§ Mr. Gavin Strang (Edinburgh, East)The Government have a responsibility to ensure that this country has an energy industry which meets our short-term needs and ensures that in the long run we will not have to depend on imported energy. For those and other reasons, I believe that Energy Ministers should be concerned about Monktonhall colliery in Lothian.
Scotland is an energy-rich country. We have nuclear and hydro-electric power, offshore oil and gas and the coal industry. However, it must be accepted that we will depend on our coal industry long after the oil and gas have run dry. There is therefore an important strategic reason why we should protect the long-term future of our deep-mine coal industry in Scotland—an industry which has been reduced to the single Longannet complex.
We were reminded today of the severity of the balance of payments deficit. At the bottom of the recession, it was announced today that there was a balance of payments deficit in March of more than £300 million. Surely the Government accept that it is only common sense to take decisions intended to reduce our balance of payments deficit in the long term rather than to exacerbate them.
It is worth recalling that, while we are now struggling to break even in our energy balance of payments, as recently as 1985 we had a surplus of more than £6 billion on our energy balance of payments. I hope that that gives some idea of the huge potential of our energy industry and, in particular, our coal industry for the balance of payments if the Government are prepared to accept some responsibility for ensuring that the right decisions are taken.
It is not just those important strategic questions that affect the economy and the coal industry. The decision to reopen Monktonhall colliery is crucial to the Scottish economy. We now have only the Longannet pit, which is operating very efficiently, as no doubt the Minister will confirm later. Output in the Scottish economy fell last year by 9 per cent. Unemployment was high and is now rising significantly. Against that background, and during a recession, there must be a strong case for encouraging a nationalised industry such as British Coal to invest in the Scottish economy. A decision to invest in Monktonhall would give a very important boost to the local economy in Lothian. A boost in investment—although not a huge investment—is required to bring the pit back into production. There would be a boost also in terms of the creation of direct jobs in the mine and also indirect jobs and in terms of the additional local purchasing power that would be generated in the local economy as a result of those jobs. That project is very important for the Lothian economy.
The Secretary of State for Scotland himself has acknowledged that the Government have a responsibility and that it stems partly from the concern that any Government should have for the future of the Scottish economy. So that there is no misunderstanding, I shall quote from a letter dated 8 May 1991 from the Secretary of State to the general secretary of the Scottish Trades Union Congress. He stated:
I am well aware of the strength of feeling surrounding the possible redevelopment of these mines, particularly Monktonhall. Indeed, a number of independent proposals to 1108 this end have been brought to my attention. For this reason I recently wrote to John Wakeham in view of his responsibility for coal policy throughout Great Britain.I hope that, if nothing else, that demonstrates that the Government have a responsibility and cannot simply wash their hands and suggest that all such decisions should be taken on a short-term basis by British Coal.The Minister will be aware of the campaign that has been mounted to secure the reopening of Monktonhall. A very important document called "Monktonhall Colliery—The case for revival" was produced collectively by Lothian regional council, the Midlothian district council, East Lothian district council, and the National Union of Mineworkers Scottish Area. The campaign has widespread support throughout Scotland and the support of Labour Members of Parliament. My hon. Friend the Member for Midlothian (Mr. Eadie), who has a deep and long-standing interest in the industry, would have liked to participate in the debate.
The tradition of coal mining in the Lothians goes back hundreds of years. I have had the privilege, as you probably know, Madam Deputy Speaker, of representing Edinburgh, East for almost 21 years. When I was first elected, quite a number of collieries were operating in Lothian. Latterly there are two collieries, Bilston Glen and Monktonhall—two large pits employing more than 1,000 men. If my memory serves me rightly, Bilston Glen employed almost 2,000 men not so long ago. Bilston Glen is now closed and all that is left is Monktonhall, which has been retained on a care-and-maintenance basis.
Let us be quite clear about what happened at Monktonhall. When Monktonhall was put on a care-and-maintenance basis, British Coal invested £14 million in new workings to open the Peacock seam, an important area of reserves which are accessible from the Monktonhall colliery. A total of 9 million tonnes of coal reserves are readily accessible from Monktonhall colliery at present. There are probably another 40 million tonnes of reserves that can be accessed from the colliery. That does not include the important reserves under Musselburgh bay. Before the redrawing of the parliamentary boundaries in 1983, I had the privilege of representing Musselburgh. We had a long discussion and argument about the siting of a satellite shaft in Musselburgh which would have allowed the men to reach the coal at Musselburgh bay, but the coal was to be brought up at Monktonhall colliery.
There is no doubt that if we can get through the short-term crisis for the deep-coal mining industry in Lothian, the Monktonhall pit will probably be in operation for another 100 years—that is no exaggeration —because of the scale of reserves. It was always said by the old National Coal Board that the reserves under Musselburgh bay had tremendous potential and undoubtedly could be exploited profitably in the long run. Nothing in the document to which I referred or the argument relates to the reserves under Musselburgh bay. The powerful case that has been mounted is based on the reserves that can be accessed from the Monktonhall colliery at present.
I accept that the decision whether to resume production, in particular under the Government's policies —I do not try to make a party point—is not only based on long-term strategic lessons. There must be a short-term market for the coal. However, all the evidence shows that there is a market for the coal.
1109 I do not wish to rely too heavily on the analysis in the document to which I referred. Various analyses have been made. But, unlike a few years ago, there are several positive developments on the likely demand for coal in Scotland. First, there is a good prospect—perhaps the Minister will comment on it—that the undersea cable that will enable Scottish Power to supply electricity to Northern Ireland will go ahead. The signs are that we are likely to have a positive decision on that in the near future.
Secondly, I assume that the interconnector between Scotland and England will be upgraded. It was upgraded previously but a doubling of capacity is now planned. I believe that that should go ahead as quickly as possible. I suspect that, if it had not been for privatisation, the upgrading would have been further ahead by now. It will enable additional electricity to flow from Scotland to England. In previous years there have been disputes between the electricity and the coal industries, but Scottish Power is now well pleased with the competitive coal supplied to it by British Coal.
It would be a mistake to assume that in the long run the necessary coal can be supplied from opencast mining. Of course, opencast mining has a contribution to make. However, British Coal has to be reminded, especially as responsibility for its opencast operations has been transferred from Scotland to the English headquarters and the operations are conducted on a Great Britain basis, that over many years there has been an unwritten political agreement between the mostly Labour-controlled local authorities in Scotland and the coal industry that councils would take a favourable and sympathetic view of opencast developments on the understanding that some of the economic benefits would be transferred to the deep-mine coal industry. British Coal may be in danger of understating the significance of that unwritten agreement.
It is fair to say that nothing like the controversy and difficulty that has arisen in England over opencast mining planning applications has been caused in Scotland. There are real problems with opencast mining. The Minister will know more about that than me from his ministerial experience and his knowledge of the position in England. However, it would be unwise for British Coal to think that its outlined ambitious plans for future opencast working in Scotland can go ahead smoothly if it does not give some indication of a commitment to deep-mine coal. An early and necessary sign of that commitment is a positive decision on Monktonhall colliery.
Growing importance has been given in recent years to low-sulphur coal. One might argue that that has been one of the most important developments since Monktonhall colliery ceased production in 1987. A premium is now put on high-quality and low-sulphur coal. The privatised English generating authorities have emphasised the growing importance that they attach to low-sulphur coal. One of the great strengths of Monktonhall coal is that it has one of the lowest sulphur contents in Great Britain and is potentially a high-quality coal.
For the reasons that I have given, there is a powerful, long-term strategic case for resuming production at Monktonhall, and, given a positive approach, a commercial case can be made for doing so, even though British Coal has not previously accepted that case. There 1110 are grounds for optimism that the commercial circumstances are such that in the years ahead the output from Monktonhall will find a market and can be produced profitably by British Coal or whoever operates the colliery.
It is no exaggeration to say that, if British Coal decided to write off the colliery, it would be an act of industrial vandalism. British Coal is committed to taking a decision next month. It is within its power to stop the pumps, to allow the colliery to be flooded and to write off a huge investment. In so doing it would sterilise reserves of tremendous potential that would continue into the next century. Huge investment would be written off, including £14 million which British Coal invested even after the colliery had ceased production. Surely such action is unthinkable.
The easy option for British Coal, of continuing care and maintenance, would contribute nothing to the local economy in the short term. The local community would be greatly disappointed if that option were taken. Jobs are needed in the area and the community is looking for them. If there were a resumption of production—I shall not say what the scale of the initial production should be, and it might not be as great as some might want originally—we would have the chance to prove that the colliery could operate extremely efficiently and competitively and that there was a market for its coal. I would hope that output could gradually be increased.
I quoted a letter that the Secretary of State for Scotland wrote to the general secretary of the Scottish Trades Union Congress, Campbell Christie. Ministers have put it on record that there have been approaches from interests in the private sector which wish to acquire and operate the colliery. Probably there are about five consortia, including the Monktonhall miners' consortium of local miners, who want to operate as a sort of co-operative. Various interests have all expressed a wish to operate the colliery.
It is not an accident that British Coal invested in Monktonhall after it had ceased production. Care and maintenance has continued. British Coal always recognised that the colliery had tremendous potential. If British Coal is not prepared to operate the colliery, surely the Government will insist that it is not written off for the long term. Surely they will insist that British Coal sells the asset to a private company or consortium. It is not for me to comment on the relative merits of the organisations which have expressed an interest. It is important, however, to put on record that private consortia have declared an interest. If British Coal is not prepared to operate the colliery, it is the overwhelming view of the local community that it must accept its responsibility to the nation and sell the asset to a private company, on the understanding that it will reopen the colliery and bring it back into production.
There is an abundance of mining skills in Lothian. Some men with a wide range of experience at the pit have not worked since it was closed. There are others who have expertise that is related to the mining operation. From the point of view of local Labour Members, the local authorities, unions and miners, the best outcome of the review that British Coal is carrying out would be for British Coal to decide to reopen the colliery and to restart production. If it took that step, there would be tremendous support and good will within the community. I am confident that if British Coal were to take that bold decision next month, its boldness would be rewarded by competitive production following the reopening of a colliery with a long future.
§ The Parliamentary Under-Secretary of State for Energy (Mr. David Heathcoat-Amory)The hon. Member for Edinburgh, East (Mr. Strang) spoke candidly about the potential for the Scottish coal mining industry and about the future of Monktonhall in particular. I share his optimism about the future, but it would be wrong if we did not temper that hope with realism about the formidable challenges that the industry faces.
Those challenges are not new. The hon. Gentleman will know that British coal mining output peaked in 1913 at not far short of 300 million tonnes a year. Since then, the industry has had to contract to meet market demands. The reason for that is obvious if we consider that before the war there were huge markets for domestic coal, railway coal, for bunkering ships and so on. Even as late as 1950, British Coal was supplying 38 million tonnes simply for the domestic market. Today's sales of domestic coal are just under 5 million tonnes and of course we do not use coal for railway transport or making town gas. So the industry has had to go through a period of substantial restructuring and now coal faces competition from gas, the nuclear industry and so on.
The hon. Gentleman spoke about imports. As members of the European Community and as signatories to the GATT arrangements, we could not operate a protectionist policy, even if we wanted to do so. I agree with him that Britain, and Scotland in particular, has substantial fuel reserves and an impressive diversity of fuel sources, but it would be wrong to protect that market artificially and to exclude imported energy as a matter of course. That would be a recipe for inefficiency and British industry generally would not be well served by a policy that exposed it to excessively expensive electricity prices simply to protect one energy industry.
The hon. Member for Edinburgh, East also spoke of the potential for exporting electricity from Scotland and I am aware of the need to strengthen the interconnector to England. But that, again, needs competitive Scottish power. I think that the industries concerned can rise to the challenge and the restructuring of the electricity industry and placing it in the private sector has helped to create a competitive market in electricity which enables British Coal and the Scottish generating companies to look forward to exporting their power to other parts of the United Kingdom.
There are formidable challenges ahead and they have been met in the recent past. The Government have been generous in helping British Coal to meet the cost involved. Since 1979, we have provided £17 billion worth of grant aid to enable British Coal to restructure, in conditions that have avoided the need for any compulsory redundancies, and any miners wishing to redeploy to other parts of the mining industry have been able to do so.
In Scotland, those challenges were faced earlier than in most of the rest of the United Kingdom. The restructuring there was difficult, but was achieved somewhat earlier. The Scottish energy market is particularly competitive. The hon. Gentleman mentioned offshore oil and gas and nuclear and Scotland is well placed for the development of alternative energy sources such as wind power.
Longannet colliery is successfully producing coal today in a way that shows what can be done with good management, good investment and the commitment and 1112 enthusiasm of a highly motivated work force. Longannet is a low-cost, highly productive pit which stands comparison with any in Europe.
Restructuring has not been painless, but the redundancy terms have, at least since 1979, ensured that those leaving the industry have done so with generous terms to cushion them during the difficult changes from working in the coal industry to working in other employment or taking early retirement.
That is the background against which the coal industry must operate and against which any decision about Monktonhall must be taken. It is for the industry, which at the moment means British Coal, to decide what its manpower requirements are. It must also, as it has already started to do, change its culture from one that attempts to retain market share at all costs to one that seeks a market share based on competition and reduction of costs to a level from which it can compete against other energy sources. The 90 per cent. increase in productivity that the industry has achieved since 1985 is impressive and shows what can be achieved. If that pace of productivity improvement can be kept up, I too am optimistic about the future.
As I am sure the hon. Gentleman is aware, British Coal has the stewardship of the nation's coal resources. Under the Coal Industry Nationalisation Act 1946, it is responsible for the efficient development of the industry in the public interest. It is charged with the task of determining where the public interest lies. Decision on access to, and exploitation of, reserves has always been a matter for British Coal, based on its assessment of market prospects. We wish to change that. As we have announced, after the next election we intend to privatise the coal industry and alter the statutory framework. That will create new opportunities for operators, companies, consortia and co-operatives of all sorts to mine coal. At present, however, the statutory framework remains that set out in the Coal Industry Nationalisation Act 1946.
Mothballing is not an easy option for deep mines. It is also an expensive option. Monktonhall is costing British Coal £500,000 a year because it has to be kept dry and the roads have to be kept open. However, it is not true that reserves are lost permanently if a mine is closed. Sometimes they can be accessed from a neighbouring pit, as has happened before. British Coal has given assurances that the pit shafts and road ways are being kept open properly.
I agree that, if British Coal decides that it does not wish to reopen and work the pit, it should give proper consideration to whether the mineworkers' consortium or the other interested groups should be given the opportunity to work it. We have encouraged the consortium and other interested parties to put their proposals direct to British Coal. I want British Coal to take an early decision. It would be wrong for it to sit for too long on this opportunity without giving others a chance to exploit the reserves if it believes that it is not in its interests to do so.
Therefore, I undertake, in the light of the hon. Member's remarks to write to the chairman of British Coal drawing his attention to the debate and expressing my hope that a decision will shortly be reached. I do not dispute the status of British Coal. It must make the assessment in the light of market circumstances and its requirements. If, however, other people decide that they 1113 can make a success of it—that they can mine the coal economically and sell it at a profit—they should be given the chance to do so.