HC Deb 11 March 1985 vol 75 cc9-11
10. Mr. Foulkes

asked the Secretary of State for Energy what has been the effect of the recent fall in the exchange rate on the international competiveness of coal mined in the United Kingdom.

Mr. Peter Walker

This is essentially a matter for the NCB. Depreciation of sterling against the dollar should increase pithead returns on coal exports, but the benefits of this to the NCB will be small in relation to the board's losses on deep-mined production.

Mr. Foulkes

Despite that convoluted answer, will the Secretary of State concede that on the central question of the economics of the pits the slump in the value of the pound has changed matters considerably and the change in NCB accounting procedures could change the economics of pits overnight? Will he give an assurance that imports of coal and oil will be curbed immediately and admit that due to the slump in the value of the pound there is now no need to close any pit in the foreseeable future?

Mr. Walker

When the exchange rate of the pound was £2.40 I doubt whether the hon. Gentleman was as vocal to the effect that, according to his calculations, that meant that all pits should be closed.

Mr. Skinner

Will the Minister confirm that before the strike the cost of deep-mined coal, averaged over all the areas, was £38 per tonne, but that since the value of the pound has fallen against many other currencies, not just the dollar, the spot price for coal on the Rotterdam market is now about 50 per cent. higher? Will he also confirm that the Common Market imports 62 million tonnes of coal from third countries? Does that not provide a great opportunity for us to take up some of that and thus have a demand of 125 million tonnes, as suggested by someone very close to the right hon. Gentleman on the box the other night?

Mr. Walker

If the hon. Gentleman is right and the changes in the exchange rate mean that British coal can now compete with imports, we should be happy to allow that to happen. I believe, however, that the hon. Gentleman wishes to stop all imports of coal. If his argument is correct, there should be no need to do that. I think he will find, however, that the changes in the exchange rate will not make all that much difference.

Mr. Neil Hamilton

Does my right hon. Friend agree that any improvement in the prospects for coal as a result of recent changes in exchange rates are almost certainly counteracted by the loss in expectations of reliability in the supply of coal to clients as a result of Scargill's absurd strike and that it is thus unlikely that prospects for coal will be improved until the NUM is under the presidency of someone who has the good of the industry more in mind than has the present incumbent of that office?

Mr. Walker

It is certain that in the past year the cost of coal production has been far above what is likely to be the average market price, and the same is likely to be true this year.

Mr. Ryman

Will the Secretary of State investigate the "Alice in Wonderland" economics perpetrated by the NCB in Northumberland? Eighteen months ago the NCB invested £2 million in the purchase of new pit props for Bates's pit, while a year later, before the strike began, the NCB contemplated closing the seam for which the pit props had been purchased and thereby making 800 men redundant. Were those not absurd conditions for the investment of money in the industry? Does it not give the lie to the Government's persistent argument that uneconomic pits must close, when the NCB invests money on such a basis?

Mr. Walker

There are plenty of economic pits and good coal faces to invest in, and it is a pity that during the past year £800 million of capital investment has been adversely affected.

Mr. Wrigglesworth

Does the Secretary of State agree that it will be impossible for the NCB to become internationally competitive if it has to bear the whole financial burden of the dispute? Will the Secretary of State tell us that that will not be the case? When will he be able to present us with plans for the financial reconstruction of the NCB?

Mr. Walker

The future financial reorganisation of the industry is a matter that the Government will have to consider, as both Labour and Conservative Governments always have considered it. However, the industry will have scope to do well in the future only if it takes full advantage of the capital investment that has taken place and will take place, and if it has very high productivity levels.

Mr. Benn

When the right hon. Gentleman precipitated the last miners' strike in 1974, the Central Electricity Generating Board bought a large amount of coal from Australia. When the coal was delivered it proved to be so much more expensive than British coal that it was sold at a loss to Electricity de France. Is it not a fact that, now that British coal costs half as much in foreign currency as it did when the exchange rate was £2.40 to the dollar, and foreign energy imports cost twice as much, the economic arguments on which the strike was precipitated have proved to be entirely false?

Mr. Walker

If we are talking about entirely false statements, the last time that the right hon. Gentleman mentioned my role in the 1974 strike was on 7 June 1984, when he said: I believe that the leadership of Arthur Scargill and the NUM executive has been brilliant throughout the dispute. The Secretary of State … lost his job as Secretary of State for Trade and Industry by mishandling the miners and he will lose his job again".—[Official Report, 7 June 1984; Vol. 61, c. 483.] That was because he believed that the NUM would again succeed.

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