HL Deb 26 June 1951 vol 172 cc349-60

Order of the Day for the Second Reading read.

4.53 p.m.

LORD MACDONALD OF GWAENYSGOR

My Lords, it will be remembered that the Coal Industry Act of 1946 laid down, among many other things, that the borrowing powers granted to the National Coal Board should terminate in five years' time. The five years end next month; hence the Bill which is before the House to-day. To those conversant with the 1946 Act, it will be clear that this Bill proposes a number of changes. The first and major change is the raising of the limit of borrowing from £150,000,000 to £300,000,000. It removes the limit of five years, relates the new limit of £300,000,000 to the amount of advances outstanding at any one time, and raises the limit for short-term borrowing from £10,000,000 to £20,000,000, while at a late stage in another place an annual limitation of £40,000,000 was also fixed.

It might be better if I dealt with the small proposals and left the major change to my last remarks. The fixing of the time limit of five years in the 1946 Act was both wise and prudent. At that time, to make a reliable forecast of the financial position of the industry as a whole throughout Great Britain would have been very difficult—I would say, almost impossible. At that time no general programme for the development of the whole industry existed, or could have existed. In such circumstances, the fixing of a time limit was a sound proposal. But in to-day's conditions, with a long-term national plan drawn up, the removal of the time limit of five years I am sure will commend itself to your Lordships. While it is true that the provision of £150,000,000 has been adequate for the five years now ending, to limit the making of plans in this manner is hardly likely to make for the best planning, especially when dealing with a major industry like the coal industry.

As to relating the £300,000,000 to the amount of advances outstanding at any one time, I may say that this change will bring the practice with regard to coal in line with what Parliament decided should be done in the legislation dealing with electricity and gas, and will facilitate banking arrangements between the National Coal Board and the Ministry of Fuel and Power. With reference to short-term borrowing your Lordships will remember that the 1946 Act fixed the limit at £10,000,000. This Bill proposes to raise it to £20,000,000. This temporary short-term policy is to meet a revenue deficit, or, in language which I think is more understandable, to meet possible losses. I thought that might be better understood! I know that we all hope there will be no losses, but before this debate ends I may be told that there have been losses in the nationalised coal industry since 1946, that they are heavy losses, and that in one year they were more than double the £10,000,000 provided. Nevertheless, there was no request for the £10,000,000 to be increased during the period since 1946. The reason is that, owing to special circumstances such as the temporary use of large sums which had been reserved for other purposes, the Board were able to make arrangements and not to exceed the £10,000,000 limit. But I want to make it plain that had it not been for these arrangements, special legislation would have been necessary. It is to avoid any such possibility in the future that the change is now being made. Let me make it plain also that no one anticipates any further losses in the, coal industry, especially of the dimensions we have experienced in the pass. It would be a sore disappointment to all of us if there were such losses. No doubt it will give some satisfaction to your Lordships to know that this power would be used only by the consent of the Minister and with Parliamentary approval.

Before dealing with the major change I have indicated, I think I ought to make a brief reference to Clause 2. This clause is designed to rectify an error in compensation awarded to two valuation districts—namely, Cannock Chase and South Staffordshire. This error was due to a mistake by the Ministry of Fuel and Power in submitting certain figures to the Central Valuation Board. Long after the certificate of the Central Valuation Board had been issued, a check of the figures showed that the Ministry had placed the expenditure of five Cannock Chase colliery concerns against the South Staffordshire district. The Central Valuation Board represented to the Minister that as a result of the earlier information given them by the Ministry a sum of £110,000 had been awarded to the Cannock Chase district instead of to the South Staffordshire district. Having been advised that as a Board they had no power to amend the certificate, the Central Valuation Board asked the Minister to take whatever steps were necessary to rectify the position. Following consultations and agreement with the representatives of the two districts concerned, the Minister decided to ask Parliament to make the necessary rectification through Clause 2 of the Bill. I should not like to leave Clause 2 of the Bill without paying, if I may say so, a well-deserved tribute to the Central Valuation Board, and, in particular, to the noble Marquess, Lord Reading, the Chairman of the Committee, for their great help in dealing with this difficulty.

I ought to make a brief reference here to the £40,000,000 annual limitation. That was put in at a late stage in the Bill in another place, as a result of representations made by the Opposition, and I feel sure will meet with the approval of your Lordships.

As to the major change, the borrowing powers have been doubled from £150,000,000 to £300,000,000. That is a very substantial increase, and I can well understand your Lordships asking such questions as: Why is such an increase necessary? For what purpose? Why is the new figure £300,000,000, and not something more, or less? What has been the basis of the calculation? Your Lordships are aware that in October last the National Coal Board published proposals for a national plan for reconstruction and investment. Although that plan is still being considered by the Government, it has been the basis of calculation for assessing the future capital requirements of the Board. We might be tempted—particularly the noble Viscount, Lord Swinton, and myself—to discuss the proposals contained in this Bill for quite a time; but I am sure the noble Viscount will agree that this is not the time for such a discussion, although it may take place upon a more appropriate occasion. However, I feel it necessary to make a brief reference to the finance involved.

The estimated expenditure up to 1965 is £635,000,000, but as this figure is based on 1949 prices it is possible that the actual sum may be substantially higher. A very big slice of this expenditure—something like three-quarters of the money required—will be provided by setting aside out of revenue substantial sums for depreciation. It is estimated that £475,000,000 will be provided in this way. However, £75,000,000 of this amount will be needed to repay sums which have been used for investment, but which must later be replaced to meet the liabilities which in due course will be incurred. For instance, £15,000,000 for the compensation fund is one such liability. Therefore, £235,000,000 has to be found by the advances—all advances from the vesting date in 1947, as well as future requirements. The net sum outstanding at present is £33,000,000. This makes a total of £268,000,000. The remaining £32,000,000 will need to cover any further working capital which may be required, and also any increase in the expenditure on the plan due to increases in cost of materials and labour since 1949. The next question which I feel your Lordships will ask is this: "£635,000,000 is a large sum of money; what do we get in return?" The National Coal Board hope—and I emphasise the word "hope"—that when proposals in the plan are put into operation, and when the plan is carried out, output will be increased to at least 240,000,000 tons annually, and that, other things being equal, the cost of coal will be reduced by 7s. per ton.

I do not think it is necessary for me to say more about the Bill. I have tried to show the changes made and give reasons for those changes. I am not going to spend any time in stressing what this country owes to coal. It has already played a vital part in the life of this country, and I am one of those who believe that it will play a vital part in the future. I know your Lordships sufficiently well to realise that any proposal which is likely to make the coal industry a greater asset to the country will receive your support. I am satisfied that the proposals contained in this Bill will help to make the industry a greater asset to the country, and therefore it is with some confidence that I beg to move the Second Reading.

Moved, That the Bill be now read 2a.—(Lord Macdonald of Gwaenysgor.)

5.6 p.m.

VISCOUNT SWINTON

My Lords, I shall be brief and general in my observations, and certainly I shall not dilate on the details of the plan, estimated to cost £635,000,000 at 1949 prices, and probably considerably more at present prices. However, I would ask how soon that expenditure is likely to take place. Owing to the rearmament programme, all priorities have been somewhat readjusted, and although the noble Lord spoke hopefully about the possibility of increasing output to 240,000,000 tons, what I should like to know (I may not live as long as the happy, distant day when the noble Lord expects that to happen), so far as the more immediate future is concerned, is what chance there is of our getting the necessary equipment to maintain the present output? The Coal Board are now to be allowed to borrow another £150,000,000, and the cost will increase.

I do not desire to be in any way contentious; I wish the Coal Board well, and I know that they will do their job well. But I am sure they will do it much better if they have not to do a great many other things which have no relation to coal. I must on this occasion make a plea that the Board should get rid of some of their extraneous assets. This is not a question merely of nationalisation or de-nationalisation. Anybody in any business would agree—and I am sure the noble Lord will agree about this—that it would be much better to have a homogeneous business. It is always a nuisance to have odds and ends tacked on to your main business—and, incidentally, it distracts attention from your main business; you generally do them very badly and, therefore, expensively. I must say that I think it would be a good thing if the Coal Board got rid of all their farms, about which they really know nothing. I do not say that they would save £l50,000,000, but they would save some millions of pounds by doing so. And not only would they do that, but they would save twice over, by saving the interest on that money and on the staff which has to be maintained.

The main question which I should like to ask the noble Lord who introduced the Bill to-day is: Who is to control this money which we are to vote in this Bill? Normally there is Parliamentary control on a detailed project before money is sanctioned or voted. Parliament knows the plan for which it is voting; the Estimates are laid, and Parliament knows who will have the spending of the money. On April 30 in another place, the Minister, in defending the Bill, said: Parliament will of course retain control over the advances which are made. The Minister of Fuel and Power and the Chancellor of the Exchequer must both give their consent, and at any moment the House can call them to account. That is a very important statement, and I want to be assured that that is right, because hitherto, when we have sought to discuss things like the Reid Report and so on, and how development is to take place, we have been told that that is a matter of day-to-day management, the business of the Coal Board and not of the Minister. I therefore ask categorically: Who is to be responsible for the spending of this £150,000,000, which is a revolving credit, and which will go towards paying for these development plans running in all into £625,000,000?

According to the Minister of Fuel, he is to be responsible, and he, together with the Chancellor of the Exchequer, will be called to account in Parliament. That is a most interesting and novel statement, because it means, if it means anything, that in the execution of this plan the Minister and not the Coal Board will be responsible. The Coal Board will no doubt execute, but the responsibility will be the responsibility of the Minister and, therefore, in either House we shall be entitled to ask and the Minister will be bound to answer, about the details and the progress of the plan. I want to be assured that that is so. If what the Minister said does not mean that, then I have not the least idea what it does mean. As I understand it, we are entering upon a new phase in which the Minister will no longer say that the development of the coal mines is a matter of management and responsibility of the Board. He says, "Parliament is voting this money and the responsibility is mine and I am going to be answerable." I can foresee that we shall have some interesting debates. If Parliament is to have that effective control continuously applied, then indeed there is a good case for granting this money because, in the Minister's words, we can call him to account at any time. Otherwise, I should have said that it was a serious thing to come to Parliament with a vague proposal and to say that the Board should have £150,000,000 more with no limit of time.

I have only one other question to ask, upon which I feel sure the Minister will be pleased to enlighten us. I have discovered, on the most reliable information from Lord Rennell, that the whole Coal Board are due to retire at the end of next month. They do not go out progressively but all together. Unlike the Government, they have collective responsibility and collective retirement, and not merely individual resignations from time to time. They are going out at the end of July. Can the noble Lord tell us who will be the new members of the Board, because if we do not know how the money is to be spent, we ought at least to know, before we part with this £150,000,000, who is going to have the spending of it.

5.15 p.m.

THE MARQUESS OF READING

My Lords, I am very much obliged to the noble Lord, Lord Macdonald, for his personal reference to such part as I have been able to play in securing the insertion into this Bill of Clause 2, to which I shall confine my remarks. Certainly as Chairman of the Central Valuation Board I could not have been content to leave the matter as it stood, after the discovery of the mistake had been made. May I just say one word of explanation on the position, in amplification of what the Minister said? The Central Valuation Board have two functions. One is subsidiary—namely, to advise the Minister, at his request, on the making of rules of procedure for application to the district valuation boards. For that purpose the Board still meets intermittently. Its primary function, however, was to distribute the aggregate sum of £165,000,000 amongst the various districts. The certificate in respect of that award was made on February 1, 1949, in the form of a statutory instrument, and, with the making of that statutory instrument, the Board, in that aspect of its work, was functus officio and could perform no further tasks. As the noble Lord has said, it was only after that that this error came to light and we could no longer remedy it. It could be rectified only by legislation. I desire to say only this in defence of myself and my colleagues: that I think we were fully entitled to accept as authentic the official figures presented to us, although they subsequently proved to be wrong. I think it is right to express our thanks at this stage to the Minister for having taken the necessary action when the matter was brought to his attention.

I would add only two small points: first, that it should be clear to all noble Lords that the transaction contained in and to be carried out by this clause is merely an internal adjustment between one district and another, and in no sense seeks to add to the global figure of compensation. The second point I should like to make is that when the error was brought to the notice of the colliery concerns in the valuation district which had profited by the mistake, they promptly and readily acknowledged that the position could not be allowed to stand, and therefore the clause has the cordial assent of all parties involved.

5.18 p.m.

LORD TEYNHAM

My Lords, the noble Lord who has introduced this Bill has certainly used very persuasive arguments in favour of it, but there are one or two aspects of it to which I should like to draw your Lordships' attention. What does the Bill really do? Of course it makes several changes in the provisions of the original Coal Industry Nationalisation Act. It abolishes, among other things, the time limit for loans; it abolishes the previous stipulation that advances which were repaid must nevertheless be counted towards the total outstanding, and it seeks to increase the total loans from £150,000,000 to £300,000,000. In fact, it is giving almost a blank cheque to the coal industry. The noble Lord who introduced the Bill has said that it is to enable the Coal Board to make plans for a capital development over a period of fifteen years ahead, and to be sure from the start that they will have the capital they need when required. I suggest, however, that at the present time it is quite unnecessary for the Board to seek this vast sum of money—£300,000,000—for a fifteen-year plan. Conditions in the industry may change, and new ideas may be brought forward. It is within the bounds of possibility that even atomic energy might be available for industrial purposes before the advent of fifteen years. I should have thought that it would be far better to divide this vast sum into thirds, so that one-third could be agreed to by Parliament, say every five years, if it were found to be necessary.

I understand it to be a fact that the advancement and completion of this new coal plan depend largely on the supply of steel available, and I should like to ask His Majesty's Government what priority the Coal Board have in obtaining steel over other Departments of the State and industry generally. It is true that the Coal Board propose to raise a considerable sum through the amount set aside for depreciation, but I cannot help feeling, like the noble Viscount, Lord Swinton, that this sum might well be increased by the disposal of many other assets which have very little to do with coal. I wonder whether it is fully realised that the National Coal Board are the largest land owners in the country. It is, of course, true that a good deal of this agricultural land is held to avoid the payment of compensation for subsidence. But on the other hand there is a great deal of agricultural land which might well be disposed of and which is not really required for that purpose. I believe the number of farms owned by the Board amounts to something like 18,000, the management of which must in many ways detract from the business of the Coal Board—which is, after all, to get coal. And what of the other ancilliary businesses, such as brickworks? Many brickworks are very much mixed up with the Coal Board—so much mixed up that it would be difficult to disentangle them. But in many other cases they could well be disposed of without interfering with the efficiency of the mines, thereby making available to the Coal Board a considerable capital sum. I suggest to His Majesty's Government that the Coal Board are trying to do far too much, and that they should get rid of a number of their ancillary businesses. Then, perhaps, they could give their full and undivided attention to their all-important work of getting coal.

I have little doubt that the coal plan which the Coal Board have placed before the country is a good one, but I think it raises the question whether it is better for the nation to use capital and labour to expand coal production or to apply some of those resources to ensuring that each ton of coal is converted into a greater amount of useful heat and energy. I should like to ask His Majesty's Government what steps they are taking in this direction. I also hope that before long we shall see a less centralised coal industry. This is, of course, the problem of bigness, and it is sometimes forgotten that size is by no means synonymous with efficiency—in fact, the two things often conflict with each other. I believe it is on record that the Coal Board employ three times as many people as the largest industrial enterprise, even in America.

I do not wish in any way to make a political point out of the coal industry; in fact, this industry has been far too long in the arena of Party politics. I think it is now generally realised that some form of public ownership of the industry will have to be maintained. The one thing that matters, of course, is that we should be able to produce enough coal, of the proper quality and at a reasonable price, to satisfy home demands and to keep our footing in the export market—and, last but not least, to ensure that the miner has security and good wages. I am afraid that I am not fully convinced that the introduction of this Bill—which, of course, is really a Money Bill—is necessarily a very good thing for the industry. I feel that there should be more Parliamentary control of finance, and that the Board should go to Parliament at least every five years for any further loans that may be required.

5.24 p.m.

LORD MACDONALD OF GWAENYSGOR

My Lords, I should like to express my appreciation of the way in which this Bill has been received. No one expects a Coal Bill to be received with open arms, and there are no doubt many aspects which noble Lords will wish to criticise; but as I say, I am grateful for the reception given to the Bill. I notice that the noble Marquess, Lord Reading, has now left the Chamber, but I should like to assure him that I will pass on his kind reference to the Minister. The noble Viscount, Lord Swinton, asked me one or two difficult questions—as he usually does. Perhaps the most difficult was that concerning the personnel of the Coal Board. I am just as anxious as the noble Viscount is to know about these things and I am very sorry I cannot answer his questions to-day, but I will certainly give him an answer—though he may get to know before me.

VISCOUNT SWINTON

I have not been approached.

LORD MACDONALD OF GWAENYSGOR

Neither have I.

As regards the question of who is held responsible for the spending of the money, I am afraid I am not able to add very much to what the Minister said in another place. I noticed that, in the quotation which the noble Viscount made from the Minister's speech, the words Parliament will always maintain control over the advances occurred. Day-to-day expenditure must be in the hands of the National Coal Board; and I wondered whether the noble Viscount had overlooked the annual limitation of £40,000,000. The same point was raised by the noble Lord, Lord Teynham, who wanted the expenditure broken up into so many blocks. I am not sure we have not done that: £40,000,000 annually into £635,000.000 works out at about fifteen years, which means that there is Parliamentary control over the annual expenditure of £40,000,000. Therefore Parliament is surely keeping a firm grip on expenditure. At the same time, I cannot, of course, add to what was said in another place by the Minister. I am as anxious as the noble Viscount to know precisely what is intended, and it may be that during the Committee stage I shall be able to give him more information.

VISCOUNT SWINTON

I appreciate fact that there is to be an annual advance of £40,000,000. It may be voted in an Appropriation Bill—but of course Parliament may refuse to vote anything at all. But what one means in common parlance, or in Parliamentary language, by "Parlia- mentary control over expenditure" is that you will know what money is going to be spent and that its expenditure can be discussed. That is really what is at stake here—not whether the Coal Board should or should not have £40,000,000. Someone may move to reduce the vote by £20,000,000 and give them only £20,000,000. That is not what we mean by Parliamentary control. What we mean is whether we can know what that £40,000,000 is to be spent on and discuss whether we think it a good way of spending the money.

LORD MACDONALD OF GWAENYSGOR

The trouble often is that the money has been spent before we are asked to control it.

VISCOUNT SWINTON

That is a very improper statement for an old House of Commons man! But, assuming that we are engaged in these improprieties, can we then discuss how the money has been spent, or are we to be told that that is the responsibility of the Coal Board?

LORD MACDONALD OF GWAENYSGOR

A certain number of millions of pounds are spent in a certain year. On what? On sinking shafts? Or in what other directions? I can see that all these questions would be raised in debate. The question of the number of shafts envisaged during the fifteen years was mentioned. But—speaking again as an old House of Commons man—I cannot give an undertaking that any suggestion made by the National Coal Board for spending money on this, that or the other object must wait for Parliamentary approval. I think it is better for me to get to know from the Minister what he meant. It may be I shall be able to get some information for the noble Viscount. As to the question of the availability of steel or other necessities, the Minister dealt with that matter in great detail. He was very confident that there would be no lowering of production but that the National Coal Board would get an adequate supply of steel and all other requirements. I cannot vouch for that. All I can say is that I am very pleased with your Lordships' reception of the Bill, and at a later stage I shall try to be as accommodating as possible on its various aspects.

On Question, Bill read 2a; and committed to a Committee of the Whole House.