Coal Industry (Grants)

HC Deb 11 March 1987 vol 112 cc302-42

[Relevant document: First Report from the Energy Committee (House of Commons Paper No. 165 of Session 1986–87.]

Motion made, and Question proposed, That a supplementary sum, not exceeding £166,300,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1987 for expenditure by the Department of Energy on assistance to the coal industry including grants to British Coal and payments to redundant workers.—[Mr. David Hunt.]

3.57 pm

Sir Ian Lloyd (Havant)

I was a little surprised that the hon. Member for Ashfield (Mr. Haynes), whose every word reaches its intended destination, should have risked referring to the analogy of caving. So fragile is the geological and political underground structure that I would have thought that he would have preferred not to do that today. However, without wishing to disparage the serious points of his speech, some of which are likely to be referred to during this debate, I wish him well with his Bill.

I should perhaps ask the House to retune from Radio 2 to Radio 3. We are about to consider a series of Supplementary Estimates which occupy a fairly thick volume. That, as we all know, has for long been a rather impractical obligation, so we are obliged to pick and choose the items of expenditure that we subject to close scrutiny. Today it is the item of some £166 million of further assistance to the British coal industry. That not inconsiderable sum is in itself noteworthy, for the coal industry has had and continues to have a gargantuan appetite for public funds.

Technically, it is usual to move a nominal reduction in the amount, and it would have given me greater pleasure to do that, for our ultimate objective must be the elimination of all public support for an industry which, in due course, and sooner or later, has to become completely self-sustaining. Alas, that would have been inconsistent with the general thrust of the report that my Committee, the Select Committee on Energy, has just made to the House on the coal industry. In it we argued that if financial provision is to be consistent with the consequences of policy, that provision should be increased from its already formidably high level. As that was the case, it seemed to my Committee that we were justified in seeking this opportunity to explain to the House precisely why we had reached what, at least for some of us, was an unpalatable conclusion. The coal industry will continue to demand and justify such consideration and analysis while it continues to make such a large claim on the nation's resources.

Before coming to my main points, I wish to make two general observations. First, I should like to thank all the members of my Committee, its Clerks and advisers, who laboured so diligently, travelled so far and argued with such conviction to produce the report. Whatever our knowledge of coal mining may have been—some members of the Committee had spent half a lifetime at least in the industry—our perspectives were widened. Those of us who saw a coal face or a longwall system in operation for the first time acquired a real respect for those who undertake that arduous, dirty, demanding and dangerous work. All of us were dismayed by the visible evidence of industrial dereliction and an almost tangible sense of despair in abandoned or declining coal mining areas. All were heartened by the sense of purpose and opportunity that new technology provided in mines both old and new.

Secondly, I should like to stress the general sense of disappointment over the highly selective and misleading way in which our conclusions were reported in some of the press, which seemed concerned only with those phrases or paragraphs in which the evidence that we received compelled us to reach conclusions critical of British Coal, the Government or the Secretary of State. It is not that we are unwilling to justify such conclusions, which came mostly from direct evidence rather than from our analysis or unchecked political prejudices. That is not the point. Such emphasis, however, detracts from the main analysis and conclusions of our report, which is but the tip of a very large iceberg of evidence.

I shall give the House but one example. The Daily Telegraph, referring to the Committee criticising the Coal Board for starting the 1985 pit strike, said: The … committee … united in a scathing attack on the handling of pit closures which led to the bitter year-long dispute. Not so. Our emphasis was on all parties learning lessons and avoiding mistakes. There was no scathing attack. Our words, in paragraph 133, were: The 1985 strike was precipitated by the decision to bring forward the closure of Cortonwood colliery where the NCB was regarded by miners as having broken an earlier promise". We say, in effect, "Avoid that in future if you can." We suggest attaching to that problem a notice saying, "Explosives: handle with care".

The press was also excited by the fact that the Committee was unable to agree all the analysis or conclusions. That, too, was incidental, for what we agreed was both substantial and significant, and provides a context in which the whole matter of current and future financial support for the coal industry can be judged. If the press seeks constantly to sensationalise Select Committee reports, it will trivialise them in the eyes of the public and Government. Governments of all parties, understandably, will react to the hostility of unfavourable press comments rather than the constructive analysis that such reports generally contain.

I do not ask the press to sugar the pill. What I ask is that it does not always coat it in cyanide when no cyanide is present. The system has strong critics, and some would gladly hasten its demise. It is my personal judgment that that would deprive the House, Government and the country of a valuable source of knowledge and objective policy appraisal.

So what did the Committee agree, as it is relevant to the Supplementary Estimate? I shall endeavour to summarise our main conclusions. First, after examining the market for coal—we realised that it is an immensely difficult task for all those who undertake it professionally—we agreed that the reduction of costs was critical and that it depended on three things: the continuing availability of large sums of capital; an adaptive and co-operative work force, which both sides of the Committee regarded as crucial; and the abandonment of those faces, seams arid mines where, for one reason or another, the new management rules cannot be met. That was unanimous.

Secondly, we pointed out that major unresolved uncertainties dominated the industry's future and that the major uncertainty was the extent to which, and the speed at which, it will be able to grasp the further economies that are undoubtedly available to it. That was also unanimous.

Thirdly, we agreed that the price of coal must respond to market realities in a market that included not only competitive coal but competitive energy, which is perhaps even more significant.

Fourthly, we concluded that British Coal's cost level target of not more than £1 per gigajoule for new capacity will, in all probability, have to be moved downwards. That has the consequence that more collieries will be at risk and that there will be greater social risk of closure.

Fifthly, we concluded that the present plans will produce a net increase in deep-mined capacity of 8 million tonnes by the early 1990s and that there was no convincing evidence of increasing demand. We looked at that very carefully. That led inevitably to our main conclusion that capacity reduction would exceed 2 million tonnes per annum. From that followed our next conclusion that the industry would have to manage a controlled reduction in its work force, with predictably large effects on both British Coal's corporate finances and the Treasury's liabilities. I shall return to that subject.

We concluded that British Coal's capital would have to be restructured and that, in he light of that analysis, a deficit grant in the range of £100 million to £200 million per annum would not be adequate; nor would a provision of £300 million to £750 million for the continuation of the redundant mineworkers payment scheme, because, if our analysis is correct—I believe that we were justified in it—we expect a higher level of redundancies. That lengthy analysis culminated in our conclusion that the Government's policy was "not fully credible". It is important to emphasise that the difference between "credible" and "fully credible.' is small but important.

A further unanimous conclusion of the utmost significance was that British Coal should not be asked to evaluate pit closure economics from a social standpoint, which, we argued, must be the responsibility of central Government. We made further suggestions about the organisation of that assistance and its scale, but pointed out that, whatever the present mismatch between resources and problems might be, a resolution of the problem would require in addition a commitment of energy, imagination and purpose. Those three qualities are not financial, but they are in equally short, if not shorter, supply.

All that was the unanimous view of the Committee. Where did we disagree? We disagreed on what were in my judgment—hon. Members may have a different scale of values—two minor issues and one major issue. The first minor issue was whether the French power supply by the cross-Channel link should be terminated to help bring demand and supply into balance. The second was whether the adoption of new mining techniques, which we all witnessed in the United States, would prejudice safety. On both, we understand but do not share our colleagues' reservations. Doubltless they will say something about that if they catch your eye, Mr. Deputy Speaker.

The major disagreement was on a largely theoretical assertion of principle. The majority favoured the principle of opening the industry in due course, and in a marginal sense, to private mining. For the minority, that ran counter to deeply held political convictions. Nevertheless, the Committee's unanimous recommendation was: For the immediate future … BC should remain in the public sector. One would not necessarily have judged that from some of the press reports. Obviously, there is no realistic prospect of a substantial supply of privately mined coal in the United Kingdom this century.

I shall now return to finance. Despite all the encouraging progress in the industry—and it is indeed encouraging—we are staring at an alarming slough of despond. If capital investment is included, the net cost to the taxpayer of coal mining in the United Kingdom was over £1.6 billion in 1984–85; well over £2.1 billion 1985–86, the strike year; still over £2 billion in 1986–87, and likely to remain there this year if the estimate is passed.

Inflation and all sorts of other things have produced an age in which large figures followed by noughts have almost ceased to have meaning. The net cost to the taxpayer of coal mining in the United Kingdom represents about £40 per head per annum for every man, woman and child in the country, or about £160 per annum per family. The total loans to the coal mining industry amount to £77 per head of population, or £308 per family. That helps to put the figures into perspective.

The achievement of true viability will require a turnaround of some £1.8 billion on a turnover of £5 billion. Despite truly remarkable progress since the strike, that remains a formidable challenge. It will not be met unless two things happen. The first is that the present rate of progress must be sustained and, if possible, accelerated. Secondly, there must be confidence within the industry and the coal mining communities that the social costs will be fairly assessed and generously provided. In saying that, I do not for one moment wish it to be inferred that I do not believe that the scale of provision has been very generous.

However defined, this is a colossal burden, but if, as has been argued, the yoke of support can be lifted, if the cost of that relief is a small further increase in a very large sum and if that will supply both the confidence and the resources required to achieve a final and permanent turnaround of this very expensive industry, then we must find the resources to do the job. I believe that that is the unanimous view of the Committee. Failure will leave the British people with this massive subsidy burden in perpetuity.

The acceptance of that burden would imply that British Coal should become a permanent section, not of the Department of Energy but of the Department of Health and Social Security. That would be the reality. It would be as painful as it is unnecessary. It would establish an alarming and most dangerous and controversial precedent. Today coal: tomorrow, who knows what? On what grounds would a Government be able to discriminate if they once accepted the principle that one industry, because of its economic position, its political clout or the social consequences of its decline, should become a perpetual pensioner of the state? There is no answer to that question, and that should be our warning.

4.14 pm

Mr. Kevin Barron (Bother Valley)

I am pleased to speak in this debate, which will be short. I should like hon. Members to reflect on the fact that the Select Committee on Energy has had time away from the miners' strike to consider the arguments that were made at the time of the strike. It was with some disappointment that I left the Select Committee just as it was about to turn to that subject and to draw up the report that we are debating. I read with great interest one or two sections of the report that relate directly to that 12 months from March 1984 to March 1985 that will be remembered, perhaps for ever, or while there is a British mining industry.

I should like to examine the conclusions of the report about things that happened during that strike. The first matter is the colliery review procedure. I am sure that many people will know that trade unions in the mining industry argued that that procedure should have been introduced before the strike. The strike was sparked off at a colliery in south Yorkshire in the constituency of my hon. Friend the Member for Wentworth (Mr. Hardy). Hon. Members will be aware that if the review procedure had been in place the strike might never have happened.

During the strike, a colliery review procedure was introduced and the trade unions said that they did not believe it went all the way towards settling the problems in mining communities that were threatened by closure. This report says little different from what the unions said then. If the case that British Coal put throughout the strike was as good as the Coal Board said it was, then by now, away from the emotion of that strike and what was happening in the British coalfields, we should be able to say that one side was right and the other side was wrong.

The report says that due weight should be given to decisions. Two colliery group procedural reports on two working collieries, Bates colliery in Northumberland and Cadeby colliery in south Yorkshire, have found that those coal mines should have remained open. However, the colliery review procedure did not give that due weight before and during the strike.

The other interesting sector of this report is in relation to what should happen about closures. The hon. Member for Havant (Sir I. Lloyd) mentioned two things that had struck him when his Committee was taking evidence. One of them was about what happens at the coal face. He said that many members of the Committee saw for the first time working conditions underground. I should like to pull the memories of hon. Members back to the phrase that the hon. Gentleman used. He spoke of the despair in the British coalfields about the decline in the industry and the scars created by that decline. That is certainly not new and has not happened just since 1984. Perhaps one of the major causes of the miners' strike was that nothing was put in the place of coal mines that were closed.

Government Members have spoken many times since the strike about the decline in the coalfields, but the Government have done little to bring jobs to those areas. British Coal Enterprise Ltd. is expanding and I am pleased about that, but a very small number of jobs are being created to replace the ones that have been lost, even in the last two years. One of the most interesting parts of the report is its references to the economic decisions that British Coal has to take before closing a coal mine.

Social cost is the nub of what the miners' strike was about. Mining communities have been arguing about this not just for one or two years, or since the strike, but for decades. They argue about the economic consequences of colliery closures and about how decisions are reached. I am pleased that the Select Committee decided to look into this in some detail. The Committee concluded that social costs should be part and parcel of colliery closures in the colliery review procedure, and should be a major part of the economic equation when deciding whether mines should be closed. I would have liked to see the Committee go further than that, but even that is welcome. However, at least the Committee looked into the matter.

In paragraph 131, the report says: although BC should be allowed to continue making decisions on pit closures on commercial grounds after a thorough and comprehensive review of the decision with other interested bodies, this should be done in the closest consultation with Government departments. If the macroeconomic and social disbenefits of the policies of the management of a strategic industry like coal outweigh the benefits to society of those policies, then it is the job of government to right the balance by fiscal or other means.

It is my contention that that has never been the practice. That is why we had the miners' strike, which was all about the gap that is left when coal mines are closed. It was a lot easier in the 1960s, when employment prospects were so much better. At that time, people were not worried about redundancy or lack of job prospects. However, in the 1980s—especially the past eight years under this Government—there has been a massive increase in unemployment and obviously a decrease in job opportunities, especially for young people. Under those circumstances, it is part and parcel that any decisions on closures should be taken in consultation with Government Departments. I am afraid that the Committee's recommendation is not as strong as I had hoped.

Paragraph 133 of the report states: the board must recognise the special vulnerability of mining communities which we outlined in the introduction of this report, and must take local authorities into account. British Coal was a massive ratepayer to my local authority. It put tens of thousands of pounds into the local authority each year. The rundown of the coal mining industry in south Yorkshire, together with the accumulated cut in rate support grant, has meant that the local authority had to cut services in many areas. Thus the rundown of the coal mines has had an effect not just on coal mining families but on everyone throughout the community. That should be taken into account.

The Select Committee recommends that a special ministerial Cabinet Committee be set up and charged with this task-cabinet committees have been set up for many less urgent tasks in the past". The task in question is the rundown of the British coal mining industry and its effect on regions and communities. I believe that that is one of the major conclusions from the report. The rundown of the industry affects the lives of thousands of people who work in the coal mines or who live in coal mining areas but are not directly employed in the mines. I hope that the Minister will spend a few minutes discussing that recommendation.

I do not intend to discuss the work practices in America. Those practices have been the subject of ample discussion in the House and in the Standing Committee on the Coal Industry Act of which I was a member. One of the most urgent matters for consideration relates to the new grant for coal conversion schemes. That grant is supposed to finish in April this year. The scheme represented a lifeline to the coal industry because it created new markets for coal, especially in industry.

The sad part about the ending of the scheme is that the grant has never been made available to the public sector. Paragraph 44 of the report contains an important recommendation: not only … that the Government reconsider its policy of discontinuing the coal firing grant, but that the scheme should be extended to the public sector so that hospitals, schools, swimming pools and other potential coal users can he aided in converting their old boiler stock to burning British coal. A great deal of research has been carried out at Stoke Orchard by British Coal, as well as by the manufacturers of boiler equipment to ensure that coal is clean burn and easily usable and also to improve storage facilities. As a result, less work is involved in keeping the boilers going. The Government's failure to extend the scheme to the public sector is a sad judgment on the Coal Board and those in the industry who have been working to perfect the use of coal in boilers. I hope that the Minister will tell us what will happen in April.

Many hon. Members, on both sides of the House, believe that it is wrong to discontinue the grant on the basis of the recent drop in oil prices. Such a position may alter. Although I accept that the take-up of coal has reduced because of the oil price drop, to discontinue the coal-firing grant to all sectors is a disservice to the community. I hope that the Minister will consider the recommendations in the report.

I do not wish to go into great detail on the Select Committee report as I believe that other hon. Members will have the opportunity to discuss the different aspects of it. It is a wide-ranging report—indeed, we could talk all day about it.

The most important thing that we must do is to look after the well-being of the coal communities. That care has not been given for many years. It behoves us all to take cognisance of the paragraphs that I have mentioned—they are not as strongly worded as I would have liked—and to ensure that a Cabinet Committee or something similar is set up. I hope that such a Committee offers not merely words to the communities but action and grants to create job opportunities. Those opportunities are badly needed throughout British coalfields.

4.25 pm

Mr. Andy Stewart (Sherwood)

I could not miss the opportunity to pay tribute to all those who work in the coal industry for achieving present productivity records that would have been considered unobtainable only 12 months ago.

The productivity increase of 23 per cent. in the past year is unmatched by any other industry, giving us unprecedented national levels of production, at over 3.68 tonnes per man shift. In my constituency of Sherwood, a productivity level of 5 tonnes per man shift has been reached. Those levels meet the objectives of the Select Committee report. The results ensure that the operating costs for this year will be 20 per cent. lower, in real terms, than they were before the damaging industrial dispute. They give us a guarantee of long-term success in the future.

Only last week, the chairman of British Coal announced that we are now the lowest cost producers in Western Europe, and that West Germany is our nearest rival with 75 per cent. higher costs. The Coal Board has now recognised the need for competitive prices in relation to other energy suppliers. Therefore, it has reduced the cost of coal to the Central Electricity Generating Board by £4 per tonne. That has cut its sales realisation by £400 million, but it has meant that industrial manufacturers have found that their energy unit costs will be frozen once again. That will give manufacturers the opportunity to be successful against their international competitors.

British Coal hopes to contain its loss this year to £300 million. That shows that, without the dramatic cuts in oil prices, British Coal would actually have shown an operational profit of £100 million this year. There is no doubt in my mind that oil prices will rise rather than remain at their current level for any considerable time. That ensures and endorses my optimism in the future of the coal industry.

Nine major industrial companies share my confidence, since in the space of eight months they will confirm their proposal to convert to coal. In the light of that, I ask my hon. Friend the Minister to reconsider the continuation of the 25 per cent. grant for conversions of coal boilers for industrial use. Perhaps he would be persuaded if he knew that the recent proposals by the nine industrial manufacturers will result in the security of 1,200 jobs in the coal industry and many more in other industries as the conversion to coal will result in £90 million investment in British-made boilers and plant technology.

In addition, British Coal has recently placed orders with British manufacturers for contracts to the value of £50 million, including £1.5 million for safety boots and shoes. On my recent visit to Bilston Glen in the constituency of the hon. Member for Midlothian (Mr. Eadie) I discovered that Scottish boots are better than those issued in Nottinghamshire. If we had better boots, I wonder whether our productivity would rise even further.

We must not forget that industry is not the only sector to benefit from lower costs. In the weeks of severe weather during the winter, much concern was voiced for our elderly citizens, and it is important to note that frozen electricity prices will give much benefit to them as well as to other private consumers.

The National Health Service will also find the current prices advantageous, since British Coal is to continue to supply some 200 NHS hospitals. Energy requirements are high and it is vital that there is economy of use and strict cost control.

Mr. William O'Brien (Normanton)

Would the hon. Gentleman care to comment on the use of imported coal by the NHS in hospitals in Yorkshire rather than British coal, to which the hon. Gentleman has been referring?

Mr. Stewart

I cannot comment on what is happening in Yorkshire. I have a big enough job commenting on matters relating to my constituency, which is the largest coal producer in Britain. There are 200 hospitals in Britain using British coal. This will save the NHS well over £2 million, which will be used for other patient care. If Yorkshire hospitals are using foreign coal, it is for the hon. Members who represent those areas to raise the matter with my hon. Friend the Minister.

I have illustrated the benefits that we all enjoy as a result of a successful coal industry, not only for consumers but for those who work in British Coal. Their financial rewards are complemented by the knowledge that they are enhancing job opportunities for others in the community. I am convinced that, if at the end of the coal dispute a certain political persuasion had prevailed over the miners in this country, electricity prices today would be at least 30 per cent. higher, with all the serious repercussions to the economy that that involves. Today's Estimates would not only be higher but would be totally unacceptable to the House.

The miners have demonstrated the way forward for the industry into the next century via the actions of the Union of Democratic Mineworkers and recently by the actions of the Welsh miners, accepting in principle 18 coaling shifts a week. They recognise that the £5 billion of capital investment in the mines must be utilised effectively. However, there is concern that localised stoppages lost British Coal 700,000 tonnes of coal last year. Surely the example set by the UDM and the Welsh miners is the way forward.

I strongly repudiate the Select Committee's view that there is uncertain long-term demand and its belief that structural change towards higher productivity and lower costs have some way further to run. I recognise that much of the report was written before this new era of prosperity for the coal industry had arrived. Nevertheless, the Select Committee introduced an element of doubt, quite unnecessarily. I want my hon. Friend the Minister to show his confidence to those who have brought such benefits to this country by ensuring that the CEGB places its new coal-fired boilers in position as soon as possible. We have a site in Nottinghamshire; the planning permission needs only to he resurrected; the coal is there; the infrastructure is ready; and the UDM will make it work. We need positive action now.

Those who work in the coal indusry have so far recognised the personal commitment that my right hon. Friend the Secretary of State for Energy has given to the industry's future by his positive actions. The industry's excellent condition is a sign of his success. The future for coal is guaranteed not by wishful thinking but by the positive action of those who work in the industry. Scientific knowledge shows that coal will replace other finite fuels in years to come. We must ensure that the industry is ready to meet that demand. Today's Estimates show that British Coal is heading in the right direction.

4.34 pm

Mr. Malcolm Bruce (Gordon)

I think that hon. Members agree that, despite the difficulties facing the British coal industry, it is more robust than many people would have thought even a year ago. The Minister will not be surprised to hear that, although the alliance was rightly critical of the way in which the strike was conducted, it agrees that elements within the coalmining industry which were destructive to its future had to be defeated. They have been defeated and, therefore, the climate is much more favourable. We look to the Government to give British Coal the maximum following wind.

The Select Committee did a good job and, although there clearly were divisions, it managed to reflect in its report the genuine difficulties and dichotomy in the industry and the choices that must be made. Coal is a major resource for the United Kingdom and will be for generations to come. It is a strategic resource and therefore requires strategic forward planning. As the Select Committee acknowledged, it cannot simply be left to the whim of market forces. The Committee said that to differentiate between simple planning and simple market forces is, by definition, to take a simplistic view of the coal industry. The Committee did a good job in identifying that.

The Government face choices with serious implications which must be taken fully into account. The most immediate one is obviously the future of generating capacity in the United Kingdom. Recently, the House debated the possibility of building Sizewell B. It would be foolish in the context of this debate to suggest that the building of Sizewell B and of a range of PWRs, which is clearly what the CEGB wants, will not have significant effects on the coal industry, just as any commitment to pull back nuclear capacity would have significant implications, in the other direction, for the coal industry. As the Committee rightly pointed out, this action cannot be taken in the short term because the industry cannot respond in the short term to such changes.

The circumstances and competitiveness of coal have changed substantially in recent months. Of course, this is only a short-term change—we do not know the longterm implications. Simple economics suggest that coal as a source of generating capacity looks very much more competitive than it did six or 12 months ago. The coal versus nuclear debate is not entirely realistic. I think that most hon. Members recognise that, even if the emphasis shifts, there will be a significant nuclear capacity and a coal-burn capacity for a long time to come. It is not clear what the real costs will be. The nuclear industry must take on board many significant changes concerning safety, which could seriously affect its costs. By contrast, the coal industry must take on board environmental protection from flue pollution, and costs are associated with that.

Reference has been made to the world market for coal, but the House should treat that with a little caution. The concept of a world market for coal is misleading. I understand that only 4 per cent. of world steam coal is traded and that, in polite parlance, this is known as overflow coal. Many of us would regard it as dumped coal. That is not a realistic point. But the comparative costs of producing the coal, most of which is traded domestically rather than internationally, are realistic.

I tried to find out from British Coal the extent to which it thought that it was faced with unfair competition. Although it was aware that certain countries such as South Africa and South America were said to be unfair—I have strong reservations for political reasons about whether we should trade in coal with South Africa—British Coal believed that there was insufficient evidence to be satisfied that competition was fair in regard to Polish coal. Poland is desperate for foreign currency and we cannot be confident that the price of Polish coal reflects the cost of its production. British Coal believes that in that context it is subject to unfair competition. The Government should investigate that to the extent that it is possible.

The other problem that affects coal and other energy commodities is the exchange rate. It was pointed out to me that the change in the value of the pound in recent months has affected adversely—by £3 a tonne—the competitiveness of British Coal. Given that coal is priced in dollars, the coal industry regards an exchange rate of about $1.40 as more congenial than the rate for the last few months.

As an aside—but an important aside because Ministers know that my colleagues and I have made the point frequently—I suggest that the argument that we cannot build a significant number of power stations based on too great a dependence on one fuel should be countered by moving much more rapidly into alternative energy sources.

I draw to the Minister's attention a report from the British Wind Energy Association. No doubt the Minister has seen it because it came out at the end of January. It claims that the experience of wind energy, which regrettably has been used more outside this country, particularly in California, than inside it, has proved that it is as cheap, if not cheaper, than other forms of power generation. The cost is as low as 2p per unit compared with 3p for most other forms of energy. As much of the technology associated with wind energy is British, we should he going further and faster in that direction.

Another sphere in which the coal industry needs to improve its competitiveness, and where the Government have a role to try to ensure that, is research into new methods of coal combustion. Clearly there is potential there. Benefits are being achieved but more resources could produce greater benefits faster. That would alter substantially the ability of the coal industry to compete. Given its constrained resources and its deficit financing, there is evidence that that area is underfunded.

The hon. Member for Rother Valley (Mr. Barron) referred to the phasing out of allowances for conversion to coal which the Government are suspending in June. The House should ask why this is so, what will follow and whether the Government are prepared to consicler extending the scheme or introducing an alternative scheme which would extend to the public sector the option for conversion. Paragraph 44 of the report refers specifically to that and is worthy of being put on the record. It states: We not only recommend that the Government reconsider its policy of discontinuing the coal firing grant, but that the scheme should be extended to the public sector". I ask the Minister to address himself to that in his reply. It would help the coal industry significantly and would be a legitimate way of giving an invigorated coal industry more help when it most needs it. It would also benefit the users and consumers of energy.

The Select Committee recognises, and I think the Government recognise, that our coal resources should be accepted as a strategic long-term asset which will require Government involvement at least for the time being. The House may be divided about how long that involvement should continue, but Government responsibility is clear. They must ensure that long-term considerations triumph over short-term pressures and that the coal industry is adequately funded. They have a responsibility to coalfield communities which are facing such painful readjustments. Many such communities need. substantial investment to improve the environment and to be promoted as attractive areas. The dereliction of many of these areas does not make them attractive for alternative investment and they need resources to enable them to respond.

The House is pleased that there is a more positive frame of mind and a more positive attitude within the coal industry. It believes that the Government have a duty to give the coal industry proper and adequate support and to recognise that, whatever their medium to long-term objectives, right now they must give coal a realistic and positive chance to compete effectively and to provide the nation with the proper energy mix which it deserves and expects.

4.45 pm

Mr. Peter Rost (Erewash)

I enjoyed the constructive contribution by the hon. Member for Gordon (Mr. Bruce). I agree with much of what he said. I was surprised to hear my hon. Friend the Member for Sherwood (Mr. Stewart) say that our report perhaps painted too pessimistic a picture of the future market for coal. I suggest to him that he should reconsider the report because there is a great deal more in the small print than the media have picked out.

We made a detailed analysis and took a great deal of evidence about the future range of the market. My conclusion was that we drew an optimistic picture of the future of the British coal industry, provided that it accepts a more realistic market climate and provided that the enormous progress in greater efficiency continues. That more realistic assessment of the industry came through strongly in the report. We took account of the latest developments and found them most encouraging. We acknowledged the success of the industry, the fact that management was able to manage, and the more constructive support from the miners themselves.

Certainly we acknowledged in the report the long-term importance of the coal industry. Indeed, if anything, we over-emphasised it, in that we believed that our coal resources have not been fully exploited and that the coal industry has not had the opportunity to develop as some of us believe it could have developed. The industry has not made the contribution to the economy or benefited consumers or those who work in it to the full extent of its potential. That was why as part of the inquiry we examined the structure of the industry. For example, we considered whether it was time to look again at the statutory constraints of the original nationalisation legislation passed in 1946. We came to some conclusions about that.

I hold the strong view that the coal industry need not necessarily and exclusively be within the nationalised sector. I support the main recommendation of the Select Committee that for the immediate future the industry should stay within the nationalised sector, but that does not mean that we should not at the same time stimulate and encourage the evolution and development of a private sector coal industry. The majority view was that the nationalised sector would benefit from the development of a little more competition from the private sector and from the participation, on a partnership basis, of private investment.

I maintain that if the Government's policy is to promote competition, private enterprise, employee share ownership, incentives and motivation, and to improve industrial relations—which I accept has been successfully pursued by the Government in the rest of its privatisation programme—surely, if that policy applies to Jaguar, British Aerospace, British Airways, British Telecom and so on, it should apply to the coal industry. The privatised coal and gas industries are successful. The electricity industry is no longer a state monopoly. The Energy Act 1983 freed the private sector to develop in competition with the nationalised industry. Why has British Gas been privatised? It is because the Government believe that that privatised industry, as with other privatised industries, will better serve the consumer, will give a better deal to those who work in the industry and will benefit the economy. Let us at least hope that my hon. Friend the Under-Secretary of State will look seriously at the constructive proposals in the report about restructuring the statutory framework.

In particular, the Select Committee cannot understand why the licensing of the private sector coal industry—such as it is allowed to exist—should continue to be under the patronage of British Coal. We believe that it should be within the power of the Department of Energy to issue licences, in the same way that it issues licences to the oil and gas industries. Moreover, we cannot see how one can justify the limited private sector that is allowed to exist having to pay royalties to British Coal. If royalties are to be paid, they should be paid by all coal producers—nationalised and private—to the Treasury. The limited and restrained private sector should not, in addition to having to obtain a licence from British Coal, have to pay royalties to its main monopoly competitor. The majority recommended that the present restrictions on private operators should be lifted.

I shall give one example of my experience. I apologise to hon. Members who may have heard it before, but it does not hurt to repeat it. One or two of the Select Committee members visited a private deep mine in Stoke. The company wants to operate two or three shifts in 24 hours to make the operation more viable. It cannot operate more than one shift because it is restricted to employing only 30 people. It is not viable to operate more than one shift in that mine unless the company is allowed to employ more than 30 miners. Meanwhile, ex-British Coal miners have been made redundant. They are willing and able and want jobs in the private sector, but cannot he employed. Thirty or 60 potential jobs are going begging in that area. Extra coal production at lower cost is being frustrated. That is just one of many examples. It seems to be economic Luddism of the sort that one would perhaps expect the Labour party to continue to encourage.

I hope that my hon. Friends will agree that that is not the sort of policy that we would expect this Government, of all Governments, to continue to promote. The Government are doing nearly all that they can to encourage private enterprise, the growth of the economy and job creation. That is just one example of how, if restraints were removed, the private sector could expand—modestly but constructively—and provide some competition to British Coal. It would help the consumer because it would offer an alternative source of production and would certainly help to lower coal prices.

There is a further example. The Select Committee recommended that if the British coal industry is to remain nationalised, we must encourage private investment. Again, it seems illogical for this Government, of all Governments, to continue to support a situation in which private British mining expertise must go abroad to invest in the coal industry because our legislation prohibits it from participating in the British coal industry. However, we know that, despite the enormous resources that the Government are injecting and have injected for new capital investment in the nationalised industry, it is still not enough and more could be provided.

New coal fields could be developed more quickly and more economically if the private sector—coal mining enterprises that have expertise that, at the moment, they must use abroad to create jobs and wealth abroad—could contribute to the British coal industry. I urge my hon. Friend the Under-Secretary of State to take that recommendation seriously.

No hon. Member—least of all myself—would argue other than that the coal industry is absolutely central to our future energy means. Indeed, we have the only major coal industry in Western Europe. We could play a bigger role in exporting coal to European countries, as we did many years ago, if we could only make our industry more competitive. We could expand production. It is shortsighted to hold back the industry by restraining it exclusively within the nationalised monopoly.

Let us remove some of the restraints, liberate the industry, let private enterprise play a partnership role, and let the private sector develop alongside the nationalised industry so that we can genuinely reap some of the advantages that this enormous resource could provide. The extra competition that it could create would help energy prices, the industry, the consumer, and, therefore, the whole economy. It would certainly benefit those who work in the industry. They would have an alternative source of employment. It would help the viability of jobs in the longer term because the industry would be given an opportunity to expand and to meet its full potential.

4.57 pm

Mr. Dennis Skinner (Bolsover)

I listened carefully to the speech by the hon. Member for Havant (Sir I. Lloyd), who introduced the report of the Select Committee. He began his remarks by stating that we cannot have a coal mining industry that has to be subsidised. He used words such as gargantuan. He gave the clear impression that the coal industry, of all industries in Britain, is using taxpayers' money. It comes very ill from Tories to attack the coal mining industry for being subsidised to some degree when, only in the past few weeks, they wrote off £750 million for the Rover Group. Hon. Members must not get me wrong. I am not against the write-off of the £750 million. I know that it means jobs in the midlands and in other parts of the British Isles. I know that workers risk being thrown on the scrap heap. I know that they must call at the employment exchange and the jobcentre and that they must receive taxpayers' money from another source. It has never made sense to me to say, "Get rid of the subsidies. We want more people on the dole." Tories do not say that, but that is roughly what they are talking about. It is monetarism gone mad.

I want to dispose of the argument that we should assume in this debate that only the mining industry has had Government subsidies since the end of the second world war. When the hon. Member for Havant was supporting the right hon. Member for Old Bexley and Sidcup (Mr. Heath)— I do not think that he supports him now—when he was the Prime Minister of the day, many hon. Members will recall that one day the right hon. Gentleman came along to the House and said, "Oh, by the way"—I do not think he used quite these words but this is what he meant— "Rolls-Royce has gone bankrupt. I'm afraid we shall have to subsidise it, chaps." The Tories trooped through the Lobby to support the right hon. Gentleman. Some of them tried to escape. Some of the purists said, "I'm a monetarist. I'll have nowt to do with this." So some of them disappeared—but not many.

We on these Benches stayed behind that night because we thought that that was not a bad idea. A lot of jobs were affected in Derby, the midlands, Scotland and north-west Lancashire. We said that we would save those jobs, because we believed that if private enterprise could not do the job we should have to get Rolls-Royce into the public sector—and sharp. So let us have none of that nonsense about only the mining industry being subsidised.

Not so long ago the Government handed over roughly £5 million to Murdoch of the Wapping press so that he could go down into the enterprise zone. Was that a proper use of taxpayers' money? Was it right to hand over £5 million to Murdoch, who has made £50 million out of The Sun and invested it in Hollywood films? Was it right to hand over taxpayers' money to Murdoch to slag off the Government with the News of the World publication about Peter Archer and Victoria station? It is bizarre, but it was taxpayers' money. [Interruption.] I apologise; I should have said Jeffrey Archer. Let us get that straight.

Is it not bizarre to say that we cannot subsidise people's jobs? Fancy Members of Parliament saying that we cannot subsidise people's jobs. This place would close down tomorrow without taxpayers' money. The Prime Minister often refers to the next door neighbour as the one we collect the taxes from. Not so long ago on television she said, "Remember that the taxpayer is your next door neighbour." I wonder what would be the result of one of those clever opinion polls— or perhaps a real opinion poll— if people were asked, "Who do you think you ought to subsidise— miners or MPs?" It would be dodgy.

Sir Ian Lloyd

The hon. Gentleman would be out of a job.

Mr. Skinner

The hon. Gentleman says that I would be out of a job. The reason I understand his argument is because I do not want miners. steel workers, railwaymen, social workers and the hundreds of thousands who ought to be working in local government to be sacked. So let us have no more of that nonsense. The hon. Gentleman was one of those who cheered his Front Bench when they handed over £100 million to save Johnson Matthey Bankers—a big, fat subsidy. There has been no Select Committee. No hon. Member has got up and said, "Let's have a Select Committee to see whether the £100 million that was handed over to Johnson Matthey Bankers was well spent." No, of course not. There was no Select Committee on that, or even on the tax relief that the banks get.

Why are the Tories not complaining? The National Westminster Bank will shortly produce profits amounting to more than £1 billion, to be followed by Barclays Bank. They are friends. When I was looking at the small print I wondered how they had made all that money. It says that £160 million is being written off the National Westminster Bank's accounts because it is not going to pay tax; it has been put down to bad debts. Bad debts? So the British taxpayer— the next door neighbour that the Prime Minister talks about—is ladling out £160 million to the National Westminster Bank so that it can write off bad debts in this country and abroad.

If it had not been a Scottish Bill that was discussed yesterday, I should have raised the issue on that debtors Bill. But that is enough of that. Let us have no more talk about subsidies being paid only to the coal industry, especially when the Prime Minister has caused the cost of running 10 Downing Street to rise from £1.3 million in 1979 to more than £5 million now. She can talk about subsidies! She has caused the running costs of 10 Downing street to rise by up to 300 per cent.

Mr. Gerald Howarth (Cannock and Burntwood)

Will the hon. Gentleman give way?

Mr. Skinner

Only very briefly, because my hon. Friends want to speak.

Mr. Howarth

The hon. Gentleman fails to point out that in respect of the accounts for No. 10 there is a new accounting practice that includes counting as the costs of No. 10 the costs of other Departments. That was not formerly the case.

Mr. Skinner

The hon. Gentleman means that the Prime Minister became so wary of these other Departments that she decided to have a foreign affairs adviser and another kind of adviser in No. 10. Why? She also has Bernard Ingham and his staff there, full time. The result is that No. 10 is costing the taxpayer—the next door neighbour taxpayer—300 per cent. more under the Prime Minister's administration than it cost under Uncle Jim Callaghan's—the man who has a book coming out very shortly, they tell me, but I do not want to advertise that fact.

I see that the Select Committee has dealt with the effects of nuclear power and with the side issue of a smaller work force and less production in the mining industry. Those who believe that the way forward is nuclear power must bear in mind that the cost is met by the taxpayer via the Ministry of Defence, but that cost is never calculated. I know that my hon. Friends will take up with zeal the point that the next Select Committee on Energy should consider how much taxpayers' money is going into the nuclear power industry.

I am pleased that my hon. Friends who served on the Select Committee divided the Committee on this issue. Many hon. Members know that I am not keen on Select Committees. They tend to be very sloppy, consensus-type Committees. However, my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) decided, along with his two colleagues, to oppose certain measures and recommendations. I applaud them for doing so. They managed to drag themselves away from the idea that they are all pals together, waltzing down the yellow brick road.

The Select Committee said that the coal mining industry cannot be privatised until the year 2000. I thought that that was rather surprising, when one considers some of the hon. Members who serve on the Select Committee. Therefore, I wondered whether it was possible that some of them had mining experience and whether they had been able to influence the Committee to a far greater degree than is usual. I agree with my hon. Friends that there should be no privatisation. That is why the Committee was divided. We have only to consider what happened in the mining industry before the war when it was privatised and to listen to the old people who are still around. They would tell us.

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

And so would some hon. Members.

Mr. Skinner

My hon. Friend says that some hon. Members would also be able to tell that story. I went into the industry in 1949, after nationalisation. They could tell us what happened under privatisation. The safety standards were abysmal.

Mr. Lofthouse

They were shocking.

Mr. Skinner

My hon. Friend says that they were shocking. He went through it. The owners did not care about life and limb. That is what would happen in future if the mines were privatised. We want no more nonsense about privatisation being the salvation of the mining industry, because it would result in more deaths and injuries than in any other British industry.

What else would it do? Those who have worked in the pits know the answer. The owners would immediately say, "Here's a nice easy seam, only 300 yards down." But looking at a coal mine a real planner would say, "If we are to maximise the output in this coal mine, we must think about the seam that is 400 yards down, and the next one that is 800 yards down, if we are sensibly to extract from the earth what has lain there for thousands of years."

Privatisation would mean easy profit and easy killings. The attitude would be, "Let us mine what we can get hold of first and to hell with all the rest of it." There would be exploitation, but a lot of coal would be lost for ever. Safety standards would fall and easy seams would be taken on.

As my hon. Friends know, we in the mining industry have had to fight for compensation for colleagues who have been injured and for widows of colleagues who have been killed. One can just imagine how, in this new, privatised, monetarist world, attempts would be made to get rid of trade unions—those which have represented the miners over the years— altogether. Imagine what paradise that would be for the lawyers—

Mr. Michael Brown (Brigg and Cleethorpes)

Will the hon. Gentleman give way?

Mr. Skinner

No. My hon. Friends must have a chance to speak because they served on the Committee.

If the mining industry were privatised, there would be more casualties and longer hours—

Mr. Brown

rose—

Mr. Skinner

The hon. Gentleman threatened to pack in his seat if it was decided to go ahead with the dumping of nuclear waste on his back doorstep. The threat is still hanging over his constituency, but he is still here. I would be more inclined to give way to him if he showed a bit of principle for a change but, like his hon. Friends, he does not.

There would be longer hours in the new privatised mining world. What else would ensue? More people would be on the dole, and more youngsters on tin-pot youth training and other Thatcher-devised slave labour schemes. In addition, more South African coal would pour into the country to service hospitals. Indeed, some South African coal is already going into Nottinghamshire and depriving Nottinghamshire miners of their jobs. [Interruption.] Some members of the UDM have said that that is happening, and, incredibly enough, they supported a motion that I tabled a few weeks ago. South African coal would be cheap to begin with, but once South Africa had seized the coal market it would call the price, as did the oil industry in the 1950s and 1960s. There would be no more nuclear power.

The report also recommends the allocation of an additional £166 million for the coal mining industry. The hon. Member for Havant said that that was a gargantuan amount, but I do not believe that. I would support the proposals more readily if I knew that more money was to be allocated on top of that to ensure that those who live in Coal Board houses and who are being preyed on by the speculators could live in better conditions. More money should be allocated to further the cause of those of us in this House who since 1970 have represented the pre-1968 miners who are still doing without concessionary coal. Why does not the Minister get stuck into that? There are not many left in the country; a few in Lancashire, a few in Derbyshire and a few in other coalfields. We should make sure that those people— widows and ex-miners who were made redundant—are treated the same as the rest.

There should be more money to compensate for subsidence, as my hon. Friend the Member for Pontefract and Castleford said earlier. In addition, there should be action on the issue of the 450 sacked miners. I should like to think that we were going to support in the Lobby today a decision that those 450 miners should get their jobs back, as they undoubtedly will under the next Labour Government.

Mr. Bruce

It will be a long wait.

Mr. Skinner

The hon. Gentleman comes from Scotland. I have been looking at the polls and statistics for Scotland, and I can tell him that if he does not watch his back, the speach he made today may be his last speech. My information is that Labour is riding very high indeed in Scotland. The hon. Gentleman is a Liberal, and I note that his SDP colleagues have not graced us with their presence. I think that I know why. The SDP is not very keen on getting rid of nuclear power or on the hon. Gentleman's ideas about mining as expressed in his speech. In fact, they are not very keen on the Liberals. Members of the SDP are using the Liberals, and when they have used them they will dump them, just as the Tories want to dump the miners. The hon. Gentleman has plenty on his own plate, and he should deal with that before talking about the Labour party.

As my hon. Friends have said, unless some changes are made, our union representatives will have to go to court. The problem stems from the Government's sequestration policy. They say that they are at arm's length with the courts, but I do not believe that.

I want the Minister to bear in mind what the Lord Chancellor said last week about another issue. Unimar, one of the firms involved in Lloyds, cheated more than 1,000 people— nearly all of them Tories—out of their money on the insurance market. The Lord Chancellor—the top Tory in the other place— said, "We cannot really pursue this very complicated and complex financial matter." Millions of pounds were involved.

That was one of the biggest scandals in the City during the past 10 years. More than 1,000 people were swindled out of their money, but there is to be no sequestration. There is to be no hunting or hounding or rushing to Switzerland, because the Lord Chancellor believes that it would cost too much time and money to pursue the matter. This wonderful British justice of ours is to allow all those in Unimar and PCW to escape. They will not get their collars felt, or be hauled before the courts. If the Government can do that for City crooks, who represent the underbelly of the Tory party, they should stop this nonsense of dragging the NUM through the courts.

We have heard today about soaring productivity, a wonderful golden future for the mining industry and conciliation. If those words mean anything at all, the Minister and his right hon. Friends should stop their witch hunt of the NUM.

5.17 pm

Mr. Gerald Howarth (Cannock and Burntwood)

We have been entertained by a good rant from the hon. Member for Bolsover (Mr. Skinner), who has clearly been practising in the Tea Room.

Mr. Skinner

Not with jackboots on.

Mr. Howarth

The hon. Gentleman does his practice with jackboots outside the Chamber. Clearly, the Tea Room provides the Labour party with an alternative to the hustings. They cannot face the people; they can only fight one another.

It will come as interesting news to the Leader of the Opposition that the hon. Member for Bolsover has made a most compelling case that, far from deserting manufacturing industry in this country, the Conservative Government have littered taxpayers' money throughout manufacturing industry. That was the point that he made. Perhaps he had better rush round to Miss Patricia Hewitt's office, or somewhere else where they specialise in leaking letters, and have a few words. The Leader of the Opposition should be aware that it is no good berating this Government for not supporting manufacturing industry, because the hon. Gentleman has produced a veritable catalogue—

Mr. Robin Squire (Hornchurch)

A cornucopia.

Mr. Howarth

As my hon. Friend says, we have heard a cornucopia of examples illustrating the extensive support given by the Government to manufacturing industry.

The hon. Member for Bolsover was ranting, rather than delivering a speech, so let me tell him now that the figure for which he was searching was £2,900 million. That is the amount of money that has been diverted from the taxpayer to British industry in respect of the aerospace, steelmaking, shipbuilding and vehicle industries. Later this afternoon we shall no doubt debate the excellent support that Her Majesty's Government have given to the British vehicle industry.

Mr. O'Brien

I am grateful to the hon. Gentleman for making that point. However, can he explain how much of that £2.9 billion has been spent in the coalfield community areas, because that is what the report is about? Can the hon. Gentleman explain how much has been spent in west Yorkshire to replace the coal industry that has been devastated by the Government?

Mr. Howarth

I am not here this afternoon to be responsible for west Yorkshire. However, I advise the hon. Gentleman that the Government have made substantial contributions, in one form or another, to alleviate the distress—

Mr. O'Brien

In the south.

Mr. Howarth

British Coal Enterprise Ltd., with capital of £40 million at its disposal, is doing a fantastic job to try to regenerate jobs. Nobody underestimates the difficulty in those areas where there have been major shutdowns in coal capacity. The hon. Gentleman should explain and be aware of the fact that the coal industry is not alone in having to undergo restructuring. It has had to take place throughout British industry, largely as a result of the post-war conspiracy between previous Labour Governments and the trade unions, which has prevented the introduction of new technology and the elimination of overmanning that has so beset British industry since the war. It is only now that those structural changes are taking place.

If the hon. Gentleman comes to the west midlands, he will see that the area has suffered more than anywhere else. It has gone from the top of the earnings league to the bottom, but nobody in the west midlands complains. Instead, people say, "We recognise that we have a problem, but we are tackling it and, what is more, we are coming through it." The good news about this report is that the coal industry itself is tackling the problems. I shall discuss that later.

I am sorry that the hon. Member for Bolsover cannot take any more of my speech. He is not in his usual seat. I am delighted that he has moved to higher ground, next to the seat occupied by his right hon. Friend the Member for Cardiff, South and Penarth (Mr. Callaghan), a former Prime Minister, who will undoubtedly be a friend of his in the next general election. I am glad to see that the hon. Gentleman has not deserted us, but will remain to contribute to our discussions because he asked for more money for the coal industry. I find it extremely odd—I am sure that I am not alone among my hon. Friends in finding it so—that he wants more money for the coal industry. He has been a Member of the House for a long time. In those ancient, dim and distant days when there was a Labour Government—I cannot remember it but I believe that there was a Labour Government at one stage—the hon. Gentleman supported them.

Perhaps the hon. Gentleman can explain, not only to his constituents but to the country as a whole, why there were more pit closures when there was a Labour Government and why more people were put out of work in the coal industry when the Labour party was in office. Perhaps he could also advise us why the terms of compensation for redundant mineworkers were so poor. The answer is that Opposition Members are a bunch of hypocrites and that when in government they did not do half the job that this Government have done.

Mr. Barron

rose—

Mr. Howarth

I shall give way to the hon. Gentleman in a moment. I continue by reminding the House—I am sure that hon. Members need to be reminded of this, after what they have heard this afternoon from Opposition Members—of the immense turnaround that there has been, thanks to the leadership of my hon. Friend the Under-Secretary and the Government.

Mr. Barron

I do not know whether the hon. Gentleman was present earlier when I spoke. However, I should like to say briefly that, when the mining industry went through restructuring because of the increase in the import of oil because it was so cheap abroad, there was a Government scheme for 26 weeks training for those who left the industry. Under the National Coal Board's enterprise scheme set up in the coal strike, three weeks' training is provided. For most of that time unemployment in coal mining areas was below 3 per cent. It is much higher now; the hon. Gentleman should know that before coming to these debates.

Mr. Howarth

I was here for the hon. Gentleman's speech and I do not disagree with much of what he said.

I know that he makes strong representations on behalf of his constituents. I understand that he has been elevated to higher things and was unable to remain on the Committee. I am sure that the Committee was the poorer for the lack of his deliberations.

However, the hon. Gentleman has ignored the part played by British Coal Enterprise Ltd. to deal with the problems in the coalfield communities. As my hon. Friend the Member for Havant (Sir I. Lloyd) and others have said, it is not the responsibility of the coal industry to consider all the social consequences of its decisions. Of course it must take them into account, but it is there to run a business and it is the duty of Government to see where the commercial operation of a business so inflicts damage on local citizens that action needs to be taken. The Government have taken that action, and will continue to do so.

That seems to have disposed of the hon. Member for Bolsover, although I hope that he will come back and regale us with further comments.

Mr. Andy Stewart

Before my hon. Friend leaves the hon. Member for Bolsover (Mr. Skinner), I should like to say that he criticised people who receive subsidies, while his own brother is taking voluntary redundancy from the coal industry. Is not that taking a subsidy?

Mr. Skinner

He is a fireman.

Mr. Howarth

I am sure that the hon. Member for Bolsover will want to tell the House about that in his own time.

I move on, because I know that some hon. Members have not had a chance to speak yet who wish to do so. I start by congratulating my hon. Friend the Member for Havant and his Committee on producing an excellent report which, in my view, ranks alongside the 1983 Monopolies and Mergers Commission report as one of the great works on the coal industry—[Interruption.] If you think, Mr. Deputy Speaker, that I am only now embarking on my speech, I hope that you will—

Mr. Deputy Speaker (Mr. Harold Walker)

Order. The hon. Gentleman said that he was just starting his speech. I thought that he had been talking for nine minutes.

Mr. Howarth

I undertook to make a short speech but the hon. Member for Bolsover enticed me down an avenue which perhaps I should not have gone down. I hope that I have been able to put the record straight about some matters that would not otherwise have been dealt with.

One of the features of this Parliament is the fact that so many coal miners and mining communities are represented by Conservative Members. It is now often the case that the Conservative party speaks for the miner more than the Labour party does. I have every confidence that, after the next general election, that will continue to apply. That is not a reflection on individual Labour Members who work extremely hard in their constituencies. Indeed, there is a certain camaraderie among those of us who have an interest in the mining industry. Opposition Members speak as sincerely about their views of the industry as I do about mine. It is more a reflection of the present state of the Labour party, which no longer speaks for the English working man, or for the many miners who now seek to buy their own homes, or who have bought their own homes, and who have benefited from the Government's policies on the mining industry.

The first success of the Government's policies can be seen in investment. The hon. Member for Bolsover should listen to this. It is no good his making a speech and then not listening to what other hon. Members have to say. From 1974 to 1979, total investment in the industry by the previous Labour Government was £1.5 billion, whereas between 1979 and 1986 this Conservative Government invested no less than £5 billion. Nothing so demonstrates the commitment of this Conservative Government to the coal industry than the efforts by the Department of Energy during the past eight years. Investment in new pits is now running at more than £2 million every working day and we know that in Margam there is to be a new £90 million drift mine which I hope will come on stream soon.

Secondly, productivity has increased by no less than 50 per cent. since 1979. Each year under the Labour Government productivity fell, despite the fact that in 1974 in the much-heralded "Plan for Coal" the target was a 4 per cent. per annum growth each year. Therefore, productivity is increasing dramatically, so much so that we are now the lowest cost coal producer in western Europe. Nevertheless, there is further to go.

I draw attention to the remarks of the chairman of British Coal to the Coal Industry Society: Out-moded restraints such as the 1908 Hours of Work Act and the 40-year-old five-day week agreement mean that highly expensive equipment is only operating for a third of the maximum time available. This is in sharp contrast to the position in other highly capitalised industries such as chemicals and steel. It is greatly to the credit of the men in South Wales who have gone back on long-standing practices that they recognise that new investment will come only where there is a change in working practices to conform with those in other industries.

Thirdly, the Government should be given credit for the pay that miners now enjoy. It is much higher than it was under the Labour Government. Fourthly, and not least— I do not wish to be unduly divisive about this—the Government are to be given credit for standing firm in the face of industrial intimidation from the NUM. It was a tyranny and the Government did a great service to the country and indeed to the coal industry in standing firm against it.

I have no deep pits in my constituency and there have not been any for some time. My constituents work at the pits of Littleton, which is represented by my hon. Friend the Member for Staffordshire, South (Mr. Cormack), and Lea Hall, which is represented so ably by my hon. Friend the Member for Mid-Staffordshire (Mr. Heddle). The increase in productivity at Littleton has been 38 per cent. and at Lea Hall 24 per cent. Those figures compare with an average for the western area of 22 per cent. That is no mean achievement. At the same time, they have been able to reduce costs at Littleton by 16 per cent. and at Lea Hall by the same figure. The overall figure for the western area is 10 per cent. Output has increased by more than 20 per cent. at both pits. I am pleased to inform the Minister that Littleton colliery has just achieved a 1 million tonne per annum output for only the second time in 85 years. Output per man shift is averaging 3.44 tonnes, and in February 4.44 tonnes was achieved.

Most important, Littleton and Lea Hall are both profitable. The message to Opposition Members is that that is good news for the industry. My constituents are to be congratulated on their efforts, not only to withstand the strike, but to recover from it and produce those magnificent results. It is good news when men can see that, as a result of their efforts, it is not necessarly to dip into taxpayers' pockets, when they can say, "We can stand on our own feet. We are profitable. We are showing the way to recovery for the whole industry." It is a measure of the success of the industry in the western area that total output from its present 11 pits is approaching 10 million tonnes—just 1 million tonnes short of the output 12 years ago, when there were 24 pits. The western area is heading for a profit for the first time in 14 years.

I know that I have spoken for some time and I shall conclude by making two further points. I endorse the remarks made by my hon. Friend the Member for Erewash (Mr. Rost) about the need to introduce private sector involvement into the coal industry. There is nothing incompatible with congratulating miners in the nationalised British Coal on their achievement and welcoming the involvement of the private sector. Throughout industry, we have seen that private sector involvement and the move towards privatisation have had a galvanising effect on the work force. British Airways was a moribund, sleepy, nationalised state airline, losing £500 million, but now the work force is motivated to an extent which was unimaginable five years ago. It is greatly to their credit that the airline is now doing so well. I would like to see that ethos and esprit de corps introduced into the coal industry.

I hope that my hon. Friend the Minister will discard some of his caution, welcome the introduction of more private sector involvement and say that the way ahead for the coal industry must involve the maintenance of the highest standards, coupled with a determined and inexorable move towards privatisation in one way or another.

Subsidence affects all mining constituencies and is a major problem for British Coal. In paragraph 160 of its report, the Select Committee rightly states: British Coal currently pays some £90 million a year m repairs and compensation for all those affected … BC cannot plan sensibly either its finances or its mining developments with no idea of the size of the subsidence compensation payments for which it may be liable. In paragraph 161, the Committee recommends that BC should no longer be liable for subsidence caused by historic mining operations. I make a vehement plea to the Minister to take note of that. Whatever else he does in response to the report, I hope that he will feel able to act on that forthwith. He knows from my correspondence with him of the anguish of our constituents whose principal asset is their home which—they cannot mortgage to raise funds to invest in a business, to extend their property or for any other purpose that they have in mind because of the blight caused by the uncertainty of mining subsidence.

I thank my hon. Friend the Member for Havant (Sir I. Lloyd) for the lead that he has given on the coal industry. There is a long way to go, but the Government have done a magnificent job. If the Minister would tackle subsidence now and privatisation next month, that would be grand.

5.36 pm

Mr. Geoffrey Lofthouse (Pontefract and Castleford)

For many months I have had the privilege of being a member of the Energy Select Committee which produced this report. As the hon. Member for Havant (Sir I. Lloyd) said, we have spent many hours on it and have travelled many miles. Some of our travels have brought me great pleasure. I have seen Conservative colleagues visiting a coal mine probably for the first time and finding great difficulty reaching some of the coal faces. The House will appreciate the pleasure I had in Wales when I watched the hon. Member for Littleborough and Saddleworth (Mr. Dickens) get halfway through a coal face, but no further. He had to be dragged back. I do not know how they would get on on a 9-hour shift at a coal face which some of them are advocating. They would find great difficulty indeed.

Nevertheless, we have made an honest endeavour to produce a responsible report on the future of the coal mining industry. Some people believe that over the past few years the financing of the coal industry could be described as rigged. Hon. Members will recall that, following the fall of the Heath Government in 1974, the Conservative party set up a nationalised industry policy group chaired by the present Secretary of State for the Environment. The final report was leaked to The Economist in May 1978. Although most attention has been focused on the right hon. Gentleman's plans to defeat strikes in the coal industry, he also proposed two financial rules for nationalised firms.

In particular, the chief inspector said that "totally inflexible" rates of return should be set for the nationalised industries and that these rates should be adhered to even if whole businesses were to be closed down as a result. It is interesting that setting the totally inflexible rate of return of 12.2 per cent. on the Margam project in south Wales was used to force the south Wales miners to accept the concept of a six-day week for coal production at the Margam colliery. I do not think that anybody would refute that. The Government's rigid financial rules became enshrined in a series of coal industry Acts from 1980 onwards. They were reflected in the 1983 Monopolies and Mergers Commission report and were built into the financial objectives for the coal industry, agreed by Ian MacGregor in 1983.

Since 1979, the coal industry's finances have been progressively rigged to make its results appear worse year by year. By 1982, the NCB began making a loss for the first time since 1974. There are three major factors behind that loss. First, the costs of contracting the industry were being loaded back on the accounts—for example, the cost of past employees' pensions.

Secondly, the agreements with the CEGB, cutting the price of coal in real terms, were forced on the industry from 1979. By 1983, the price of coal sold to the CEGB was cut in real terms by £2.25 per tonne. That reduced revenue by more than £150 million a year by 1983. Thirdly, Government grants were taken out of the profit and loss account and added as a deficit payment to the end of the balance sheet, contrary to continuing practice in the private sector. The new agreement with the CEGB has meant the transfer of profits.

The latest agreement with the CEGB, backdated to April 1986, means a cut in the price of coal by a further £3.80 per tonne. Since 1979, therefore, the industry has lost revenue of £6 per tonne on coal sold to the electricity industry—or some £500 million a year. A further £100 million has been lost through knock-on price cuts in other coal markets. If that had not happened, instead of making a projected £300 million loss in 1986–87, the coal industry would be making £300 million profit. Had that been the case, how many pits that were closed because they were uneconomic would have been able to survive because they would have been economic?

Indeed, Sir Robert Haslam has acknowledged that a £300 million annual profit would make the industry fully viable and that it would be able to generate its own investment funds. Instead, the Coal Board had to set off another severe round of cost cutting in the industry to claw back half the loss of potential profit in the current year. Furthernore, he admits that the now notorious Wheeler plan has been drawn up to push the industry past a break-even position into full financial viability. In the chairman's own words, the board wants to remove outmoded restraints such as the 1908 Hours of Work Act and the 40-year-old five day week agreement.

The board wants to shed another 50,000 mining jobs over five years. If the Minister does not agree, he should say so when he winds up.

The Supplementary Estimates add £95 million to the external financing limit. The Government say that the EFL for the industry for 1986–87 was set at £730 million before the oil price collapse. What the Government really mean is that it was set before the new agreement with the CEGB was forced on the industry. As a result, the industry lost £400 million in revenue. The Government are now proposing to increase the EFL by £95 million. That would add further interest payment burdens to the coal industry.

By contrast, it was announced last week that the CEGB expected to make £750 million profit in 1986–87. It is interesting to note how the Financial Times, published on 4 March, interpreted that announcement. It stated: Thanks largely to last June's revised understanding with the British coal industry, the CEGB this year expects to make about £750m profits, after depreciation and before interest. On top of that creaming off of the coal industry's profits, the Chancellor announced in his autumn statement last November that the amount that the electricity supply industry in England and Wales would have to pay to the Government in 1987–88, through its negative EFL, would be increased by £237 million. For the first time, the electricity industry will make substantial corporation tax payments in 1989–90.

What is now known as the Ridley plan is being operated in top gear to cream off the wealth produced not only by the mining communities but by the electricity workers. It is operating at full throttle because this is an election year. However, electricity consumers have not received full benefits, as the Government pretend. Electricity prices for domestic consumers have merely been frozen, as this policy is aimed at raising Government revenue and destroying mining communities. Electricity prices were increased by 5 per cent. at the beginning of 1986–87. The later price reduction merely offsets that increase. The only real beneficiaries are the big business users of electricity, who have secured, collectively, a £50 million price cut.

Mr. Andy Stewart

And jobs.

Mr. Lofthouse

I am not disputing that. I welcome new jobs.

The Government might object that, if the new agreement had not reduced coal prices, the CEGB would have substituted oil or imported coal. That argument does not stand. Oil prices are so uncertain that Lord Marshall says that the CEGB does not intend to build any more oil-fired stations, and a huge oilburn by the CEGB would have lifted the international price of oil to such high levels that the policy would be counter-productive.

Secondly, as the Financial Times coal report demonstrated, in its evidence to the Energy Committee, imported coal is being sold at $10 per tonne, on average, less than its costs of production and transport. In other words, imported coal is being dumped at around £6 per tonne less than the price that it should have been sold at. At the same time, British Coal has been forced to cut its prices by £6 per tonne. If an import duty of £6 per tonne were placed on imported coal, the coal industry could be freed from the shackles of the CEGB agreement and it would be making a profit of £300 million.

To import massive volumes of coal is economic nonsense for other reasons. Huge balance of payment problems and large costs to the country will result from yet more pit closures, which will cost the economy and the Exchequer dear.

As to the Supplementary Estimate of £71.3 million for the redundant mineworkers payments scheme, the Government are proposing to add that figure to the provisions under the RMPS, because costs in 1986–87 are now expected to be much higher than the original estimate of £540 million. That is because 29,000 miners have been made redundant up to January 1987. The £1,800 million that was provided under the Coal Industry Act 1985 has been exhausted.

As a result of the huge increase in redundancies in 1986–87, the provision in the Coal Industry Act 1987 for the continuing costs of past redundancies will also be insufficient. The public expenditure White Paper has already estimated that, in the first three years, continuing payments will total £514 million. The maximum figure of £750 million which was provided for redundancies and redeployment is meant to last until March 1992. I must ask the Minister, are the Government planning to load yet another burden on the coal industry?

I will cut my speech short because I know that other hon. Members wish to speak. Nevertheless, the question appears to be, how many redundancies does the Minister expect over the next three years? The figure that I have been able to work out is about 30,000. I shall give him the opportunity to refute that or agree with it.

What I would call the minority report— the major amendments proposed to the report— was brought about purely and simply by our fear of the prospect of privatisation. People such as myself, who have had experience of privatisation of the mining industry, know a little about it. We fear that dramatic safety problems will be created by the privatisation of the coal industry. We have seen that before and we saw it in our visit to America. We established our evidence that the system in America of roof-bolting roadways was not the safest. That was confirmed by the chief inspector of mines. If British Coal continues its policy of using roof bolts purely for economic purposes, it will be going against the views of the chief inspector of mines, who feels that it is not the safest method, and British Coal always prides itself on providing the safest methods.

5.53 pm

Mr. Spencer Batiste (Elmet)

I am grateful to you, Mr. Deputy Speaker, for calling me in this important debate. I shall be brief because I realise that other hon. Members wish to speak.

In the main this has been a constructive debate, except for the contribution from the hon. Member for Bolsover (Mr. Skinner), who spoke in his customary diplomatic and tactful manner. I am indebted to the hon. Gentleman for his suggestion that I should read the novels of Peter Archer. That was the one constructive suggestion that he made and was, I suspect, about as accurate as the rest of his speech.

However, he raised one fundamental point which underlines what I want to say in the first part of my speech. It is the difference between providing assistance for an industry, even massive assistance, to help it restructure itself so that it can stand on its own two feet, and providing long-term open-ended subsidy without taking the necessary and sometimes painful steps to put that industry right. In industrial terms, it is the difference between the hospital and the hospice. It was clear from the hon. Gentleman's contribution that he did not understand that difference, certainly in the way in which he contrasted the role of Government intervention in different industries.

Let me return to the point that I wanted to make, with what I have said as a preface. I was a member of the Select Committee when it started its report on coal and, like the hon. Member for Rother Valley (Mr. Barron), I had to leave it before it reached its conclusion. I am deeply indebted to the Committee for producing a report which will be extremely valuable to those who have the interests of the coal industry at heart. I am sure that the current hon. Members on the Committee will forgive me for saying that it is not so much their conclusions that are important— although they are interesting, but we shall all have our own ideas on them— it is the way in which they have pulled together evidence in such a careful, constructive manner and given their own careful deliberations in weighing that evidence that gives us a valuable source for considering the future of the coal industry. While I missed out on some of the pleasures of visits that took place in the preparation of the report, there is a lasting testimony before us which will act as a bible on the industry for many years.

The message that comes from the report is that there is wide acceptance of the important strategic need for coal at the centre of the country's energy policy. Many hon. Members have touched on that theme time and time again over the years— each of us, perhaps, from a different viewpoint—but it is clear that in a country such as ours there needs to be a diverse policy on energy. Coal must be at the heart of such a diverse policy.

It is necessary to achieve productivity improvements so that coal can compete effectively and be viable in its own right, rather than having to be propped up merely for the sake of diversity. The progress that has been made under my hon. Friend and the Secretary of State has been such that over the last year a month has rarely passed without one reading of a new record level of productivity being achieved in the industry. All hon. Members must congratulate the industry on that.

I am not sure that I go along with the Select Committee on its analysis of supply and demand, in particular on demand, because it is a notoriously difficult thing to predict a long time in advance. The evidence that it collected and its analysis of it is useful, but anyone who looks back 10 or 15 years at the development of energy demand in the world could say only that there are many factors which emerge which could not have been taken into contemplation at the beginning. I have no doubt that in the next 10 or 15 years other factors will arise which may cause us radically to review our assessment of demand.

It is important for the coal industry that supplies should, in the words of my right hon. Friend the Secretary of State, and repeated in the report of the Select Committee, be "adequate and secure". If we have a native energy source which is reasonably readily available, that is its prime selling point to United Kingdom customers. It does not then matter to them whether there is political instability in the middle east; it does not matter whether there are problems with other sources of energy. Coal has the benefit of being here, being locally available and being relatively easy to supply.

It is with some concern, therefore, that I look at the one way in which the coal industry could defeat itself. I look to see what progress has been made in industrial relations since the end of the strike, and how the militancy that was so apparent in some quarters during that strike has been accommodated. On the whole, the industry's productivity record speaks for itself, but I am still concerned. My hon. Friend the Minister will know that towards the end of last year I visited the Selby coalfield so that I could report back first-hand to the House on how well that project was going. To my dismay and surprise, I was greeted by a halfday strike in opposition to my visit. I understand that my hon. Friend has had a similar experience at other pits. I understand that in the last month or so other people visiting the Selby coalfield have had similar experiences. The Opposition laugh at that. That is a tragedy, because not only did those one day strikes take place, but, a few weeks ago, the Selby coalfield went on strike for a week on the basis that the men should have had bonuses for the weeks when they had taken industrial action.

The mining industry should by now realise that its future depends above all upon the support of its customers. Nothing can destroy their confidence more than a reputation for unreliability. Let us hope that that reputation for unreliability has been firmly buried. The voice of realism is increasingly being heard from the shop floor in the mining industry, as it is in south Wales over Margam. I only hope that the invective directed towards south Wales from the president of the NUM, which in some ways is reminiscent of the invective that he loosed on Nottingham some while ago, will not be repeated but will be repudiated by all in the industry who have its best interests at heart.

My second point relates to something that has not been picked up significantly so far in the debate—new jobs. British Coal Enterprise Ltd. was set up to achieve various specific objectives within the coal community. Where there have been closures it was important that funds should be available to assist and help in the creation of alternative employment. There are different problems in different areas. [Interruption.] It is noticeable that whenever one talks about the successes of the mining communities the Opposition do nothing but barrack and harass speakers. They do it here and in the coalfields. It goes to show just how much they are really interested in constructive progress.

Mr. Barron

Will the hon. Gentleman give way?

Mr. Batiste

With great respect, I promised to be brief, so I shall not give way. I must press on.

My point is clear. British Coal Enterprise Ltd. has been successful in bringing investment and jobs to many areas where they are desperately needed. However, the needs of different areas are very different. In some places what is needed is to convert the premises of an old pit or to put up buildings for new business to move into; such is the strength of the business community in some areas that those premises will be taken up. My constituency has two such sites at Micklefield and Ledston Luck close on the A1. The commitment to develop those sites, making them suitable for business, should, because of their excellent siting, enable industry to move in and provide jobs in those areas.

It is equally clear—the Select Committee focused on this point—that in many places more help is needed. The Select Committee says that the Government should invest more money through British Coal Enterprise Ltd., but I recall my hon. Friend the Minister saying during many coal debates that as much money as British Coal Enterprise Ltd. could usefully use would be made available for it. It merely happens that £40 million is the current level of funding because that is what it requires. My hon. Friend nods as I say that and it is something that he has repeated over and over again.

The Select Committee makes an important point when it draws a comparison with the development of the docklands in London. There is a need for a catalyst. We need more than just investment. We need a more wide-ranging approach to the development of some areas. The highly successful mechanism of the urban development corporations in London and in Liverpool, which have recently been extended elsewhere, should not be confined only to city centres. The coalfields are just as worthy recipients of such a package as are the city centres. They have similar problems and the comprehensive response of an urban development corporation adapted to the coalfields would have a great deal to contribute to the redevelopment of those areas. That is a constructive suggestion by the Select Committee and I hope that the Government will take it on board.

6.3 pm

Mr. William O'Brien (Normanton)

The hon. Member for Elmet (Mr. Batiste) referred to the Government's financial support for the mining industry. The inference was that it is not good for the Government to sustain the mining industry. Other Conservative Members also referred to the subsidy which the mining industry receives. However, little has been said about the tremendous subsidy that we give to agriculture, and that is shocking. The subsidy to mining is nothing compared with the subsidy to agriculture. Let us put the record straight.

The hon. Gentleman also referred to the dispute in the Yorkshire coalfield which in the main has arisen because of the lack of negotiation and consultation. The hon. Gentleman says that disputes are the responsibility of the men in the industry and that they should know better. Yet when a record is broken no reference is made to the men who work in the industry. Instead, the hon. Gentleman says that the Minister should be congratulated. The record should be put straight on that too.

The Select Committee's Chairman referred to the Supplementary Estimate of £166 million. The industry is worthy of that and the Select Committee did not condemn that assistance to the coal industry. My hon. Friend the Member for Bolsover (Mr. Skinner) said that more money should be made available to meet the concessionary fuel costs on which many widows and retired workers for the industry are losing out because of an ancient agreement.

I want to draw attention to a recent agreement under which widows and retired members are losing benefit because of British Coal's attitude. I hope that there will be a rethink and that the Minister will have a word with British Coal's chairman about the reduction in benefits to widows and retired members.

The hon. Member for Sherwood (Mr. Stewart) referred, in reply to my intervention, to the need to transfer money saved in the Health Service for more health facilities. If we follow that philosophy and say that imported coal should be used in hospitals throughout Britain, those whom the hon. Gentleman represents will be out of work.

Mr. Andy Stewart

I never said that.

Mr. O'Brien

The record will show that that is what the hon. Gentleman said. That will not be in the best interests of the hon. Gentleman's constituents.

The Select Committee examined the problems and prospects of the British coal industry and reviewed the progress which has been made to set the industry on a sound footing. We had to look beyond the 1990s and make recommendations for the coal industry. Although the Committee's terms of reference suggested that we were responsible only for monitoring the work of the Department of Energy and British Coal, the Government's evidence made it plain that the task of dealing with the consequences of a coal policy to mining communities rests with the Government.

The hon. Member for Erewash (Mr. Rost) referred to privatisation—the real issue that divided the Committee. Whether an industry is publicly or privately owned has no bearing on its efficiency. Sir Robert Haslam, British Coal's chairman, who has spent most of his life in the private sector, said: the perception that somehow private industry has some great magic wand and can come in and do something which nationalised industries cannot do has not got a great deal of validity. The Committee believes that the privatisation of the coal industry is an unnecessary and potentially harmful sideshow, which the chairman of British Coal called an "unfortunate diversion".

The real structure of the industry is broadly accepted as it is and its ownership by the public brings real practical and strategic advantages. No case for the alteration of that position has been adequately made, either in evidence to the Select Committee or in the debate this afternoon.

On several occasions the Government assured the Committee that there were no plans for the privatisation of British Coal, although at times we have been assured that that is only for the present. However, we are equally sure that some Ministers remain ideologically committed to privatisation. With regard to coal, we set particular store by the Prime Minister's words on this matter since decisions about the privatisation programme are clearly taken at No. 10 and the Treasury rather than in the sponsoring Departments. We ask the Minister this afternoon and the Prime Minister to give a categorical assurance that privatisation will not take place.

The Government have privatised one fifth of the state sector of industries that they inherited in 1979 and will have transferred a further one fifth to the private sector by the end of this parliamentary Session. It is also the Government's intention to return most of the remainder to the private sector in the next Parliament. However, we have been told that there are no current provisions for the privatisation of British Coal. Do we infer from the answers that have been given in relation to privatisation that there is no future involvement or commitment for the privatisation of British Coal? In the Select Committee report, we recommended in an amendment that the Government should give a categorical assurance that British Coal will not be privatised. I hope that the Minister will comment on that when he replies.

I readily admit that part of my opposition to a privatised coal industry is based on the experience to which hon. Members have referred in this debate of the private coal industry in this country before 1946. Sir Robert Haslam must be one of British Coal's few remaining employees who worked in the private industry and he spoke graphically of some of the problems of the old private system. I do not want a return to the contract system in the mining industry. I have experienced that and I would not wish it on any other person working in the industry. I also believe that in the interests of safety the British coal industry must remain in public ownership. That will secure a safe industry in which people will be proud to work.

A further principal argument for maintaining public ownership of British Coal is my belief that important strategic assets should remain in public control so that the temporary storms in world energy markets can be ridden out and our principal energy assets preserved for the country's future needs. The case for running down the coal industry is based on short-term economic factors. That is not in the best interests of this country.

The Select Committee had no quarrel about the small deep mines in Great Britain. A more rigorous argument was presented for allowing more private sector opencast on bigger sites. That argument was backed by the Monopolies and Mergers Commission in 1983. I have argued elsewhere that there should be a limit on the quality and quantity of coal extracted by opencast methods as a means of easing the pace and scale of British Coal's difficulties. We tabled an amendment that was carried in the Committee about restriction on opencast workings.

I want to refer briefly to the references made to the new mine in south Wales and the fact that if it is to achieve the necessary output it will be necessary to break all the existing agreements about working hours and the five-day week. That is not necessary. To illustrate that point, I want to refer to Sharlston colliery in my constituency. The pit at Sharlston was sunk in 1865 and it has been running for more than 120 years. In February this year, the men at the pit achieved one million tonnes output—and that was achieved in an old pit working to the existing agreements on hours and conditions. That pit knocks sideways the Government's philosophy that there must be changes if achievements are to be made. The achievement at Sharlston was made with six weeks still to go in the current year. The productivity at Sharlston colliery in the past two years has risen from three tonnes to five tonnes per man shift. During the year, the workers set a new weekly output of 31,000 tonnes and an all-time productivity best of 5.6 tonnes per man shift.

We do not need the changes in conditions that we have been told are necessary. The men in the industry can produce the output if they are given the resources to do so. The pit at Sharlston has also reduced its costs to £ 1.20 a gigajoule. No one has mentioned that today. We do not need the changes in the industry that are being propounded by Conservative Members. The men in the industry can achieve that if they are given the resources. The £1.20 per gigajoule at Sharlston is well within the yardstick laid down by the Government of £1.50 a gigajoule. The one million tonnes of coal produced at Sharlston are for power station use. Such achievements can be made at Selby and at any colliery if the men and the management are allowed to work together and if there is the same family atmosphere at other coalfields and collieries as there is at Sharlston.

As time is running out, I shall be brief. There must be a different spirit in the mining industry if it is to achieve the aims that were set out in the Select Committee report. I hope that the Minister will consider the points that have been raised, especially those about the relationship with the industry and the fact that the machinery must be provided for the men to achieve the objectives.

6.17 pm

Mr. Michael Brown (Brigg and Cleethorpes)

I will finish my speech by 6.20 pm. I am grateful to the Opposition Front Bench for being so generous as to give me the opportunity to participate in the debate.

I was stimulated to intervene in the debate by the remarks made by the hon. Member for Bolsover (Mr. Skinner). I am sorry that the hon. Gentleman is not in the Chamber to hear my comments. I wanted to intervene during his lively speech to ask him whether he felt that, in view of his comments about his hon. Friends quite legitimately dividing the Select Committee because they were unhappy with certain aspects of the report, he regarded the report as giving the green light for privatisation of the coal industry. If he had allowed me to intervene, I would have expected him to answer, "Yes." That is my interpretation of the Select Committee report.

I joined the Select Committee on Energy when it had finished taking evidence, and during the time when it was considering what the report should contain. Like the hon. Member for Bolsover, this was the first time that I had served on a Select Committee and, like the hon. Gentleman, I had my reservations. To be honest, as a member of the Select Committee, I still have reservations about the whole idea of Select Committees.

Nevertheless, the Select Committee on Energy has produced a clear, crisp and concise report which, in my view and I suspect in the view of the hon. Member for Bolsover, points the way to the future. That future contains an involvement of the private sector in the coal industry.

I do not have pits in my constituency. However, the site of the South Killingholme power station is in my constituency. That site was purchased by the CEGB after the second world war with the idea that a power station should be constructed there. As it has this dead land lying around, the CEGB wants to use it, via its subsidiary NIREX, to dump nuclear waste there. The hon. Member for Bolsover made some remarks about that. I am on record as saying that, as long as I am the Member of Parliament for Brigg and Cleethorpes, there will be no nuclear waste there. There is no nuclear waste there, so I am the Member of Parliament for that constituency today, and that will be the case tomorrow, the day after and the day after that.

I say to the hon. Member for Bolsover and to all hon. Members with mining constituencies that I believe that there is a demand for coal if we can get that coal out of the pits at competitive prices. When we get it out of the pits at competitive prices, there is a case for the South Killingholme power station site being used for a coal-fired power station. The CEGB has selected the site for study as a coal-fired power station. It would provide the demand for coal from hon. Members' constituencies. I want coal to be successful. I want it to be mined competitively and cheaply by private enterprise, because that will protect jobs in other constituencies and create jobs in mine. We do not want a nuclear dump in South Killingholme; we want a coal-fired power station.

6.20 pm

Mr. Alexander Eadie (Midlothian)

It is fortunate that the House is debating the Estimates in the setting of the report of the Select Committee on Energy which was published on 28 January. It would be extremely churlish not to thank the Chairman of the Committee and its members for the report and the two volumes of evidence. They must have spent long, painstaking hours on its compilation. It would be shallow and inaccurate if I suggested that we could do the report justice in three hours, and I apologise in advance for doing it less than justice. I hope that it will be accepted that I am disciplined by the time at my disposal.

On examining the report, one soon observes that The House will be interested to know how British Coal described the strategy. The report states: Capacity planning is therefore not designed to maintain forward output at a pre-determined level, but by the application of 'minimum regret' rules to make the best decisions possible on a year to year basis. That raises questions about planning in the industry, which belongs to the people of Britain. How will it be possible to go ahead with the new pits when it is known that long lead times will be involved in bringing those pits into production? The period mentioned is between seven and 10 years, but unless we have new pits the industry will inevitably contract.

What are the cost parameters for what British Coal describes as capacity planning? Its evidence was that it would write off capacity with an operating cost of more than £1.65 per gigajoule. Those pits will be closed. Any additional or incremental output generated during the next few years should have marginal costs not exceeding £1 a gigajoule. British Coal argues that that is what the market says, but the country must be made aware that the policy will mean writing off millions of tonnes of coal, especially in existing pits. The company will take the best seams first and will leave those that it deems uneconomical. It will bring the life of many pits to a quicker end and the coal left will be lost for ever. Even new pits that are sunk could have a reduced life.

The policy is a throwback to the days of private enterprise, which I and many of my hon. Friends believe vandalised our coalfields. The policy was, "Take the berries first and leave the rest." I predict that, before long, British Coal will tell us that we do not have 300 years' worth of coal, that the figure will be slashed to 50, 60 or 70 years. My right hon. Friend the Member for Salford, East (Mr. Orme) told us that Mr. MacGregor said that his policy would mean that we were left with only 50 years' worth of coal. That would be a disastrous policy. If Parliament agreed to such a policy, Britain would live to regret it, because coal is the only fossil fuel that we have in abundance, compared with the reducing assets of oil and gas. I agree with those hon. Members who made the same point in the debate, although perhaps in another context.

The Coalfield Communities Campaign submitted stark evidence of the contraction of the coal industry. That evidence went up to 1985, but the position is worse if we take it up to 1987. In 1972, the National Coal Board employed 271,000 wage earners. By September 1985, the figure had fallen to 156,000—a drop of 115,000, or 42 per cent. The campaign suggested in evidence to the Committee that, if present trends continue, the 156,000 people employed in September 1985 could drop to between 62,000 and 109,000—minus 30 per cent. to minus 60 per cent.—by 1990.

The campaign's remarkable evidence to the Committee gave two examples contrasting Scotland with Nottingham. In 1975, Scotland had 22 collieries with more than 24,000 employees. Today, it has fewer than 6,000 employees. The scale of the decline has been dramatic. The multiplier effect has been dramatic job losses in the electricity industry, steel, the railways and mining equipment manufacturers. They have been severely affected by reductions in employment and capacity in the coal industry.

The campaign says that the Nottinghamshire coalfield is generally regarded as one of the most prosperous in the country, with an assured long-term future, yet it is not an area of stable employment. At paragraph 2.8 on page 191, the campaign states: In March 1980 almost 42,700 people worked for the NCB in the County. By March 1985 this had reduced to some 34,000. The rate at which jobs have gone has been accelerating with about 7,000 jobs going between 1982 and 1985. Since March two collieries, Moorgreen and Pye Hill, have closed with the loss of a further 950 jobs, though employment at these pits had been substantially higher in previous years. In addition, the amalgamation of the two NCB Nottinghamshire Areas into one administrative unit in August will almost certainly have led to further job losses. The former South Nottinghamshire area has been particularly hard hit, as about 38 per cent. of the area's jobs have disappeared since 1980. It is on record that it lost in the region of 10,000 jobs. We have to place on record the fact that the Select Committee—

the Committee divided along party lines on some fundamental issues. The hon. Member for Havant (Sir I. Lloyd) described them as two minor issues and one fundamental issue. We learn from the report that the British Coal document entitled "New Strategy for Coal" signalled the end of indicative planning in the industry, with the market being left to decide its shape. Some of my hon. Friends have commented on the Opposition's view of that. The new strategy replaces five and 10-year plans with annual reports, including discussion with area directors.

Mr. Andy Stewart

Voluntary.

Mr. Eadie

I suppose it is voluntary but, in Nottinghamshire, the same as in any other area, when a job is lost, it is lost for somebody. The community has lost that job. It means that some kid leaving school will have fewer opportunities in his quest for a job. We should never be complacent about the loss of jobs. We should certainly demand that people who lose their jobs should be compensated—to that extent I am at one with the hon. Member for Sherwood (Mr. Stewart).

The Select Committee tried to respond to the evidence of the Coalfield Communities Campaign, because of the scale and likely persistence of unemployment in mining, by recommending that a special Cabinet Committee be set up and charged with the task of dealing with and coordinating the work. One will find in the report that the recommendation made by the Select Committee was based on the complacent reply furnished by the Government when they were asked about steps taken to alleviate hardship.

British Coal Enterprise Ltd. was set up to assist in creating jobs. It was a positive recommendation that substantially more resources be committed to match the size of the problem found in mining areas. However, after all the claims made about the organisation and its work on the scheme, it can be observed in the report that the deputy chairman of British Coal said that he did not claim much for the scheme.

We should look with interest upon the recommendation that British Coal should no longer be liable for subsidence caused by historic mining operations. We have had many debates on that in the past. The argument has been, roughly, that it was always unfair that the National Coal Board, and now British Coal, should have financial liability for operations carried on by their predecessors. I know that that is a controversial area but the Select Committee should be congratulated on the other things it said and the way in which it has tried to seize what I would regard as a difficult nettle.

I referred earlier to the change in the redundant mineworkers payments scheme, which is scheduled for withdrawal by the Government from 1 April 1987. The Select Committee has said that it wishes the Government to review that. That matter has been raised previously during debates on orders relating to redundancy and the Coal Board. It will be a litmus test for the Government to look at the recommendation and examine the evidence that led the Select Committee to make the recommendation.

It is no secret that when the Government announced— one may say, timorously— that the existing scheme would end on 1 April this year, managers in certain areas of British Coal were boasting that, because the agreement was being terminated and because British Coal had already intimated that there would be an agreement that would be less financially worthy, they could close any pit in the British coalfield: when the men knew that the existing redundancy agreement was ending, they would decide to take the better of the two schemes. That is a hell of a way to run an industry.

The Select Committee dealt with the financial burden of interest that British Coal has had to meet. That has had many airings in coal debates in the House. I am not sure whether the Under-Secretary of State has taken part in those debates, because he is fairly recent addition. It has been said many times in the House, and it is on record in Hansard, that we starved the coal industry of proper investment until 1974. I said that, in 1974, the undertakers were ready to take away the coal industry. Successive Governments have ploughed substantial investment into the industry since 1974. It has to be said that, as a consequence, it has been the policy of Governments to accelerate investment in the industry.

The Select Committee highlights the burden of interest payments. For example, it mentions the £437 million in 1985–86. It recommends restructuring British Coal and, if necessary, writing down the value of assets in line with the revenue earning potential. It challenges with doubts British Coal's ability to break even financially by the end of 1988–89. Those doubts are shared in many quarters. It asks for a reconsideration of the deficit grant payable. I do not know whether the Minister will respond to that today or whether the Government will respond at some later date, but those are items of tremendous importance and weight. The Government have to consider those recommendations, which could influence the future trends of what we should all regard as "our" coal industry.

I shall be sketchy on industrial relations. Some comments were made on that in debates on the Coal Industry Bill this year. Part of the main thrust of that Bill was to give statutory rights in consultation and conciliation to the Union of Democratic Mineworkers. We tried to introduce a new clause, which in essence meant that all mining unions would get rights. We did not think that the Government had the prescription for better industrial relations. I see that the UDM rejected British Coal's wage offer and British Coal has produced a special issue of Coal News asking the members to vote against the union. It says that £10 a week is fair to everyone.

We are entitled to ask hon. Gentlemen who have been so articulate—I do not quarrel with their articulateness—in defending the UDM, "Whose side are you on? Are you on the side of the membership or British Coal?" [HON. MEMBERS: "Democracy."] If one is on the side of democracy, one will be on the side of the men. It is unique in the history of industrial relations that British Coal should decide to issue a special four-page supplement to try to undermine the recommendation by the men's union in Nottinghamshire. That is important.

The part of the Select Committee's report dealing with the structure and ownership of the industry is the least satisfactory in the report. It is riddled with political ideology. It is an attempt by the Government majority on the Committee to fit out the industry for privatisation. History and experience have been ridden over roughshod. Popular capitalism is supposed to be a different beast from the days of the old ruthless capitalist coal owners. History gives a catalogue of what was nothing less than callous brutality towards miners, their wives and children.

I was pleased to read in the report that my hon. Friends divided the Committee on that matter. One aspect was safety. I remind the House that more than 53,000 miners have been killed in this century in this country's coal mines, and most of that slaughter took place in the days of private enterprise.

Although we have some disagreements with the Select Committee's report, I repeat that we congratulate the Committee. To coin a pun, the report is a mine of information, which I hope hon. Members on both sides of the House will study from time to time.

6.40 pm

The Parliamentary Under-Secretary of State for Energy (Mr. David Hunt)

When coal is the subject of debate, discussion is always wide-ranging and often controversial. This afternoon has been no exception. I have listened with interest and, in some cases, with incredulity to what hon. Members have said.

As I believe hon. Members know, I have been taking every possible opportunity to visit British Coal pits all over the country. I look forward to a visit next week to Ollerton in the constituency of my hon. Friend the Member for Sherwood (Mr. Stewart). On those visits, I have spoken to the men, to British Coal management, to representatives of all the trade unions, but in particular to the men working underground. I can tell the House quite categorically that men and management are in good heart. Morale is very high, with men and management looking forward with an optimism now based not on empty words but on solid achievements.

My hon. Friend the Member for Havant (Sir I. Lloyd) speaks with a great deal of authority on these matters, not just because he has been a Member of the House since 1964, not just because he joined the Select Committee on Science and Technology as long ago as 1971 and then became Chairman of various important Sub-Committees, but because he has been Chairman of the Select Committee on Energy since 1979.

My hon. Friend introduced the report constructively and positively, in the great tradition of reports of that nature and in the considerable tradition of Chairmen of Select Committees. I thank all those involved in the production of the report. However, I hope that my hon. Friend will not mind if I say that, on a preliminary view, I find myself in considerable difficulty following the train of thought behind several of the recommendations. That may be because This has been an interesting debate. The hon. Member for Rother Valley (Mr. Barron) has a considerable tradition in the industry. I think that he was with the National Coal Board, as it was then, between 1962 and 1983. I respect his views, but, in view of all that has passed between us, I do not think that he would expect me to agree with virtually anything that he said. However, some parts of his speech were constructive, notably when he talked about the recommendations.

My hon. Friend the Member for Sherwood has established a reputation as one of the most articulate and able coal mining Members of Parliament. There are nine pits in his constituency, and I look forward to going underground with him next week, following our visit underground in his constituency at Blidworth and Bilsthorpe. He needs no lessons from anybody in the House about how to articulate most effectively the needs and wishes of his coal mining constituents.

The hon. Member for Gordon (Mr. Bruce) said that during the strike there were elements in the National Union of Mineworkers that had to be defeated. I do not criticise him, but he was speaking on behalf of the Liberals and indeed the alliance as a whole in the debate, and I wish that we had had more support from the alliance in the difficult days of that dispute. He is right to point to the importance of alternative energy, but it was in the days of the Lib-Lab pact that we had the lowest expenditure on alternative energy research and development. During all those years it totalled merely £17 million. Now, under this Government, who came to office in 1979, the total is rising this year above £100 million.

My hon. Friend the Member for Erewash (Mr. Rost) was an original member of the Select Committee in 1979. He reiterated many of his longstanding views. I pay him credit for consistency if he will please give me the opportunity of continuing my disagreement with several of the things that he says.

I am afraid that the debate took a downturn with the speech by the hon. Member for Bolsover (Mr. Skinner). Our debates used to follow the course that he followed this evening, but the usual coal war has ended and it seems that the hon. Gentleman is the last to realise it. I do not need to go further, however, because my hon. Friend the Member for Cannock and Burntwood (Mr. Howarth) destroyed effectively the hon. Member's arguments. I was glad that my hon. Friend the Member for Cannock and Burntwood paid tribute to Littleton and Lea Hall. He will know that I went underground at Lea Hall comparatively recently. The people in those pits have done a remarkable job to achieve above-average increases in productivity.

The hon. Member for Pontefract and Castleford (Mr. Lofthouse) has a great tradition of experience in the industry. I think that he was a personnel manager with the NCB. He has been a member of the NUM, the British Association of Colliery Management, and the Association of Professional, Executive, Clerical and Computer Staff. I am sorry to have to tell the hon. Gentleman—it will not come as a great surprise— that I disagreed with much of what he said. He made several important statements about the finances of the coal industry. Just about all of them were wrong. I do not have time now to go through them individually, but I remind him that when British Coal moved into accounting deficit the deficit grant was introduced to deal with the problem. It had nothing to do with social grants.

The joint understanding between British Coal and the Central Electricity Generating Board reflects movements in energy prices, especially international coal prices, and is not some sort of Government-inspired malevolence as the hon. Gentleman sought to describe it. The hon. Gentleman was wrong even about current events. The £95 million increase in the external financing limit will be reflected in higher grants, not higher borrowing.

My hon. Friend the Member for Elmet (Mr. Batiste) has also established a reputation as a great protagonist for working miners, and has a depth of knowledge of coal mining that is the envy of many in the House. One of the tasks that he has always undertaken in these debates has been to identify militancy as the great enemy of the industry.

The hon. Member for Normanton (Mr. O'Brien) was a longstanding coal miner. Indeed, I believe that he has been a member of the NUM since 1945. He told us that he would put the record right, and then proceeded to put the record wrong more than I can recall in the House for a long time. I tell him again that as the Minister proud to be responsible for the coal industry I never cease to congratulate men and management on productivity records. He wrongly represented what my hon. Friend the Member for Sherwood said.

My hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown), who is always robust, continued his tradition by, as the newest member of the Select Committee, already speaking of his doubts about the whole Select Committee system. That is his prerogative. He established in his speech that he is a strong champion of coal and I recognise his interest and that of his constituents in the development of South Killingholme. I hope he agrees that that is more a matter for the CEGB.

the Committee divided on certain portions with certain majorities in control at certain times— [Interruption.]—but I think that the hon. Member for Midlothian (Mr. Eadie) would criticise me if I did not make my feelings clear about the report. I saw the report only recently, at the end of February. Obviously, I want to study carefully, with my right hon. Friend the Secretary of State and my Department, all the facts and statistics, and all the recommendations.

Mr. Geoffrey Dickens (Littleborough and Saddleworth)

Does the Minister agree that now that the mining industry has increased its productivity, is getting coal out of the ground at the right price and is becoming competitive with the rest of the world, that makes imports of coal less likely and assures the future of the mining industry? The industry has now justified capital expenditure on the mines, but has it not taken the defeat of a year-long miners' strike and the stupidity of Arthur Scargill to bring the industry to its senses?

Mr. Hunt

There is a great deal in what my hon. Friend says. In a very short contribution he encapsulates many of the key points about the industry.

The hon. Member for Midlothian has a great reputation spread over many years for service to the coal industry. To utilise a speech in this debate to seek to try to identify Nottinghamshire as an area where British Coal and the Government stand to be criticised is once again operating according to a Scargill brief. His speech was not the sort that he would have made under other circumstances. I know that he takes that as a compliment.

Mr. Eadie

indicated dissent.

Mr. Hunt

The hon. Gentleman shakes his head. Other people do not take that as a compliment, and I am glad that he does not. He was very selective in his statistics. He talked about a reduction in the number of people working in the mines since 1970–74. He omitted to mention what happened when his Government were in power during the six years before 1970. In 1965–66, about 455,700 men were on colliery books, and by 1970 the number had fallen to 287,000.

When the hon. Gentleman is giving statistics, he should do the House the credit of mentioning that his Government were responsible, through compulsory redundancies, for a reduction in the coal mining work force— men on colliery books— of approximately 180,000. I know that the hon. Member for Bolsover still worships the ground on which Arthur Scargill walks.

Mr. Skinner

The Minister ought to do his homework. I have been in this House since 1970 and for many years before that I served in local government and in the union. Most hon. Members will know that I do not go in for worshipping leaders of any kind. I am more concerned about principles, and I shall stick to those. I am not prepared to bow down to leaders of any kind. I am not like the Minister who has to scrape and wipe clean the shoes of Madame Dross, the Prime Minister.

Mr. Hunt

It is surprising to find that not only are the miners deserting Arthur Scargill in droves, but Opposition Members are queuing up to join them. The sooner the president of the NUM stops his articulate line of militancy the better it will be for the future of the industry.

Mr. Skinner

Arthur Scargill is right.

Mr. Hunt

The hon. Gentleman says that he is right. Only this week Arthur Scargill said: Colleagues, I'm sick and I'm tired of listening to those apologists, those advocates of so-called 'new realism'. Their alternative policy apparently is the kind of thing that's taken place in Wales, it's to collaborate, it's to accept, it's to cooperate with the employer or the Government. Well, I wasn't elected President of this Union to do any of those things. That is one of the most disgraceful things that I have heard from Arthur Scargill— and that says something. [Interruption.] The hon. Member for Bolsover agrees with him, but that only proves that what I say is true.

Hon. Members spoke about morale problems in the industry. However, productivity records have been broken week after week and on the front page of Coal News I see the smiling faces of miners who are proud that they have joined the million club by producing a million tonnes of coal this year and are turning in record levels of productivity. I am proud to tell the House that we thought we had a productivity record of 3.68 tonnes. However the figure has been revised upwards and for the week before last coal productivity was 3.69 tonnes, compared with 3.06 tonnes for the same period last year.

In the weeks to come I shall consider very carefully the Select Committee report. The Chairman and the members of the Committee would not expect me to give an immediate reaction to a carefully thought out report. I disagree with some parts of the report but I shall consider carefully all that it says. British Coal is now the lowest cost coal producer in Europe. It is absolutely vital that British Coal continues to make progress in cutting costs—given the competitive nature of the energy market. The turnround in British Coal's fortunes will take time, especially following the dramatic fall last year in oil prices and the CEGB agreement.

The motion that we are considering demonstrates once again the Government's commitment to supporting British Coal through this necessary restructuring. The Government are seeking Parliament's approval to make a further £166 million available to the coal industry this year—£95 million in deficit grant and £71 million for the redundant mineworkers payments scheme. This brings the amount of Government support to the coal industry this year to a total of £1,380 million.

This latest increase in the amount of grant paid to British Coal this year reflects the increase in the external financing limit— from £730 million to £825 million— announced in the House on 19 January. In the event, the market pressures on British Coal have continued into 1987 and it now expects its external financing requirement for this year to be higher than the limit that was set in January.

British Coal has also said that it is having to look again at its external financing requirement for next year. When Sir Robert Haslam, the British Coal chairman, has given my right hon. Friend his considered view, the Government will consider whether a revision of the external financing limit for 1987–88, presently £727 million, is necessary.

My right hon. Friend today announced the objectives that he has agreed with Sir Robert Haslam. The basic objective of British Coal is that it should earn a satisfactory rate of return on its net assets and achieve full financial viability without Government support. That is vital not so much for narrow reasons relating to public expenditure, but because the future security of the industry depends on it being competitive.

We believe that the industry can be a success. Sir Robert Haslam has committed himself to achieving break even in 1988–89 and thereafter looks to achieving full financial viability. Break even by 1988–89 is a tough target, but the Government and British Coal believe that it is attainable. Moreover, in future the industry's capital requirements will increasingly come from the industry's own resources rather than the industry depending on Government funds. By 1989–90 British Coal is aiming to reduce its operating costs by at least 20 per cent, compared to last year.

Until such time as British Coal is ready to stand entirely on its own feet, the Government are committed to supporting the industry financially. The Coal Industry Act 1987 provides a further £200 million in deficit grant support and up to £750 million in restructuring grant support.

In view of the shortage of time, I shall respond in correspondence to those hon. Members whose points I have not covered. I felt it right to give everyone possible an opportunity to participate in the debate.

In the past two years the industry has gone through a massive process of restructuring. It has been successful in creating and establishing the basis of a stable, viable industry capable of offering long-term employment and contributing positive benefits to the nation. There will always be restructuring in an extractive industry such as coal. The important news is that we now see this vital restructuring coming to an end with a great future ahead for this magnificent industry.

The debate having continued until Seven o'clock, MR. SPEAKER interrupted the proceedings, pursuant to the Resolution [9 March].

Question deferred, pursuant to paragraph (4) of Standing Order No. 52 (Consideration of Estimates).