime ban that they do not support. They are losing a lot of money, and they are fed up with being manipulated for political ends. They know that there is no prospect of an increase in the offer. They also know that the action being taken seriously endangers the industry's future.
On Friday I visited a pit in Warwickshire. I shall not tell the House what one of the miners said he would do if Mr. Scargill showed his face in a Warwickshire pit. It involved the use of a mine shaft and gravity. However, I warn Mr. Scargill that the miners in north Warwickshire have had enough of being manipulated for political ends.
The fact is that every Conservative Member is fully committed to the future of the coal industry in Britain. We know that there must be investment. The Bill provides for more investment than for any other nationalised industry. To criticise it for not going fast enough is absurd. The Bill represents a very full commitment to the future development of our coal mining industry. I hope that the House will support it.
§ Mr. Alexander Eadie (Midlothian)
I am very grateful to my right hon. Friend the Member for Salford, East (Mr. 761 Orme) for his comments. For 12 years I was the Front Bench spokesman on coal for my party, both in and out of government. I am told that that record will probably never be repeated, although never is a long time. However, I welcome the opportunity of speaking in the debate.
It is rather depressing to listen to remarks of the sort made by the hon. Member for Warwickshire, North (Mr. Maude). He indicted not only all the miners in Britain, but those in Europe. We produce the cheapest coal in Europe. It is absurd to suggest that American miners are better than those in Britain or Europe. We are entitled to something more than such sixth-form debating points.
§ Mr. Eadie
I shall give way to the hon. Gentleman in a moment.
We must start to discuss the case for coal. That case has nothing whatever to do with providing miners with jobs, important though that is. The case for an expanding coal industry involves the whole nation, because coal is the only fuel that we have in abundance. All the other fossil fuels are wasting assets. By the 1990s oil will have been reduced to a trickle. By the next century gas resources will have disappeared. However, there is an abundance of coal. We have coal resources that we can identify that will last for more than 300 years. We have pre-planned mining projects which could expand the coal industry. In addition, our technology will certainly improve, and then there will be coal in these islands for more than 2,000 years.
Therefore, the case for coal is that we have that form of energy in abundance. A Government who neglect it do a great disservice not only to the miners but to the whole nation. It makes economic sense to say that a nation that does not have its own energy cannot hope to be an industrial nation or to occupy any position in that industrial league of nations. It must have supplies of energy that are not only abundant, but safe and secure.
This country is blessed with an indigenous and abundant source of energy. Therefore, the case for coal is overwhelming not only from the miners' viewpoint, but from that of the nation. The Prime Minister is fond of saying that she is concerned about the defence of the realm. Indeed, we are all concerned about that. However, it is in the interests of that defence that we should develop our own indigenous source of energy, coal. Can anyone say that the situation in the middle east is anything other than volatile? We know what is happening in Lebanon and that a crisis can rage throughout the middle east for just one night and force the whole Western world almost to its knees. Given what the Prime Minister preaches, the Government must have a duty not to contract the coal industry, but to expand it. That is in the interests of the defence of the realm, of industry and of our people.
Some Conservative Members who are accountants and lawyers seem concerned about the accounts and the cost. However, that expenditure could easily be put on the defence bill. That would make more sense than some of the defence expenditure now being incurred.
§ Mr. Eadie
I apologise to the hon. Gentleman, but I cannot give way. I have a lot to say, and this is the first speech that I have made from the Back Benches for 12 years.
762 I want to deal not with propaganda, but with the arguments. We have already heard some propaganda tonight. In opening the debate, the Secretary of State's approach was a little cosmetic. He told the House that the Bill proposed extra borrowing for the coal industry. None of us would quarrel about that. However, we would have liked to oppose the Bill or to table an amendment to increase borrowing, but are unable to do so because it is tied to the money resolution. We can reduce the sums. but we cannot increase them. That is one of the reasons for not opposing the Bill.
There is a case for even more investment in the coal industry. I said that the Secretary of State had been a little cosmetic. He spoke about 1973. I went into the Department of Energy in 1974. I am not criticising the right hon. Gentleman and I wish that he were in the Chamber to hear me, but when I arrived there in 1974 the undertakers had already arrived for the coal industry. I refer to the right hon. Gentleman's record when he had responsibility for the coal industry. The industry was starved of investment. The right hon. Gentleman said that he gave the nod for Selby, but it was the Labour Government in 1974 who sank that mine. I had to go to Gascoigne Wood to answer all the objections. I had to go to the Cabinet to find funding for the project. I discussed it with the National Coal Board.
Do not let me hear the Secretary of State say that he sank the pit at Selby. The Labour Government were responsible for the investment in Selby. I went there, and was present at the pit's sinking. The Government have a despicable record, for which I attack them. During their period of office from 1979 to 1983 they did not sink one new pit.
The Government have changed to some extent the strategy for coal. They do not have a policy of sinking new pits or opening coalfields. It is a disgrace for the Government to talk about the Vale of Belvoir. If that scheme comes to fruition, there will not be three pits; there will be only one pit. The Government are killing that coalfield financially, before it starts. That is disgraceful.
The Government are pursuing and encouraging what I have described as a black site policy. What do I mean by "a black site policy"? Money is being invested in existing pits. I do not quarrel with that policy; I started it myself. I believe that, if one can find new reserves in a pit and coal seams because of the vast increase in technology, one should capitalise on that investment. It makes good sense to invest in existing pits.
The policy pursued by the Government will cause the contraction of the mining industry. Unless we have a green field site policy, the industry will contract. There must be new coalfields if the industry is to progress. The Government have not sunk a new pit since they came to office. Because they are not pursuing a green field policy, that will inevitably cause the contraction of the coal industry.
We should take account of investment. Eighty-one per cent. of investment—I may be 0.5 per cent. out in my calculations—is in Nottingham, Yorkshire and parts of Derbyshire. The other 19 per cent. must be divided between south Wales, other parts of Derbyshire, Durham, Cumberland, Kent and Scotland. Those areas are classified as peripheral.
The policy advocated by the National Coal Board, and encouraged by the Government, will cause the complete destruction of peripheral coalfields. It is their fondest wish 763 and dream that the mining industry should disappear in south Wales, Derbyshire, Durham, Cumberland and Scotland. They are pursuing a policy of contraction. They may talk about investment, but that investment is not properly divided.
When we consider the areas of coal production in the United Kingdom, the matter seems much more serious for the nation. About 55 per cent. of coal production comes from the areas I have mentioned which benefit from 81 per cent. of the investment. The rest of the coal is produced in areas that receive only 19 per cent. of investment. Was it not a joke when the Secretary of State was chastised when he spoke of anthracite coal? He said, "Oh yes. But when the new investment comes, everything will be all right." We know that Margam is rich. We know that Betws is rich. The Government and the National Coal Board have done nothing about that. Long lead times are involved. It is vandalism to pursue such a policy.
My criticism of Mr. MacGregor is not that he is an old man, which he is, but that he is incompetent. I said when he was appointed as chairman of the NCB that it was a provocative appointment. The mining industry does not want him. According to the standards applied by the Tory party and its arguments on the standards of the market, Mr. MacGregor would have been sacked from the British Steel Corporation. It had lost more money when he left than when he started, never mind the wholesale destruction of manpower in the industry.
I was pleased to hear my hon. Friend the Member for Easington (Mr. Dormand) talk about liquefaction. When I was a Minister, I proposed two schemes for liquefaction. I signed an agreement with the NCB and obtained £20 million from the Labour Cabinet to get them started. In relation to liquefaction, the Government have never washed a dish, they have never struck a blow, although we have had plenty of promises.
When he was the Minister responsible for the coal industry the Financial Secretary to the Treasury told me that a Conservative Government would match every penny that the Labour Government promised to start the liquefaction schemes. I know what will happen. A scheme will be started in a country such as Japan, but the Government and Mr. MacGregor will do nothing about it.
When some of my hon. Friends went to see Mr. MacGregor about the liquefaction scheme, he said that he had no intention of reinventing the wheel. He also said that it would not come into being until 20 years after the beginning of next century. Mr. MacGregor is not only an entrepreneur and the chairman of the NCB, but he is posing as a scientific expert. He could say to his kids that oil will not be made from coal for the next 37 years. Every scientist and economist would laugh him out of court for making such a suggestion, but he did make it. It was reported in the press. That is why he is incompetent.
Perhaps the reason why Mr. MacGregor is incompetent is that there has never been a scientist in the NCB since Joe Gibson left. The Minister should say to the NCB that it is time that it had scientific advice. A scientist should advise Mr. MacGregor so that he does not make silly statements.
Mr. MacGregor said that he thought that there could be a market for 200 million tonnes of coal. However, there cannot be a market for 200 million tonnes of coal if coal is not liquefied or gasified. I have said before that I refuse 764 to believe that after we have invested billions of pounds in a gigantic gas pipeline all over the country we shall forget all about it when gas in the North sea has diminished. Of course we shall gasify coal.
I understand that some exciting things have been happening in the gasification of coal. There is no problem about making synthetic North sea gas. We mastered that technology years ago. We sold some of it to America and kept the patents ourselves. There is a breakthrough, but Mr. MacGregor does not know about it. He is trying to assist the NCB to get the 200 million tonnes. He is incompetent.
When we talk about oil from coal, it is not a Walter Mitty idea. It is not a new technology. It is now being developed in South Africa by Sasol. Incidentally, the technologies invented by the NCB are better than those of Sasol because they are better in the use of coal, but we as a nation are doing nothing about the matter. The Government have dragged their feet all the time. I have said before that making petrol and oil from coal is nothing new. Most of the aeroplanes that came over from Germany during the last war and knocked hell out of us in Clydebank, in Coventry and in London flew on petrol derived from coal. We are not talking about a new technology, although one would think when listening to the National Coal Board and the Government that it was.
The Secretary of State talked cosmetically about the pit closure programme for contraction of the industry. The House must understand that the average age of miners in the coal industry is lower than ever, at about 38.7. It is the declared policy of the National Coal Board to get rid of 70,000 men. That is on the record and there cannot be any argument about it. The board will not be able to do so simply by getting rid of men over the age of 50. The board will be saying that men over the age of 30 will have to leave the industry because of the policy which is being pursued. I know it is tied to the economic policy of the Government, but it is dishonest for Conservative Members to suggest that there are great prospects in the mining industry if we go ahead with the policy that the National Coal Board is pursuing.
In my area the miners at Monktonhall were out on strike for eight weeks and I resented it bitterly. I have always believed in conciliation rather than confrontation. I believe in argument and discussion. In this debate I have tried to put forward arguments which should at least be considered. In the first week of that dispute I, together with my hon. Friends the Members for East Lothian (Mr. Home Robertson) and for Edinburgh, East (Mr. Strang) put forward proposals to settle the dispute. They were discussed for two and a half hours. Those proposals would not have suited everybody but they would have ended the strike. My constituents in Midlothian were on the sticks for eight weeks and suffered terribly. When they went back to work it was more or less on the proposals that we had put forward.
I say to Mr. MacGregor and his faceless bureaucrats in Hobart House that they bear a heavy responsibility for the suffering of the miners in Midlothian, who will not have a good Christmas. Mr. MacGregor and his officials should feel ashamed that they allowed that strike to go on for eight weeks. How can they expect to have good industrial relations?
Last Friday I went to the miners' treat at Monktonhall. In the mining industry we never forget the old folk. To organise a treat for 1,000 people requires much work. Do 765 hon. Members know what the National Coal Board has done? It has withdrawn facilities for the union and the social committee to organise the old folks' treat. Mr. MacGregor is an old man. It is a disgrace that he should be associated with that policy and that he should be punishing the old people in my constituency by non-co-operation.
The coal industry is a great industry. We must get rid of people like Mr. MacGregor. We must preserve a policy of green field site investment. We must sell more coal abroad and introduce all the new technologies. There must be a policy of liquefaction and gasification of coal, not just to suit the miners but because it is the right thing to do in the interests of the nation. I long for the time when my right hon. Friend the Member for Salford, East will be the Secretary of State for Energy and when a Labour Government will pursue these policies in the interests not only of the miners but of the whole nation.
§ Sir Anthony Meyer (Clwyd, North-West)
The hon. Member for Midlothian (Mr. Eadie), who for 12 years spoke with immense distinction and authority in the House for the coal industry, has made a great speech; the whole House listened to him spellbound. I say that it was a great speech, but I do not say that it was a sensible speech. Indeed, I disagree with much of what the hon. Gentleman had to say. All of us, particularly on the Government side of the House, should recognise the passion and the conviction with which the hon. Gentleman spoke. He was speaking on behalf of the miners. No one on this side of the House has come to appreciate the miners more than I have, but I did not make the mistake of identifying their interests necessarily with the national interest. In many cases they may coincide, but they will rot always do so.
I speak with some sadness because I no longer represent coal miners. Because of parliamentary distribution the Point of Ayr colliery is no longer in my constituency. Although I fought as best I could for the liquefaction plant at Point of Ayr, I no longer have the right to do so as a constituency interest. That colliery is now in the constituency of my hon. Friend the Member for Delyn (Mr. Raffan), who is not present today because he is negotiating with Mr. MacGregor and the National Coal Board to further the interests of that most important scheme. I can only give him what suppert I can from the outside. I hope that the hon. Member for Alyn and Deeside (Mr. Jones), who was here earlier, will recall that this mine is no more in his constituency than it is in mine and will confine his interventions in the matter to supporting the efforts of my hon. Friend the Member for Delyn.
Although the Point of Ayr colliery is not in my constituency, it is reasonable for me to say that the technology of liquefaction of coal is valuable in itself. Not merely is it a technology that will be valuable to this country for converting coal into oil, but, if we can perfect it, it will have a sale value in other countries.
As a result of a slowing down in the increase of world oil prices it is only too clear that this process will not be viable, considered in purely commercial terms. If we had a Secretary of State who was the hard-faced monetarist that it suits some Opposition Members to portray him as, he would no doubt very swiftly run his pen through the whole project. I rejoice in the fact that my right hon. Friend is a man with a broad approach to these problems 766 and that he is prepared to apply Keynesian economics where they can be demonstrated to work. I feel a measure of confidence that this child is in his keeping.
I pay a deep tribute to my hon. Friend the Member for Croydon, Central (Mr. Moore), who for a long time looked after the interests of the coal industry from these Benches. I note that he has come under criticism from the Opposition for floating proposals for a measure of privatisation of the coal industry. I do not think that any of us on this side of the House are sufficient ideologues to think for one moment that it will be possible to privatise the coal industry. But surely it must be to the advantage of the coal industry, as to all other industries, to draw additional resources into it. If that involves binning the frontiers between private and public ownership, then I do not think that any of us should object. I am glad that my hon. Friend, now Financial Secretary to the Treasury, is putting forward these ideas. Perhaps they cannot he made to work, but, if they could, some of them would be of real benefit to the coal industry.
I welcome the presence of my hon. Friend the Member for Pudsey (Mr. Shaw) on the Front Bench. He has already demonstrated his close interest in the industry. I think this is generally recognised on the Opposition Benches. No doubt he, too, will demonstrate a broad approach to the problems of the industry.
In such a debate Mr. Ian MacGregor becomes the Aunt Sally at which every Opposition Member loves to heave a stone, and clearly he is the sort of man who attracts violent criticism. However, it is wrong to regard Mr. MacGregor as a butcher. He is a salesman—a man who sees it as his function in life to sell the products which he is in charge of producing. That merely echoes the point made by the hon. Member for Easington, who spoke of the importance of selling more British coal abroad. It is absurd that Britain, which produces such vast quantities of coal and has enormous reserves, should be content that only a tiny proportion of it is sold abroad. The argument for the MacGregor approach is powerful. It is that if one brings costs down far enough, one can have a better paid work force and a much larger output. That is the direction in which our coal industry must move.
It is not unfair to say that the previous Secretary of State for Energy was not interested in proposals for a common energy policy in the EC, because he regarded it as a means by which EC expenditure, and therefore Government expenditure, might increase substantially. I hope that the present Secretary of State will be a little more flexible in his attitude towards this matter. When the EC budget was being considered, the budget commissioner, Mr. Christopher Tugendhat, put forward proposals for a tax on imported energy into the Community. In some forms, such a tax or levy could be extremely damaging to Britain; but here is the germ of an idea that could be of immense benefit to Britain and to the coal industry, because it could produce the funds to enable a substantial investment to be made in the coal industry to make it more modern and efficient. If the coal industry of the next century is to compete with the United States, India or Australia, we must be prepared for massive investment and for the modernisation of working methods. That inevitably involves considerable expenditure—probably far beyond what is available to any single member Government.
We must not lose sight of our main objective, which is not merely to secure jobs for the miners—although we would all wish to do that—and to get as much coal out 767 of the ground as we can, but to provide the British people and industry with energy at a fully competitive price. All of us know from speaking to constituents that they are sick of perpetual increases in the cost of energy—above all, the perpetual increases in the cost of electricity; and the largest ingredient in the cost of electricity is the price of coal. We must keep down coal prices, which, as has been demonstrated by many Conservative Members today, would be consistent with high wages and good working conditions for miners. The coal industry must be expansion-minded. I know of no Minister more expansion-minded than my right hon. Friend the Secretary of State. I am glad that the Bill is to receive a Second Reading, apparently without opposition.
§ Mr. Terry Patchett (Barnsley, East)
Many hon. Members present today represent constituencies that are heavily involved in coal mining, as is mine. I have heard much today about the miners, but I have heard nothing about the attitude of the miners towards the Government and how we have reached the present position. I am sure that the coal industry will welcome this breathing space given by the Bill, given its present financial position, but we must realise that it is only a breathing space. The Government have not fully recognised the problems of the industry, which can be settled only on a longer-term basis than the Bill allows.
However, the Bill at least hints that the Government are aware of some of the problems, since clause 2 grants a new period of payment of grants to reduce deficit from 1983–84 to 1985–86. However, their enthusiasm for clauses 3 and 4, which deal with the financing of pit closures and redundancies, highlights one of the major problems of the industry. The miners — I am speaking not about one chap I met in the club, but from a lifetime's association with the mining industry—believe that the Government lack enthusiasm for the industry.
We are all aware that the strategy of the Coal Industry Acts 1980 and 1982 was that the board should ultimately be self-financing, and every report that I have read said that that would be achieved by 1984. However, three years is a long time in industry as well as in politics, especially under a Tory Government. Who would have predicted in 1979 or 1980 the utter failure of the Government to tackle unemployment and thereby to stimulate industry to use energy? Conservative Members say much about markets abroad, but the domestic markets have been decimated by the Government's lack of initiative in tackling the problem. That, apart from the added financial burden of the stacks of coal in collieries all round the country—which are not caused by a lack of interest or productivity on the part of the miners — is a monument to the Government's economic policy.
The men in the industry believe that the Government are basing their energy policy not on the cool light of facts but on a blind hatred of the National Union of Mineworkers. They imported an Americanised chairman more renowned for union bashing than for his experience in the coal industry. However, at least they conceded a U-turn. At the beginning of the recession the Government were blaming naughty trade unionists and the lack of productivity for the problem, but the Prime Minister could 768 not go to the CBI and find anyone suitable in British industry to manage our nationalised coal industry. Even her friends in the CBI must have been snubbed by that.
The Government seem to be hell bent on a nuclear energy programme, regardless of the safety questions that are still unanswered, including the disposal of nuclear waste.
In 1979–80, 24,000 jobs were lost in the industry, and 10,000 were lost in 1982–83. That does not stimulate confidence in the Government, who appear to be going nowhere. The terms of reference of the Monopolies and Mergers Commission once more highlighted only a three-year period and ignored completely the fact that we lost a vast market because of the Government's inactivity.
My right hon. Friend the Member for Salford, East (Mr. Orme) said that one reason why the board's figures were so bad in recent years was high interest rates. They have been a handicap since vesting day, and the public should appreciate that they have been a heavy burden. Therefore, a high proportion of the grants paid to the National Coal Board are repaid in the form of interest payments for previous borrowing.
Coal is an asset, and it should be exploited as such. Many allied industries will suffer as a result of the cuts and closures in the mining industry that the Government are encouraging through the auspices of MacGregor. The Government appear to be considering coal expenditure as a single aspect of spending. It is not just spending on the coal industry that counts, but the overall effect on public spending. When uneconomic pits are sliced off, public expenditure must be used to cover the loss of jobs and so on.
I hope that with this in mind the Government will take a fresh look, will recognise the damaging effects of the recession and will be ready if ever an upsurge comes. I do not see one coming, but Conservative Members tell me it is. When a Labour Government take over after the next election we want a coal mining industry and an energy industry to get the country back to work and to bring down unemployment. We want to get the industry back on its feet. Please do not decimate our energy source.
§ Mr. Michael Fallon (Darlington)
Two weeks ago the House was asked to approve a Bill to increase the borrowing powers of British Shipbuilders, the borrowing limit of which in 1979 was £300 million, to a limit this year of £1,200 million. Tonight we are being asked in a similar way to increase a limit which in 1979 was £2,200 million to a total of £5,500 million, extendable to £6,000 million. The two Bills appear to have three similar characteristics. First, there is no end in sight to this public subsidy. Secondly, and sadly, there appears to be a total absence of agreement between management and unions on the structure, size, shape and scope of the industry involved. Thirdly, the assumptions made by Government throughout the consideration of both industries for a period going back more than 10 years have been wrong time and again.
My right hon. Friend the Member for Guildford (Mr. Howell), when introducing the Coal Industry Bill 1980 said:I would expect that the new level would be sufficient to last the board for about three years".—[Official Report, 17 June 1980; Vol. 986, c. 1380.]We are three years on today and not only is that assumption wrong—and, interestingly, it was made on 769 the basis of 14 per cent. annual inflation, which did not turn out to he the case—but the other assumptions made when that Bill was presented to the House in terms of the closure of uneconomic capacity and improvements in productivity were similarly wrong. I wish that Opposition Members, who have mentioned productivity in their speeches, would study the damning evidence in appendix 3.10 of the Monopolies and Mergers Commission report.
I described the action of British Shipbuilders' unions in demanding an increase in the borrowing powers of that industry as treating Parliament as an autobank. I think it only fair to say that, for the miners over the past 10 years, Parliament has been more of a milch cow. What has been mined over the past 10 years is public money —taxpayers' money — from the Treasury. As we have already heard today, more than £1 billion a year now goes in either capital or current subsidy to the industry. Not only operating grant, but all manner of supporting money goes together with that subsidy. There are regional grants, social grants, and deferred interest payment schemes for the industry and, for the miners themselves, there are, in addition to normal redundancy payments, disturbance allowances, retention payments and removal allowances.
Indeed, the Monopolies and Mergers Commission, in paragraph 3.133 of its report, put it very well when it said that:The NCB has been financed almost entirely by loan capital and Government grants during the last ten years.I think it is time that hon. Members were slightly more frank about the state of the industry, in particular the state of the deep collieries and their operating results. It was not until the publication of that report that it was possible for the House to evaluate the operating results of each colliery, one set against another. It was not until that report was published that it became clear that only twice over the past 11 years have the deep mines ever been profitable and the profit over those 11 years totalled about £32 million and must be set against losses of nearly £855 million.
I have carefully read through the proceedings on both the two previous borrowing powers measures and, having read those debates and the proceedings of the two Standing Committees, I am struck by the air of unreality that appears to permeate debates on the coal industry. The only honourable and consistent exception to that air of unreality appear to have been the speeches of my hon. Friend the Member for Bedfordshire, North (Mr. Skeet). This industry might be described as "Arthur in Wonderland". I should like to give a current example of how unrealistic are the attitudes of the industry and how divorced they are from the interests of taxpayers as a whole. An article in The Times of 3 November said:At a recent joint meeting of the deputies' union, NACODS, and the British Association of Colliery Management, it was agreed that the coal board should be approached to ask the Government to ban further pit closures, provide subsidies for coal production, and halt coal imports.With regard to providing subsidies to the industry, it has become clear during the debate that not only has my right hon. Friend responded to the challenge to put further resources into the industry but he has done so in a way which some Conservative Members might consider almost too lavish. With regard to halting coal imports, it appears to have escaped the notice of the right hon. Member for Salford, East (Mr. Orme), as was pointed out by my hon. Friend the Member for Warwickshire, North (Mr. Maude), that coal imports have halved over the past three years—the great bulk of them is taken up by the import 770 of materials that are not indigenous to this country. While I agree with the hon. Member for Easington (Mr. Dormand) who said that the real task facing the industry is to find new markets abroad, I was disappointed that he then went on to mount a personal attack on the chairman of the Coal Board, who has particular expertise in that area. Not only did he do that but he appeared to expect OECD countries, to which we were to be asked to export more coal, at the same time not to expect us to change some highly monopolistic arrangements in the conduct of our own industry, such as the centralised bargaining system that exists between the Coal Board and the Central Electricity Generating Board.
The final issue raised in the statement by NACODS and the British Association of Colliery Management is closures. It would appear from what has been said from the Opposition Benches that the need for the closure of uneconomic capacity has been suggested only by Mr. MacGregor and Conservative Members. That is not true. It was first proposed by the then Labour Government in 1974. The present Financial Secretary to the Treasury, speaking in the debate on the last coal industry measure, in 1982, reminded the House:A coal industry examination interim report produced by the Labour Government in June 1974 contains definite assumptions relating to the pattern of closures due to excessive capacity during the period when new capacity came on stream. The assumption was that 3 million to 4 million tonnes of capacity a year would disappear during the period'.—[Official Report, 2 February 1982; Vol 17, c. 206.]That was recognised not only by the Labour Government in 1974. It was subsequently recognised by the Commission in Brussels in a proposal for a new regulation and it has been recognised yet again by the chairman of the Coal Board in his introductory statement to this year's report, when he says:In these circumstances of financial and physical imbalance, it cannot be right, as I have said repeatedly throughout the year, that a small proportion of our total output, mined from persistently unprofitable pits with no prospect of viability, should be responsible for the greater part of both surplus output and financial losses".In the end we return to the report of the Monopolies and Mergers Commission, and this is the first opportunity that the House has had to consider the findings of that report since its publication before the election. Its central conclusion, in my view, concerns pit closures. It says in paragraph 8.25:When we questioned the NCB as to why it had failed to achieve the level of closures envisaged in the Tripartite Report of 1974 and why it had assumed only a modest level of closures in its current medium-term development plan, we were told in both cases that the necessity of maintaining good industrial relations precluded faster progress.Thus, when the right hon. Member for Salford, East argues for a return to the tripartite machinery, he is really arguing for a return to the veto by the miners' union over decision-making by the management and Government on the future needs of the industry and, indirectly, over the needs and better interests of taxpayers as a whole.
§ 7.3 pm
§ Mr. James Wallace (Orkney and Shetland)
It was a pleasure to listen to the maiden speech of my compatriot, the hon. Member for Sherwood (Mr. Stewart). and a privilege to listen to the remarks of the hon. Member for Midlothian (Mr. Eadie), whose speech was the most passionate I have heard since entering Parliament. It had the House spellbound. 771 The Bill is necessary, given the present state of the National Coal Board's finances, because it extends the borrowing limits of and advances extra assistance to the NCB. Therefore, we on this Bench will not oppose it. Nevertheless, we consider it another disappointing measure because it represents an extension of a Government policy which, although presented today as supportive of the industry, falls far short of the positive commitment to the coal industry that we in the Liberal party and SDP believe is necessary if the industry in Britain is to have a meaningful future.
It cannot be doubted that there is a crisis in the coal industry. There is a crisis in industrial relations, of which recent events at Monktonhall are a symptom, and there is a financial crisis, one of the more acute symptoms of it being the increased stocks at many of our coal mines. The hon. Members for Bedfordshire, North (Mr. Skeet) and for Warwickshire, North (Mr. Maude) seemed to think that the consequence of having large stocks was colliery closures. The hon. Member for Midlothian eloquently put the argument why hard-nosed economics are not the only criteria to apply when considering the future of collieries. Although we may have coal reserves in the soil to last for 300 years, in the great length of history that is only a limited period. In any event, much of those stocks would be lost if we closed mines which still had productive capacity.
Reference has been made to defence considerations. I have on a number of occasions debated North sea oil with the hon. Member for Bedfordshire, North. It has been generally accepted by hon. Members that it is in the national interest that we should become increasingly self-sufficient in oil and not be so dependent on the volatile nations of the middle east. The hon. Member for Bedfordshire, North thought that we might get coal from South Africa. Apart from any moral questions—about how that coal is produced as cheaply as he indicated—that would appear to be a volatile part of the world on which to depend for future energy supplies.
I agree that we have excess coal stocks, but that is due to efficiency on the part of the coal industry and inefficiency on the part of the Government to run the economy properly. When the Conservatives came to power in 1979, the fuel used by the public supply system was 122 million tonnes coal equivalent per annum. It had reduced to 107 million tonnes by 1982, a drop of just over 12 per cent., but the proportion of that made up of coal fell by only 9½ per cent. There has been a world recession, but there has also been a Government failure to sustain the level of overall demand, and that has led to a decrease in the demand for coal. At the same time, there has been an increase in the efficiency of miners; overall output per man-shift hour has been rising over the years and today, at 2.44 tonnes, it is the highest since nationalisation.
One must examine the problem from two angles. The first is to examine how to increase the market for coal. There must initially be an expansion of the economy. Lost manufacturing production since the Conservatives came to power has contributed to much of the problem. If the Government introduced some of the policies outlined in the report "Back to Work" commissioned by the Liberal party and the SDP, there would be an increase in manufacturing output and a corresponding increase in fuel demand.
772 The Government could extend the Government-aided scheme, for which there are signs of a good take-up, for converting to coal-firing boilers now using gas and oil equipment. The hon. Member for Easington (Mr. Dormand) referred to this at length. It has been suggested that the limit of £50 million placed on that scheme by the Government will be reached by the autumn of this year. It also appears that the take-up of the scheme only scratches the surface of what could be done. Will that scheme be continued and is it having a good take-up?
The biggest market for coal is that which goes to the CEGB and the South of Scotland Electricity Board. Perhaps they could follow private industry by converting some of their oil boilers to coal firing. It has been done with considerable success in the United States and Denmark, where some conversions have enabled a dual system to operate; it is then possible to have both oil and coal capacity, thereby safeguarding the position to take account of future price differentials.
We on this Bench consider that a barrier to innovation is the decision of the CEGB and South of Scotland Electricity Board to put so many of their eggs in the nuclear basket. We are sceptical about the expansion of nuclear power and do not think that there are economic arguments for it. No doubt someone from the electricity generating industry can pick out one good nuclear power station and pit it against a coal-fired station and tell us that it is more economical. We are entitled to ask, in any of these calculations, where are the costs for the years which Heysham B took to be constructed and the years when Hunterston B was out of commission? The Select Committee on Energy, in a report two years ago, made it clear that it was dubious on this matter, and had great scepticism about whether there was an economic case for saying that electricity generation by nuclear power was cheaper than by coal.
The demand argument does not exist. There is excess capacity in England and a considerable amount of excess capacity in Scotland. As a result, in the last fortnight the South of Scotland Electricity Board yet again cut its requirements for coal from Scottish pits. In 1981, the demand from the SSEB was 7.8 million tonnes, and next year it will be just over 3.8 million tonnes. That must threaten a number of pits in Scotland. The Government say that they are supporting the coal industry, but is that not hypocritical, and inconsistent with their encouragement of bodies such as the SSEB to go ahead with nuclear power stations, and in particular to continue with the station at Torness?
The other crisis in the coal industry is that of pit closures. Undubtedly, after many years of working, pits can become exhausted, or the geographical circumstances may be such that there are insuperable difficulties, and in both events pits must close. Labour Members have been misrepresented by Conservative Members as saying that they oppose closures at any cost. I heard some Labour members say clearly that there were circumstances in which closures had to take place. "Plan for Coal" in 1974 made it clear that when a mine had become exhausted and there were insuperable running difficulties it had to be closed.
The great loss of morale in the coal industry is because much has been said about closures and not enough about investment in new mines.
§ Mr. Wallace
The hon. Gentleman is correct.
We accept that some mines will have to close, but there should be full consultation with everybody involved, and a number of factors should be taken into consideration, in particular the social ones. The older mines, which are in most danger of being closed, are in limited geographical areas in south Wales, the north-east of England and Scotland. If closures occur in such limited areas, the social impact will be even greater. We must ensure that the Government are sensitive about this and have social policies ready to take care of the problem if and when it should arise.
We should also ensure that we do not waste resources. Our energy resources are finite and we cannot afford to lose them. I have studied some of the reports of past debates on the coal industry, and I was struck by the number of right hon. and hon. Members who gave examples of mines that one year were declared to be unprofitable and unproductive but which, because nothing was done about them at the time, were making a profit two or three years later in changed circumstances. The hon. Member for Ashfield (Mr. Haynes) gave such an example today. We must be sure, when we take decisions to close mines, that we are not unnecessarily wasting capacity.
The closure of mines must go hand in hand with the progressive replacement of old capacity with new and the introduction of new technology in mining to make it more efficient and safe, and we must develop existing mines as well as sink new ones. There must be a future for our coal industry, because coal resources are available. Coal must play a significant part in our future energy strategy. We call for a reaffirmation of "Plan for Coal". There should be a new tripartite deal for coal, with the industry committed to a high level of investment, and with more Government support.
The right hon. Member for Salford, East (Mr. Orme) asked, "Why not financial reconstruction?" When the Government seem prepared to write off the debts of British Airways, why not take the bold step of writing off the debts of the NCB? It is all very well for the Government to tell us how much they are giving as a deficit grant to the coal industry—£374 million in the last financial year—when of that £366 million was paid back by the Coal Board in interest charges. The third leg of the tripartite agreement would be constructive co-operation between management and the mining unions on any pit closures, with the unions safe in the knowledge that that would go hand in hand with new mining developments.
As we look forward to a time when oil and gas reserves decline, the future of the coal industry must be bright. Its problem is a short-term one because of lack of demand. It is vital, at this difficult time, that we maintain existing capacity, do not unnecessarily throw away coal resources or our skilled labour force, and that we invest in a successful future for the coal industry.
§ Mr. Tim Eggar (Enfield, North)
I hope that the hon. Member for Orkney and Shetland (Mr. Wallace) will forgive me of I do not follow him in his points about the future of the coal industry. I shall dwell on one particular proposal. We need a strong coal industry. It should be a smaller industry, and it will be in the National Coal Board's interests, over a period, to dispose of its ancillary businesses and opencast mining operations. However, I shall not develop that point this evening.
774 I shall concentrate on developing some of the points made by Labour Members about the current balance sheet and financing structures of the Coal Board. This is the fourth Bill that the House has had to consider since 1977. Mr. Tony Benn in that year raised the borrowing limit to £1,400 million. In this Bill, some seven years later, we are seeking to extend the limit to £6,000 million. That. by any stretch of the imagination, is a considerable increase.
There is an argument in favour of putting all nationalised industries, not just the Coal Board, on a proper financial footing. There is also an argument for a radical restructure of the Coal Board's balance sheet. I do not say that simply with a view to writing off bad debts. We need to ensure that the Coal Board has a proper balance sheet and a reasonable debt to equity ratio comparable with other mining companies worldwide. It should also be reasonable to expect it to proceed without further deficit grants. Any social grants that are thought to be reasonable in all the circumstances should be revealed in the balance sheet and committed by the Government up to a maximum limit for a number of years forward.
With this reconstructed balance sheet, the Coal Board should be expected to pay a dividend on the Government's equity capital. In other words, the Coal Board should be put into the same position as any major private sector mining company, such as Rio Tinto-Zinc, the Amax Corporation or any other corporation, with the one difference that the shareholding would be held by the Government only, not by a number of private sector individuals or investment trusts.
What are the advantages of such a change? There is not only the question of the writing off of past debts, but acknowledging that we have lost a considerable amount of public money. The major importance of such a restructuring is that it would concentrate the minds of management, unions and Ministers on where they want the industry to go in future. It would force them to put a sensible valuation on the assets of the Coal Board. Restructuring would make them examine how much investment they would need to achieve in two or three years.
Management and Government would know that it would be a matter not simply of returning to the House for a further inrease in the borrowing limit if things went wrong. There would be effects on directors if a company went bust under the Companies Acts. That would affect public understanding of the financial difficulties within the industry. The public do not realise that each time we raise the borrowing limits, in effect we acknowledge that the National Coal Board has gone bust again. They would understand it if the Coal Board were a company under the Companies Acts and had to go through the stages that are required of such companies.
I do not believe that this Bill will make a tremendous difference to the way in which the Coal Board is run, but it is an improvement. It would mean an internal discipline on management, and an improvement in communication with the public about the industry's performance. Just as importantly, this measure would make it easier for those of us who are not experts on the coal industry to have a better idea of what is happening. It would ease the role of the Select Committee in examining the way in which the industry is proceeding.
I recognise that it is too late for the Minister to consider introducing such a step in the Bill, but I hope that the Department and the Government will consider my 775 suggestion because it applies to all nationlised industries, not just to the National Coal Board. If, God forbid, we have a similar Bill in a few years' time, my suggestion might offer an alternative that could be considered by the House.
§ Mr. Ray Powell (Ogmore)
When I left the Chamber for one cup of tea, I was frightened to death by the story on the front page of The Standard about the crash of an atomic waste lorry on a motorway. I thought that the article referred to the M4 into Wales, across the Severn bridge. If a lorry crashed there and traffic on the bridge was further restricted, this would be a disaster for Wales even greater than the one that we have suffered since the Tory Government took office in May 1979.
There are four valleys in Ogmore, each containing a number of collieries. After four years of Tory Government there is only one colliery in the Ogmore valley still producing coking coal. Last week we were informed that the Wyndham western colliery was subject to closure. If Conservative Members want to see the social consequences of a colliery closure in a mining valley, they are invited to come to my constituency. In the Ogmore valley, there are 8,000 people out of work. Last Friday the job centre had 100 jobs on offer—for bar attendants and assistants and for engineers in Airvac, but there were few jobs available for people in the Ogmore area.
The hon. Member for Bedfordshire, North (Mr. Skeet), who left the Chamber as soon as he made his speech, suggested that no young people are being made redundant. He should come to Wales, because not only are young people in the collieries being made redundant, but there is no chance of jobs for them in Wales. In the Ogmore valley, 1,600 young people under the age of 21 have few, if any, prospects of obtaining a job in mining or other industries.
My father was a miner, and I lived in the Rhondda valley. He tried to persuade me to continue at school so that I did not go into the mining industry. However, all my school mates worked in the colliery. Their sons and grandsons, who should have jobs in the Rhondda, Ogmore and other mining areas of south Wales, have no chance of a job in a colliery. No apprentices are taken on in south Wales.
When I left the Chamber for a cup of tea, I had a shock not just because of the front page story of The Standard, but because of a story on the second page. In a way, it was a relief because I read:Jobs message to ToriesThe Government must cut unemployment if it is to stay in office for a third term, Energy Secretary Peter Walker said today.Speaking at a Financial Times conference in London on The Second Thatcher Government, Mr. Walker said he did not think the Tories should go into another election with jobless figures at their present level.
§ Mr. Powell
We have noted the right hon. Gentleman's stance when he addressed that conference and his stance when he started to address the Chamber this afternoon. If he does not change the Government's energy policies and stops colliery closures, I can guarantee that the Tory Government will not have a third term.
Because of the carve-up of parliamentary boundaries by the Tory electoral commissioners, to ensure Tory seats, I 776 lost half of my former constituency. I had an electorate of 74,000, and it was reduced to 52,000. Nevertheless, despite a reduction of 22,000 electors, I received a handsome majority of 17,242—1,240 more than I had received during the 1979 election.
We feel for the people who have been put out of work, and we talk to them. Conservative Members should go to the Ogmore valley to see young lads strolling round the streets with nothing to do all day. They should go into the miners' institutes, to which my father and my friends' fathers contributed threepence a week to keep them going. Those lads are in the clubs and playing snooker. Some of them have degrees, but have no chance of obtaining a job because of the Government's policies.
People in the Ogmore and other valleys had already suffered massive unemployment because of MacGregor's attitude to the British Steel Corporation. This was before Mr. MacGregor was appointed to the chairmanship of the National Coal Board.
§ Mr. Powell
Do not put me off; I was in full flight.
Mr. MacGregor began by persuading the trade unions that the answer to the steel industry's problems was to make the industry efficient and well paid for those who would be retained in that industry. Conservative Members should go to the Port Talbot and Llanwern works, talk to the remaining staff and ask them whether it is the industry that they expected when they agreed to demanning.
I warn the miners and their leaders that this is what will happen with MacGregor, who is there to butcher and cut the mining industry. He will persuade them that a reduction in manning levels is needed so that he can create circumstances similar to those in the steel industry.
The Wyndham western colliery is the one pit left in the Ogmore valley, and that is to close. There is one industrialist on a new estate about which the Secretary of State for Wales continually boasts. There are four new factories on the Pwyllygwent site. One is occupied and employs 40 women. That industrialist told me only a fortnight ago that if the Wyndham western colliery closed he would take his factory from Ogmore valley and go elsewhere. With a valley of 8,000 to 9,000 people, we have one factory employing 40 females while a colliery is to close that employs 540 miners.
It is no good the Secretary of State going to a conference this afternoon and warning people about the Government's term of office expiring at the end of this Parliament unless unemployment is cut. Something must be done in the valleys to create jobs for people in my area.
The hon. Member for Bolsover (Mr. Skinner) mentioned "Yankee." I call Mr. MacGregor the Yankee doodle butcher of the steel industry because he can claim the remarkable achievement of closing most of our steel plants at taxpayers' expense. I have often wondered, and I have been asked many times, how Parliament can pay such a price to one person to destroy so much in so short a time. I know hundreds of people who could have easily achieved more for far less. Mr. MacGregor reduced the steel industry by 110,000 jobs within four years. Parliament does not do anything. We take him on at great expense to cut as many jobs as possible in the shortest possible time, without any regard to the social consequences of colliery closures. Only 69,000 steel workers are left after four years of MacGregor. They are 777 facing an endless deterioration in their standards of living. It is time that Parliament took a hand to try and streamline the industry. Wales will never recover from the butchery. It is still reeling from this vicious, unprecedented attack on its steel industry. There are 200,000 people out of work in Wales. Most areas had a reduction in unemployment figures last month but in Wales they increased.
MacGregor wants a vote to decide whether the miners should accept their 5.2 per cent. increase and whether overtime should be banned. I have no doubt that the miners would welcome a ballot if he included in it a question whether he should continue as chairman of the National Coal Board. The miners would jump at the chance of making a democratic decision.
For months before the general election in June, as convenor of the Welsh group of Members of Parliament I had discussions with county councils, borough and district councils, trade unions, Welsh Members of Parliament and at Select Committee meetings; we had seminars and talks with Philip Weekes, the general manager of the south Wales NCB, and Mr. Siddall. The list is endless but the results are significant. The Government announced the new NCB chairman. A crisis turned out to be a frightening disaster. We approached many people. including the Secretary of State for Energy. He responded and within a matter of hours received a deputation as the result of a request from the Secretary of State for Wales. A letter was sent to MacGregor in September asking for a meeting. He said, "No, go and talk to the chairman of the south Wales NCB."
The Government should carefully consider the extent of the butchery and annihilation of the south Wales pits that has taken place, so that we retain what we have.
§ Mr. Neil Hamilton (Tatton)
The Opposition's speeches have been long on heat and short on light. We on the Conservative Benches will not all rise to speak with unalloyed pleasure about the presentation and discussion of the Bill. It is the third time recently that we have been invited to pour more money down the mine. Some of us are coming to the conclusion that the time is quickly approaching when this must stop.
The intention of the 1980 Act which we are updating was that the coal industry should break even without grants by 1983–84. The results are manifestly different from the original expectation. It is well worth studying the published figures to see the amount of money which has been swallowed by these bottomless pits since 1980 and to understand the scale and measure of the problem. In 1979–80 grants amounted to £251 million; in 1980–81 to £255 million; in 1981–82 to £576 million; in 1982–83 to £520 million; and in 1983–84 they are expected to rise to £643 million. Thousands of millions of pounds of taxpayers' money have been wasted in this appalling way.
§ Mr. Skinner
The hon. Gentleman has given us some interesting statistics. He may like to compare them with the fact that the Government whom he supports are proposing to spend £3 billion on 400 families in the Falkland Islands. We have 200,000 people employed in mining plus those in its associated industries.
§ Mr. Hamilton
The hon. Gentleman would no doubt look at the matter differently if there yeas a prospect of sinking coal mines in the Falkland Islands. He seems to 778 consider that burrowing underground is worth spending money on regardless of what is brought out. Some of us wish that the hon. Gentleman was still burrowing underground.
The figures that I have given represent operating and social grants that have been made to the industry. In addition, investment finance has also been funded by the taxpayer. The NCB's external financing limit this year is the amazing sum of £1,195 million. It is the largest external financing limit of any nationalised industry. We must ask ourselves what its purpose is. Is it simply to maintain in existence for ever a coal mining industry? What would be the utility of such an approach?
Much has been said about the history and social consequence of changes in the mining industry. Although there are no coal mines in my constituency, my family has been involved with the mining industry for many generations. I am the first member of my family not to derive an income directly from the coal mining industry. My father spent 35 years in the south Wales mining industry, and both my grandfathers were coal miners. I grew up in the type of area to which the hon. Member for Ogmore (Mr. Powell) referred and I well understand the social problems created when a mine is closed, but we must not blind ourselves to the consequences of economic change throughout the world. We cannot ossify our economy for ever on the basis of that which existed 60 or 70 years ago.
§ Mr. Hamilton
The hon. Member can make his own speech in his own time. I should be grateful if he did not make it from a sedentary position while I am speaking.
§ Mr. Deputy Speaker (Mr. Harold Walker)
The hon. Member for Bolsover (Mr. Skinner) must not interrupt from a sedentary position. The hon. Member for Tatton (Mr. Hamilton) is clearly not giving way.
§ Mr. Hamilton
The hon. Member for Bolsover recently enjoyed the protection of Mr. Speaker. I am sure that you, Mr. Deputy Speaker, will extend the same protection to me.
We must not consider ossifying the economy. No doubt similarly impassioned and erudite speeches could have been made about the charcoal burners of the 16th century when the coal miners took over from them. Impassioned pleas could also have been made to preserve the jobs of cart and stagecoach manufacturers in the 19th century No doubt the national union of quill pen operatives would have had much to say when the typewriter was invented and new technology made redundant many of the skills employed by its work force.
The arguments of Opposition Members have been quite extraordinary. We are discussing taking money out of people's pockets which they themselves, by the expression of their wishes through the market, do not wish to spend on the purchase of coal. That would be the equivalent of forcing people to shop in an establishment where the prices are higher than they wish to pay and the goods in the shop window are not those which they wish to purchase. I believe that the time has come for us to consider properly the ethics and morality of continuing in the present manner.
The debate and the relevant documents have established that the coal industry is absolutely broke and that there is 779 no justification for any wage increase. If we examine the NCB's outstanding loans as shown in its books, we discover that the sum involved is £3.74 billion and that the assets of the NCB amount to £3.71 billion, so the balance sheet will show a deficit. The NCB is giving an illusion of prosperity. The Bill is the most expensive pit prop ever invented.
I deplore the derogatory remarks made about Mr. MacGregor, the new chairman of the NCB. I believe Mr. MacGregor to be a talented and intelligent business man who has the interests of the industry at heart. He appreciates that to survive in the world we must produce the goods that people want to buy at the price that they are prepared to pay. The future prosperity of the coal mining industry depends not only on domestic demand for the product but on being able to sell it increasingly on the world markets. That is the only way in which employment in the industry will stabilise, thereby saving jobs.
The 1974 document, "Plan for Coal", is the root of all the arguments to which we have listened and underlies the legislation that we are trying to update. Parts of the plan have been fulfilled and Opposition Members are delighted with those. However, they conveniently forget those parts of the plan which have remained unfulfilled. Since 1974 16 million tonnes of new productive capacity have been opened and a further 23 million tonnes of annual productive capacity will be opened by 1987. We are getting near to the 40 million to 42 million tonnes which was the target for annual and new capacity put forward in "Plan for Coal".
Conversely, when we examine the history of closures of uneconomic mines, which was an essential part of the strategy in the plan, we note that 2 million tonnes of annual capacity have been closed since 1974 which is well below the 3 million to 4 million tonnes of capacity projected in the report. We can see that the other side of the equation has not come into existence.
The two principal problems facing the coal industry have been well exemplified in the report of the Monopolies and Mergers Commission. Contrary to what was said by one hon. Member, the report is not hostile. It was compiled by independent men who had taken evidence from both sides of the industry and came to an independent conclusion. Both of the problems isolated in the report are referred to on page 366, paragraph 19.13, which states:The first problem is that the NCB is producing much more coal than can find a market either in the United Kingdom or, at acceptable prices, abroad. As a result coal stocks held in the United Kingdom have been rising for a number of years, and in the NCB's own view are now excessive. These stocks are a continuing drain on the NCB's finances and a considerable burden on public funds.We all know that at present there is six months' supply of coal on the ground. We also know that Mr. Scargill poses no danger by threatening an overtime ban which would hurt only the employees in the industry because the power stations have sufficient stocks of coal to last them through the winter. For the miners to crucify themselves on the altar of Arthur Scargill and his blatherings would be the ultimate in foolishness.
Coal stocks stand at 59 million tonnes, which is six months' supply to the CEGB. An overtime ban for four years would be needed to exhaust the existing stocks.
The second problem which the report identified was that of high cost pits. Paragraph 19.14 states: 780well under half of the 1981–82 deep-mined output of 108 million tonnes was produced at levels of operating cost below current average proceeds.The report correctly states:The high cost pits impose a heavy burden on the industry's finances. In 1981–82 the 10 per cent. of the deep mined output 10–8 million tonnes that came from pits with the highest losses per tonne involved operating losses of £263 million.
§ Mr. Hamilton
My hon. Friend is absolutely right. Some Opposition Members seem to have been unable to read volume II of the report. Although Monktonhall colliery was referred to the hon. Member for Midlothian (Mr. Eadie) as a profitable pit, the figures given in the report by the Monopolies and Mergers Commission belie that statement. A loss of £8.9 million was recorded in the latest year for which figures are available. Before the Opposition pontificate on the Bill, they should read and digest the facts. The problems of the coal industry are high production costs and insufficient demand.
§ Mr. Deputy Speaker
Order. The hon. Gentleman must not attribute arguments to me and expect me to explain them.
§ Mr. Pike
I apologise to you, Mr. Deputy Speaker. Does the hon. Member for Tattorn (Mr. Hamilton) agree that the high stocks of coal are due to lack of consumption resulting from the rundown of the economy brought about by the Government's policies? If the economy recovered and demands for power increased, the stocks would rapidly fall.
§ Mr. Hamilton
The simple answer is that I do not agree, but I shall not detain the House on that point.
There is a startling contrast between the situation in the high-cost deep-mine pits and the new investment in efficient projects. In contrast in the loss-making 12 per cent. of production capacity, operations such as the newly developed Selby coalfield employ advanced mining technology and are highly capital intensive and highly successful. At Selby, the world's largest capacity coal mine, 4,500 men produce 10 million tonnes of coal per year. About 25,000 men would be required to produce that volume of coal from the high-cost mines listed in the report. If the industry is to survive and be profitable, and if jobs in the industry are to be secure, that is the way of the future.
There is another dimension to the problem. It is not just a question of the direct cost to the taxpayer in the price of coal and the subsidies to the industry. Other industries must bear the high cost of energy, with repercussions on jobs elsewhere in the economy. It is well known that 82 per cent. of CEGB power stations are coal fired. The high price of fuel thus makes production costs of other industries uncompetitive and many other jobs are put at risk. Far from contributing to the decrease in unemployment that all Conservatives wish to see, it makes it even harder for firms to survive.
The Government have sponsored agreements with the CEGB to purchase more coal, imposing further cost on the taxpayer. In 1981 the NCB contracted to sell 75 million tonnes of coal to the CEGB. Imports were to be restricted to 0.75 million tonnes although coal could be obtained on 781 the world market more cheaply than at home. That cost £19 million in compensation from the Government. I therefore greatly welcomed the Financial Secretary's recent statement that no state monopoly was sacrosanct and that through competition and privatisation the Government intend to open the state sector to the stimulus of competition. I hope that that will be extended to the coal industry, at least in some limited way. I have no doubt that that would maximise investment in the most efficient pits, which would do wonders for job security in the industry as well as being regarded as an advantage by the taxpayer.
The Opposition regard the multinationals and the oil companies as bogies and demons——
§ Mr. Lofthouse
On a point of order, Mr. Deputy Speaker. Is it right that a Member of the House should ignore the advice and guidance of Mr. Speaker, who asked for brief speeches? Some hon. Members have been here since 2.30 pm and they will be deprived of the opportunity to address the House.
§ Mr. Deputy Speaker
Mr. Speaker can only offer advice. Whoever is in the Chair, one hopes that hon. Members will follow that advice. If hon. Members are anxious that the hon. Member for Tatton (Mr. Hamilton) should conclude his speech, it may help if they let him get on with it.
§ Mr. Hamilton
I shall not detain the House much longer.
There are great prospects for investment in the coal industry by the oil companies if only we allow it to happen. In 1981, the last year for which figures are available, five or six major oil companies world wide invested £1,400 million in the coal industry in various parts of the world. We need that kind of investment in this country from private pockets, not extorted from the taxpayer by the use of parliamentary majorities. There is an umbilical connection between exports, jobs and investment from abroad.
This week's issue of The Economist——
§ Mr. J. D. Concannon (Mansfield)
On a point of order, Mr. Deputy Speaker. Many hon. Members have been present since the beginning of the debate, hoping to participate. Many are from coal mining constituencies which will be affected by the Bill. I am getting a little hot under the collar because the hon. Member for Tatton (Mr. Hamilton) has been speaking for more than 25 minutes. I appeal to you, Mr. Deputy Speaker, that after this we should go on to the 10-minute rule.
§ Mr. Deputy Speaker
Nothing has occurred so far which is out of order. I repeat, however, that I hope that hon. Members will take Mr. Speaker's advice. It is perhaps in the best interests of the House if we let the hon. Member for Tatton (Mr. Hamilton) conclude his speech.
§ Mr. Hamilton
I might well have finished by now if the right hon. Member for Mansfield (Mr. Concannon) had allowed me to continue.
A short paragraph in The Economist this week exemplifies yet another opportunity to expand the coal industry and the number of jobs in it. I should have thought that to spend a few minutes on that would be encouraging. I am surprised that the Opposition disagree. The article states:Britain is western Europe's largest hard-coal producer, sitting on the edge of one of the fastest-growing coal markets in the world. Europe's present consumption of 250 million tonnes 782 of coal could, some think, double in 10 years. But British deep-mined coal costs on average £38 a tonne to extract, while world prices for coal delivered to Europe are around £33 a tonne.We are not competing in the market to maximise our advantage.
The coal industry has not always been renowned for good industrial relations, least of all before nationalisation. In a letter after the 1926 strike Lord Birkenhead said that it would be possible without exaggeration to say after meeting the miners' leaders at that time that he had met the stupidest men in England, were it not for the fact that he then went on to meet the owners. The taxpayers are now the owners and they are not so stupid. The taxpayers of this country will not stand by for ever while thousands of millions of pounds of their money are poured ever further into the bottomless pits of the coal industry.
§ Mr. Roy Mason (Barnsley, Central)
We have just witnessed a blatant display of bad manners and an abuse of the House. The person responsible—one cannot call him honourable—should withdraw from the precincts. The Government Whips panicked because they had run out of contributors in a coal debate, so they scoured the Corridors and brought in somebody with an Institute of Directors type of mind to pour out statistics and phrases from the various volumes and documents that he had the nerve to bring into the Chamber. He should be ashamed. The House will remember what he did.
§ Mr. Neil Hamilton
On a point of order, Mr. Deputy Speaker. I have attended the debate since it began at 4 o'clock, except for an hour between 5 pm and 6 pro when I was attending an industry committee.
§ Mr. Deputy Speaker
There is nothing that the right hon. Member for Barnsley, Central (Mr. Mason) has said which I believe to be out of order.
§ Mr. Mason
You will know, Mr. Deputy Speaker, if you have been present during the whole debate, as we have, that the hon. Member for Tatton (Mr. Hamilton) might have appeared, but that he vanished for at least two hours until he was sought out to come and fill the gap on the Conservative Benches.
I shall be brief. I am surprised that the Secretary of State for Energy, in what could have been a wide-ranging debate on the future of the coal industry—especially on Second Reading of a borrowing powers Bill—did not try to allay the fears and anxieties of Opposition Members and many people in the mining industry. We are worried about the threat of our industry being privatised. The Minister knows that the Financial Secretary to the Treasury, who was formerly responsible for the coal industry, made a typical speech to stockbrokers in the City. He can afford to be brave in front of his stockbroker friends. During that discourse he said that activities such as coal production and sale are in no sense natural monopolies. That is extremely ominous, coming as it does from the former Minister with responsibility for coal who is now the Financial Secretary to the Treasury.
If the Minister wishes to clear the air in his winding-up speech, he should say whether he and his right hon. Friend the Secretary of State are seriously considering privatising some deep mine output which is now controlled by the NCB. We do not want the clock to be turned back 35 years. We got rid of the old system in 1947. I must warn 783 the Minister that if ideas of that type are allowed to run free without him or the Secretary of State stopping the rumour gathering force, the miners will resent the Government and the Secretary of State with such force that the pit closure programme will not alone be the driving force for that resentment. I strongly recommend that he clears the air tonight.
I warn the Government about the MacGregor ballot which is being rumoured in the press and other media. Those rumours are too strong to be without some foundation. Perhaps they are being encouraged by the Government. I warn the Minister that such a ballot would be regarded by everyone in the industry, whether managers, deputies or miners, as a blatant and gross interference in the constitutional practice of trade unions. The Government must ask themselves what will happen if the miners ignore a ballot. They will. The call will be to the men to ignore the bosses' ballot and stand by their union. The result will be hardened attitudes, and direct confrontation will be inevitable. Is that what the Government want? Moreover, what is the Government's role in this affair? I advise them to clear the air on the matter and not to encourage MacGregor on that tack.
The Monopolies and Mergers Commission report has been mentioned. Having read his speech, the Tatton director has just left. His departure is another typical abuse of the Chamber. The report is a series of cold calculating proposals made by a group of detached bureaucrats. The Government are using the commission as a tool to do their dirty work. They will use it to say what the Government want it to advise. They will then present it as an independent body which is telling us what to do—cut capacity by 10 per cent. We have already lost 24,000 jobs in the coal industry since 1979. Are we to lose another 10 per cent. or 60,000 jobs by 1987? Embarking on such a programme will produce constant conflict in the coal industry.
The Government must be warned that the closure of high-cost collieries will have serious repercussions on employment in some of the most deprived regions of the country. What is more, they will be inflicted by a man who has already imposed job losses in Scotland, the north-east, Wales and in the coal mining areas around Sheffield and south Yorkshire. If the Government embark on the Monopolies and Mergers Commission's recommendations, there will be trouble. They should recognise that there has been increased output per man-shift overall and at the face, and that absenteeism has been reduced. Moreover, there has been no opposition to mechanisation. We now have the cheapest deep-mined coal in Europe and we have achieved that with less subsidy than our European competitors. Instead of just subsidising redundancy and the dole queues, the Government should see how we can best use that investment to keep jobs.
Who is now encouraging the idea of devolution in the coal mining industry? Is it the Government? Is it MacGregor — the man who has now taken over the NCB? Is it he who is encouraging the break-up of our national industry into autonomous areas? Is it he who is insisting that each area must pay for itself? Is it he who insists that the rich will survive and the weak must go to the wall? Is he responsible for reviving the old district competition? Such a course will be hated and it will be fought against by the British Association of Colliery 784 Managers, the National Association of Colliery Officials, Deputies and Shotfirers and by every man jack in the NUM.
I should have thought that, in his first major speech on the coal industry, the Secretary of State would have tried to allay some of the anxieties that Opposition Members and those who work in the coal industry feel. We have many worries about the industry's future. I hope that the Minister will allay some of those fears. I warn him that there are too many ominous signs and that there are many dangerous roads ahead.
§ 8.7 pm
§ Mr. Roger Freeman (Kettering)
I do not represent a mining constituency but I served my political apprenticeship in south Yorkshire. I hope that the hon. Members for Doncaster, North (Mr. Welsh) and for Don Valley (Mr. Redmond) will return to the Chamber soon to make their speeches as I intend to be brief.
I resented the implication of what the hon. Member for Ashfield (Mr. Haynes) said—that only those who have worked in, or are now involved in, the coal industry are qualified to speak. I resent that because the Bill is being presented to the whole House. We are talking about a great deal of taxpayers' money and I am one hon. Member who, I hope, represents taxpayers.
I and several of my colleagues recognise the difficulties associated with pit closures in some parts of the country. We are also aware of the dangers of coal mining. When I lived in south Yorkshire I visited many pits, so I appreciate their dangers. Conservative Members are as keen as Opposition Members that miners should earn higher wages but the difference between us is that Opposition Members cannot apply sound common sense to the industry's economic future.
I have sat through the entire debate and I have heard not one sensible justification for keeping open the 20 or 25 pits that are losing upwards of £300 million a year.
§ Mr. Freeman
I have been looking forward to an interjection from the hon. Member from Bolsover (Mr. Skinner).
§ Mr. Skinner
The hon. Gentleman will recall that in the past few months another Bill has gone through the House dealing with petroleum royalties. The central argument of that Bill was that because of the shortage of oil—we shall hit the peak in 1986—it would be a good idea to relieve marginal oilfields so that they could produce oil. We believe that marginal pits should be given the same lease of life.
§ Mr. Freeman
That leads directly to the two points that I was about to make.
The two justifications offered to the House for keeping open uneconomic pits were, first, as the hon. Member for Midlothian (Mr. Eadie) said, that we should look to the future and thus be assured in some magical way that there would be a real demand for coal. It can be said, with the benefit of hindsight, that "Plan for Coal", which is now almost 10 years old, made optimistic forecasts for coal. Those forecasts have not materialised. It is our duty in the House to look at the present position of the industry, and not look forward 10 or 15 years. We must take the industry as we find it.
785 The second justification, offered by the hon. Member for Ogmore (Mr. Powell), relates to the social consequences of closing pits. My view is that it is the duty of the National Coal Board to run the industry efficiently, and the Government's duty to look after the social consequences of unemployment.
We are talking about a substantial Government expenditure this year of up to £666 million. We must look at alternative ways in which the Government could spend that money. For example, there is the youth training service, which costs about £1 billion. We have heard nothing from the Opposition Benches about alternative uses of Government spending, for example, on the National Health Service, housing and education—all of which are vitally important in my constituency. As the hon. Member for Bolsover knows, it is valid for the House constantly to compare priorities, and that is what I am doing on behalf of the taxpayers.
Conservative Members accept the Bill, but we believe that progress should be faster in improving overall productivity. There are three reasons why we need to improve productivity. First, we need to control public expenditure and reduce subsidies to this industry. Second, we need to improve our opportunities for foreign trade in coal, by controlling and reducing the price of coal and making it more competitive. Third, we must hold down electricity prices, because they depend crucially on coal prices.
This year, productivity in the coal industry, up to the end of October, rose fairly dramatically—that is, up to the overtime ban. It is up by about 5 per cent. When Selby comes fully on stream, productivity will increase even more. However, the House must be assured, by steps taken by the industry itself, that the public money we are considering tonight is spent wisely and that the industry will take steps to put its house in order.
It has become a ritual for Opposition Members to criticise Mr. MacGregor. I remind them that it was the right hon. Member for Chesterfield (Mr. Varley) who first persuaded Mr. MacGregor to come here from the United States. Mr. MacGregor has been described as old, unpatriotic and incompetent. He can well look after himself, and I hope that he will play his part in pushing and pulling the industry into the next decade.
§ Mr. Peter Hardy (Wentworth)
This is a very unusual coal debate, because as yet Labour Members have not spoken successively. Clearly, the Government have persuaded their newer Back Benchers to join in. Unfortunately, not all of them have listened to the whole debate. If they had, they would have realised that one or two Conservative Members have actually made some sensible comments. The hon. Member for Sherwood (Mr. Stewart) made a particularly telling point when he urged the Government to persuade Mr. MacGregor not to intervene in industrial relations. Unfortunately, the last two speeches from the Government Back Benches have not shown the same intelligence. The one advantage in the speech of the hon. Member for Kettering (Mr. Freeman) was that it took less time than the speech of the hon. Member for Tatton (Mr. Hamilton).
We have argued from these Benches that the Government should not take such short-term action that it disqualifies the future. The Minister has already mentioned, as did my right hon. Friend the Member for 786 Salford, East (Mr. Orme), the difference between 1983 and 1973. The change is remarkable. The reference to 1973 reminded me that the present Secretary of State—I very much regret that he has hardly been in the Chamber since he made his speech—was in charge of the steel industry 10 years ago. The hon. Member for Bedfordshire, North (Mr. Skeet) is probably the only occupant of the Conservative Benches who was here then. He may recall that when the Secretary of State was in charge of industry at that time, he was buoyant about the future of steel and foresaw a huge growth in steel production. The National Coal Board, in my area particularly, invested hundreds of millions of pounds to improve the coal product and to bring it up to metallurgical standard to meet the demand for steel that was envisaged by the present Secretary of State. Hundreds of millions of pounds were invested at south Yorkshire pits. Then came Mr. MacGregor, and the whole investment was rendered worthless.
I wrote to Mr. MacGregor suggesting that the steel industry had an obligation to the coal industry, in view of the massive investment that had taken place. Mr. MacGregor's response was dismissive. He said that he did not see that he had any responsibility to assist the coal industry. I am not surprised that the Government appointed Mr. MacGregor. However, I suggest that he will have to be restrained, because it cannot be said that he succeeded in steel. Certainly, our experience in south Yorkshire of the decline in the capacity of our special steel industry, which the Minister knows is of world breaking character, cannot be allowed to be repeated. In 1973, the Conservative Government engaged in a U-turn. That is what we need now.
Mention has been made of unemployment. In the Rotherham metropolitan borough this year only 14 per cent. of school leavers have got jobs. I ask the Minister to comment on that. Does he believe that any community can sustain for long the sort of unemployment that the hon. Member for Tatton and others want to be exacerbated?
My hon. Friend the Member for Bolsover (Mr. Skinner) spoke about aid for small oilfields. We should mention the vast sums of money that the Government are preparing to put into the pressurised water reactor. In the press last weekend—I believe that this is relevant—we heard that orders are likely to be placed in advance of the Sizewell inquiry resolution. We read in the press that safety issues are as yet unresolved. In recent weeks there has been substantial evidence of the incidence of contamination. Indeed, if the Conservative party took the same cautious view of the PWR as it appears to take of the coal industry, there would not be the risk of us running headlong into intensive energy difficulties.
§ Mr. Jack Thompson
Does my hon. Friend know that not only are there advance orders from Sizewell, but that at Druridge bay in Northumberland, land is being purchased for a site for which there has not even been a planning application? There is a further point that may interest hon. Members. On 18 July this year, there was an exchange of notes between the United Kingdom Government and the Government of the Republic of France. There is now an agreement between this country and France on the monitoring of establishments that give off radioactive discharge. We made that agreement this year, although we have had nuclear power stations in this 787 country for 30 years, and France has had them for the same length of time. Someone is worrying now in 1983 about something they did not worry about in 1952–53.
§ Mr. Hardy
I cannot respond to that intervention from my hon. Friend, but I trust that the Government will arrange a full day's debate very soon to discuss the important matters that are now subject to public debate.
My hon. Friend mentioned France. I was about to say that Ministers and their Back-Bench supporters are talking nowadays about cheap French nuclear power. Not long ago at a conference I challenged the chairman of the CEGB, who was also talking about cheap nuclear power in France and who had conveniently forgotten the enormous capital write-offs that the French Government provided to ensure that French industry enjoyed lower energy prices than industry in the United Kingdom. We should follow their example and apply a more Keynesian approach to our industrial policies. French energy prices are cheaper than ours, because the French Government make sure that they are cheaper in order to assist industry. They have written off nuclear capital research and development expenditure to an enormous extent. They have taken advantage of that which nature has given them. they have maximised the potential for hydroelectric power, which is essentially inexpensive.
Our national advantages are being thrown away. The Government are extracting our oil and gas with the utmost speed, and we shall very soon reach the end of our self-sufficiency in energy. To do that, and then to respond to the call of Conservative Members for a contraction of the coal industry, would be stupid. In less than 20 years we shall need 90 million tonnes of coal a year for gas alone. We shall need coal for feedstock. We shall need coal for mobility. My hon. Friend the Member for Midlothian (Mr. Eadie) made a splendid speech on that subject, and I shall not repeat his remarks. We shall need all the coal that we can get. It would be utter folly — it would be an absurdity—to allow the coal industry to contract to the point at which it could not serve the national interest.
Conservative Members may say that coal can be imported. We would be remarkably foolish if we were to lose our strategic advantage, to lose the skills which have been developed in the British mining industry and to become dependent upon the "COPEC" of the 1990s or the first years off the 21st century. Let us not take that route.
I was reassured when a Foreign Office Minister, in answer to a question last week, suggested to me that he would be encouraging Europe to buy our coal. Since we have to fund such a large part of the common agricultural policy, the request is not an extravagant one.
There have been changes in the industry. One of the most significant changes has been that younger men are now working down the pits. The average age has been reduced. We have heard about safety rates in the American pits. I believe that Mr. MacGregor is casting an eye on supervisory and management grades in the NCB.
I represent the National Association of Colliery Overmen, Deputies and Shotfirers. One of the principal grounds for pride in that association is that it has made a tremendous contribution to ensuring that our industry is safe. If we have a younger work force and if Mr. MacGregor decimates the supervisory staff—or worse—we might not be able to boast any longer that we have a 788 safe industry. That would be foolish, uneconomic and immoral. It would be foolish because we have a real international advantage. Today, man is scratching the earth's crust. He will have to go deeper and deeper for his mineral resources, and that presents an enormous opportunity for the British mining engineering equipment and technology industries. If we can demonstrate that we produce safe equipment and that our industry is successful and has a regard for human life, there will be a substantial international opportunity for us.
Many people who are interested in the industry are disturbed at the growing concern in Europe about acid rain. One cannot attend a meeting of any kind in Europe without hearing about this anxiety. The Government could demonstrate to Europe and to the world that they take that problem seriously. If the Government decide to act upon the Atkins report and to encourage British industry to develop fluidised bed combustion, and if they establish CHP and district heating systems, that would be a highly desirable form of capital expenditure. We would then be able to demonstrate to our neighbours that we are concerned about their problem, that we are doing something about it, and that Britain can maintain not only a modern and safe coal industry but modern and efficient coal use. If the Government did that, they would be able to look areas such as mine more squarely in the eye. That would compensate for the appalling industrial devastation that the Government have inflicted on constituencies such as the one that I am proud to represent.
§ Mrs. Edwina Currie (Derbyshire, South)
I apologise for not having attended the whole debate. I have been serving on the Standing Committee on the Housing and Building Control Bill. As soon as the Committee finished, I rushed down to the Chamber—I did not even have tea—to listen to the honeyed words of the hon. Member for Bolsover (Mr. Skinner).
Yesterday, with a number of other hon. Members representing coal mining constituencies in the midlands, I spent an hour with Mr. MacGregor. There is only one coal mine in my constituency, but there are also the main research establishments where work is being done on acid rain and other developments, the main test sites and a number of other major research units. We have the brainiest coal miners in the country. I suspect that we have the brainiest mining people in the world. They have had the sense to vote Conservative in the last five elections, and I intend to continue to represent them into the next century.
In the short-term, Mr. MacGregor's view was that we must close these Victorian holes in the ground as soon as possible. They are uneconomic, unpleasant and dangerous. Last December the Select Committee on Energy produced a report on pit closures which said:There can be no doubt that the very high cost of this marginal and, at least in the short-term, surplus capacity, unfavourably distorts the coal industry's financial position, and imposes a considerable drain on public funds … to judge by their evidence to us, the NUM appear to believe that in order to maintain employment in mining, the industry should be encouraged and financed to produce as much coal as it possibly can, and that the country somehow has an obligation to find ways of consuming it." ——and, one might add, ways of financing it. If the NCB does not have a hit list, it should have one, and the sooner it acts 789 on it and reduces the uncertainty about closures, which is so difficult to cope with. the better it will be for the industry.
In the medium term, Mr. MacGregor's view was very encouraging. He believes that the many marginally unprofitable pits could be brought up to profitability by considerable investment. I believe that my mine at Cadley Hill probably falls into that category. The south midlands area of the NCB made a loss of £27 million last year, of which £24 million came from three pits. The other pits in the midlands are carrying the burden of those three uneconomic pits, and the quicker that they are shut, the better. That £24 million could then be invested in the remaining pits so that we could take the coal economically.
In the long term, Mr. MacGregor's plan for coal is very exciting. It is that we must aim to replace oil by the year 2005 and at economic, competitive world prices. That will require a quite different approach to the small-mindedness and backward-looking views of Opposition Members. Indeed, I could only fault Mr. MacGregor on one thing; his habit of calling me "Lady". I took exception to that, but when I called him "Gentleman", he stopped it.
In my constituency there are many sheep. I do not mean miners, but real sheep on four legs. The other night I stayed to listen to the debate on sheep payments. That measure was not opposed, and I hope that Opposition Members will not oppose the Bill. Beneath the sheep there is a lot of grade two agricultural land, and beneath that their is a heck of a lot of some of the best coal in the world. It is perfect for electricity generation. The economy of my area means that it is well produced and has a considerable future.
The long-term approach to the coal industry should be quite different from that displayed by Opposition Members. We should be asking where the coal is, and how we can get it out. We should be asking how we can bring it to the surface with the latest technology, which is all British, and which involves industries operating in the midlands and the north. How can that be done? Let us not tie ourselves to the existing pits, some of which were sunk more than 100 years ago. Let us ensure that by the year 2005—when many of us will still be representing coal miners—the industry is as efficient as possible. The scale on which that could be achieved is astonishing. Those of us who visited the Selby coalfield with the all-party group on minerals, and who saw what can be done with an investment of £1,000 million in a top-class coalfield, and the way in which coal can be obtained for £17 per tonne all found, know that that must be the way of the future.
It takes about seven years from the point at which the decision is taken to the point at which coal is taken out of the ground. I have urged previous Ministers, as I urge the Government now, to take decisions soon about the Asfordby coalfield in Leicestershire, the Warwickshire coalfield based on Daw Mill and about the future development of the mine, which I regard in a personal fashion, at Cadley Hill in south Derbyshire. In that way we can ensure that as oil runs out in the 1990s there is coal to replace it. Otherwise, there may be shortages. I strongly believe that in that way the coal industry can have a rosy future.
§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
I congratulate my hon. Friend the Member for Midlothian (Mr. Eadie) on his return to the Back Benches—not that I do not think that he is not needed on the Front Bench—in that he has found once again his old powers of Back-Bench oratory which we all enjoy. All those who heard his speech will have enjoyed it.
The debate was interesting and enjoyable until the director of the Institute of Directors, the hon. Member for Tatton (Mr. Hamilton) came along and spoilt it, and then fled from the Chamber. Although the debate has been enjoyable and worthwhile, I think that we may be wasting our time. I wonder whether anyone has been listening to us. I also wonder whether the decision to scrap "Plan for Coal" has not already been taken.
In the press we read that Mr. MacGregor tries to rattle his sabre and talks about going to ballots and putting the increase in wages in the miners' pay packets. However, my advice to him, which comes from a lifetime of experience in the mining industry, is that he should keep his nose out of trade union affairs. If he does not do so, he will find that in taking on the miners he is taking on a heavier force than he attempted to take on when he was chairman of the British Steel Corporation.
There can be no doubt that the coal industry, not for the first time, is at a critical point in its history. The recession has had a devastating effect on British industry, with the result that total United Kingdom primary energy demand has fallen by more than 12 per cent. That has led to the old clamour for market forces. Some of the statements made by Mr. MacGregor and others have created an atmosphere of distrust in the mining industry. Unfortunately, I believe that some of those utterances come from Ministers who should have much more sense. We all know that not long ago the Financial Secretary to the Treasury was the Minister responsible for the mining industry. His speech has already been referred to at length, and I shall not go into it in detail. It shows that there is no doubt that the Government have plans to privatise the mining industry.
Last Thursday the Prime Minister went some way towards denying that there was a privatisation programme for the mines, but she did not rule out the fact that some parts of the industry might be privatised. If that is so, the Government are going down an unwise road. The mining industry is not an animal that is ready to be privatised. Even the younger men in it are well aware, from the teachings of their fathers, of what happened in the days of privatisation. I remember that, because I worked in the industry. I know the difference between the privatisation and the nationalisation of coal mines.
The Secretary of State for Trade and Industry said that the nationalised industries were nothing but a drain on the country's economy. We refute that. The Secretary of State for Energy is reported as having suggested that he is to open the floodgates for privatisation. If that is true, he owes it to the mining industry to come clean and tell us what the programme is. The longer the rumours continue about the number of pits, such as 40 or 60, and the number of men, the worse it will be for the industry. It will be completely soured. The miners want to know the truth. I hope that the Government will be prepared to give it to 791 them. Whatever actions the miners take to defend themselves and the industry are a matter for them, but they have a right to know the truth.
However, I am not hidebound by my general disapproval of the Government's attitude to the public sector. I recognise the continuing high capital investment in the industry, now about £750 million per annum. I welcome the Bill, which extends the NCB's borrowing powers to £6,000 million. Whether the ceiling is sufficient is a moot point, but I welcome the proposed extension. I also endorse the Government's renewed commitment to establish a coherent EC solid fuel policy, reported in the supplement to the Treasury's economic progress report of October 1983. I welcome the more strident stance taken by the Under-Secretary in Brussels recently on that important issue.
The EC market is a potential major outlet for United Kingdom coal. I fully support the Government in all measures that will facilitate the entry of the NCB into that market. The Commission expects coalburn, excluding that of the United Kingdom to increase to about 330 million tonnes per annum by the year 2000. United Kingdom coal could increase its share of the European market if the Community were to expand the resources available by input from the general Community budget. There have been recent welcome developments in that area, but they are only proposals and a political decision is needed to translate them into action. The Secretary of State for Energy is a supposed expert in dealing with EC matters. He should put his talents to use on behalf of the coal industry. However, I regret that tangible success has been thin on the ground so far. One or two potential markets should be vigorously pursued.
I was pleased to hear that the coal industry national consultative council had been informed at its meeting in October that the £50 million allocated by the Government for the grants scheme for the conversion of industrial boilers to coal had been taken up. It will produce an additional 2 million tonnes of coal sales. The council was also advised that there is potential for a further 2 million tonnes of coal, provided that the grants scheme can be extended beyond the end of the year. It is therefore essential that the Government allocate further money for this proposal not only because of the additional coalburn that it will provide but because of the cost effectiveness of the scheme.
Another important additional market in the short term, particularly for Scottish coal, would result from the conversion of Kilroot power station in Northern Ireland to the use of coal. Currently oil consumption in the generation of electricity in Northern Ireland is the equivalent of some 200 million tonnes of coal. This would be reduced substantially if Kilroot were to be converted to coal. The arguments for conversion are compelling and should not be constrained by making conversion dependent on the Northern Ireland budget. It is, however, a cause for concern that the matter has been deferred again until 1987.
In regard to the longer term, the liquefaction of coal presents a potential new market for coal. The lull in oil prices should be used as a breathing space to step up energy investment rather than as an excuse to relax and allow important decisions to be deferred. The process developed by the NCB's coal research establishment is 792 much more efficient than the liquefaction technology used in South Africa. The importance of this will become increasingly clear as we move to the time when the production of petroleum from coal becomes a viable proposition. Unless the Government take a more positive approach and stop insisting on a private sector partner, the already minuscule pilot plant at Point of Ayr is likely to be postponed indefinitely. This would be a tragedy. It would be a great mistake if the Government did not take action and put in sufficient investment.
In regard to the decision of the NCB to bring in a private consultancy firm, McKinsey and Company, to examine what management responsibility might best be devolved to areas, this is unwise. The British Association of Colliery Management will resist it with all the power at its disposal. I understand that that firm did a similar exercise in the steel industry and that its recommendations were a miserable failure.
Great play has been made of the report of the Monopolies and Mergers Commission. I have not the time to go in depth into that report. Many hon. Members have used it to illustrate recommendations which are in line with Government thinking, but I stress one paragraph that says:Where the social consequences of a decline in coal mining in a region would be particularly acute, it is for the Government to decide what action to take.What action will the Government take if there are to be mass pit closures? In my time in the mining industry, both as a trade union official and a member of the industrial relations department, I lived through the days of Sir James Bowman stockpiling coal and through Robens' butcheries. I was in an office in the National Coal Board that was responsible for transferring workers up and down the country.
Things were difficult then, but the climate was different from what it is today. There were not the same mass redundancies and unemployment. We are reaching a stage where men aged 50 and over can expect in the next few years to be offered redundancy. I must be honest and say that so far the board has not had a difficult task in getting men of 60 and 55 to take redundancy. It is a fact of life that many miners of that age have been waiting for redundancy. They have sold their sons' jobs, but one can understand them. If I were still down that hole in the ground after 40 years, and someone dangled that gold in front of me and said that I need not go down the pit any more, it would be a great temptation. However, the Government are now talking about redundancies for men aged 50. In the early days, the system may be attractive, but I can tell the Government——
§ Mrs. Currie
Will the hon. Gentleman confirm that a man aged 50 who has worked in the coal industry for all his life, assuming that he does not work until pensionable age, will take home a total benefit of about £30,000?
§ Mr. Lofthouse
Yes, but, although it is attractive in the early days, it is not so attractive when considered against the years during which he will have lost wages.
With respect to the hon. Member for Derbyshire, South (Mrs. Currie), there is more to it than that. I, with many of my colleagues, live, play and work with miners. Some of those who have been made redundant have said to me after the first months, "This is the worst job we have ever had." They have known nothing but hard work, and they have not had many hours of play, because when they come out of the hole in the ground they are too tired to play. 793 They find it unpalatable that at a young age their work is ended and that there is no prospect that their sons will replace them.
I hope that the Government, while taking everything into consideration and not just the mark at the bottom of the balance sheet, will acknowledge that we must compete. We cannot continue to produce coal for ever if we do not use it. I believe that the production capacity of the NCB should be continued at 140 million to 150 million tonnes a year, with readily available reserves of another 50 million tonnes, until the year 2000. The Government would be very unwise not to pursue that course.
§ Mr. Kenneth Carlisle (Lincoln)
One can understand and respect the deep commitment to and understanding of the coal industry shown by the hon. Member for Pontefract and Castleford (Mr. Lofthouse), but tonight Parliament is once again being asked to approve a massive expansion of public funds for a nationalised industry. ft is one of many such demands that the House has had to meet during the past year. Parliament has an absolute right to examine the demand carefully and to decide with great caution whether it should approve an extension of funds to the NCB. It is not the Government's money that we are providing, but taxpayers' money, which could be used in other ways. If it were used to reduce the national insurance surcharge, that would create jobs in other industries. We could use it to meet our health needs, with which all hon. Members are concerned, or to meet the rising demands on defence expenditure if we are to have proper defence.
We need not spend the money. We could use it to reduce our massive borrowing, which would lower interest rates to industry and thus help to create jobs. Tonight we must remember that over the past decade thousands of millions of pounds have gone to tie NCB. That expenditure by itself has imposed a burden on jobs and production elsewhere. That is why the House has a duty to ensure that taxpayers' money, for which the House is primarily responsible, is spent as efficiently and as effectively as possible. That is a principle on which the House could unite.
I believe that the whole House recognises the importance of coal. There is not much dispute about our aims for coal. "Plan for Coal", which, nearly a decade ago, set out a substantial future for the coal industry, has had the support of successive Governments. Indeed, I believe that the hon. Members for Wentworth (Mr. Hardy) and for Pontefract and Castleford are too dismissive of the support of this Government and of the previous Government for the coal mines. Indeed, my right hon. Friend the Secretary of State said in his opening speech, that investment in coal has been substantially higher than that envisaged in "Plan for Coal". We cannot ignore that. The whole country is proud of the achievements of Selby, as my hon. Friend the Member for Derbyshire, South (Mrs. Currie) pointed out. We are proud that the 20 most efficient pits produce their coal at a cost of £28 a tonne while the selling price is £40 a tonne. We are certainly proud of the technical skills that have been developed in the pits and the application of technology to mining. Such skill has been, and can be, exported around the world.
We are proud of our coal industry—its traditions and achievements—but at the same time we have a duty to recognise that there is a darker side to the industry. We must face that. It is not good that the 20 least economic 794 pits produce their coal at about £90 a tonne, losing £50 for every tonne produced. It is wrong that the worst 12 per cent. of pits make a loss of nearly £300 million a year. We should recall that in the past year about £650 million has gone from the taxpayer to the National Coal Board, which is not far short of 1p on income tax. We must remember that the taxpayer, not the Government, contributes that money. We are asking the taxpayer to support our coal industry.
It was sad to learn from the Secretary of State that in the past decade productivity has increased by less than 5 per cent. in total when "Plan for Coal", which all Governments have supported, envisaged—of course, in rosier times—an increase in productivity of 4 per cent. a year.
There is much to hope for in the coal industry, but it is fair to recognise that there is much to put right. If we are to approve the Bill tonight, as I believe we should we should be assured that the problems facing the industry will be tackled realistically. The House is right to demand that the current dispute about overtime and wage settlement should be settled moderately.
We also have a right to demand that we should at least tackle the problem of uneconomic pits. My hon. Friend the Member for Derbyshire, South pointed out that there is a generous redundancy scheme that can give new hope and new perspectives to those miners who, unfortunately, must be made redundant, but, as Opposition Members said, many of them have chosen that course because they recognise the opportunity that is offered to them.
The Government must adopt a more imaginative approach to the productive future of the coal industry. It is fair for the taxpayer to ask, "What is wrong with putting private capital in the industry? Why is that evil?" For example, if an old mine is to be closed, is it not sensible to see whether someone with private capital is prepared to put money into it and to squeeze out the last reserves if that will save jobs in the area?
§ Mr. Carlisle
I shall not give way because several hon. Members are still anxious to take part in the debate.
Why should not developments—for example, Belvoir—be financed by private capital? Indeed, I believe that many miners would welcome the opportunity to participate on the financial side, and private finance could give them that opportunity.
I believe that the opportunity for exports has been underestimated. If we could control costs in the mining industry, then with the reserves, infrastructure and skills at our disposal we could increase exports by far more than the 7 million tonnes annually now going abroad.
I am willing to support the Bill to give extra help to the mining industry—a step that hon. Members in all parts of the House support—but I expect better results from now on. I want the Government to make efforts to get those results in a full-hearted, not half-hearted, manner.
§ Mr. Alec Woodall (Hemsworth)
By necessity, not intention, my remarks will be brief so as to allow other hon. Members an opportunity to speak, and I will speak only about clause 4. That provision increases the payments to redundant mine workers from £300 million to £1,200 795 million, an increase of 300 per cent. That is designed for one purpose only—to speed up pit closures, so making more miners redundant.
Several of my hon. Friends, in particular the hon. Members for Easington (Mr. Dormand) and for Ogmore (Mr. Powell), spoke of the social consequences of closing collieries. Coal mines are not to be found in London, Birmingham, Glasgow or Liverpool. They are away from such areas and usually the coal mining communities are built near the collieries, as my right hon. Friend the Member for Barnsley, Central (Mr. Mason) said. When a pit is closed, the whole life of the area can be cut off, and usually it is the type of area that already suffers from high unemployment. When a pit is closed in that sort of area, devastation is the result.
I want Conservative Members to know exactly what happens when a pit is closed. Not only have I seen it happen, I have lived through it, but they have not had it spelt out to them in detail. I worked at what was called a gathering colliery for pits that were being closed in the late 1960s and early 1970s. I regret that my right hon. Friend the Member for Barnsley, Central is not in his place because he knows the areas about which I am speaking, such as Darton, New Lodge and Mapplewell.
The pits there were closed and the miners who lived in those areas were transferred to my colliery at south Kirkby. They were asked for their addresses, buses were then laid on—on contract because at that time the NCB did not own buses; it does now—and lists were given to the men showing the various picking up places where the buses would stop to take them to south Kirkby. On the day shift, the men from Mapplewell and New Lodge had to be on the corner of the street at 4.10 in the morning. That was the time at which they had to be picked up, enabling the buses to go round the estates of Barnsley so that the men could be down the pit at south Kirkby before 6 o'clock. That meant that by the time they got out of the pit they were away from home for at least 12 hours to work a shift. If, for any reason—accident, breakdown or whatever else—a miner did not get out of the pit on time, his mates were on the bus screaming, "Let's get off home," and he had another two or three hours added to his day away from home because he had to travel home by public transport.
It is all very well for the Secretary of State to say that young miners have no need to fear, and for the NCB to say that there will be safe jobs in future. We are concerned about the jobs of young miners, but we are also concerned about potential miners. What young miner today who has had his pit closed and has had to transfer to another and travel miles to work until he acquires his own transport or packs in altogether will want such a life for his son?
By clause 4 the Government are making miners redundant, and as a result they will be in short supply. I remember what happened in 1974. After the oil crisis, pits became more popular and we wanted more coal. There was a nation-wide appeal for ex-miners to come back into the industry. They were offered generous resettlement money and, they were told, a secure job. Now, 10 years later, the Government are telling these people that they do not want them any more. They are being given a carrot of golden shekels, and are told to get on their way because they are not wanted any more.
796 If the Government start to close pits on a massive scale, as they intend, they should remember what happened and try to imagine what will happen in a few years when the 58 million tonnes of coal now in stock have gone, the pits have gone and there are no new developments or collieries for the new young miners who are now at school. Some of those young men are just entering the industry and they will marry and have sons to do the same.
My hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) is right. It is all very well to dangle the carrot and offer the golden shekels to the miners to make them accept redundancy. They will accept them, and I can understand that. However, any man who has worked down a pit for 40 years should be given a generous pension and told, "Retire now, you've done your whack." They should not be tempted to leave the industry by a measure that is designed to run down the industry and will be to our detriment. As my hon. Friend the Member for Midlothian (Mr. Eadie) said, it is vandalism of the industry, and it is doing the nation a great disservice.
The Government should be careful not to lose potential miners because, once they do, we shall never get them back. The hon. Member for Derbyshire, South (Mrs. Currie) appealed to the Government Front Bench to take early decisions on the new developments in Leicestershire and Warwickshire. It is too late now to make the decision because the pits in Leicestershire and Warwickshire will be closed soon and once they are closed we shall never get the ex-miners back into the industry, no matter how much we try. I warn the Government not to sacrifice young miners and potential young miners for this expediency of closing the pits because they say that they are uneconomic.
Conservative Members may favour privatisation and want the sale of profitable subsidiaries. When a nationalised industry makes money, it invests it so that it can have money of its own instead of having to increase the borrowing requirements and the consequences that go with that. The Government had better think hard again about selling off the subsidiaries.
§ 9.3 pm
§ Mr. Michael McGuire (Makerfield)
I remind the hon. Member for Lincoln (Mr. Carlisle) that in 1919 there was a Sankey commission, which recommended certain things. At that time, the coalmining industry was privately owned but we were still having to shovel money at it. The Sankey commission's conclusion was that the industry should be nationalised and that there should be a miners' charter. The miners have always had a public duty, and although after the war they could have pulled down the temple of nationalisation, it was this public awareness that some day they would reap their reward that meant that the miners did not enforce, as they could have done, the Sankey charter, which consisted of such points as a seven-hour day. Anybody who tries to put over this barmy notion about putting private money into certain projects in the industry will start up more trouble than they could anticipate, as my right hon. Friend the Member for Barnsley, Central (Mr. Mason) said. I advise anybody who thinks like that to study the history of the British coal industry.
During the Secretary of State's speech I intervened to plead a point that my colleagues have made from time to time. Hon. Members who represent mining constituencies know of men who have worked in the industry for as long as 40 years. Only a fortnight ago, I visited a man who, I 797 believe, had worked for 41 years in the mining industry. He believed that he had pneumoconiosis. Paradoxically, this disease used to enable a man to claim special hardship and obtain the lighter jobs that were reserved for such men. This man was not able to obtain certification. He could not continue in the industry, but he had to earn a living. Because of his poor health, he intermittently worked outside the industry. Subsequently, he was certificated. In his bedroom he has oxygen containers, which he must use daily. The authorities have given him a bungalow. Because of the gap between his leaving the industry and being certificated, he cannot go to court to claim compensation. If we empathised with that man, we would be worried about him.
The Government, like the Labour Government, have introduced many good social measures that have helped the miners, especially by the tripartite agreement. I hope that money will be made available to these ex-miners. Not many people are affected, and many more widows than surviving ex-miners. It would be deeply appreciated if the Government recognised their plight.
I missed the speech of my hon. Friend the Member for Midlothian (Mr. Eadie), who has had much experience in these matters. I believe that he has given distinguished service to our Front Bench in Government and in opposition. I have been entertained by him, in the past and have, indeed, tried to entertain him in previous coal debates, as, I hope, have others.
My right hon. Friend the Member for Barnsley, Central, in a cogent speech delivered with skill and passion, warned the Government about what miners want to hear. The Secretary of State—I hope that he is doing so unwittingly—may, with Mr. MacGregor be encouraging the idea that they should pre-empt the constitution of the National Union of Mineworkers. Time and time again, Conservative Members, during a dispute in some other industry, have praised the miners for their constitutional provisions for strike ballots and the like. 'When there is an overtime ban, the mineworkers' constitution does not provide for an automatic referral to its members, as it does when strikes are proposed. Given the record and the solidarity of the mineworkers' union, it would be the height of folly to interfere to organise a ballot. My right hon. Friend the Member for Barnsley, Central was right. If that were done, the ranks would immediately close out of loyalty to the union. The men would be asked whether the Coal Board or the union makes the decision. The mineworkers' constitution provides for a 55 per cent. vote in favour before a strike can be held. The long history of mining has shown that this is a matter of life or death. The solidarity of the union is the spirit that moves its members.
There are already signs afoot that pressure will bring about, sooner rather than later, some attempt to test the temperature. Let matters develop in their own way. Mr. MacGregor should not take a straw poll, because I believe that the Secretary of State would regret it bitterly if the issue were forced. I urge him to say to Mr. MacGregor, "Hands off." The miners have sound union machinery, which has been long developed. It has been the unanimous wish of the coalfields, which have been consulted in the traditonal way, to take this action. They will make the decision to change. Anyone who seems to be interfering will bring down upon them the miners' wrath. Instead of being successfully settled as I hope, the dispute will be prolonged, to the miners' discomfiture. It will be a tragedy for the nation.
798 I end as I began by asking the Minister to look sympathetically at the subject of concessionary coal for the group of former miners that I have mentioned.
§ Mr. Tony Blair (Sedgefield)
My anxiety to speak is attributable not merely to the amount of time that I have been waiting but to the increasing concern that I have felt as I have listened to the way in which the debate has developed.
The starkness of the position that faces not just the NUM and the coal industry generally but people in my region particularly has been made clear in the speeches of Conservative Members. In 1947, when the coal industry was nationalised, there were about 201 pits in Durham and Northumberland and about 149,000 men employed in the industry. There are now about 20 pits employing about 27,000 men. However, the NCB is still the major employer in the north-east.
We are faced with the problem of whether that 27,000-strong industry will survive. The Government have an inconsistent attitude to the coal industry, the representatives of the NUM and Opposition Members. They heap opprobrium on our heads and call us scaremongers and exaggerators when we talk about the difficult problems that face the coal industry — the NCB's intention to close pits—but every speech that has come from Conservative Members has been redolent with phrases such as, "Let us have a hit list," "Why do we not close pits?" and "It is only a Victorian hole in the ground." and so on. Areas such as the one I represent face a cut in the coal industry.
The coded language is clear—whether in terms of peripheral pits as opposed to central block pits or economic pits as opposed to uneconomic pits—that one of the crucial issues presented during the debate is whether the peripheral pits have any future. There is a considerable body of opinion on the Conservative Benches and in the NCB that feels that they have no future and must be cut.
The Government attempt to present the issue as an inevitable economic position—something that is written in an economic fate from which the NUM cannot escape. We have heard a great deal about facing up to reality and the necessities of economic life.
The Opposition case is that there is no inevitable or inexorable fate that dictates that mines must close. It is a matter of political choice and judgment. The coal industry's restriction to an annual production of about 80 million tonnes, which is what Mr. MacGregor wants, and the cutting of the peripheral pits have nothing to do with economic inevitability but everything to do with deliberate political choice.
When we consider the political choices to be made, two factors appear in any sensible and objective examination of the coal industry. First, we must consider the extraordinary difficulties involved in predicting the demands made upon the total energy resources of the nation and the predicted energy consumption. "Plan for Coal" was published in 1974 because the attempt to meet short-term expediency demands was seen to be quite out of kilter with the true energy needs of the nation. The plan was an attempt to assess our future energy needs rather than leaving the problem to the short-term fluctuations of the market. Surely we must analyse the future of the coal industry in that spirit.
799 Secondly, in the context of the available sources of energy, especially gas and oil, a shortfall will occur in the next few years about which a decision must be taken. At present we have the gas energy equivalent of about 70 million to 80 million tonnes of coal and about 114 million tonnes of oil. In the next few years those sources will dry up or diminish considerably. We shall be faced with either importing the energy, with all that that means for the indigenous industry and our balance of payments, or taking a long-term view now and planning ahead to meet that crisis by expanding the coal industry.
I urge the House not to allow subsidies to obscure the real argument of coal as an energy source in the future. The heartwarming factor in the speech by my hon. Friend the Member for Midlothian (Mr. Eadie) was his challenge to the Government on their basic thesis towards the coal industry. We have a simple choice to make about coal. We either restrict the industry in the way in which Mr. MacGregor wishes, which would be incapable of meeting an increased demand as it arises, or we take a long-term view and expand coal production to meet the energy requirements as they arise.
When Conservative Members refer to subsidies, one would think that the coal industry was the only industry which received a subsidy, or that subsidies were invented by the National Union of Mineworkers and never saw the light of day until the Government came to office. The truth is that there is nothing odd about subsidising an industry. To proceed in such a way is sensible.
The subsidy given to agriculture is massively greater than that given to the coal mining industry but we do not hear a murmur from Conservative Members about that. If we accept the figures given in the NCB's 1983–84 report, the subsidy for the north-east coal mines is about £60 million to £70 million. That figure is nowhere near the equivalent cost of putting 27,000 people out of work. The social cost of cutting back the industry in the manner contemplated by the Government easily outweighs the cost of any subsidy. To use a subsidy is a perfectly sensible way to organise the coal industry in my constituency. The issue affecting constituencies such as mine is not just that of providing coal as a source of energy or jobs but the future of entire communities which have grown up and exist in and around the mines. When the National Coal Board is the major employer of labour in such areas and the mining industry contracts, the communities are bereft of life. Although about 2,500 miners live in my constituency, it is full of disused pits. The work which was supposed to have come to my constituency has not arrived. What is at stake is a sensible energy policy for the future and the livelihoods of many people working in many communities. I hope that the Government take account of that.
§ Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)
First, it is my pleasant duty to congratulate the hon. Member for Sherwood (Mr. Stewart) on his maiden speech. It was most interesting in that he did not identify himself with some of the harder lines that we have heard today. He talked about the story of Robin Hood and Sherwood forest. In the summer I read a book by Professor J. C. Holt who said that Robin Hood did not even exist. 800 I am sure that the hon. Gentleman will not peddle myths in the House. We hope that he will contribute to our debates on many occasions.
My hon. Friend the Member for Midlothian (Mr. Eadie) made the best speech of the debate. I share his passionate commitment to the industry. Having been brought up in a mining community and representing a mining community, one understands the arguments and the issues.
I wish that I could have complimented the Secretary of State even on having attended most of the debate, but he was absent for more than four hours. He opened the debate, listened to a speech or two and then left. I have been a Member of Parliament since 1966 and I know that it is not usual for a Minister to behave in that way. Had he stayed, he would have learnt more about the industry than he appears to know. It is no use the right hon. Gentleman shrugging his shoulders. We are justified in complaining about his absence. Had he remained, he would have heard about the deep concern of communities which fear another round of accelerated pit closures. As many of us know, that means closing not just pits but communities. Anything that happens to the pits of south Wales, the north-east or Scotland happens to the entire community.
Had the Secretary of State stayed to listen, he would have been shocked at what he heard. We now understand that the future of our miners lies not in staying in Scotland or in Wales but, as the Scottish press now shows, in advertisements for colliery electricians in South Africa. That, apparently, is the future offered to many young miners who may be thrown on to the scrap heap by further accelerated pit closures.
It is no use the Secretary of State issuing dire warnings to Financial Times conferences about the future of the Government and saying:We do not think the Tories should go into another election with jobless figures at the present level.He should make his comments here in the House where it matters and where hon. Members of all parties can ask questions. Let him stand up now in the presence of Members from communities worried about jobs and even more worried about the problems facing the mining industry.
Had the Secretary of State stayed, he would have heard the challenge made to him by my right hon. Friend the Member for Barnsley, Central (Mr. Mason) that he should clear the air about privatisation now—not with the glib response that he made when he was first challenged about the Financial Secretary's speech but by telling the House that he does not believe in privatisation of coal production and that that is no part of his policy or the Government's. Let him clear the air today. If myths and unreal anxieties are growing in the mining areas, he is the best person to allay those anxieties and puncture those myths. Otherwise they will grow. That is the problem.
In his opening speech the Secretary of State made no reference to the growing anxiety in the industry. He opened a debate on coal industry finances with a most curious speech in which he scarcely mentioned the report of the Monopolies and Mergers Commission. Yet the shadow of that report hangs over the mining communities, arousing new worries about a further programme of accelerated pit closures. The extraordinary thing is that the Secretary of State did not refer to that report. His answer is typical of a Government who answer only through 801 written answers. Just before the summer recess, the Secretary of State gave his view of the Monopolies and Mergers Commission report.
Apparently the Secretary of State—who has not attended most of the debate—is not prepared to listen even now. He knows that a deputation, of which I was a member, saw him before the summer recess to express the anxieties of coal mining communities about the Monopolies and Mergers Commission report and about what may happen to those communities if there is an accelerated pit closure programme. At that meeting, the right hon. Gentleman referred to a memorandum that he was preparing for the Cabinet. It dealt with the future of the coal industry. Has he prepared it yet? Has it been submitted to the Cabinet? If so, what conclusions has the Cabinet made? When can we expect a statement on the future of the coal industry from the Secretary of State? I am not referring to the type of speech that the right hon. Gentleman made today.
§ Mr. Walker
Rubbish. I made an extensive statement on behalf of a Government who have invested much more in the coal industry than did the Labour Government.
§ Mr. Rowlands
The right hon. Gentleman made no real statement about the future of the coal industry. He made no effort to allay the anxieties that the Monopolies and Mergers Commission report has created. Where does the right hon. Gentleman stand on the commission's recommendations? Why is he laughing at that?
§ Mr. Rowlands
It is an extremely serious point, as the report has cast a new shadow on the industry—and the right hon. Gentleman knows it.
In a written answer the right hon. Gentleman said:The Government also agree with the MMC's central conclusion." —[Official Report, 28 July 1983; Vol. 46, c.523.I shall remind the House of that conclusion. It was that we should remove 10 million tonnes of capacity from the deep-mined coal industry. The report identified the means of achieving the removal of that 10 million tonnes of capacity as lying with the 70 top loss-making pits in British coalfields. It did not suggest 20 or 30 pits but a massive 70. It is perfectly reasonable for people who are told that the Secretary of State supports the central conclusion of the Monopolies and Mergers Commission report to be worried when they read it. Will the Secretary of State now say that he supports the proposition that 10 million tonnes of capacity should be taken out of the British coalfields and that that involves 70 pits?
§ Mr. Walker
Does the hon. Gentleman still agree with the two Labour party statements on the coal industry of 1974 and 1977 which say that between 3 million and 4 million tonnes of capacity should be taken out each year?
§ Mr. Rowlands
Perhaps I may ask the right hon. Gentleman a simple question. [HON. MEMBERS: "Answer."] In each year since 1974, 2 million tonnes of capacity have been taken out. Since the Monopolies and Mergers Commission report, 18 pits have been closed.
§ Mr. Rowlands
The right hon. Gentleman should answer my question. Does he support the report's central conclusion? Does he agree with his predecessor——
§ Mr. Rowlands
The right hon. Gentleman should answer this question. In February 1981, the Secretary of State's predecessor came to the Dispatch Box and rightly withdrew an accelerated pit closure programme. Does the right hon. Gentleman support his predecessor's decision? The right hon. Gentleman and others, who say that miners are Luddites, should realise that there are 500,000 fewer miners in the industry than there were in 1947.
The right hon. Gentleman knows that community after community has accepted closures where there is development. We say that there must be development alongside change. We have never refused to accept change. Mining is one of the most remarkable industries, and it has accepted considerable change. My hon. Friends know how many changes there have been and how many pits have been closed. Indeed, Conservative Members repeatedly say that there have been pit closures. Of course there have. We have accepted change on a scale that is almost unprecedented in any other industry, and we are not prepared to listen to lectures from the right hon. Gentleman and others.
We ask the Secretary of State again, "Do you support the central conclusion of the Monopolies and Mergers Commission report which suggests that during the next couple of years—or whenever it is to be—10 per cent. of capacity has to be taken out?" That is the commission's recommendation, and it will affect pits with losses of more than £10 a tonne. That means 70 pits.
Let me give an illustration of what that means. The hon. Member for Bedfordshire, North (Mr. Skeet) gave the list. I shall tell the right hon. Gentleman what it means for south Wales. It would mean that, under that criterion, 24 of the 33 pits in the 1981–82 list would go. It would take out nearly half the anthracite production of this country. Two of the major pits would be closed. It is nonsense, and we know it is nonsense, so why does not the right hon. Gentleman reject it? Why did he not say this afternoon that he does not support accelerated pit closures? Does the right hon. Gentleman support an accelerated pit closure programme? We do not. We reject it utterly, just as it was rightly rejected in 1981 by the right hon. Gentleman's predecessor.
§ Mr. Rowlands
As the report shows, the worlds of 1973 and 1983 are utterly different worlds. We do not support an accelerated pit closure programme, as proposed in the Monopolies and Mergers Commission report—nor did the right hon. Gentleman's predecessor.
§ Mr. Peter Walker
Does the hon. Gentleman agree that the present Government have kept up the investment programme of "Plan for Coal"? Will he admit that investment by this Government has been better than that of the Government that he supported? Will he further admit that, in what he has just said, he has now scrapped "Plan for Coal"?
§ Mr. Rowlands
We rightly welcome investment, but most of it was laid down in our period of government. Investment under "Plan for Coal" was started in our period, and this Government have continued it. We welcome that. However, many of my right hon. and hon. Friends have said that we cannot have pit closure programmes of this scale and size in our present economic situation.
I ask the right hon. Gentleman, as the Minister who is responsible, whether he supports an accelerated pit closure programme of the size that is proposed in the Monopolies and Mergers Commission report. Will he answer that question?
§ Mr. Rowlands
It is not bogus. That is the shadow that has been cast over our coalfields. As a result of the Monopolies and Mergers Commission report—the right hon. Gentleman endorsed it in a written answer—we shall see another accelerated pit closure programme. Does the right hon. Gentleman support that or not? We shall certainly not support such an accelerated pit closure programme. We do not beleve that the Government have any idea of what they will do about it. We need not less investment, but more. We need more investment in anthracite. We need more investment to open up new coalfields such as Margam. We will then be able to accommodate the problems of closures in the south Wales coalfield.
Where there has been investment, there has been increasing productivity. I represent pits in which there has been some investment. Their productivity has rocketed. They have been breaking production records. We are entitled to demand that the Government should tell us that they do not inend to embark on another accelerated pit closure programme, as proposed in the commission's report.
Does the right hon. Gentleman support the pit closure programme that would be the automatic consequence of this document? If he does not, he has an opportunity now to dispel the fears in the mining communities in all our areas. In social and economic terms, in terms of jobs and employment, we fear what the consequences would be. It is within the Minister's power to say that, on the contrary, the Government will recognise the potential for development of the biggest and most successful coalfield in Europe, and the coalfield with the lowest cost per tonne in Europe. We want to know whether the Government intend to support the industry.
We do not intend to oppose the Second Reading of the Bill. We will investigate the Bill more closely in Committee. We want to know whether there will be support for the boiler conversion programme, which the right hon. Gentleman has not mentioned. We want to know whether opportunities to open new coking fields in Margam and elsewhere will be taken. These are not questions for the NCB alone. They are questions for the Government too, because the consequences of not taking these steps would be visited on local authorities and central Government and on our communities.
When the Under-Secretary replies, I hope that he will tell us whether the Government support the potentially dramatic changes suggested in the report of the Monopolies and Mergers Commission. We believe that the industry has tremendous potential. We believe that, given 804 the backing of a Government who will turn their back on the nonsense of reducing options by premature pit closures, the industry will in the future befit the nation's needs.
§ The Under-Secretary of State for Energy (Mr. Giles Shaw)
First, I join Labour Members in paying tribute to the excellent maiden speech by my hon. Friend the Member for Sherwood (Mr. Stewart). It came as no surprise to me that the hon. Member representing that constituency should decide to make his maiden speech in this debate. I congratulate him on what he said and on the manner in which, clearly, he will take an active interest in the major industry in his constituency.
When I was at Gedling colliery recently, which I suspect is in my hon. Friend's constituency, I heard men speak extremely highly of the interest my hon. Friend was taking in the colliery.
I should also like to pay a warm tribute to the hon. Member for Midlothian (Mr. Eadie). My predecessor came to know him well and had a warm regard for him. It was typical of the hon. Gentleman that he also extended his courtesy to me in my brief but pleasurable acquaintance with him. His robust performance from the Back Benches today demonstrated that he has lost none of his tremendous fire and enthusiasm for the industry that he loves so well, and has served with such distinction for so long.
The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) sat down amidst a welter of accusations and counter-accusations. It is not usually my style to do battle with him about this or any other issue, but I should remind the House what my right hon. Friend the Secretary of State said in a written answer on 28 July:The commission found that the NCB is facing two central problems, which are closely related: over-capacity and the high cost of a number of pits in which coal production has become uneconomic. The commission did not attempt to define precisely the way in which the NCB should reduce excess capacity in high cost collieries, acknowledging that that is for the board to define and take the necessary action." — [Official Report, 28 July 1983; Vol. 46, c. 523.]Although I understand the deep anxiety of the hon. Member for Merthyr Tydfil and Rhymney about potential closures, particularly in south Wales, the facts are now so clear that successive chairmen—not just Mr. MacGregor, but Sir Norman Siddall before him—have actively discussed, within the industry and outside it, how to tackle the problems. I am glad to note that this Bill will not be opposed. That does not surprise me one bit, given that £6 billion is being made available in borrowing limits. However, it is vital to argue the case in a way that bears some relation to the facts. Hon. Members should not say that they are all in favour of progress as long as it does not mean change. That philosophy is not worthy of the industry or of those hon. Members on both sides of the House who have its interests at heart.
The debate has been wide-ranging and more balanced than other debates. Since May 1979 the Conservative Benches have had a number of worthy representatives from coal mining areas. Debates on coal mining are now, certainly, cross-party affairs—[Interruption.] For example, my hon. Friends the Members for Derbyshire, South (Mrs. Currie), for Warwickshire, North (Mr. Maude) and for Sherwood all spoke from their intimate knowledge of their constituencies' mining problems, as 805 did my hon. Friend the Member for Darlington (Mr. Fallon). That is very worthy. Opposition Members do not have a monopoly of interest or knowledge in these matters.
§ Mr. Shaw
Mr. MacGregor is entitled to have many things. I have little doubt that he will take advice from my hon. Friend the Member for Derbyshire, South. However. I am sure that he is capable of making up his own mind. having taken soundings within the industry.
The right hon. Member for Salford, East (Mr. Orme) mentioned investment levels. The Bill provides for a very high borrowing limit. As the right hon. Gentleman knows, in recent times the investment levels have been about £800 million per annum, or £2 million per day. The right hon. Gentleman said that that was much less than in some other parts of the Community, but it is three tunes the amount invested in West Germany and 20 times the amount invested in France. It is substantially greater than the sums for other comparable European countries. However, I take the point that there are methods of subsidy other than investment. Nevertheless, the right hon. Gentleman cannot have it both ways. Perhaps one could provide investment on the scale that the right hon. Gentleman wants, but if there were subsidy plus investment, we would be unable to make that provision.
Let us also be clear about interest rates. The board's total deficit financing will provide cover for its interest charges. With that level of deficit grant, the board can cover the interest charges. There is no case, purely on interest rates, for a capital restructuring of the board, which is another matter that was raised by Opposition Members. We must recognise that there is high investment. It is not possible to have a similar and comparable level of subsidy. We have a high deficit financing that carries the board through its high interest charges.
Privatisation was mentioned by the right hon. Members for Salford, East and for Barnsley, Central (Mr. Mason). I make it clear that when my hon. Friend the Financial Secretary to the Treasury said that there was no natural monopoly in the production of coal or of many other things, he was not suggesting that there was an immediate prospect of, or plan for, the privatisation or selling of pits. There is no such plan. As my right hon. Friend the Prime Minister made clear, there is no plan for the privatisation of pits. There has been, and is, a plan for the disposal, where possible, of ancillary businesses associated with the NCB. As the right hon. Gentleman will know, that has been the board's policy for years. There is nothing new in that.
§ Mr. Shaw
I am not surprised that my hon. Friend asked that question. I pay tribute to the fact that about 100 private mining companies produce about 1 million tonnes of coal, many under contract to certain power stations. I make it clear that that is not the issue raised by the right hon. Members for Barnsley, Central and for Salford, East. 806 If clearing the air is required, I hope that the right hon. Members and the Opposition will accept that there is no plan to sell the pits.
Opposition Members also referred to Point of Ayr and liquefaction. It would be rare if the hon. Member for Midlothian did not refer to it. I am aware that there have been recent discussions with Mr. MacGregor and that he made a statement about it. The 2.5 tonnes per day coal liquefaction pilot plant at Point of Ayr in Clwyd is on target. Progress is being made. Hon. Members expressed concern at the statement by Mr. MacGregor early last month that he would need to take time to make a proper assessment of the viability and future of the project. I assure hon. Members that the basis of that assessment will be the report on the current programme of work, involving the detailed costing, design and proper specification of the pilot plant. The programme began in April this year and should be completed in about mid-1984. An announcement on the appointment of the design support contractor is expected shortly.
Hon. Members have also been concerned about the funding of £1 million. It is being shared by the Department of Energy and the NCB and is not conditional on Community or private sector support for the project. I give that assurance to hon. Members who raised the matter.
Many hon. Members referred to the conversion grant scheme. I recognise that they believe in it and consider that it is making an important contribution. We agree about that. About 2 million tonnes of additional coal burn has been identified during the two years that the scheme has been in operation. The hon. Member for Easington (Mr. Dormand) wondered whether the percentage grant could be extended, and whether the scheme could be extended to the public sector. It is run by the Department of Trade and Industry, not by the Department of Energy. However, my right hon. Friend the Secretary of State is having urgent discussions and we have been examining the scheme. We hope that the correct decision will be made in due course. I give the hon. Gentleman the assurance that we are working on it.
With regard to the extension of the percentage grant, the hon. Gentleman will be aware that 25 per cent. is the limit currently in force. He asked whether the limit could be raised from 25 per cent. Possibly the average grant has not reached that level, but the limit is currently at that level. With regard to extension to the public sector, the scheme is under the Industry Act 1972, and that Act precludes assistance to public sector schemes. I very much regret that that cannot be done.
Some hon. Members expressed concern about coal imports. I fully understand that concern, but the House must always bear in mind that 95 per cent. of our coal requirements are supplied by British coal, so we are talking about a very small proportion. That volume has been getting substantially smaller in the last three years. It was 7.3 million tonnes in 1980, 4.3 million in 1981 and 4 million in 1982. In certain instances fuel shortages of one sort and another have made it inevitable that prime quality coking coal and anthracite should find their way into the market by imports, but I stress that it is a small percentage of the total coal take and I hope hon. Members will not consider it a serious threat to the viability of the industry.
The redundant mineworkers payment scheme is a major provision in the Bill. Provision for it is increased from £300 million, at which it was introduced two years ago, to £1.2 billion. This has raised a great deal of contention 807 on both sides of the House. Some hon. Members argued that it is far too generous, and I regret that it was described by one hon. Member as a glorified death grant. At the time of its introduction the scheme was warmly welcomed by the industry as probably the most effective and generous scheme that could be designed.
Let me try to disabuse the House of one belief, which the hon. Member for Hemsworth (Mr. Woodall) expressed with some force. The sum of £1.2 billion in the Bill is not and cannot be interpreted as an absolute number of persons leaving the industry, as it were, a targeted figure. Indeed, when the Bill becomes effective, about two thirds of the money will be used for payments to those who have become redundant before 1 April 1984. As hon. Members know, there is a weekly payment of a kind under the scheme and it is a commitment until the miner reaches pensionable age. Those payments constitute a major requirement for about two thirds of the £1.2 billion provided in the Bill. Therefore, hon. Members can recognise that the scheme is not a hidden measure, but a major commitment to the costs of redundancy in the industry. The fact that the increase in the amount required is of this order is a reflection of the current rates of redundancy and also of the changes introduced to the scheme earlier in the year. Hon. Members on both sides of the House will understand that.
The Flowers report, or the CENE report as I used to know it, was referred to by the hon. Member for Easington. I yield to no one in my determination to see that that report is carried through, as he would expect from my previous background. There has been much progress within the industry on its discussion. For example, opencast planning procedures will be transferred on a transitional basis to my right hon. Friend the Secretary of State for the Environment probably from 1 January. As the hon. Member for Easington knows, working studies have been initiated on spoil disposal. I hope that we will keep faith with the major recommendations to which he ascribes such importance.
The hon. Member for Ashfield (Mr. Haynes) always gives the House an extremely frank view of affairs, and with his 35 years experience in mining he is entitled to do that. However, I hope that he will, on reflection, accept that the propositions in the Bill are not a preparation to sell off the industry.
§ Mr. Haynes
On a point of order, Mr. Speaker. I did not say that, and I ask the Minister to take it back.
§ Mr. Shaw
—shows the hon. Gentleman how confusing he can be when he starts to speak on this matter.
My hon. Friend the Member for Bedfordshire, North (Mr. Skeet) has made a major contribution to coal debates for a long time. He was right to lay stress on the international price of coal, on the height of stocks and on the fact that the overall commitment of expenditure in the industry has topped the £7 billion mark. Those are the significant underlying reasons why we must examine the 808 industry on a factual, not an emotional, basis. I welcome the cool clarity that he brought to the proceedings at that point.
My hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) said that he was no longer responsible for the constituency in which the Point of Ayr liquefaction plant is established. He also laid stress upon the EC dimension. I realise that the Community can make an important contribution to the restructuring of the coal industry, and discussions continuing in its energy committee are encouraging in that regard. I understand the passionate concern of the hon. Member for Wentworth (Mr. Hardy) about the unemployment that will be caused in some constituencies—his might be one—but we must consider whether we can continue to make provision for the entire range of costs that are incurred in mining, and he will know much better than I that changes can bring benefits if we apply them in as many pits as we can.
The main issues before us were best summed up by my hon. Friend the Member for Warwickshire, North (Mr. Maude), who talked about the cost of extraction versus the price that can be obtained in the market. The industry must grapple with that basic fact. I remind hon. Members on both sides of the House that, taking a production value of about £40 a tonne, about 47 million tonnes are currently being sold on the right side of the line, which is at market rate or above. However, 32 million tonnes are below that line, but are close to being brought into the profitable sector. While the debate has been largely concerned with closures, we must allow the industry to examine afresh the prospects of moving a large part of its output into the productive and profitable price sector.
§ Mr. Shaw
That does not mean closures. It means improved efficiency, better methods, better management and a reduction in overheads. It can be achieved, and the right hon. Gentleman knows perfectly well that if those 32 million tonnes could be brought on the right side of the line and were profitable, there would be a major reversal in the capacity of the industry to pay its way.
I should make it clear to the right hon. Gentleman that although the Bill provides for only two years, that does not mean that the job must be completed within two years. Another Bill will follow this one, no doubt with further provision. The borrowing limits have been raised to £6 billion, and the provision for redundancy and other payments has been increased to £1.2 billion, and it is clear that there can be a major improvement in the profitability of coal produced, but what really matters is to be able to sell the coal that we produce to people who are willing to buy. We cannot do that when world prices have dropped to a point where United Kingdom deep-mined coal is significantly less competitive than other coal. The Bill provides a commitment that the Government will continue to support the industry with huge public investment and with a vast deficit on the understanding that we shall have a more viable industry in a few years' time. I commend the Bill to the House.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).