THE COAL CONTROL.

HL Deb 27 November 1919 vol 37 cc497-511

LORD LAMINGTON had the following Questions on the Paper—

To ask His Majesty's Government—

1. Whether their attention has been called to the unfair position in which Lanarkshire collieries are put by being debarred from exporting coal, except to a small amount.

2. Whether they will now remove the restrictions imposed during the war on the source of supply of coal to consumers caused by the division of the country into a number of coal areas, having regard to the fact that under the present system in some cases delay in supply and increase of cost are caused.

3. To ask whether the Coal Control should not now be removed.

The noble Lord said: My Lords, as it is so late I will put these Questions briefly. Perhaps it will be more convenient to take the second one first. That refers to the part of the country in Scotland in which I live, and I will try to explain how the matter stands.

Owing to Scotland being divided into coal areas people are prohibited from obtaining coal, except in the areas to which they have been allotted. In my particular case there are coalfields within 18 and 22 miles of the locality, on the same trunk line of railway, but all those dwelling in this area are prohibited from getting coal from what has been our natural source of supply. Instead of that we are compelled to buy our coal in East Lothian, at a distance of at least 45 miles, as compared with 18 miles. The coal obtained is of inferior quality. I believe it costs more at the pit mouth, though it is difficult to ascertain the relative prices, and there is a vast increase in haulage expense. That puts everybody under a great disability in this particular area and there is a general complaint about it.

I have privately protested against it, but I was told that when you have Government restrictions you must have anomalies. There the matter has rested. I have tried to find our whether there has been any great saving in haulage owing to these Regulations, and all those whom I have asked very much doubt whether there has been any considerable saving in this respect. In the particular case to which I refer not only do they not bring the coal by the shortest route to where we live, but I am told—this is unofficial—they make a big detour in order to increase the mileage and charge a higher tariff.

THE EARL OF CRAWFORD

On purpose to do that?

LORD LAMINGTON

In Lanarkshire. Instead of going over one system of railway the coal, owing to these restrictions, has to go over two trunk systems, the North British and the Caledonian. That may be a small matter as the locality is sparsely populated and there is no great consumption of coal, but it illustrates the hardships of those subject to these restrictions. I very much doubt whether over the whole country there has been any really considerable saving on haulage. Why should people wish to get coal from a greater distance than they need? It may be said that some manufacturers, some industries, are particular about the quality of coal and go to a great distance in order to get it. They only do so for the more economic working of their industry and that, therefore, cannot be said to be a wasteful way of conducting their business. I understand, since the Question was put on the Paper, that there is to be some relaxation of this system of allotting customers to certain. coal areas.

With regard to the first Question, I must say that the other day I received notice that they had threatened to close down a small colliery, which I have the partial good fortune to own, owing to the effect of the uncertainty now prevailing in the coal world in consequence of the Government Regulations, the slackness of the working of the miners, and, particularly, the fact that Lanarkshire is not allowed to export coal to any large amount, so that they do not share in the benefit of the high prices to the great extent that other collieries do. We know that profits are pooled and a certain amount is redistributed to those collieries which supply coal for home consumption only. In this case the pit has a very poor, narrow seam of from 17 inches to 19 inches, and there is no way of making up for the great expense of working such a pit under the modern conditions which are brought about by the action of the Coal Controller. That is a fruitful source of trouble to colliery owners in Lanarkshire and it really leads to the demand for the withdrawal of coal control altogether. The argument which will be used probably in reply is that if you do not have the control now when the export is so enormous and the prices obtained so great, coal will be almost entirely exported and there will not be enough for home consumption and maintenance of home industries. There is one answer to that, namely, that you could not get sufficient shipping to take away coal to that extent. I was talking recently to a gentleman prominent in the coal industry and he said that the coal world, and the industrial world, would rather the Government restrictions were removed and that they should run the risk of enormously increased prices for the carrying on of their industries. than submit to the present uncertainty and the constant issue of regulations. It seems to me that Government control of coal, like Government control of other things, is the "fifth wheel of the coach." It does not add to the progress of the machine. They issue fresh regulations, make speeches, and print Blue Books; but it comes to nothing. It does not aid the advancement of our industries or add to the convenience and comfort of the people of this country, and I trust we shall see shortly if not total abolition at all events a considerable curtailment of the coal control.

LORD GAINFORD

My Lords, I think everybody must admit that the position in the coal trade is not yet quite normal, and until the supply more nearly meets the demand some control must, I think, be necessary. But whilst the trade itself has come to no definite conclusion as to the exact way in which the Government should de-control, I think I am right in saying that it is quite possible for local committees to be given powers which would enable them to do two things which are necessary in the interests of the home consumer. One, that they should be able to prevent prices soaring to the high level which can be obtained for export trade, and, two, secure that sufficient coal should be retained for inland consumption. If local committees could be given powers of that kind in my judgment the Coal Controller's work might very rapidly be brought to a conclusion. These committees ought to be representative. They should have a representative of the Government and, of course, there ought to be some link to protect the consumer. It would obviate the great number of these harassing restrictions which are so objectionable at the present time.

As coal owners we were willing to discuss with the Coal Controller, or with the President of the Board of Trade, some system of de-controlling, and we were impressed by the statements which the President of the Board of Trade made to us in regard to the present system of control, which he regards as bad. I quote his words on November 21 in the other House— In the light of these facts it is desirable, at an early date, to modify profoundly the present system of coal control which, in my opinion, is unnecessarily hampering. We are all at one, apparently, in endeavouring to secure de-control but, to the great surprise of the coal trade, we were suddenly brought face to face with a proposition which is going to cement in its position the system of control more firmly than it has ever been before. The proposal to decrease the price of coal to the home consumer is a most extraordinary announcement on the part of the Government. Only on November 13 the President of the Board of Trade, in the House of Commons, said— I would be prepared to recommend the Government to take risks with reference to the price of coal, to lower the price not by 6s.—that is impossible with the present output—but by some much smaller amount. Within eleven days he comes down to the House of Commons, knowing he has not a single figure more to help him in connection with his policy, and that there has not been any increased output of coal, and announces the intention to reduce the price of coal by 10s. to the home consumer. He knows this is to be a mere dole out of somebody's pocket. There are only two pockets out of which it can come. It may be extracted out of the pocket of the coal trade in a way which I do not think can be justified, or it will, as I believe, come out of the pocket of the already over-burdened taxpayer. I think I shall be able to show that it is necessary for a very large portion of this sum of money to be drawn out of the pocket of the over-burdened taxpayer in relief of the cost of living.

It is a most extraordinary policy, it is so illogical. Coal is produced now at an excessive cost, due to many mistakes made, I admit, under difficult circumstances, but when the cost is higher than the existing selling price, the Government choose the very coal which is the most expensive to produce (produced by the poorest firms in the country who are least able to bear the special strain put on their finances) and thus place this 10s. additional cost upon those collieries which are already being carried on at a loss, or in many cases with only a small margin of profit. The Government have adopted a most extraordinary position and it is very unfortunate, when we thought we were in close communication with the President of the Board of Trade and discussing what should be the future policy, that a step has been taken which will make it very difficult to carry out in the country the object which, apparently, the Government. desire.

Every individual coal owner will naturally desire to send as much coal as he can to the best market, and it will require a great number of officials to direct the coal now to be distributed into the channels which are the least attractive to the coal producer, because he will get a less price for it. His financial position also will be more strained in consequence of having to obey a direction to send coal into the household market rather than into others in which he more desires to enter.

I understand that a section of the House of Commons intend to press for an inquiry into the figures over the whole question of control. For my part I hesitate to support an inquiry of that kind if it is going to delay de-control which is very necessary in the interests of the State. I should hope that facts and figures may be ascertained quickly and made public by the Government, and that we should have no unnecessary delay by inquiring into the past. Mistakes have been made, high minimum wages have been given, which have resulted in the fact that we get fewer tons of coal although there are many thousands more men employed than before the war. I, for one, would like bygones to be bygones, but I wish to enter a caveat in regard to certain statements which have been made by Mr. Hodges in regard to colliery profits. He has urged that there should be a reduction in the price of industrial coal, not to any similar extent to that of household coal, and has argued from figures which he has published in the papers that there is a possibility of this reduction being secured out of the profits of the coal industry. I wish to say that Mr. Hodges' figures are, so far as I know, purely conjectural. Nearly every prophecy which has been made in connection with the coal trade in recent months has been falsified, and we have no facts or data to work on with regard to how much may be attributable to what is called the Sankey Award—what is the effect of the limitation of working hours. What we do know is that the labour cost is excessively high; that the estimate, so far as it has been able to be estimated, for labour alone was in the month of July 19s. 6d. per ton, as compared with a prewar labour cost of 6s. 4d., and I am told that. the average working cost now is over 21s. for labour alone.

Until we have definite information we cannot form any accurate conclusion, and I suggest it is quite premature for the Government to try and justify the limitation of profits in the coal mining industry in the way that has been suggested. To do so, I believe, will not only hamper the industry but will prevent a great deal of trade. We desire to see the collieries of this country developed in a progressive way, and any limitation of profits is bound to affect prejudicially the future output of the mines of this country, and to recoil upon every other industry which is dependent upon fuel. If you keep down the profits in the coal trade you are going to starve the industry, and I assert that it will be felt chiefly by the working classes. We resent a system of control, and we ask for increased freedom. We think we are entitled to reasonable profits in our coal trade just as much as reasonable profits may be acquired in every other industry in this country. We see no justification whatever for our being treated in an exceptional way, and in a way that is going to harass the future development of the industry, and we desire to arouse the national conscience to the fact that not only is it unfair upon one industry to treat it in this way, but detrimental to the interests of the State and of the wage-earners themselves.

I would like to give official denial to a statement which is now being circulated in the Press in connection with the attitude of coal owners towards nationalisation. It is alleged that we are desiring to ride for a fall. I wish to give that lie an emphatic denial. The whole of those engaged in carrying on the trade in this country are opposed to the principle of the nationalisation of the industry root and branch, and they intend to fight it and to defeat it. It is promoted chiefly by socialists and those in favour of revolutionary ideas, and in the event of their succeeding in securing nationalisation, even if they paid for it by script, a very large proportion of those individuals would not hesitate to try to tax out of existence a very great deal of the script.

It is a most dangerous principle to introduce into the industries of this country, and I am glad that the Government have already discountenanced it, but I trust the Government will realise that the mistakes which they have hitherto made have given encouragement to those who are in favour of extreme steps being taken such as I have alluded to, and that they are partly to blame themselves. Through misguided control the confidence in the industry has been largely shattered. Capital hesitates to come forward when threatening legislation is suggested. Also there is a great danger that when you commit such an extraordinary act as you did the other day, of decreasing the price of coal below that at which it can be produced, serious economic troubles may follow. I wish to say on behalf of the coal trade that we are very anxious to help the Government get over their difficulties, and to prevent the coal trade being hampered in the way it is under the system of control, but if they are going to introduce exceptional legislation directed at the coal trade it will be strongly opposed, not only because it is unfair but because we believe it will arrest that development which, under a system of private enterprise and free trade and open competition will produce the best results in the interests of the State and of the working classes, as well as of those engaged in the industry.

LORD STRACHIE had the following Questions on the Paper—

To ask His Majesty's Government —

1. Why the Coal Controller will not allow any coal to be exported abroad from Somerset and Bristol.

2. Why the Coal Controller, while allowing South Wales and the Forest of Dean to increase their prices by 2s. 6d. a ton extra under the Coal Prices (Limitation) Act, has refused such an increase for Somerset and Bristol.

3. Whether any collieries in Somerset, and if so which, have received any payment, and how much have each received, under the Government guarantee to make up the profit to their previous war standard of profits and their losses under the War Wage and Sankey Wage; and to move for Papers.

The noble Lord said: My Lords, I should like to support what my noble friend has just said as to the difficulties and as to the objections to this 10s. reduction, which means to my mind putting permanently, or for a great many years, the coal trade in this country under control. At the present moment—I am talking of before the 10s. reduction takes place—the reduction is 3s. 4½d. below actual cost, and therefore when this reduction of 10s. takes place the net result will be that the domestic consumer will have his coal at 13s. 4½d. less than the cost of production. That seems to be a very startling state of things. Why on earth does the Government desire to subsidise this particular industry in this way? At the present moment we well know that there is another subsidy, namely the wheat subsidy, but we understood from what has been said in another place that the Government were anxious to get rid of subsidies in every direction. Now they are going in the direction of another subsidy, because there is no doubt that this continuance of the 10s. reduction will go on for some time, and owing to the fact that that is dependent upon export of coal to foreign countries the result will be that the Government will have to control that for a long period of time in order to go on with the reduction of 10s. per ton.

What is going to be the result in the case of the small collieries—on whose behalf I speak especially—in the West of England? The result is going to be very serious indeed. Of course, I know that the noble Lord who will reply to me will say that it will not hurt them at all, because although it will be true that they will be losing 10s. in addition to the 3s. or even more that at the present moment they are losing, it will all be made up in due course under the Government guarantee. That would be very well if the Government guarantee was paid in any reasonable time, but at present the Government guarantee to make up pre-war profits does not take effect for a year or two years. The consequence is that these unfortunate collieries which have not large finances at their backs will have to finance the dole that the Government is now giving to the domestic consumers until they receive the payment of this guarantee. What will be the position? It practically comes to this, that collieries such as I have been speaking of—small collieries worked with small capital—will be put under the greatest difficulty in order to finance the dole to the extent of £1 or more per ton for a year at least and perhaps for two years before they will get any repayment from the Government. I would ask the noble Lord, How is it possible for small collieries to continue under that state of things? At present the collieries in Somersetshire and Gloucestershire not only have to finance the war wage and the Sankey Award, but in addition they will have this 10s., and altogether, as I have pointed out, it will come to more than 20s. a ton. In a district such as Leicester the result of the working of the war wage was that they lost only 2s. 6d., while in the Bristol area it was 6s. 6d., which included 4s. actually out of pocket on the war wage.

Having pointed out to the noble Lord that there are these difficulties, I ask him on behalf of these areas how the Government are going to meet those difficulties? It is all very well to say to the big collieries, "You can go to the bankers and get an advance." To the small collieries that is practically impossible, and the result is that they will have to be shut up. It has been intimated to me only to-day that steps are already being taken in certain districts in the West of England to put that into effect, because they will find it impossible to go on working at a loss. The first Question that I have to put to the noble Lord is to ask him, in regard to the export of coal, why the Coal Controller will not allow any coal to be exported abroad from Somerset and Bristol? I cannot under- stand what the reason can be. No doubt the noble Lord will tell us that in the past not a very large amount of coal has been exported from Somerset or Gloucestershire. Yet coal has been exported from there, and from the Forest of Dean a good deal was exported. Being near the great port of Bristol it seems only natural that they should have an opportunity of exporting their coal and be able to make some profit, and not have to go on working under the difficulties that I have indicated and at such a heavy loss.

I am informed that if in Somerset they were allowed to export coal to Italy they would be able to get from 70s. to 80s. f.o.b. instead of the 30s. that they are now getting. That is the effect of coal control. Where you can export coal from a great port like Bristol to other countries the Government step in and prevent it being done. It might be argued by the noble Lord that the reason coal is not to be allowed to be exported from Gloucester and Somerset and Bristol is because of transport difficulties. But if the Somerset and Gloucestershire people are not to be allowed to export for that reason then some compensation ought to be paid to the shareholders in these collieries who are not to be allowed to make a profit.

The second Question I ask is why the Coal Controller, while allowing South Wales and the Forest of Dean to increase their prices by 2s. 6d. a ton extra under the Coal Prices (Limitation) Act, has refused such an increase for Somerset and Bristol. It seems unfair to allow collieries working under practically the same conditions to have a price of 2s. 6d. a ton extra, and to refuse it to other collieries. Probably the noble Lord will reply by saying, "But you did not make your application till the war was nearly over, and therefore, as the war is over, we cannot give you this increase, for conditions have not altered? As the difficulties are as great, it seems to me very unfair to treat one area in a district in a different way from another.

Lastly, I ask the noble Lord whether any collieries in Somerset, and if so which, have received any payment, and how much have each received, under the Government guarantee to make up the profit to their previous war standard of profits and their losses under the War Wage and Sankey Wage. I hope the noble Lord will give some indication that there will be different treatment in the future, especially of these small collieries, when payment is made of the guarantee. He must realise that without this extra the small collieries will be in a very sad position indeed.

LORD SOMERLEYTON

My Lords, may I first say a word as to what fell from my noble friend opposite (Lord Gainford) and the suggestion that he made with regard to local committees. That suggestion appears to me to be worthy of the fullest consideration. With reference to what he said about Government control, I would remind him that Government control did a great deal to win the war, and it cannot be given up hurriedly and without precautions being taken, though the intention of the Government in this direction will be made clear. With reference to what fell from Lord Strachie, may I say that any small colliery which is in financial straits receives, if it applies to the Controller, an advance on account of the Controller's statutory obligations of a sufficient amount to tide it over financial difficulties. I trust, therefore, that the last part of the noble Lord's Question is answered in a way that will be satisfactory to him.

LORD STRACHIE

Does that apply to the pre-war guarantee?

LORD SOMERLEYTON

It applies to the existing course of affairs. I would like, if I might, to remind your Lordships that as it is the intention of the Government to limit the profits of coal owners in the aggregate, the price obtained and also the profits earned by individual coal owners will not affect the aggregate profits to which the owners will be entitled. This will enable such questions as the allocation of export and the variation in prices to be dealt with on national lines without hardship resulting from the fact that in some districts no export trade is available and the inland price is less than the cost at which the coal is produced.

If I might take first of all the Questions asked by my noble friend, Lord Lamington, who is naturally specially interested in his own county and is also interested in the trade of the whole country, I would say with regard to the Lanarkshire collieries that the output of coal in the United Kingdom has not yet reached a figure that will remove cause for anxiety, and the pressure on the railways and other means of transport has rendered imperative the need for reducing to a minimum the distance from pit to consumer over which coal has to be transported. This has been carried out as far as possible, though in carrying it out certain exceptions have been unavoidable, of which I regret to hear one has occurred in my noble friend's own neighbourhood. The domestic and industrial requirements of coal in Lanarkshire are very heavy. To meet those demands from the district itself practically the whole of the output has to be allocated, and in consequence it is not possible to release any large quantity of coal for export. If export of this coal were permitted either the requirements of the district would be left unsatisfied or further demands would have to be made on the transport systems, already experiencing extreme difficulty in carrying coal which has to go by rail. But, on the other hand, it is the intention of the Government so to deal with the profits on export coal that those profits shall be shared by collieries unable to export as well as those allowed so to do.

With regard to the second Question asked by Lord Lamington, the coal transport reorganisation scheme was put into operation on September 8, 1917. The object of this scheme was to effect a saving of railway transport. It was based on certain main principles—first, that the consumption of coal should take place as near the producing point as possible; secondly, that movement of coal traffic should follow the main trunk lines wherever practicable; thirdly, that the movement of coal should, as far as possible, be in well-defined directions, namely, north to south, north to south-east, north to south-west, and east to west; and, fourthly, that an area producing insufficient coal for its own needs should not send any portion of its output to another area. On the other hand, an area producing more coal than required for consumption within the area should distribute the excess to adjacent areas, or areas connected by convenient transport facilities.

This scheme, while necessary in view of the heavy demands on transport during the war, naturally disturbed the normal channels of trade, and for this reason it was decided that it should be suspended at the earliest possible date. Although the transport position was still difficult in September, 1919, a portion of the scheme was suspended from the 1st of that month, and a general permit under the scheme was issued. By this means the interchange of supplies was not limited to certain specific areas, and the normal flow of trade was therefore to some extent restored. Your Lordships must, however, remember that the shortage of output has made it necessary to instruct the collieries that they must supply those consumers who were their customers in 1917 with the same quantity of coal at the present time. This has the result that the passage of coal from one area to another is still limited to some extent, but when a colliery has met the requirements of its 1917 customers it may dispose of its surplus output without any restriction whatever as to area.

Now in regard to removal of coal control. The need for modification of the present system of coal control is fully appreciated, but there are several factors which must be considered in this connection. First, the present output of coal is insufficient to meet both inland consumption and the demand abroad for English coal. Exports of coal must therefore continue to be limited in quantity if the home supply is to be conserved. Secondly, the pit prices of coal for inland consumption are limited, and the average price is below the present average cost of production. This is a very unsatisfactory and dangerous position for the coal industry. While the price of domestic and household coal is being reduced the price of industrial coal will need to be revised to place it on an economic basis. Thirdly, the first Sankey Report was accepted by the Government in letter and in spirit. It contained a recommendation that for the year the profits of colliery owners should be limited to 1s. 2d. per ton of coal raised. The Government, therefore, is pledged. to legislation to this end, as stated already on several occasions in another place. It is hoped that, with the output improving as it is, it will be possible gradually to transform the coal control machinery until it consists of these three parts only.

In answer to Lord Strachie's first Question, no coal is allowed to be exported abroad from Somerset and Bristol because this coal is required for inland consumption. The area is not self-supporting and it never has been an exporting district. Difficulties of transport make it impossible to carry by rail the quantity of coal required inland and considerable quantities are being carried coastwise. Though this is more expensive than transit by rail an endeavour is being made to increase the quantity carried coastwise, as the home demand is still in excess of the supplies available in the non-producing areas. If coal were exported from Somerset and Bristol a further shortage in home supplies would result. The allocation of exports is determined entirely by the question of national interests, and it is not possible to apportion the exports among districts so that each district should derive a benefit from the high prices prevailing in foreign markets.

In reply to the second Question, an application for an increase in the price of coal was made by the collieries in the Somerset and Bristol district shortly after the Price of Coal (Limitation) Act, 1915, was passed. The Board of Trade were not satisfied that there had been such an increase in the cost of wages and material as would justify an increase beyond the 4s. provided in that Act. The application was. renewed just a year ago, and the evidence by which it was supported was under consideration when the Coal Industry Commission was appointed. In view of the. evidence which was placed before the Commission it was not thought to be in the national interest to allow any further increase in price at the time. When the increase of 2s. 6d. a ton was allowed to collieries in South Wales and the Forest of Dean there was no control of the coal mines. Since December 1, 1916, the collieries in South Wales and Monmouthshire, and, since March 1, 1917, the rest of the collieries in the United Kingdom have been subject to the Coal Mines Agreement (Confirmation) Act, which guarantees the profits. of coal owners up to such a point as to remove the hardship resulting from the price in any district not having increased commensurately with the cost in that district. It is, however, true that under the Coal. Mines Control Agreement (Confirmation) Act, those owners who by obtaining high prices are able to earn excess profits are at an advantage as compared with those who are not able to earn excess profits. There are other districts in which the comparison of the cost with selling prices is much more adverse than in the. Bristol and Somerset district.

I may say, in answer to the third Question, that collieries in Somerset have received sums to make up their profits to their guaranteed standard and their losses under the Coal Mines (War Wage Payments) Directions, but to disclose the amounts would involve a breach of Section (4) of the Coal Mines Control Agreement (Confirmation) Act, and Clause 19 of the Agreement, Schedule to that Act, which provided that such information shall be confidential, and placed restrictions upon its disclosure. I hope my noble friend will recognise that I have given him all the information compatible with the carrying out of the Agreement named, and it is impossible for me to give further information on this subject, though any other information which it is in my power to give I shall be glad to supply.

In a supplementary Question, the noble Lord asks me as follows. Even under present conditions with the 10s. now to be removed, he says some collieries cannot be worked at a profit, and he asks, How then can the Government face the loss which the 10s. reduction will cause? With regard to that I would say that the loss occasioned by the 10s. reduction will be made good out of the export profit. There are now collieries making losses, and advances have to be made to them from time to time. It is recognised that such advances will have to be made more frequently, and the necessary machinery is in existence. I trust that, whether or not the information I have given is sufficient or satisfactory, it will be recognised by noble Lords opposite that I have done my best to answer the Questions.

LORD LAMINGTON

In view of the last statement made by the noble Lord, that the 10s. diminution of price in the cost of coal will be taken out of excess profits, may I ask this question? A report appeared in The Times about a week ago of a statement made in Rome by Lord Crawford that already this country was losing £400,000 a week owing to the cost of the working and distribution of coal. That is something like £25,000,000 a year. If there is a further loss of 10s., that will make it up to £40,000,000 or £45,000,000 a year loss to the country.

THE EARL OF CRAWFORD

A very condensed report of what I said did appear in the newspapers. I stated that in sixteen months up to the end of July last the cost to the taxpayer had been £26,000,000. I should like to correct the false impression that Lord Lamington has received.