HC Deb 26 July 1993 vol 229 cc938-47 5.16 am
Mr. Bill Etherington (Sunderland, North)

When the list of subjects for the debate was published, I thought that I would do what I usually do, and that is begin to make my speech at 8 am, just as the debate is due to end. However, I have been very fortunate, and I am pleased to be able to continue the Adjournment debate that you chaired a week ago, Madam Deputy Speaker, when my hon. Friend and much-cherished neighbour the Member for Sunderland, South (Mr. Mullin) first referred to the possible effect on water supplies in the north-east should the coal mining industry in that area die.

One reason I chose this subject is that, last week, many questions remained unanswered. Although this is a difficult subject for most lay people to get a grip on, Members of Parliament do not have to be experts to have an opinion on most subjects. Our constituents expect us to take notice of expert opinion and try to reach a conclusion on the issue.

Until the late 1950s or early 1960s, my constituency and, indeed, what was the town of Sunderland before it became a city relied for its drinking water almost entirely on bore holes. That was an expensive way of providing water, because it required complex pumping arrangements.

Most hon. Members are aware that, when the Kielder reservoir was mooted in the 1950s, it was to cope with what was expected to be burgeoning demand from the expanding Teeside industrial sector—an expansion which, sadly, never came about. The Kielder was far too large for the needs of the area. When the Kielder reservoir was built, the system supplying the north-east was by means of a pipeline to the River Tyne, the River Wear and the River Tees. The pipeline intersected the three rivers between 25 and 30 miles from the coast. From that time on, bore holes in and around Sunderland were gradually closed, and more and more water was taken by abstraction from the River Wear. My constituency now relies almost entirely on the abstraction of water from that river.

The nearest plant at Chester-le-Street, which takes water out for the purposes of purification and transfer into the water supply system for Wearside, is 20 miles downstream from where that water enters the River Wear from the Kielder reservoir pipeline. This information may be mundane and boring but it explains the fears of my constituents should mining cease in the north-east.

The way in which the matter has been handled by British Coal and the Government reminds me of that great Prime Minister, H. H. Asquith, Earl of Asquith and Oxford, as he became, who was immortalised—perhaps not for the best of reasons—for the phrase, "Wait and see." No politician or anyone who has any sense should use that phrase to answer a question. Such a reply could be a millstone around their necks for the rest of their lives. Yet that is precisely what representatives of British Coal say in response to the fears vented by local authorities and people in the north-east.

Mining in the north-east began in the western extremes of the coalfield, which were quite shallow. Mining gradually worked its way east, to a great depth. It so happens that the one remaining colliery in County Durham, Wearmouth in my constituency, is the deepest shaft mine in the north-east. It is at the bottom of the basin that consists of the coal measures.

In the past 100 years, as the western parts of the coalfield have been worked out, water has migrated from the cavities created by the roadways and the collapsed coal faces. For many years, British Coal operated a series of pumping stations, spread out inland, to prevent those vast quantities of water from reaching the coastal pits. Until relatively recently, there were eight coastal collieries, which were served by a fan of inland pumping stations. Gradually, those pits have been closed.

When the Minister replied to last week's Adjournment debate, he said that, in the 40 years since nationalisation, 107 collieries have closed. He claimed that that had not affected the water table or drinking water supplies. That reply misses the point, because, although the pits have been closed, the pumping has, until now, gone on unabated and kept the water table artificially low. It has remained at that level for the past 40 years.

I do not want to be alarmist, because many people spoil a good argument by exaggerating the possible effects of certain action. Nevertheless, British Coal has expressed one opinion about the water pumping which has been contradicted by the reservations expressed by environmentalists and the National Rivers Authority. They are not prepared to accept the opinion of British Coal.

The argument is about how long it will be before the subterranean water returns to its original level in the water table and about its quality when it finds its way into the River Wear. The old mine workings have created an entirely different underground environment from that which existed when the ground was solid. The coal measures contain permeable and impermeable beds through which water runs and forms Artesian wells at the bottom of the deepest measures.

In the past, various water companies bought water from the then National Coal Board. They did, however, on occasions, stop buying it, because it was considered unsuitable for processing into drinking-quality water.

I, like many others, have met British Coal spokesmen about this issue. The vagueness of their replies leaves one more worried than before the questions were asked. For one thing, no one can give an exact estimate of when the water will start issuing from the mineshaft, nor can anyone say what its chemical properties will be.

Still, the coal board contends that there is nothing to worry about. It may have nothing to worry about, because by the time the problem arises, British Coal may no longer exist, but eventually someone will have to pick up the tab. Already my constituents and the rest of the people supplied with their water by the Northumberland water authority are having to pay higher bills because of the construction of the massive Kielder reservoir. It is a pity that it cannot be put to better use, and the water sent to the midlands and southern England where it is badly needed —but that is a problem for another day.

Within the past week all Members of Parliament have received a letter from the Director General of Water Services in which he explains that the country is having great difficulty complying with EC water quality regulations. He goes as far as to suggest that some of the criteria should be made less stringent, so that we can comply with them more easily. At least we are being honest with the EC about our water quality; several other countries are not bothering to be. I understand, too, that the regulations are shortly to be tightened up further, which will only make matters worse. Anyway, the regulator estimates that compliance with the current regulations will cost the average householder another £100 a year.

Our worry is not that we will suddenly lose our water supply in the north-east; we are worried about the costs if British Coal, as seems likely, is proved wrong. I seem to remember the coal board being wrong about a lot of things in the past. On its analysis we should still have 80 collieries operating. We were told that there was a golden future for them in the late 1990s, but we now have fewer than 20 pits.

British Coal may say that it knows all there is to know about pumping water and about geology. It does not know, however, about the chemical properties of the water that it produces, about the water's effect on supplies, and about the ability of the regional water companies to deal with the problem.

I would feel more confident that the problem will be adequately dealt with if the water companies had not been privatised. The consumers are now having to pay for most of the investment, and for the vastly enhanced salaries of the people who took over the industry and got themselves a nice cushy number. These private bodies seem more concerned with selling off land and running hotels than with water.

If problems arise, Northumbrian Water is likely to turn to the Government for a subsidy to help overcome this foreseeable problem. As British Coal has one opinion and the environmental experts have another, I hope that the Minister will announce that the Department of the Environment will set up a commission comprising a geologist, a hydrologist and other experts to give us an independent report. I have heard no statement from the Northumbrian water authority, so I do not know its position, but the National Rivers Authority, with which the basic responsibility lies, is far from happy with what is being said by British Coal.

In last week's debate, we went through many of the arguments, and I have tried not to repeat them tonight, but there is one thing that everyone should know, even if they know nothing about the supply of water. Everyone should know that, if one creates a void, something fills it. There are hundreds of square miles of voids at various levels throughout the whole of county Durham and most of Northumberland.

I do not think that the problem will have a great effect on the River Tees because it is on the edge of the coalfield but, as the water table rises and water percolates into streams and eventually into the River Wear, there will be insurmountable problems in the 20-mile stretch from where the Kielder water pipeline meets the River Wear and the furthest pumping station downstream at Chester-le-Street. It is important that the debate continues until someone provides some answers.

It is no good one authority saying that it is worried while another says that it does not need to be. That is far from satisfactory. Any Government who were rightly concerned about the issue would be starting to make inquiries in their own right.

5.30 am
Mr. Robin Cook (Livingston)

I congratulate my hon. Friend the Member for Sunderland, North (Mr. Etherington), on the dawn of the last day on which the House will sit before the summer recess, on giving the House an opportunity to return to a matter that has concerned it throughout the parliamentary year.

My hon. Friend drew attention to one of the effects of the decline of the coal industry which may have been insufficiently noted in our debates. While some of us have dealt with the economic and social impact of closure on local communities, my hon. Friend rightly and properly drew attention to the incalculable impact on the environment and, specifically, on the water supply.

I hesitate to follow my hon. Friend in talking about the water supply of his area or the impact of the closure of the pits on that supply, because he has shown such great knowledge. Having visited some pits, however, I was extremely impressed by the complexity of the charts and maps of the underground workings. I visited Markham, which has now closed. A chart of the underground workings covers an entire wall of the manager's office, going back 120 years. Each successive decade is represented in a different colour, one on top of the other. It is an extraordinarily graphic representation. Indeed, it entered my mind that the Tate gallery might pay enough for the objet d'art to keep the pit in operation for another six months.

When one examines such a chart, what comes across is the fact that no one knows what the final impact of ceasing to pump in such areas may be on the water supply and water flow. My hon. Friend is right to draw attention to the wide-ranging, and to a large extent unknown, consequences which may have a permanent impact on the environment, just as the closure of the pit will have an immediate impact on the area's economy and employment prospects.

The debate takes place in the wake of the publication of British Coal's annual report, which highlighted the cost to British Coal of ceasing work at some pits. It was clear from the bottom line losses in the report that, in the past year, it has proved much more expensive for British Coal to try to close mines than to keep them in production. My hon. Friend highlighted one of the additional costs of the closure of pits, which could well flow to the Government. It is a cost that has not hitherto been reflected in considering whether it would be profitable or costly to close the pits.

My hon. Friend had the good sense to make the terms of the debate wide, and he has thereby attracted to the Dispatch Box two spokespersons on the energy rather than the environmental side. I congratualte him on that, because it gives us the opportunity to explore some of the questions on which we have attempted to press the Government in previous debates.

May I therefore invite the Minister to update us on the answers to some of our questions? I say "update", but to be honest that is rather charitable, because, when we last debated the matter three weeks ago, we received no answers to our questions. May I tempt the Minister by saying that I understand why the Secretary of State, addressing a crowded House in prime time and in a fevered atmosphere, may overlook the need to answer questions posed by the Opposition, but we are speaking frankly, openly, in sober terms and in a modestly attended Chamber. If the Minister needs further temptation, may I point out that Hansard will not be printed until the House has risen and that he can therefore risk being more frank with us?

The Minister will be aware that it is now almost four months since the Government published their White Paper on the coal review. He will be aware that the central solution that they adopted was a subsidy on coal from the 12 allegedly reprieved pits. None of those 12 pits has yet seen extra contracts signed for its coal between British Coal and the generators; nor is there an immediate prospect of a contract being signed.

I want to press the Minister on some of the background against which the negotiations took place and to put to him three points on which I should be grateful for his guidance and which would help British Coal and the 10 remaining reprieved pits in seeking extra contracts. I am aware that this is a late hour, and I notice that the Minister is not supported by his entire private office. He may wish to write to me rather than reply to my points today, but it would make a refreshing contrast from our previous debates and it would send me off to the summer recess in a sweeter mood if I could have an answer to the questions that I am now going to put.

The first question is, what is now happening between the Government and the generators about stock drawdown? The most immediate reason why the two generators do not wish to place extra contracts for coal is that they have 35 million tonnes of it on their doorstep. They have taken the view that it is cheaper for them to burn the coal that they have already paid for than to place contracts, however competitively priced, for more coal. My judgment is that that may be in the short-term interests of the generators but it is not in their long-term interest, and it most certainly is not in the long-term interest of energy supply in Britain. The short-term effect of not purchasing that extra coal could be permanent closure of the extra pits that are looking for those contracts.

The White Paper promised action and committed the Government to entering into a dialogue with generators about the rate at which they draw down stock. If I recall correctly, during the debate the Minister for Energy said that talks were now proceeding. It is not immediately obvious from the impact on the rate at which generators are drawing down or attempting to draw down stock that those talks are having a significant effect.

May I therefore press the Minister to tell the House whether talks have taken place with the generators? What is the Government's objective in those talks, and to what extent do they hope, within the immediate future, to secure an agreement that might then concentrate the minds of generators on buying extra coal from British Coal?

My second point arose in previous debates. If the Minister can conclude this matter the debate will have had the happy effect of drawing together some of the unanswered threads of previous debates. When we debated the White Paper, the President of the Board of Trade was pressed from his own Back Benches about the interconnector with France. He was specifically pressed by the hon. Member for Romford (Sir M. Neubert) about the requirement that we were making of the French to obtain common carriage through the French grid to Spain, Italy, Switzerland and other countries that might wish to purchase our electricity.

We recognise that it is difficult to get the French to purchase our electricity. They do not need it, and even if they did they probably would not buy it. However, they have no right, under European legislation, to deny us common carriage across their grid to neighbouring countries that need our electricity and might be tempted to purchase it, and in doing so facilitate the export of coal in the form of electricity.

I and many of my hon. Friends find it incomprehensible that we continue to import such large volumes of electricity from France, meeting base load need in the south of England, when France will not even accept the common carriage of our electricity to third countries for sale—for no other reason than that such common carriage would provide them with competition on the sale of French electricity to those countries. It cannot be right that there is a Community obligation on us to import French electricity when there is not a parallel Community obligation on the French to provide that service of common carriage.

In reply to the hon. Member for Romford, the President of the Board of Trade said that he was aware of the issue. He gave the impression—after all, a tense vote was approaching—that action was being taken on that front. I very much hope so. I press the Minister to share with us details of what negotiations are now proceeding with the French, and what progress there may be on obtaining common carriage across the French system. If we could secure that, there is every possibility that Britain could significantly enhance its coal burn for electricity that it could provide to countries where it would be extremely competitively priced.

My third question to the Minister on which I would be grateful for his guidance either this morning or in the next few days by letter is: what has happened to the nuclear review? The White Paper said that it would be brought forward from 1994 to this year. The nuclear review has a close and immediate impact on the subject that we are debating this morning.

The White Paper followed the report of the Select Committee, which clearly spelled out the extent to which the nuclear levy is more than sufficient to meet the cost of decommissioning nuclear power stations, and the excess is providing a subsidy to the operating costs of Nuclear Electric, which confers on it a substantial competitive advantage against coal, and results in the rather odd economic outcome that, although electricity from nuclear power is more expensive than electricity from coal-fired power stations, it is cheaper for the electricity companies to buy it.

I may have missed something in the past few days, but I have not seen any announcement about the nuclear review—I confess that I have been unable to reach any of my research staff in the past hour as I have been thinking about the debate—but I am aware that there was an expectation that it would be announced before the House rose. Could the Minister guide us on when we can expect that the nuclear review will be announced and what its remit will be? In particular, could he remove the anxiety among those who want to see a broad-balanced strategy towards energy policy and those who are particularly concerned about the place within that of the coal industry?

Could the Minister also remove the anxiety that the nuclear review, when it comes around, will be narrowly focused on how the Government will manage to achieve their ideological objective of privatising the nuclear industry? Will he assure us that, as well as looking at that question, which I am sure that the Government will look at, the nuclear review will also look at the issues of the economic evidence of the nuclear industry and the extent to which the nuclear levy may provide it with a competitive edge against the coal industry which works against the interests of the most efficient use of fuel mix in British power stations?

There is one specific issue on which it would be helpful if the Minister could remove anxiety and concern from the minds of those in the House before we rise for the summer recess—or, in our case, before we adjourn for breakfast. Twelve pits were "reprieved" in the White Paper. The closure of two of those 12 pits has already been announced. That leaves 10 pits for which, as yet, no extra contracts have been signed. Without extra contracts, the future of those 10 pits remains deeply insecure, and the stability of their reprieve is under a major question mark.

Does the Minister have any information to suggest that any of those 10 pits will close during the recess? The future of those pits is an issue to which the House will have to return. I press the hon. Gentleman for an assurance that that issue will not arise while the House is not sitting. I would not wish a circumstance to arise in which hon. Members' summer holidays were interrupted by the need to recall the House to discuss further pit closures.

It would be extremely helpful if the Minister could give an assurance that, if it turns out that our fears are well founded and that the future of some of those pits is in doubt, that issue will not arise while the House is not sitting, and that the House will have the opportunity to return before there are any further additions to the long list of pit closures that has studded this parliamentary year.

5.45 am
The Parliamentary Under-Secretary of State for Trade (Mr. Patrick McLoughlin)

I congratulate the hon. Member for Sunderland, North (Mr. Etherington) on securing this slot in the Consolidated Fund debate. I, like him, was under the impression that we might not reach this subject—but fortune has possibly shone on him. I shall deal with the matters raised by the hon. Member for Livingston (Mr. Cook) in a moment; first, I want to deal with the speech of the hon. Member for Sunderland, North.

A number of the hon. Gentleman's points are really matters for my hon. Friend the Under-Secretary of State for the Environment. I cannot add too much to what he said during an Adjournment debate on 20 July, in which the hon. Gentleman participated. My hon. Friend said —I endorse his remarks— The consequences of mine closures are complex. It is clearly an offence for mine owners, such as British Coal, to cause pollution of water courses, regardless of whether a mine is active or abandoned. I do not think that there is any dispute about that, and there need be no argument about it. Responsibility for avoiding pollution rests with the discharger. Discharges from active mines are covered by the system of discharge consents that are operated by the NRA. We are aware of the issues that have been raised about the legal provisions causing discharges from mine workings. The question was referred to in last year's report from the Royal Commission on Environmental Pollution on freshwater quality, which recommended"—[Official Report, 20 July 1993; Vol. 229, c. 332.] My hon. Friend then outlined what was particularly recommended.

There is no doubt that these matters are being continuously considered. The hon. Gentleman said that he wanted to ensure that the debate would continue, and he has shown us tonight that it will continue and will be watched carefully. That is only right.

The hon. Gentleman made a rather strange comment, which I felt was both inaccurate and out of place. He said that the trouble with privatisation was that the consumer has to pay for investment. That has always been the case. Both before and after privatisation, whether as a taxpayer or directly, the consumer has always had to pay for investment. It is wrong to think that, before the water authorities were privatised, people did not have to pay for investment. Since privatisation, the water companies have made substantial investment, which will lead to improved quality in our drinking water. I should have thought that that would be welcomed by everybody.

The hon. Member for Livingston referred to the recent debate in which my hon. Friend the Minister for Energy made it clear that the conclusions of the White Paper were reached only after listening to a wide range of opinions, not only from Her Majesty's Opposition, but from the Select Committee on Trade and Industry. We listened to what people said to us and took into account all the evidence that we received. We considered the independent reports which were commissioned and, in particular, we listened to the Select Committee's recommendations.

Many different opinions were expressed, even among the experts, but the main common theme from many people was that there was the prospect of an increased market if coal could be made available at world-related prices. The estimates of the size of the market varied. The Select Committee suggested in its report that the overall market might be as large as 313 million tonnes over the next five years. Our consultants suggested figures—based on high and low scenarios—of between approximately 200 million and 260 million tonnes. Figures from others were different again, as we made clear in the White Paper. We responded to those views. We accepted the main recommendation of the Select Committee and offered a subsidy to help coal obtain the extra market.

My right hon. Friend the President of the Board of Trade made it clear when the House voted in favour of the White Paper's conclusions that we could give no gurantees, and that remains the case. There can be no guarantees of the precise market for coal—that is not within our control or the control of private coal producers or British Coal. We have given the coal industry a fresh opportunity to compete, backed by public subsidy, for the extra market that so many commentators believed existed. British Coal is continuing to pursue that market vigorously.

I also remind the House of the second message that came through during the coal review: that British Coal would be better placed for a long-term, viable future if it could be given time to build on improvements in efficiency and cost reductions already achieved. The hon. Member for Livingston referred to his visit to Markham Main colliery, where he saw the coal workings. I accept that the hon. Members for Sunderland, North and for Barnsley, Central (Mr. Illsley) will have seen many such maps—as I have. Therefore, the detailed workings that have taken place underground do not come as a surprise to us.

Reference was made to the maps going back more than 100 years. We are dealing with an extraction industry which has seen many changes. One of my memories stems from the early 1960s, when I walked over a large area of disused coal mines where the West Cannock site used to be. Over a number of years, coal mining districts have experienced radical changes in their make-up and in the availability of work in the coal industry. That is not new to the industry or coal mining communities.

British Coal is continuing its efforts to improve productivity and efficiency and cut down costs. We are giving the industry the prospect of an increased market for coal by providing a subsidy. British Coal is also committed to making available to the private sector pits which it no longer wishes to operate. The recent letter from the chairman of British Coal to Members of Parliament shows that the corporation has been honouring its commitment.

British Coal has now advertised 19 pits for sale. Whether or not those pits ultimately find a successful home in the private sector will depend on the market, which it is not for the Government to determine. However, I understand that British Coal has received numerous expressions of interest in the pits advertised. That suggests that there are private companies which believe that there is a market for the coal which they could produce from the pits. Indeed, many of them, as well as independent analysts, said as much to us in their evidence to the coal review. They argued that private sector companies could substantially increase efficiency and reduce costs and therefore find additional markets.

The hon. Member for Livingston asked a number of questions. First, he asked about the French interconnector. I will give him the latest position. If I miss out any points, I will write to him, because I am keen for him to have a good recess, which he asked for.

On electricity trade with France, the Government have published a summary of their legal advice which is clear. Action to cut off imports through an interconnector would be a breach of Community law. The non-levy status of Electricité de France could not be removed without giving it the benefit of levy payments. That would mean that British consumers would end up paying more for their electricity.

There are a number of positive developments. Following earlier discussions with the then French Government, EDF recently reviewed and changed its bid price to supply into the pool for England and Wales to bring them more closely into line with its short-term marginal supply costs.

Last month, my hon. Friend had useful discussions with Mr. Longuet, the new French industry Minister. In the light of that meeting, officials are pursuing the issue of trade across the interconnector and EDF's non-leviable status. The future pattern of trade across the interconnector will depend on the operation of commercial contracts. The White Paper noted the evidence to the Committee that net exports from France to the United Kingdom could progressively but significantly reduce after 1995.

A United Kingdom generator has signed a contract for £100 million to export electricity to France over the next eight years at periods of peak demand in France during the winter. That shows in the clearest and most practical way that there are opportunities for United Kingdom generators.

The hon. Gentleman asked about the review of the nuclear industry. I am afraid that what I say to him today will not take us much further forward from the questions that he has asked in the past. The Government will bring forward the review to later this year. Draft proposals for the scope, timing and format of the review have yet to be made. The Government will make further announcements in due course. I know that that will not bring much favour to the hon. Gentleman but I will draw his questions to the attention of my hon. Friend the Minister for Energy.

Mr. Cook

I raised another matter which the Minister may wish to pursue in writing, if not in this debate. I hope that he does not lose sight of it either way. The rate at which the generators draw down coal stocks on site is critical to the immediate prospects for any extra contracts for British Coal. Unless the generators can be persuaded the Government have the power to do this—to moderate the rapid rate at which they propose to run clown the stocks, there is little prospect of extra contracts, which would provide a permanent and secure future for the 10 pits to which the Government claim to have given a reprieve.

Mr. McLoughlin

I apologise to the hon. Gentleman. Since the publication of the White Paper, action has been taken to review the level of the stocks necessary for security purposes. Discussions with the generators are continuing. Coal stocks will continue to be the mainstay of security for the electricity system. We will not allow them to fall below a level that would put supplies of electricity in jeopardy.

My hon. Friend must use his powers under the Electricity Act in a rational and defensible manner for their intended purpose. We cannot use them as a means merely of covertly subsidising British Coal. The Committee recommended that stocks should be kept at 20 million tonnes of coal, although it did not explain the rationale behind that figure. The figure is irrelevant to the debate, because stocks held at power stations at that time were more than 30 million tonnes. At present, stocks at the pithead are more than 13 million tonnes.

The whole question of stocks is rightly being addressed. It is obvious from the figures I referred to that substantial stocks already exist. I therefore do not see our stocks falling to a basically unacceptable level. Obviously, I take the hon. Gentleman's point.

As I said, in this parliamentary year—the end of which we are approaching—coal has featured strongly in the political arena. I hope that what I have said in the debate and on other occasions shows that we are concerned about the future of the coal industry and that we rigorously question the way in which we can best ensure its future and a market for coal. Those have been our guiding principles in taking forward the discussions that we have had in the past year, and they will also guide us in the future.