HC Deb 24 January 1986 vol 90 cc621-6

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Neubert.]

2.52 pm
Mr. David Penhaligon (Truro)

I wish to launch into what may not be the easiest of tasks. I want to achieve an application of the collective mind of the Department of Trade and Industry to the tin crisis, which affects my county and parts of London, instead of the other difficulty that has received a considerable amount of publicity this week.

There are two collective problems, one of which caused the other. However, the solution to one of those problems does not necessarily mean that the other will be solved. The question that is constantly being raised in the House —I have raised it several times, and the hon. Member for St. Ives (Mr. Harris) has also raised it several times—is what will the Government do? I can tell the Minister that in Cornwall there is more interest in the Government's reply to that matter than in the Westland saga.

The saga begins in London at the London metal exchange. As is well known, the international tin agreement has collapsed and the market was closed towards the end of October 1985. Various rescue bids have been launched. During Question Time yesterday the Prime Minister expressed optimism about the possible conclusion of the latest rescue attempt. I must say that the Prime Minister's optimism was greater than that expressed by the people who are involved on a day-to-day basis.

The crisis has been going on for three months, and business is already leaving London. Some people believe that the saga could lead to the end of commodity dealing in London and the reneging on international debts by major financial powers. Whatever the outcome, it is certain that the price of tin will fall, and it is at that stage that Cornwall becomes involved.

I am one of those in Cornwall who have long taken the view that hard-rock mining is on a pleasant growth pattern and is likely over the next decade, two decades or three decades to make an increasing contribution to the Cornish economy. I and others who share my view do not expect hard-rock mining to return to the levels of production of 140 or 150 years ago, but we have no doubt that hard-rock mining, given Cornwall's mineral structure, can make a major contribution to the local economy.

In the 1960s, the average production of tin was about 1,500 tonnes a year. In the 1970s the average was 3,000 tonnes. In 1984, it exceeded 5,000 tonnes for the first time this century. Tin is not the only metal that is mined. Cornwall produced 7,500 .tonnes of zinc, 750 tonnes of copper and 2.5 tonnes of silver in the past mining year. At October 1985 prices, the value of this output was about £50 million to the balance of payments.

Against this background there were developments in the offing. The two mines in my constituency, Concorde and Cligga, obtained permission to begin production and they are now preparing to launch themselves into it.

Mr. Robert Hicks (Cornwall, South-East)

I should like to substantiate the argument that is being advanced by the hon. Gentleman. There are no non-ferrous mines in my constituency, but major prospecting is taking place and boreholes are being sunk at Redmoor near Callington. The determination of the ultimate viability of the project, which it is estimated will produce 300 jobs, will be reflected by the overall price of tin on the world market. The hon. Gentleman is making an important point.

Mr. Penhaligon

I thank the hon. Gentleman for making that intervention, which reflects the general picture of growth. Only six months ago, reasonable men would have extrapolated growth. There are about 1,500 on the industry's payroll, in Cornwall but it is an industry that does a good deal of subcontracting and the actual number employed by the industry, directly and indirectly, is considerably greater than 1,500. The industry claims—this has not been challenged—that it contributes about £23 million a year to the economy. That contribution is made mostly in west Cornwall. It is a worthwhile figure and one that should not be cast aside lightly.

We are talking about an area that is in the midst of the country's employment blackspot. In Falmouth, 26.7 per cent. of males of working age are unemployed. The figures for Penzance, Redruth, and Helston are 28.4 per cent., 23.8 per cent. and 25.4 per cent. respectively. A quarter of the male population in the area that is most affected is already unemployed. Thankfully, Truro comes in at fifth place in the unemployment league at about 15 per cent.

The industry has been aware for some time that the cartel price at which tin was being traded could not be sustained ad infinitum. It was well aware that if the industry was to continue to prosper and grow, it would have to succeed in competing in a free market. It was under no illusions and it recognised that the price of tin in a free market would be less than that at which the commodity had recently been traded on the London market.

The industry had been making vigorous preparations for the commencement of a free market. Even the most realistic among the mining personnel thought that the day was at least two years further on from today, but preparations were clearly being made made, and most obviously at the three really important mines, the Wheal Jane complex, South Crony and the mine in Penzance which is called Geevor. Geevor is a good illustration of the effort that is being made to enable the mines to modernise themselves and to compete in a free market. Money has already been invested in a new mill at Geevor, which will double its capacity to treat available ore. Half of the ore comes from the old Geevor mine. It is good quality ore, and well worth treating. The other half comes from the old rubbish dumps of years ago. The mine is investing an enormous amount so that it can run into the old Botallack and Lezant mines for further sources of good quality ore to allow the mill to work at full capacity with good material. If the improvement is completed, the mine will be able to compete in the free market.

We have to deal with the present crisis and the mines are in the worst of all positions. They have lost the higher price that they were enjoying, but have enormous financial commitments. Large sums have already been spent on improving the mines. Unfortunately, although the money has been half spent, the efficiency gain has not been half felt. Indeed, no efficiency gains have been felt so far. If improvement work were terminated today, no improvements in efficiency would have been made.

The simple question for the Minister is, "Will the Government help?" Will they help towards meeting development costs to improve the efficiency of mines so that they can compete in a free market? If the will exists, there are half a dozen ways in which financial asistance could be given. The county, the miners and their families want to know whether the Government will help. Does the will exist? Will the Government help Cornwall at this tragic time?

I am not pleading for a lame duck industry. The dominant employer in my constituency is English China Clays, which this year declared a profit of £74 million. I do not know what the Treasury takes from that profit, but I have a feeling that it is considerably more than zero.

We are merely asking the Government to realise that mining is a high-risk industry and to act as an honest broker in the middle, sometimes assisting mines when they get into difficulties that are not necessarily long-term or terminal.

On Wednesday next week, about 500 tin miners from my county will be lobbying Parliament. The Cornish anthem, "Shall Trelawny die?" includes the line Here's twenty thousand Cornish men will know the reason why! There are not 20,000 Cornishmen coming to London on Wednesday, but a lot more than 20,000 in Cornwall want to know whether the Government will assist the Cornish tin industry and, if so, to what extent.

If no assistance is forthcoming, at least some of the mines will undoubtedly close for all time. A couple may be held on standby for half a decade or so in the expectation that the tin price will rise again. If the Government refuse to assist at this crucial time, the growth that has taken place over the past couple of decades will stop and the production of Britian's only significant mineral resource will cease. I cannot believe that that would be a logical or rational outcome. I look to the Government for an assurance that they are willing to assist the Cornish tin industry through the tragedy confronting it.

3.3 pm

The Minister of State, Department of Trade and Industry (Mr. Peter Morrison)

I am glad that the hon. Member for Truro (Mr. Penhaligon) has had the opportunity to raise an incredibly important matter for Cornwall.

I listened carefully to the hon. Gentleman's detailed and well-informed account of the tin industry in Cornwall. He and my hon. Friend the Member for Cornwall, South-East (Mr. Hicks) may be aware that I have been down two tin mines in Cornwall and I have visited Cornwall perhaps more times than any other part of the country since I became a Minister about five years ago.

I am aware that unemployment in Cornwall is extremely high—about 19.5 per cent. I am aware also that Cornwall's distance from market places could be described as an inhibiting factor. I believe that people in Cornwall feel that way. I think that it is fair to say—I do not say this in a patronising way—that the rest of the country misunderstands Cornwall's position. To a certain extent, it is assumed that problems do not exist in Cornwall. When we go as tourists and holiday makers to the area, we are greeted with enormous hospitality and great generosity. The countryside is beautiful and the seaside is perhaps everyone's dream. We do not see the true position.

Most people would not expect unemployment in Cornwall to be 19.5 per cent., yet, in the big cities, the unemployment levels are as follows: Manchester, a little less than 14.5 per cent.; Newcastle, 18.4 per cent.; Glasgow, 17.5 per cent.; and Bristol, 11.3 per cent. Even Ebbw Vale, where one would expect a much higher level of unemployment, has precisely the same unemployment level as Cornwall. I do not underestimate Cornwall's problems. The problems are not sufficiently understood, and some people underestimate them.

Of course I understand the position of those who work in Cornwall, especially at Geevor, South Croft) and Wheal Jane, and at the other small producers in the constituency of the hon. Member for Truro. The hon. Gentleman said that about 1,500 people work in the tin mines. About 4,500 people, including dependants, are directly affected. Many other people are indirectly employed and, not surprisingly, are worried about what is happening. They will read what has been said in the debate and dissect it carefully.

It is still too early to judge the impact of recent developments on the commercial prospects for tin mining in Cornwall. The most important factor will be the price at which tin settles when the market reopens. Some fall in price is probable, indeed almost certain. The extent of that fall in the short term will depend on the outcome of the Government's efforts to secure an acceptable settlement of the International Tin Council's debts and a return to orderly trading. As it is unlikely that the International Tin Council will agree to resume buffer stock buying, it seems inevitable that in the longer teen supply and demand will have to balance—I was interested in what the hon. Member for Truro said about the tin mines of Cornwall in the market place in the longer term—and some of the world's more expensive producers are likely to have to close as a result. It is against that background that prospects for Cornwall tin will have to be assessed.

We have already said that we shall consider applications for grants for tin mining companies to help them reduce production costs. Since 1979, we have given grants of £3.5 million to continue projects, including exploration. Decisions on grants cannot be taken until we can be satisfied that any project receiving assistance from the taxpayer has reasonable prospects for a sound commercial future. I hope that the hon. Member for Truro and his constituents will understand that.

The period of uncertainty has been lengthy, and that is bound to cause problems for some companies. That is one of the reasons why our priority is to restore orderly trading as soon as possible. That will be in the interests of everyone. That is taking longer than we had hoped, but, when 22 countries are involved, there are bound to be difficulties.

The United Kingdom has made quite clear its readiness to meet its share of any commitments of the International Tin Council member countries and has called upon others to do likewise. Proposals aimed at finding an acceptable solution to the International Tin Council's problems have been put forward, and we have made great efforts to resolve the crisis through diplomatic channels and will continue to do so. I can assure the hon. Gentleman that an inordinate amount of time has been spent in my Department dealing with this matter. The people involved are working nights and weekends.

Mr. Alan Williams (Swansea, West)

I helped to save Wheal Jane in the late 1970s, and I have a keen interest in this issue. There is an inconsistency in what the Minister says. The tin industry is beset by the chaos that followed the collapse of the ITC, and it needs help during the period of the chaos. The Minister says he cannot judge whether the industry qualifies for help until the chaos is over and the Government can make an assessment of whether it will be viable post-chaos. Is it right that the governor of the Bank of England came to the hon. Gentleman's Department yesterday to seek assistance? Can he tell us what he told the governor?

Mr. Morrison

What I am saying is no different from what the right hon. Gentleman was saying and doing, no doubt well, when he was involved with Wheal Jane during his period of office. When one is dealing with a moving target—because, as I explained, the complication is that it is not just ourselves, and the right hon. Gentleman will appreciate that—it is not sensible to come to firm conclusions if only because one would be taking the wrong decisions because one would not know precisely on what grounds the decisions were to be based.

As I said to the hon. Gentleman who instigated the debate, no set of people could be doing more to bring this difficult problem to a conclusion. I can assure him that that is the case and will continue to be the case. The tin industry in Cornwall is important, but unemployment affects more than the tin industry.

Mr. Penhaligon

We can debate unemployment in the county at another time. I have done it before. The Minister has paid a great deal of attention to the pleadings of the county over the years. The tin mines have sold their tin up front, as they call it. People are committed to taking the production of tin from the Cornish tin mines for about the next six months starting last October. The agreed price was of the order of £8,000 a tonne. We are now a quarter of the way through a year, and there must be 1,200 tonnes of tin kicking around Cornwall for which nobody has paid a bean.

If the international tin agreement finally collapses, the brokers who have committed themselves to paying £8,000 a tonne are nowhere near being in a position to fulfil their contracts. They will hit the wall. At that moment, if not before, the whole thing will collapse like a pack of cards both in London and in my region. The only slight hope is that at least two of the mines are owned by Rio Tinto-Zinc and, although nobody would accuse that company of being a public charity, one does suspect that it does not suffer from the immediate cash flow problems of Little Geevor, which is an independent mining company. There must already be some doubts about whether the company is trading legally, given the circumstances that exist. Some assistance is required in the near future.

Mr. Morrison

I understand precisely what the hon. Gentleman is saying—

Mr. Alan Williams

But the Minister will not do anything about it.

Mr. Morrison

I understand what the urgency is. We are doing everything within our power to make the situation solid as opposed to fluid, which is what it is at the moment. It is all very well for the right hon. Member for Swansea, West (Mr. Williams) to say that we shall not do anything. As a matter of fact, everything within our power is currently being done. We must look at the situation as it slowly develops. As I said, we are dealing with a moving target. We are constantly looking at it carefully. I fully understand what the hon. Member for Truro is saying, and that there are many uncertainties for those involved.

I agree with the hon. Gentleman that the problems in Cornwall as a whole are difficult. That is why the Penzance and St. Ives travel-to-work area can benefit from regional development grants and regional selective assistance. That is why the Redruth and Camborne travel-to-work areas can benefit from that, too. I appreciated the hon. Gentleman's point of view when he said that he was pleased that in his part of Cornwall, in Truro, unemployment was not so high, but that does not detract from the fact that unemployment in Cornwall as a whole is very high.

My Department has given selective assistance since 1979, amounting to about §3.8 million, involving 44 different projects, creating about 1,000 new jobs and safeguarding a further 700. In addition, payments of RDG have totalled more than £4 million over the same period.

When I first went to Cornwall in 1981, I think I went to the hon. Gentleman's constituency, and I certainly went to that of my hon. Friend the Member for Cornwall, South-East. I recall the newspaper headline the day after I went there. It said, "Morrison offers no hope." When I was a Minister at the Department of Employment, the enterprise allowance scheme was developed. In Cornwall, there are now 1,254 participants. The youth training scheme was developed, and currently about 2,500 16 and 17-year-olds are benefiting from that. The community programme was developed. By May this year, we hope that there will be about 2,000 full places.

Between my first visit as a Minister to Cornwall and today, I have listened carefully to what is said and watched carefully what is happening in Cornwall. I hope that the hon. Gentleman will understand that. I assure the hon. Gentleman that I shall not forget the tin industry, and I shall continue to try to find a solution to a very difficult problem.

Question put and agreed to.

Adjourned accordingly at eighteen minutes past Three o' clock.