HC Deb 29 January 1990 vol 166 cc9-11
8. Mr. Skinner

To ask the Secretary of State for Energy when he next expects to meet the chairman of British Coal to discuss coal imports; and if he will make a statement.

15. Mr. John Marshall

To ask the Secretary of State for Energy if he will make a statement about the level of coal imports.

Mr. Wakeham

I meet the chairman of British Coal regularly to discuss all aspects of the coal industry, including coal imports.

Coal imports for the period January to November 1989 were 11.2 million tonnes. We do not produce estimates for future years.

Mr. Skinner

How can the Minister justify that massive increase in imported coal—to more than 11 million tonnes in less than a year—when we already have a balance of payments deficit of more than £20 billion? Is it not economic lunacy to add to that bill? Does he realise that that figure is equivalent to more than 10 pits and more than 11,000 jobs of miners who, having been thrown out of work, would have to be picked up by the taxpayer, who would have to pay their dole and welfare benefits? What is the point of it all?

Mr. Wakeham

The hon. Gentleman may make his point; he has made it a number of times before. He referred to a massive increase in coal imports, but the figure that I quoted was 11,188,000 tonnes, which, as the hon. Gentleman knows, was less than the figure for 1988. The figure was for 11 months, not for 12. We cannot speak of those figures, therefore, as a "massive increase".

Of course, no Government have ever restricted the import of coal and we do not believe that restricting competition is in the best interests of the coal industry and of the long-term security of jobs, which rely on its being a competitive industry.

Mr. Marshall

Does my right hon. Friend agree that the world price of coal is somewhat lower than the price charged by the coal industry to the electricity boards? Does he therefore agree that coal imports are in the interests of the consumer, that they will lead to lower electricity bills for pensioners and that they will help to safeguard jobs in manufacturing industry?

Mr. Wakeham

I believe that overwhelmingly the main source of coal supplies for United Kingdom generating industry for a long time to come will be British Coal. But my hon. Friend makes an important point. The House may be interested to know that United Kingdom coal imports in 1988 cost an average £35.67 a tonne, compared with British Coal's price of £41.16 a tonne. So there is not a staggering difference, as some people make out, but there is a significant difference and British Coal must continue to improve its productivity.

Mr. Eadie

As the Secretary of State is aware both that it has been clearly established that if the Associated British Ports (No. 2) Bill passes through the House there will be an increase in coal imports and that the chairman of British Coal has said that he is against that Bill, is it not lunacy to proceed with it, especially when the Government and the nation are being confronted with our horrific balance of payments deficit, to which my hon. Friend the Member for Bolsover (Mr. Skinner) referred, and more miners will be made redundant as a consequence? Is that a sensible energy policy?

Mr. Wakeham

It is not an amazing surprise that the chairman of British Coal should not be wildly enthusiastic about any Bill that he perceives will increase competition.

Nevertheless, we believe that competition is right. The hon. Gentleman's time scale is wrong. Even if the port is built as intended and all the necessary arrangements are made, it will be a good many years before much extra coal is imported through it. Moreover, British Coal has other competitors in the market, such as oil and gas. There is no need to build additional ports to bring in those facilities. That is why it is essential that British Coal continues making substantial improvements in future. That is its long-term security.

Mr. Paice

Does my right hon. Friend agree that another major competitor is nuclear generation and that if coal prices were increased, which is the Labour party policy, that would change the balance in the figures more closely in favour of nuclear generation which, incidentally, many Conservative Members would welcome?

Mr. Wakeham

I am a strong supporter of nuclear energy. It has a part to play in the diversity of supply which we want. My hon. Friend is right that the significant difference between the nuclear industry and the others is that the nuclear industry must pay the full costs of disposing of its waste, and we know of the difficulties that that produces. That is not necessarily so of fossil fuel generation.

Mr. Barron

What will happen to coal imports this year? It is all very well to quote the figures for 1989, but the Secretary of State is well aware, as I am, that the two new generating companies established by the Bill to privatise the electricity supply industry have so far contracted to import 6 million tonnes of coal to generate electricity—

Mr. Paice

Not enough.

Mr. Barron

The hon. Gentleman shouts, "Not enough" and perhaps he can explain that.

Until now British Coal has lost 5 million tonnes. It signed a contract for 70 million tonnes this year, but it does not know which electricity generators will need the coal. We do not know what our base load generation will be. As a consequence, there is low morale in the British coal industry from top to bottom. The Secretary of State does not know where the coal flows will come from, from pits to generating stations, and we do not know what the industry's future will be until we hear answers to these questions.

Mr. Wakeham

The hon. Gentleman makes many remarks. If he had listened to the original answer he would have heard that we do not produce estimates for future years. He should understand that coal must be imported if we are to use a great deal of United Kingdom coal which has a high sulphur content. It is necessary for the mix. I should have thought that in a balanced prospectus of the position, he would say something about the fact that this is the first time that British Coal has had a long-term contract to supply the British generating industry. I should have thought that that was a good thing.