Coal Industry (Restructuring Grants) (Hansard, 2 March 1988)

§ The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer)
I beg to move, That the draft Coal Industry (Restructuring Grants) Order 1988, which was laid before this House on 8th February, be. approved. I understand that the Opposition wish to take this order and the draft Coal Industry (Limit on Deficit Grants) Order 1988 separately.
This is the second annual order under section 3 of the Coal Industry Act 1987. It has three purposes. First, it specifies those kinds of restructuring expenditure for which grant may be paid in respect of costs incurred in 1988–89. The types of expenditure are set out in the schedule; they are identical to those specified in last year's order.
Secondly, it establishes the proportion of next year's restructuring costs which will be met by grant. With the exception of grant under head 4, which is subject to a separate cash limit, the proposed rate of grant for 1988–89 is 72.5 per cent. This reduction on 1987–88 continues the process of transferring new restructuring costs to British Coal at a rate consistent with the corporation's efforts to move towards commercial viability. The Government will continue to meet costs arising from past restructuring. In particular, weekly payments to beneficiaries under the redundant mineworkers payments scheme, which closed to new applicants in March 1987, are not affected by the draft order.
The third purpose of the order is to raise the statutory limit on restructuring grant from its present level of £300 million to a higher level of £500 million in order to provide adequate headroom for the payment of restructuring grant up to March 1989.
The restructuring grants order has to be seen in the context of the deficit grant order which I shall be moving later tonight.
When I spoke in the debate on the coalfield communities last November, I said that the immediate future for British Coal was likely to be difficult. I mentioned that a revised external financing limit would be necessary and that an order increasing the level of deficit grant payable might be needed.
World markets for coal have indeed continued to be highly competitive. British Coal cannot be insulated from the influence of the international market or the competition from other fuels—

§ Mr. Rhodri Morgan (Cardiff, West)
What about nuclear?

§ Mr. Spicer
I shall deal with the difference between nuclear and coal in a moment, if the hon. Gentleman will bear with me.
It is true, of course, that the taxpayer continues to contribute massively towards the coal industry, as he has done for the last nine years, at an average rate of £1 billion every year. The total commitment of £9.2 billion over the past nine years can be compared with a figure of £1.7 billion of public funding for the nuclear industry.

§ Mr. Morgan
The proposed structure for the privatisation of the electricity industry means that the British coal industry will have to compete with the world coal industry. The British nuclear industry will not have 1074 to compete with either the world or the British coal industry, and the British coal industry will not be allowed to compete with the British nuclear industry for fuel supplies. Is that fair or competitive?

§ Mr. Spicer
I understand precisely the hon. Gentleman's point in the context of the privatisation proposals. My answer is that, in competing with other forms of fuel, British Coal continues to get backing from British taxpayers of about £1 billion. If that is not an element of support to the coal industry, I do not know what is. It compares favourably with any support for research in the nuclear industry.
The post-privatisation figure in the nuclear industry is about 20 per cent. Coal is, and no doubt will remain, a much larger proportion of the fuel for the electricity industry than the nuclear industry will ever be. So there is no question of there being any disparity or unfairness against the coal industry, as it is receiving this massive public support.

§ Mr. A. J. Beith (Berwick-upon-Tweed)
Does not the privatisation legislation mean that the coal industry will compete with other fuels for the attention of electricity generators, whereas nuclear energy is intended to have a guaranteed share of the production of energy?

§ Mr. Spicer
The hon. Gentleman is right, but the point behind the order is that, in competing with other fuels at home and abroad, the coal industry has enormous advantages, one of which is that it is receiving money from the taxpayer at the rate of about £1 billion every year. If that is not giving it a bit of a head start against other forms of fuel, I do not know what is.

§ Mr. Frank Haynes (Ashfield)
The Minister has not answered the question on competition and he knows it full well. He is bandying about figures for what taxpayers are investing in the industry. How can our mines compete against countries such as South Africa, where they use cheap slave labour to mine coal? We cannot compete against their price. There is no doubt that, with the privatisation of the electricity industry, it will be encouraged to buy coal from South Africa. What about selling Britain here tonight?

§ Mr. Spicer
The hon. Gentleman knows a great deal about this industry and will perhaps accept that British Coal competes extremely well. To say that it cannot compete when South African coal accounts for about 200,000 tonnes in the electricity industry and British Coal is producing 80 million tonnes is a little more defeatist than the hon. Gentleman means to be. Not only can British Coal compete if it puts its house in order, but it is receiving enormous support from taxpayers to enable it to compete.

§ Mr. Dennis Skinner (Bolsover)
Not as much as the farmers.

§ Mr. Spicer
The hon. Gentleman has just come into the Chamber. I am delighted to see him and I thought that he would probably come in, as he usually does. But every time he comes in he shouts about farmers.

§ Mr. Skinner
Will the Minister confirm that in the past 12 months farmers have received subsidies from the CAP of £2,000 million and that his beloved Daily Telegraph the other week concluded that every family in Britain was contributing £11 a week to sustain the CAP? If the mines of Britain had had that sort of subsidy, there would have been no closures in the past five years.

§ Mr. Spicer
If the hon. Gentleman had been present at the beginning of the debate, he would have heard me say that the coal industry has received £9 billion of taxpayers' money during the period of this Government.

§ Mr. Skinner
What about the farmers?

§ Mr. Spicer
This is precisely the same point as the hon. Gentleman is making about farmers. With his great mathematical knowledge, he can no doubt work out precisely what that means for every family in terms of subsidy.

§ Mr. Skinner
The man's an idiot.

§ Mr. Spicer
The hon. Gentleman has called me an idiot. If he for one moment considered that he personally was responsible for encouraging British miners to frustrate the modernisation of British pits, if he could answer why he did that and what the effect has been on the coal industry, perhaps some of us would be prepared to listen to him occasionally. He is personally responsible for the frustrations of the pits and for preventing the modernisation of coal. If there are losses, it will be due to the hon. Member for Bolsover and his friends and the encouragement that they have given to opposition to the modernisation of pits. We do not need to hear much more from him about idiocy.
British Coal has responded to the challenge of greater compensation by raising productivity and cutting costs. So far this year, operating costs have been cut in real terms by over 3.5 per cent. and productivity, despite the efforts of the hon. Member for Bolsover, is 12 per cent. up on last year, making a total of over 50 per cent. since the strike which the hon. Member for Bolsover encouraged. Much of this higher productivity has been achieved through investment in new heavy-duty equipment and the spread of new mining techniques.
It has also been necessary to continue with the closure of high-cost pits. It is expected that, during 1987–88, the number of pits will have been reduced by 16, with 12 closures and four mergers. This restructuring is expected to lead this year to large additional depreciation charges of over £150 million. Manpower is expected to have fallen by between 18,000 and 19,000 between March 1987 and March 1988. The cost of the extra redundancies, each of which has been voluntary and the supplementary redundancy lump sum of £5,000 per man have sharply increased the requirement for restructuring grant.

§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
Does the Minister appreciate that, despite all the millions of pounds being put into the mining industry, over the past four years in my constituency, thousands of miners have lost their jobs? Since 1983–84, 82,000 men have lost their jobs. Does he also appreciate that the average age in the mining industry is 34 and that the men losing their jobs now have no weekly protection of earnings?

§ Mr. Spicer
I do understand, and that is precisely the point that I was making. Many people in the industry have lost their jobs. The industry is now in a better position to compete and do everything that Labour Members want. However, more needs to be done before the industry is fully able, as I am sure that it will be, to compete with the rest of the world.

§ Mr. Morgan
I am not quite sure that the Minister understood the importance of the age point made by my hon. Friend the Member for Pontefract and Castleford 1076 (Mr. Lofthouse). In other words, where restructuring, or shrinkage, took place two years ago, there was a reservoir of people aged 50 or 55 who were happy to leave the industry. The shrinkage or restructuring that takes place now will put people out of work. They may go voluntarily because the golden handshake may be big enough to persuade them to go, but for men aged 30 or 34 that will have severe social consequences, particularly in the light of Lord Young's statement today about dependency making people go soft. Nothing will make people go soft more easily than being put out of work with a golden handshake of £25,000 or £30,000 at the age of 34, which is the average age in the industry.

§ Mr. Spicer
Not only has all the redundancy been voluntary, but, as a result, anyone who wanted to continue to work in the industry has been able to do so. Whether that will continue in the future is unclear. British Coal has announced that it hopes that in the year ahead there will not be many redundancies or closures.

§ Mr. Jack Thompson (Wansbeck)
Does the Minister realise that people are leaving the mining industry not because of voluntary redundancy but because they are offered jobs that are not comparable with the work they are doing and that they do not want to do? In other words, it is semi-voluntary.

§ Mr. Spicer
If the jobs that they were offered were unattractive, they had the option of staying in the industry. That is one of the options that has remained open to them.

§ Mr. Jimmy Hood (Clydesdale)
On voluntary redundancy, is the Minister aware that high British Coal officials have taken redundancy on a Friday, gone down the road with £100,000 of the taxpayers' money, only to come up the same pit lane on the Monday as the director of a new private mining company and go down the pit to negotiate contracts with managers in the pit that they have just left?
This is happening in Nottinghamshire. Production managers and colliery managers are now setting up as private mining engineers. This is in the constituency of the hon. Member for Sherwood (Mr. Stewart). Can the Minister address himself to that problem as well?
We in the miners' parliamentary group had a meeting today with British Coal. For years now, British Coal officials and Ministers have pushed the view that the problems in the industry have all been caused by Scargill, Scargill, Scargill. This year the nurses have been on strike, but hon. Members cannot blame Scargill for that. The deputies have been on strike. The National Association of Colliery Overmen, Deputies and Shotfirers has been on strike. This was caused not by Scargill but by the Fascist-type management of British Coal, supported by the Government.

§ Mr. Spicer
The hon. Gentleman has made his own speech and no doubt the House listened with interest, particularly to the point about Fascist management. May I now continue with what I was saying?
Restructuring grant is expected to total £232 million in cash terms in 1987–88, compared with the original budget of £129 million in restructuring grant. Payment is, of course, subject to approval of a Supplementary Estimate presently before the House. Apart from tough market conditions and the need to respond to them, British Coal has had to face industrial action by both the National 1077 Union of Mineworkers and NACODS, which has led to a loss of output and a damaging decline in customer confidence.
All these factors have combined to increase the corporation's cash requirements and its deficit for the year. So, as foreshadowed in the November debate, I announced in early December an increase in British Coal's external financing limit to £842 million, and I announced a further increase to £920 million earlier this year to reflect the extra redundancy costs that had become necessary.
The corporation's financial position is extremely fragile. Under the statutory rules governing lending from the National Loans Fund, it has not been possible for some months to allow British Coal access to medium and long-term funds. British Coal will therefore be increasingly reliant on short-term borrowings. To reflect this, we have agreed to increase the corporation's temporary borrowing limit from £900 million to £1,000 million this year, and a further substantial increase is likely to be required next year. We shall continue to keep the financing of British Coal under review, in the light of market and all other relevant factors.
The Government have invested an enormous £9.2 billion in the coal industry. In addition, since 1979, they have supported capital investment of £6.2 billion.

§ Mr. William O'Brien (Normanton)
I appreciate the Minister giving way, because this is relevant to the point that he is making about capital investment in the industry. He referred to the expenditure on redundancies, which gives great concern to those of us who represent mining constituencies.
But there is a further issue which is also relevant to what the Minister was saying about capital investment. Is he aware that mining machinery manufactured in this country is being overlooked and set aside in favour of mining machinery bought from Europe and America for use in our pits? The industry is declining, yet mining machinery is being purchased from abroad, thereby creating employment problems in areas, such as my constituency, where mining machinery is manufactured. Will the Minister examine the situation of the mining supply industry which is faced with problems of redundancy because British Coal is buying machinery from abroad?

§ Mr. Spicer
The hon. Gentleman is absolutely right to mention mining equipment. Only this afternoon, some representatives from that industry were in my office. There are 50,000 people employed in that industry and it currently exports 35 per cent., or about £140 million-worth, of equipment. We are market leaders, beating Germany in many markets, including that of the United States. We have nothing to be ashamed or concerned about in the mining equipment industry. It is a superb industry and I understand that it absolutely dominates the British market.
The hon. Gentleman was absolutely right to mention that important industry in this context, as it is often forgotten when we are talking about those directly employed in the coal industry. The mining equipment industry is very healthy and is now exporting at a remarkable rate.
The Government recognise the strategic importance of a strong and competitive coal industry supplying the core 1078 of the country's energy requirements. That is precisely why we are investing heavily in the industry. In spite of the extra losses which I have described tonight, we still expect capital expenditure to continue unchanged at £650 million next year. I emphasise also that we do not propose to change the external financing limit of £670 million for next year.
We are in fact now beginning to see the prospect of a return on the taxpayer's investment. The cost reductions which British Coal has achieved offer the chance of break-even next year, for the first time in 10 years. I do not underestimate the nature of this task, but I believe that break-even remains a realistic, though difficult, target for next year. Within this, some limited restructuring will continue to be necessary, and next year the Government will provide grant to meet 72.5 per cent. of that cost. This will lift the cumulative expenditure on restructuring grant since March 1987 to more than £300 million by the end of next financial year; and it is in recognition of that that the restructuring grants order before the House seeks an increase in the limit on expenditure to £500 million.
I continue to be impressed by British Coal's determination to eliminate its losses. It is therefore all the more disappointing that certain union leaders seem prepared to jeopardise the prospects of the industry and the jobs of their members by their refusal to consider modern methods of flexible working which are now widespread in other countries and industries, and by encouraging senseless industrial action.
I have to tell them through hon. Members that the Government's financial support is not inexhaustible. The taxpayer cannot be expected to continue to put high rates of capital investment into the industry beyond next year unless fuller use is made of the plant and machinery that has already been installed. In future, more of the money for further investment will have to be generated from within the industry itself.
If union leaders fritter away the industry's great opportunities, the inevitable effect will be lost investment, fewer jobs and closed pits. Of course, that will be especially true as a soon-to-be-privatised electricity supply industry begins to shop around in the best markets for coal in the interests of its consumers.
In short, this draft order is necessary for the continuing process of putting the coal industry in a strong position, from which it can exploit the opportunities which lie before it. I have no doubt that British Coal has the capability, the capacity and the resources to compete against foreign producers of coal. Whether it does so will depend upon those who work in the industry. The Government tonight show they are willing once again to stand behind the British coal industry. They are backing the industry with funds as no Government have ever done before. The question is whether those investments will be allowed to be put to good use. I commend the draft order to the House.

§ Mr. Michael Fallon (Darlington)
On a point of order, Madam Deputy Speaker. This is an important debate on the coal industry and you will probably have received a number of applications from hon. Members on both sides of the House who wish to participate in the debate. As approximately 46 Opposition Members have coal mining interests, and only a third of them are present, would it be 1079 in order to adjourn the debate for about 10 minutes so that the remainder who are not here can be found in the bars and coffee houses of this place?

§ Madam Deputy Speaker (Miss Betty Boothroyd)
There are enough hon. Members in the House to keep this important debate going.

§ Mr. Martin Redmond (Don Valley)
On a point of order, Madam Deputy Speaker. Would you care to inform the House how many Conservative Members were queueing to speak before 6 o'clock this evening? For your information, the answer was none.

§ Madam Deputy Speaker
I am in a position to answer that: I am not in the numbers game.

§ Mr. Alexander Eadie (Midlothian)
Having listened to the Minister, I wondered whether he was introducing an order or a threat. His closing remarks were unfortunate. The orders have been delayed in coming to the House. We have been threatened with them for some time. Under article 5 of the restructuring grants order, the aggregate for grants is increased from £300 million to £500 million. The accompanying schedule deals with the expenditure under such heads as redundancy and early retirement, changes of work and place of employment, concessionary coal, retraining and new employment.
Because money is required under all those headings we have the opportunity to comment on the industry in its entirety. The Minister also gave us the opportunity because he talked about next year's restructuring. Some of us wonder what will happen then. I gathered that the Minister's speech was written before the privatisation of electricity was proposed, and even before the negotiations took place. He has also told us, in conformity with what we were told before, that there will be a transfer of costs to British Coal.
What happened in the coal industry in 1987 made it inevitable that the Minister should have to come to Parliament with new proposals in 1988. I read what we were told by the then Minister when a similar order was debated in 1987, and it bears no relation to the climate in which the coal industry is operating. I hope that the Minister will concede that. Nor indeed does it bear any relation to what the Government saw for the coal industry or for miners at that time. If the Minister is in any doubt about that, I can refer him to the debate, because I have a copy of it here.
In the many years in which I have taken part in coal debates, I can never recall a time when such a cloud hung over the industry. As we discuss the orders, the very existence of the coal industry in part of the country hangs in the balance. Whatever is said in the debate, that is the backcloth. We cannot ignore what has taken place. I was a miner for 30 years before I came to the House, and I have never known a time when morale in the coal industry was at such a low ebb. I indict the Government as the main architect of the crisis in morale.
The Secretary of State for Energy has said that British coal will have to compete in the market, but nuclear power is not to be treated in the same way. If it were it would wither, because the market could not stand up to the commitment and the expense. To sell the privatisation of electricity, the Secretary of State for Energy has given the green light to coal imports. Foreign coal miners have jobs; 1080 British coal miners are threatened with the dole. No one who has kept abreast of the situation in the coal industry can fail to be aware that 1987 was marked by the emergence of international coal as a major competitor. I concede that the Minister referred to that in his opening remarks.
What has been done to deal with the problem? I shall deal with the question of restructuring and of redundancies. At a very heavy cost, British Coal's prices have undergone a sharp drop. Under the joint understanding with the Central Electricity Generating Board, to which I have referred in previous debates, price concessions were made in 1986 to the tune of £400 million, but the decline in the value of the dollar against sterling during 1987 has exacerbated matters by increasing the gap between the prices of British and foreign coal by 25 per cent., or £6 per tonne, without any action being taken by British Coal or its competitors. The overall loss of revenue from sales amounts to more than £500 million.
It has been said that the work of British miners should be put on record. The Minister referred to that, but not to the financial burdens that British Coal has had to bear because of the slump in the dollar and its effect on the competitive prices of coal. I would put the case rather differently from the Minister. The output per man shift has passed the 4-tonne barrier. Productivity has increased by 60 per cent. since the miners' strike in 1984 as a result of so-called restructuring.
The coal communities have paid a very high price for that. At the end of the strike there were 169 pits. We are now left with 102, and before March 1988 ends the figure is likely to fall to 96. The number of coal faces has fallen from 520 to 260. Total manpower has fallen from 220,000 to 127,000—an overall reduction of 93,000, 78,000 of whom were mineworkers. That contraction of manpower is without parallel elsewhere in industry in recent times.
I am informed that British Coal's sales are running at about 105 million tonnes. The industry has reduced its costs by 23 per cent., but, with all the price pressures on industry in real terms, British Coal's average proceeds are down 15 per cent. since the miners' strike. British Coal is running hard even to stand still.
Having outlined those circumstances, I want to put it on record that British Coal recorded a profit of £306 million in 1986–87—a a greater profit than British Steel achieved. Unlike British Steel, which paid £20 million in interest on its capital in 1986–87, British Coal is paying nearly £400 million at an interest rate of 11 per cent.
Much of the public discussion — it is fuelled and encouraged — is based on the view that the electricity generating industry could import much of its coal requirements and that the present low price to international coal can continue indefinitely. The reasoning behind the oft-quoted savings of £750 million for the CEGB and £10.5 million to £20.5 million for the South of Scotland Electricity Board is a myth. At current Rotterdam spot prices those figures are not sustainable. The prices do not cover the exporters' operating costs. Already 10 Australian mines have been closed, and even South Africa has cut exports by 8 million tonnes. Present prices do not form a basis for new capital investment. To do so, they would have to be 50 per cent. higher.
I am told that only some 4 per cent. of steam coal is traded internationally. Imports to the whole of western Europe are only 70 million tonnes. The CEGB alone consumes at least 80 million tonnes. Any large-scale 1081 attempt by the CEGB or the SSEB to buy coal on international markets would sharply increase import prices. As for the claim that those higher prices would still be lower, I am reminded that British Coal already sells 12 million tonnes at international prices.

§ Mr. Andy Stewart (Sherwood)
I am following the hon. Gentleman's argument with interest. Last year just over 9 million tonnes of coal were imported into this country, more than 7 million tonnes of it by the British Steel Corporation. If we had flexible working arrangements in south Wales, much of that coal could come from this country. Does the hon. Gentleman agree that that would be a step forward?

§ Mr. Eadie
The hon. Gentleman's figures are correct, but he is introducing an Aunt Sally into the debate. I am trying to defend the present position of British Coal. If the hon. Gentleman has views about flexible working, he may manage to catch your eye later, Madam Deputy Speaker, and make his own contribution.

§ Mr. Edward Leigh (Gainsborough and Horncastle)
The hon. Gentleman speaks with moderation and sincerity, but he has been speaking for some time. Before he sits down, will he not utter even one word of criticism on behalf of the Labour party of the blinkered and destructive leadership of Mr. Arthur Scargill, who has served the interests of the miners so badly? Does he realise that the patience of Conservative Members and of the public at large is running out?

§ Madam Deputy Speaker
Order. The order before the House does not concern any individual personality.

§ Mr. Eadie
I apologise for giving way to the hon. Gentleman, Madam Deputy Speaker. I should have known better. The hon. Gentleman may not like it, but I have not finished yet.
There is little doubt that the SSEB coal row has grabbed the headlines, and so it should, because if the SSEB gets its way it will mean the extinction of the coal industry.

§ Mr. Nicholas Fairbairn (Perth and Kinross)
Will the hon. Gentleman give way?

§ Mr. Eadie
I am sorry, but I must carry on for the moment. In this crisis, the Government appear to be involved in some skulduggery. The Financial Times international report for February substantiates that assertion. It says: There seems to be little likelihood that the British government will intervene to stop the import move. It is understood that before last month's price enquiry the Secretary of State for Scotland, Malcolm Rifkind, had given his assent to the move. It is likely that the SSEB chairman, Don Miller, would have once again sought clearance from the Scottish office before leaping. Nor is British Coal likely to get any support from energy secretary Cecil Parkinson who last week told the Coal Industry Society that the shortly-to-be privatised British electricity supply industry will be entitled to buy its coal from whichever source it chooses. Clearly Miller has been told that he need not wait for privatisation". That is why I said that there had been some skulduggery in this matter.
I asked the Library to research the terms of reference of the Central Electricity Generating Board and the South 1082 of Scotland Electricity Board. I know that the Secretary of State's hands must be very sore from sitting on them with regard to this industry. He has sometimes said, It was nae me; there was nothing else that we could do. The Act says: The powers of the Secretary of State for Scotland in relation to electricity supply are contained in Part II (sections 32–38) … to give directions to either Scottish board where this appears to be necessary in the national interest". The other board that is referred to there is the Scottish hydro board.
The Government are not entirely guiltless in this matter. This week, Campbell Christie, who is the general secretary of Scottish Trades Union Congress, was reported as saying that someone was lying. He was referring to Donald Miller's vice-chairman, Iain Preston, and to whether the SSEB had obtained a tender from British Coal. The press release from British Coal says: Responding to comments … made by SSEB Vice-Chairman … Malcolm Edwards said: 'We offered the SSEB on Monday before the closing date for tenders, a unique 12-year coal supply and price package which reduces the prices from British Coal from April 1 in money terms by 6 per cent. or £9 million. In real terms, corrected for inflation, the saving would be nearer 10 per cent., or £15 million.' Mr. Campbell Christie is entitled to a reply to the question that he has posed. Who is lying about this crisis in Scotland?
These orders earmark the provision of finance associated with the coal industry. Large-scale contraction arising from cheap imports will be irreversible and permanent.

§ Mr. Patrick McLoughlin (Derbyshire, West)
rose—

§ Mr. Eadie
Unlike factories, coal mines cannot be mothballed. Once they are closed, they stay closed. Do we want electricity supplies—the House must be apprised of this possibility — to be in the hands of South Africans, Poles, Russians or the Colombians, with all the trauma and uncertainty that that would entail? We have an abundance of coal reserves in this country, and it is in our strategic interest to mine them.
Why should we rely on the short-term vagaries of the spot market? The Government should have a clear policy for the mining of indigenous British coal. They certainly have a clear policy for nuclear energy. I hope that my hon. Friends will highlight the blatant prejudice for nuclear energy that the Government are showing in their policies, and how biased they are becoming in relation to the coal industry.

§ Mr. Dick Douglas (Dunfermline, West)
I shall try to be brief, as many of my hon. Friends wish to participate in the debate.
I should like to expand on some of the remarks by my hon. Friend the Member for Midlothian (Mr. Eadie) about the dispute between South of Scotland electricity board and British Coal. My hon. Friend referred to comments made by Campbell Christie of the STUC. I met Mr. Miller, chairman of the board, last Friday, and we talked about the vexatious problem of the restructuring of the Scottish industry.
I see that my hon. Friend the Member for Clackmannan (Mr. O'Neill) is present. In our area, we know some of the consequences of restructuring, particularly in Fife. My mind goes back to a meeting some months ago in Oakley, where the issue of the closure of 1083 Comrie colliery was discussed. One point made then was that if the colliery closed, the resources would probably be available for investment in Seafield, Castlebridge and other parts of the Longannet complex.
The men made a brave decision: they voted for the closure of their own colliery. That colliery was sunk in the 1940s, and Herbert Morrison, when he went along there, called it the cat's pyjamas. It was kept in existence by the efforts and tenacity of the men. It is rather insulting that, according to one of my hon. Friends, someone called Lord Young has said that we live in a soft society. Some people may he living in a soft society — I may be looking at some of them on the Conservative Benches — but very few miners in my constituency do so.
I have worked hard in my time. I left school at 14—I am probably one of the few hon. Members on either side of the House to have done so — and I have worked damned hard. But never have I seen men work as the men in that and other collieries have worked. Nevertheless, those men voted for the closure of their colliery and the restructuring of part of their industry.
We now have not an old but a young labour force. At a meeting that I attended on Sunday in Fishcross were some very young men. I do not consider myself an old man yet, but I was old enough to be their father. They were in their 20s and 30s, and they were concerned about the future of the Longannet complex.
What is at stake is an analysis of competition. The Coal Board says that it is making an arm's-length offer to the SSEB. The SSEB is constrained by an Act of Parliament to get the best deal that it can. Mr. Miller says that there is a dispute. If there is a dispute between two public boards, it does not behove any sensible Minister to sit back and say, "I am having nothing to do with it." The dispute is about the offer that British Coal is making, and its interpretation by the SSEB.
I have written to the Prime Minister on the subject. I hope that I am not misinterpreting Mr. Miller. He suggested to me that if British Coal was willing to subject its offer to independent scrutiny, he would be similarly engaged. Given that, any Government worth their salt would bring them together, perhaps not at ministerial level but certainly at civil servant level. I shall mention a civil servant by name: I cannot believe that if a Labour Government were in office the Gavin McCrones of this world in the Scottish Office would not be asked or told—indeed, they would not need to be asked or told—to get some idea of what the hell the two boards were up to.
We are not talking about market economics. We are talking about upwards of 4,000 jobs and about the salvation of deep mining for coal in Scotland. The Minister is putting a lot of money into it—he told us how much. What happens to Castlebridge and the Longannet complex if the SSEB walks away from them? They are not pieces of putty. They are a fixed asset with a specific function that is tied to the power station.
I shall digress and mention the stupid statement made today by the cockeyed, phoney-baloney Secretary of State. He said that we shall have competition in the electricity industry. But we are not dealing with England or Wales. He spoke of setting up two companies, one for the north of Scotland and one for the south. The two of them will come together to run the nuclear side of things. And what will the nuclear side count for in Scotland? It will account for between 25 and 30 per cent. of capacity and output. Off the top of my head, that is about 50 per cent. of baseload.
1084 Where in God's name is the competition there? It is a pantomime horse called duopoly, its head in a plutonium trough. Who is kidding whom about competition?
We are asking about men's lives and the future of communities. We are asking for fairness and we intend to keep up the campaign in Scotland. I hope that the rest of the country realises what is happening there. The Minister cannot or will not take the responsibility for resolving the issue of what is involved in the contractual relationship. Deep mining in Scotland is in deep jeopardy.
I accept that there have been many difficulties in industrial relations in the past, but now the industry has been pruned down, and there is little spare flesh or muscle left to trim off. We are down to the bare bones of capacity and output. I plead with the Minister or the Secretary of State not to stand back and accept the position but to obtain a proper analysis of what is going on. I remember 1964 and further back, when the great future for fuel and power supplies was in cheap oil, but we know what happened in the 1970s. That could happen again. It would be a brave man who anticipated the demand for and supply and price of oil over the next 10 years.
We are in a transitional stage. If we give up deep-mined coal in Scotland, we shall destroy a valuable and irreplaceable asset. Much money has gone into the industry. We cannot write off the £80 million that has gone into my constituency and that of my hon. Friend the Member for Clackmannan. No Government in their senses could do that. But perhaps I plead in vain—I see little sense in Ministers these days.

§ Mr. A. J. Beith (Berwick-upon-Tweed)
The restructuring of the mining industry has had its effect in Northumberland, where the number of mining jobs fell from 34,000 in 1960 to 4,500 in 1985, and is probably significantly lower than that now. Most of the remaining jobs are in my constituency. Despite this massive change, into which considerable amounts of Government finance have gone, we are still not receiving the help that we need to deal with the consequences of change for the community.
The lack of assisted area status and the feared decline in regional aid under the recently announced new arrangements means that the Government, having helped to finance restructuring from public funds, are leaving the communities to finance the consequences of restructuring, which are a heavy burden. They are doing so in a framework in which local authorities have little power to spend money even if they could raise it, so they are severely restricted in what they can do to deal with the consequences of this massive change. Their access to European funds to help to deal with the changes is blocked by the lack of assisted area status in many of the affected areas, including the one that I represent.
The House has discussed that subject often and I will not repeat what I have said. However, the problem has not gone away; it remains as serious as ever. On top of that, there are worries produced by the proposed privatisation of the electricity industry and the particular form that that is intended to take. It has raised fears that the position that has already arisen in Scotland over the South of Scotland electricity board contract might also arise extensively in England.
Morale in Scotland is worrying. The SSEB is the electricity provider for a significant part of my 1085 constituency and its activities have caused us some concern over the years as it has launched a massive nuclear programme which gave it a colossal over-capacity; some really extraordinary investment decisions were taken, the consequences of which we are beginning to see as the board puzzles over what to do with the Torness plant and the problems that it presents.
If the Government get their way, the SSEB and other boards will be committed to deliberate market distortion to secure a future for the nuclear industry at a level that the private sector would not provide of its own free choice. There can be no other explanation for the Government's desire to include a requirement in their privatisation provisions for the nuclear industry, disguised in the proposals as a requirement for non-fossil fuels. I do not believe that that is what it is all about. Obviously it is an attempt to secure a place for the nuclear industry which purely market decisions would not provide. That is a sign of the kind of pressures that will be brought to bear on the coal industry.

§ Mr. McLoughlin
Will the hon. Gentleman accept that we desperately need to balance energy resources in this country so that we are not reliant on any one sector of energy? What has changed since the National Coal Board's report of 1966–67, which stated: The task now facing the board is to secure the largest possible output of coal at prices that are competitive with rival fuels. Competition from oil, natural gas and nuclear power will be a formidable and continuing challenge to the coal industry"? That was perceived quite some time ago.

§ Mr. Beith
Since then it has become clear that the potential of nuclear power in any straight commercial circumstances does not seem to be anywhere near as dangerous to the prospects of the coal industry as the coal industry once thought. The provisions would not be in the Government's privatisation proposals if they did not fear that, given a free choice, the private sector simply would not invest in nuclear power.
The hon. Member for Derbyshire, West (Mr. McLoughlin) advances the interesting argument that we should forget the market and devise an appropriate balance of different kinds of energy production. That is not the Government's policy. At least, it is not the philosophy that the Government espouse. If it is Government policy, it means that in relation to the coal industry we should take a much longer-term view of the implications of coal prices for what the electricity industry buys and which pits we keep in production. If the objective is to keep a balance, we should take a little less notice of the current spot price for coal and look to longer-term considerations and how to keep the coal industry in being. The Government must solve that inconsistency in their approach.
One of the ways in which the coal industry has tried to alter the balance of costs has been through the expansion of opencast production. The restructuring towards opencast is almost as significant as that being carried out in other areas. That restructuring has had a particular impact in my constituency and the pressures have now built up in my constituency to a frightening degree. The local community has been confronted by a number of major site proposals. These have affected the villages of 1086 Linton and Ulgham. The proposal for Ulgham is for a very large site intended to replace the Butterwell site in due course.
Areas in which people had not expected a major expansion of opencast operation have become subject to it. Whereas opencast was initially developed in my constituency in areas that had been severly ravaged and in which the restorative work of the Opencast Executive could bring at least some benefit at the end of the day, the development is now entering areas where that will not happen and where the prospect is simply many years of misery for the people living on the doorsteps of the opencast. Restoration will not equal the quality of the countryside that existed before the opencast development.
The most recent case—it is causing a great deal of anxiety in my constituency — is an application for a private licence opencast scheme in an area of wild Northumberland moorland where nobody really expected that sort of development to take place. The area is called Wandylaw. It is an area of prehistoric sites, cup and ring markings, cairn cemeteries, beautiful natural moorland and all sorts of features that were thought to be sacrosanct. The area is now the subject of an opencast application, which the county council has approved in principle, thereby preventing any public inquiry, public meeting or other methods by which the local community can express its concern.
The community in Northumberland was initially fairly willing to accept the move into opencast production and was pleased about the small number of valuable jobs that it would create. However, there is now increasing hostility towards the scale of opencast development. The local people are increasingly concerned now that the Secretary of State for the Environment has overturned his own inspector's reports in some recent cases. That will lead the local authorities to feel that it is not worth turning down applications because they will only be overturned on appeal and they may be wasting their time in refusing the application in the first place.
This has created an unfortunate climate of much greater hostility towards opencast coal operations. It calls for a little more caution in the pace at which the applications go ahead and a more determined attempt to enable the local community to express a view when opencast applications come forward.
The coal industry is distinctive in the scale of disruption that its restructuring causes its communities. That is partly because of the great dependence of some of those communities on the industry and partly because of the physical changes that come about as a result of opencast mining. The Government have to recognise the importance of stability in the industry now that it has been pared down to such a small prorportion of its former size. They have to recognise the concern of local communities and their need for practical help in dealing with the problems of restructuring.

§ Mr. Nicholas Fairbairn (Perth and Kinross)
I am moved to make a short contribution by the sincere speech of the hon. Member for Midlothian (Mr. Eadie) for whom, as he knows, I have the greatest respect, and by the speeches of the hon. Members for Dunfermline, West (Mr. Douglas) and for Berwick-upon-Tweed (Mr. Beith). The House is nobly served by the contributions of the hon. Member for Midlothian and there is no more sincere and 1087 passionate advocate for the mining industry than he. As a lawyer, I have had the pleasure and honour over the years of representing members of the mining industry.
The hon. Member for Midlothian said one thing that was not strictly accurate. He said that the proposals of the Scottish electricity industry—I am careful because there is presently a case that is sub judice and has been taken to avizandum between British Coal and the South of Scotland electricity board—would spell the death knell of the mining industry in Scotland. That is not so. More than 50 per cent. of the production in Scotland is not deep mined. It would certainly have consequences for the deep mining industry in Scotland if the SSEB were to obtain its fossil fuels from sources that were not deep mined in Scotland; of that there is no question.
As I understand it, one nationalised, or denationalised, industry is not supposed to be in business to keep another at work. The function of the electricity industry is to provide for the customer — coal miner, retired coal miner, coal miner's widow or whoever—electricity at its lowest possible cost.
Probably the most resented and most difficult to meet bill that comes into any household in Scotland is the blue, the red and then the white cards of the electricity industry. That bill is directly related to the cost of the fuel that the industry requires to provide electricity.
Let us be under no illusion. There is no duty on any industry to keep another going at the expense of the public whom it is intended to serve. That was the issue this afternoon and that is the issue which is echoed tonight.

§ Mr. William O'Brien (Normanton)
Balderdash.

§ Mr. Fairbairn
Is it balderdash that the electricity industry is intended to serve the community — pensioners, hospitals and industry—with fuel that they can afford, or is the electricity industry meant to keep in business traditional industries which are more expensive, whatever the cost in unemployment and the cost to the pensioner, the family and those who cannot afford to heat their homes?

§ Mr. Phillip Oppenheim (Amber Valley)
My hon. and learned Friend, like me, probably has in his constituency a number of miners and a number of other people who work in other industries, such as dyeing, pottery and brickmaking, all of which are highly energy-intensive industries. Does he agree that the jobs of those people in energy-intensive industries would be at risk if the Opposition's policies were ever implemented?

§ Madam Deputy Speaker
Order. I have to remind the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) that we are discussing restructuring grants in the mining industry. I hope that he will relate his remarks to the order.

§ Mr. Fairbairn
I am obliged to you, Madam Deputy Speaker.
The hon. Member for Berwick-upon-Tweed referred to the anxieties about opencast mining, but the anxieties about deep mining are just as great. The dangers of deep mining are infinitely greater, so of course the anxieties are great. Until the hon. Gentleman spoke, I had never heard anyone refer to the moors in Northumberland as places whose beauty people were anxious to preserve.
My point is simple. It is our duty to restructure, as so many mining communities have done. They have a 1088 particular and remarkable social consciousness and moral value as communities, but that is not any reason for the rest of the people to be held to ransom on the basis that, whatever the cost of the fuel that it uses, the electricity industry has in some way a duty to the mining industry but no duty to the public whom it is serving by the energy that is produced.

§ Mr. Allen McKay (Barnsley, West and Penistone)
I should like to follow the comments of the hon. and learned Member for Perth and Kinross (Mr. Fairbairn) on production in Scotland. I agree with my hon. Friend the Member for East Lothian (Mr. Home Robertson) that the death knell will sound for the coal industry in Scotland if the problem of the Scottish power industry is not solved. I learnt only this week that the outcropping, or opencast mining, in the constituency of East Lothian has not just been held up, but has ceased. Almost 150 people will be made redundant. The colliery involved will not open again until it can be guaranteed a market for its product. Much of what is produced in Scotland by opencasting goes across to Ireland.
It should sound a warning when opencasting, which is supposed to produce the cheapest coal, ceases to work because it cannot be guaranteed a market. The Minister looks puzzled. In my talks today with the deputy chairman of British Coal and the managing director of the Opencast Executive, Mr. Proctor, they admitted that there was a problem. It is a warning of what is happening to the coal industry in my area.
Perhaps I should declare a lack of interest in the debate. When I came to the House in 1978, there were eight collieries in my constituency, and two more in an adjacent constituency. There are now no collieries in either my constituency or the adjacent one. Ten collieries where my constituents used to work have therefore closed. They have been restructured since 1978. Restructuring is all about colliery closures. When we consider an order that increases the amount of money available for the restructuring programme, we look at it suspiciously, because it indicates that further closures are imminent.
The Government have recently taken away British Coal's guarantee regarding its collieries and have physically and knowingly transferred it to the nuclear industry. That is what they did the other day, when they announced that British Coal was breaking even.
There was something sinister in the closing remarks of the Minister—I agree with my hon. Friend the Member for Midlothian (Mr. Eadie) about this—when he said that the taxpayer will go only so far. How does the Minister know that the taxpayer will go only so far? He said that the Government believe that the taxpayer will go only so far, but they are wrong. The Government will leave the coal industry wide open, under the guise of market forces operating in relation to a privatised electricity industry. They have sold the coal industry down the river. The coal industry will be run down to a managed proportion which will be ideal, in the not-too-distant future, for a Bill to come before the House to privatise what is left of the coal industry.
The hon. and learned Member for Perth and Kinross referred to balance. The balancing effect has now changed. It used to be argued that we could sustain a large viable coal industry and that what it could not produce for the electricity industry would be topped up by nuclear fuel. All 1089 that has now changed, because the balance has swung in the opposite direction. Evidently, the future trend is towards nuclear, topped up by coal, so we are working towards the long-term demise of the coal industry. That is what the Department of Energy means when it says that the coal industry must compete against foreign imports.
The only thing that is stopping imports from pouring into this country is the fact that we do not have the facilities for them. Opposition Members put blocking motions on Bills to try to ensure that the coal industry has a fair crack of the whip. The Government talk about making facilities available for more coal imports as part of their long-term plan. That accounts for the so-called restructuring programme.
The last colliery to close in my constituency was Redbrook colliery. Some £29.5 million was spent on the colliery, thereby making a new colliery. On the day that the closure was announced the contractors were still there completing the restructuring. The output of that colliery was twice the national average. There was no investment or output reason for its closure. In restructuring, what is the money being spent on? Does spending £29.5 million on a colliery only to close it come under restructuring?
I agree with the hon. Member for Berwick-upon-Tweed (Mr. Beith). Most areas are coming under pressure from the opencast executive to extend opencast mining. It has been said that the coal is needed for blending, and in some cases this is true. In other cases, it has been said that it is done to keep the deep mines open, but that is not true. The cash flow from opencast mining appears on the bottom line, so it reduces only the total cost of British Coal. It does not keep down mines open, or Redbrook in my constituency would not have closed. British Coal is seeking to produce low-cost coal that will be able to compete against imports, but opencast mining in Scotland is not succeeding. All that we can see is the demise of the coal industry, as a deliberate policy of the Government.
What is happening to liquefaction and gasification? What has happened to the Waldilove report? It has been held up until privatisation becomes imminent. No private owner will take on board the costs of subsidence. These are questions which we should all ask, and which the Minister should be able to answer. He should be honest with the House, with British Coal, and with the people who work in the industry, because they have a right to know what is behind the restructuring programme. Are we correct in our assumption that there will be an increase in colliery closures and that if the industry does not break even next year it will go under? If so, that is pure market economics.
The coal industry was nationalised because private enterprise could not sustain it. Public money made it possible to bring the coal industry to the level that it has achieved. I am proud of having worked for the coal industry from when it was not mechanised through to its electronic era, and I had a hand in introducing that. However, I am afraid that all that expertise will be thrown to the wall and the coal industry will be destroyed, or at least severely diminished, because of the programme that the Government have planned for it.

§ Mr. Martin Redmond (Don Valley)
I listened intently to the Minister, and his speech reminded me of the sinking of the Titanic. It did not fill me with confidence for the 1090 industry, particularly given the amount of money that he is granting it. The order is about restructuring. Has the Minister had any detailed discussions with British Coal on how that money will be spent against the block headings? I worked in the industry for many years and I know that there have been many restructurings, many reorganisations and much rationalisation.
I will give the Government an example of why I say that they should have detailed discussions with British Coal on how the money is to be spent. The workshops where I worked, together with stores and transport, had a considerable amount of money spent on them, only to be closed immediately after the strike. I can recollect talking to the workshops director about rationalisation of workloads at the various workshops. He had come with plans to rationalise Carcroft for electrification. We put some counter-arguments to him about why that was not in the interest of the workshops. He agreed to take them away and give us a reply. That was at least 12 years ago and we are still waiting for an answer. So the Government really must be told what the money is to be spent on.
We have said that we are not impressed by the restructuring plans of British Coal. I do not think that British Coal and the Goverment have any intention of making sure that we have a viable industry which will work in the long-term interests of this country. The Government are sacrificing the long-term interests of the industry and the country on the altar of market forces.
Yorkshire Main, a pit in my constituency, has £10 million spent on modernising the head gear. Then Yorkshire Main, of course, was closed and the £10 million was thrown down the drain. The pit had a life of 15 or 20 years, but British Coal closed it through its vindictive attitude to the lads in Edlington village. That is the point that I am making. It is no good shoving money across to British Coal and talking in terms of restructuring. The Government really ought to get off their backsides and find out just how British Coal intends to spend the money.

§ Mr. Jack Thompson (Wansbeck)
My hon. Friend has touched on a very important point. In my experience of the mining industry in my area, considerable sums of money were spent from 1947 onwards but it was wasted by what I contend was mismanagement. Decisions made by management have proved to be totally wrong, and millions, if not thousands of millions, of pounds have been lost. Yet there has been no inquiry into the management of the mining industry at that period. Such an inquiry is absolutely necessary. Would not my hon. Friend agree?

§ Mr. Redmond
I absolutely agree with what my hon. Friend has said. Certainly the old Coal Board was found guilty on many occasions. If the Minister is not concerned about British Coal wasting taxpayers' money, he ought to be.
Bentley pit in the Doncaster area was to close under the old ABC hit list. Through the good offices of the Doncaster National Union of Mineworkers' panel, the director was persuaded, under the threat of a strike action, to retain the pit. Of course, many years later, the director was holding Bentley pit up as an example. This is what I am saying: the future of the industry needs long-term planning, and restructuring is about long-term planning. And we shall not get long-term planning if we have this "market forces" routine in operation.
Coal imports have been mentioned. Obviously, the two proposed ports at Humberside will import several million 1091 tonnes of coal. That will have a devastating effect on Nottinghamshire and Yorkshire and will cost the industry many jobs.
No other country can compete with the amount of planned dumping in Britain. The Minister must agree with the dumping of coal and with the slave labour that it produces in such countries as Colombia where women and children are employed. Obviously the Minister agrees that women and children should work in the coal industry or he would not allow the importation of coal from those countries.
In addition to the problems caused by the importation and dumping of coal, the gas industry intends to import gas. Of course that will have an impact on the balance of payments. The Chancellor obviously is not concerned about that, given the recent figures.
The Minister talks about the movement of men and the benefits that they get from restructuring. The industry and those who work in it have always welcomed the introduction of technological changes to improve efficiency. They welcomed those changes and worked with the Coal Board. However, the miners do not want to become industrial gipsies skipping from pit to pit in a downward spiral.
I question whether it does any good to give the Coal Board money for restructuring, when it seems to be operating a policy of confrontation. There is a saying that silent pain provokes no response. When the lads at the pits complain about the jackboot tactics of the Coal Board, they are shouted down, sacked and sent down the road for standing up for their democratic rights, as people living in a so-called democratic country. When we talk about peace, prosperity and restructuring, we must not forget that at Rossington pit, which has produced a great deal of good coal during the past few years, a number of miners have been sacked. No matter what restructuring takes place, it will not cure the industrial relations problems that prevent the industrial peace that the board seeks.
1092 The Minister attacked the union officials and accused them of being Luddites. I have never met a more moderate set of union leaders in the industry than those who now hold office. Moderation is the watchword and the key word by which they operate.

§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
Does my hon. Friend agree that his comment that the men are moderate was confirmed this week when the NACODS union, on the wish of a judge, returned to work normally and have suspended the strike? At Kellingley, the major pit in the country, there has been deliberate provocation in that the deputies' duties have been extended——

§ Madam Deputy Speaker
Order. Regrettably, this is not part of the order. The order concerns the restructuring and the level of financial support provided by the Government to the coal industry.

§ Mr. Redmond
It is no good restructuring the industry without restructuring certain elements within the industry. Industrial relations are an important part of the industry. The provocation that the Minister seeks to use against certain NUM and NACODS officials simply will not wash. The keyword of the NUM is moderation.
The Minister ought to acquaint himself with a major problem at Rossington. Those who worked in the coal industry at Rossington before nationalisation are deeply concerned about what is happening to their concessionary fuel.