FUEL AND POWER POLICY

HL Deb 21 January 1959 vol 213 cc645-701

4.33 p.m.

VISCOUNT HALL rose to call attention to the national fuel and power policy; and to move for Papers. The noble Viscount said: My Lords, I almost feel that I should apologise for introducing a matter of this kind after such an interesting debate as we have just had. I will not call it an important debate, because I think the subject matter of what we are going to discuss under my Motion is infinitely more important: it affects the lives of thousands, hundreds of thousands, of people; and, of course, it affects one of the main industries of the country.

It is well known that at the present time the coal industry is facing great difficulties. It is most unusual for this industry to be told that it is producing too much coal. What is wrong? Four years ago the industry was booming; there were increasing demands for more coal and power, and these demands were expected to grow, and to continue to grow for a decade or two decades. To meet the demand for power energy, coal, it was supposed then, had to be supported by two partners, both of which were very costly to buy and had to be imported from other countries, one from some hundreds or some thousands of miles away. Both of them were vulnerable, as was underlined during the Suez crisis, and, I repeat, costly—a fact which must add to any balance of payments difficulties which might arise. There is no doubt that the recession in trade in this country during the last six months has caused the falling off of some of the demand for coal. Not only here has there been a falling off of that demand, but also in most other European countries which are producing coal, though not to the same extent as in Britain. We are bound to admit that some of our trouble is of our own making, for which perhaps the National Coal Board have some responsibility. But I think the major responsibility rests mainly on the Government, who, with their advisers, have done so much estimating from 1954 until the present time that it led people to think that the demand and industrial production in this country were going to continue at that rate.

The estimated power energy required, according to estimates, by 1965 was some 300 million tons of coal equivalent, with 10 million tons for export. The basic assumption for this estimate was a statement made by a member of Her Majesty's Government some years ago, that in twenty-five years from 1955 the standard of life in this country could be doubled. To achieve this it would be necessary to increase annually the total index of industrial production by over 3 per cent. Unfortunately, that increase in industrial production has not been sustained—it was not sustained in 1957 or 1958—and there is no doubt that the reduction in production of both basic and some capital goods has been substantial. The latest figure which I have been able to get shows that of eight of the principal basic materials and capital goods produced in this country, only one showed an increase. That was commercial vehicles. Machine tools were down by 10 per cent.; steel by over 8 per cent.; coal by 4 per cent.; houses by 9 per cent. In consumer goods, of the nine industries which were referred to, in three the production was fairly large; the six others were down by amounts varying from 35 to 6 per cent.

This reduction may well be a pointer to the future position of industrial production and the decisions relating to the existing fuel energy programme and the fuels required. The recession has greatly affected the coal industry, the total consumption of which declined from 1957 to 1958 by 13 million tons. Ten million tons represented a fall in inland consumption, and 3 million tons in exports. Output for the same period was down by 8 million tons, and note must be taken that the National Coal Board propose to produce in total this year 203 million tons, of which 11 million tons will be opencast and 3 million tons will go into the large amount of stock which we have at the present time. Deep-mined coal will be reduced to 192 million tons—a reduction in deep-mined coal of 9½ million tons in 1959. That will mean a reduction of 18 million tons in deep-mined coal in two years. This, as your Lordships know, means the closing down of no fewer than thirty-six pits and the displacement of some 13,000 to 14,000 miners.

It must mean, too, almost the closing down of a number of communities, for, as your Lordships know, mining communities are usually built around the colliery. This is particularly so in the case of the old pits—those 50, 60, or 80 years old—where the pit is not merely the centre but is the economic life, and is the life of the community. Unfortunately, a large number of the pits to be closed are of that type. We have six in South Wales, and I know almost every district. My Lords, it is no use saying that you can transfer the workpeople from one pit to another. You can transfer some of the younger people, but when men have spent thirty, forty, or fifty years of their lives working in the pit, and have lived all their lives in that community, they cannot be transferred to any other colliery—or, indeed, to any other industry. Noble Lords who know the type of life which these people lead will understand the difficulty which is being caused as a result of the closing down of these collieries.

My Lords, I know that in such a situation there is always a danger of spreading alarm and despondency, but I should be insincere if I said that, with the present Government's programme for the coal industry, I could see any hope of a quick recovery of the industry. I base my view on the following reasons. First, we have very little of our coal export market left. Our exports last year were lower than they were in what might be regarded as any normal year during the last fifty years. They were only one-half of the exports during the two previous years. That in itself is causing a great deal of trouble, and I would ask anyone who is associated with or who knows the coal industry whether, in the light of the coal position in Europe, which is one of our largest markets, there is any possible prospect of increasing the export trade within, say, the next few years—even if then.

I do not want to be too despondent about this matter, for there are some other industries to which I am going to give great credit for the saving of fuel. One is the Electricity Authority, for in ten years—from 1948 to March last—the improvement in thermal efficiency in the generating stations has saved over 41 million tons of coal, valued at about £140 million. That saving has been brought about by reducing the amount of coal required in generating. Indeed, they have brought it down in some of the generating stations to less than a pound of coal for the generation of one unit of electricity. During the past four years what they have done in relation to the reduction in the cost of conventional power stations is surprising. The cost of a conventional power station has been reduced by 30 per cent. during the last four or five years. This is surprising and amazing, seeing what can be done with coal. With all the saving, the Central Generating Board is still the largest user of coal in the country, for it is taking some 46 million tons, most of which is the lowest grade fuel, which is of little use for any other purpose.

I have referred to the fact that coal has two powerful competitors. One, of course, is oil. I understand that nine electricity stations are at present burning oil, seven of which have been converted from coal, and that there are four stations in the course of conversion. Reading the cost for the change-over from coal to oil, one finds it rather surprising. The Paymaster General said only last month in another place [OFFICIAL REPORT (Commons), Vol. 596 (No. 27), col. 1308]: The position of the power station contracts is this. In 1955, when I said that our coal imports were costing us £73 million, the electricity industry, with the support of the Government, embarked upon a series of contracts for the purchase of oil for use in power stations. These contracts involved purchasing certain quantities of oil for the period of the middle 'sixties. He also referred to the fact that this was brought about as a result of a shortage or a scarcity of coal. My Lords, there could not have been any shortage of coal in 1955. As a matter of fact, the £73 million paid for the import of coal in 1954–55 was more than it cost to import all the coal in the previous eight years. Whilst a certain amount of coal has been imported since 1955, it has been nothing compared to the £73 million. In that year, we exported more coal than we imported, and we received for our coal almost as much as was paid for the imported coal. In 1956, we started to store undistributed coal, 3 million tons of it. In 1957, that was increased to 8½ million tons and by 1958 the stocks of undistributed coal had gone up to nearly 20 million tons.

There is no shortage of coal in this country. What really happened was that certain decisions were taken, into which we were stampeded; and the result is that we have become tied up to a contract for the provision of oil equivalent to something like 6 million tons of coal until 1964 or 1965. I would ask the Minister whether he can tell us how long the contract is to continue. In addition to the use of oil for the generation of electricity, the supposed shortage of coal has induced many other industries to use oil instead of coal. For example, the use of oil for gasification is receiving increased attention from the various Gas Boards. It is said that by the spring of 1957 fourteen new plants were at work, and a further twenty-five, which were under order in the early part of 1958, will have been brought into working before the early part of this year. They will use something like 400,000 tons of oil a year. In addition, a large amount of gasification comes from refineries. I do not think that we can have much objection to that, but the conversion from coal gasification to oil gasification I just do not understand.

Not only that; I saw it reported the other day that the Gas Council, not being successful in their search for natural gas in this country, are likely to import liquefied natural gas from the Gulf Coast. I understand that an experimental craft has been built, or is being built, for its transfer. Are we going crazy about this matter? Is there a war against coal? It is almost impossible to believe that things of this kind have been done under the shelter of what was assumed to be a scarcity of coal. Again, we hear that the Transport Commission have announced that in the next few years it is hoped to eliminate the last of the steam engines for shunting and similar work by the use of oil.

Oil consumption in fields where coal could be used has increased from 19 million tons of coal, equivalent in 1957 to 28 million tons of coal equivalent in 1958; and during that period we have imported no less than £62 million worth of gas oil, diesel oil and fuel oil. The strange thing to me is that I find, on looking at the trade and navigation figures, that nearly £25 million for that oil has gone to Germany, Italy, France and the Netherlands. I have not heard of any oil being produced in these countries, except from refineries. I should like the Minister to look into that aspect, because I think that we ought to have some explanation of it.

In 1954–55, we turned to nuclear power, and I think that this also had a little to do with the shortage of coal. Our hopes were set on the development of nuclear power to provide electricity. It was suggested then that within twenty years nuclear power stations might produce annually electricity equivalent to the output Of 20 million tons of coal. Then followed, in 1955, a White Paper announcing a programme under which 1½ to 2 million kilowatts of nuclear power would be provided by 1965. Since then, we have gone on to a programme of 5 million kilowatts, and have extended the period to 1966. Seeing that the first programme meant that there would he a saving of 20 million tons of coal. I should like to ask the Minister whether that figure stands for the much larger nuclear power programme.

We know that the building of nuclear generating stations is costly. We are told that the first two to be built for the Electricity Generating Board, apart from the cost of the initial fuel charges, will cost roughly three times as much per kilowatt as the up-to-date conventional steam station. For the third station the capital cost, again excluding the cost of fuel charges, will be about two and a half times that of a conventional station. I have referred to the cost of fuel. Fortunately, most of the uranium which is brought into this country comes from the Commonwealth countries, South Africa supplying the greater part of the Atomic Energy Authority's import. Some of it comes from Canada, and some also now from Australia. In fact, we have prospectors in almost every country in the British Commonwealth—and I am not complaining, because uranium is very hard to get. The purchasing of this fuel is not the responsibility of the Minister of Power, but he must have some estimate of the cost to the Generating Board and the cost of generating electricity by this fuel. I have seen certain references made to the fact (and it is my experience) that not one scientist of any standing will state that electricity can be generated more cheaply from nuclear power than from coal. Indeed, someone associated with the Electricity Authority has recently said that he cannot see any possibility of it And, indeed, due to the fact that there has been a falling off in the use of electricity during this year, it unlikely that it will be possible to get such cheap electricity from nuclear plant as can be obtained from a conventional plant.

Last year I visited Australia, Canada and the United States of America, all of which countries have large programmes of electrical development, much of which I was able to see. I questioned some of the leaders of the industry about their building of nuclear generating stations, as there was little evidence of such stations being built. I was told, particularly in Australia and Canada, that they were interested in what we were doing in this matter, but were surprised that we were building so many of these nuclear generating stations. In Australia and Canada, both countries producing uranium, it was said: "We have coal which will provide us with cheaper electricity than nuclear power will do." The Americans were of the same opinion. They said: "We shall have some nuclear power stations for prestige purposes, but for no other purpose." It was interesting to note a statement issued in America last year of the countries using nuclear power for generating electricity, and of the position they would occupy in that matter in 1965. It was said that America will generate less than 1 per cent, from nuclear power; Europe will generate from 3½ to 4 per cent.; and Britain, if she carries out this present programme, will generate from 12½ to about 14 per cent.

All coal-producing countries maintain that generating electricity from coal is cheaper. It was interesting to see a statement made when a contract for a conventional generating station was given to C. A. Parsons quite recently. It was to the effect that when completed it will be the cheapest generating station in the country, although it will swallow up some 200 tons of coal a day. One cannot repeat too often that every ounce of uranium and almost every gallon of oil used in this country has to be imported. This fact must be felt when there are difficulties in relation to our balance of payments.

One is inclined to ask: Why are Her Majesty's Government so anxious to build twelve to fourteen nuclear generating stations in such a hurry? Our prestige is more than established in that branch of nuclear development; and we all expressed a good deal of appreciation of the scientists and those responsible for bringing this about. But, reading some of the publications which are issued, one comes to the conclusion that the use of nuclear power is only in its experimental stage. Indeed, in a publication by the Atomic Energy Authority last year, Sir John Cockcroft said: that in the commercial power stations now being built in Britain one ton of uranium would do the work of 10 thousand tons of coal. Sir John Cockcroft has forecast that eventually some years hence, we may expect to make a ton of the metal do the work of one million tons of coal.

All of us were really interested in the development of Zeta last year. It was said in one publication that I have here: Research with Zeta and other apparatus on the control of thermonuclear reactions has made good progress. But it is impossible yet to forecast when a contribution to power supplies from this source can be expected. We do not know what is going to happen. Possibly during the next ten or twenty years the very nuclear power stations which we are building at the present time will be out-dated. Is it too much to ask the Government, in view of the situation, both in relation to the decline of our national production and the plight of the coal industry, that they should examine their fuel policy and their power policy with a view to revising it?

The Coal Board, representing the major industry in this field, plan, I take it at the request of the Minister, to reduce their policy of coal production. Because a former Minister of Power was advised that there may be a shortage of coal, fourteen stations are, or will be using oil, taking the place, as I have said, of 6 million tons of coal. I know that the Minister has reduced the original contract. We should like him to do a little more. Is it not possible to stop the four stations again to be converted to oil, and to let them continue to use coal? Is there no escape in the contract which has been entered into? When does the contract expire? If electricity can be produced from coal as cheaply as from oil—or indeed if it costs a little more—it is much better to use coal. Just as the Gas Board should concentrate their efforts on using more indigenous small coal, instead of importing oil and methene gas and natural gas from other countries, so the municipal authorities, and particularly the Railway Commission, should be strongly advised to concentrate on electrification for traction shunting and, indeed, other purposes on their railways, and to use coal and avoid using oil.

What is more important is to review the nuclear power station programme not by cutting down numbers but to see whether the period of construction could be extended to at least 1970 or, better still, 1975. Also there is an urgent need for an intensification of scientific research into the utilisation of coal. This is of particular importance with regard to smokeless fuels, and also in regard to using coal as a raw material for the extraction of chemicals, including possibly oil, rather than as a primary source for energy. As to smokeless fuel, I should like to ask the Minister whether he could tell me what progress has been made in this field, particularly on the shape progress.

There is still much dissatisfaction among the miners, and particularly the public, where opencast coal is still being mined. Can the Minister and the National Coal Board do something to reduce it? The coal industry is one of our most important industries. It should know where it stands as to future output. Her Majesty's Government cannot now be thinking in terms of an output of 228 million tons in 1960, or, indeed, of 240 million tons in 1965. This year we are producting 203 million tons, 3 million tons of which is going into stock. The miners should have some idea of the stability of their employment. Any reorganisation of the industry means the closing down of pits—and do not let us have a repetition of what is happening at the present time, an announcement of the closing down of thirty-six pits, and within a few weeks notices being given to a large number of the 13,000 persons who are affected and who are to leave their present employment, many of whom, because of age, cannot get employment in other industries. The Coal Board should know years in advance of the pits which would be closed in the event of a further reduction of coal consumption. It should give much longer notice—some months or even years in advance—which would allow time to transfer the younger men to other pits, or give them time to get work in other industries. The Coal Board should see that an adequate pension or other remuneration is provided for the older workmen who cannot he transferred to other collieries or find other work.

We are facing a long-term problem in the coal industry, for we must face the fact that we may well in some way be moving out of the coal age as we knew it. To blind ourselves to the advance of atomic power and Zeta is a failure to recognise the major problem of the coal industry in the future. Atomic power and Zeta, when they are established, will not only be cheap but clean, and who, with my noble friends Lord Lawson and Lord Macdonald of Gwaenysgor, have spent many years of my life in the coal mines and owe a good deal to the coal miners, cannot help confessing that there is a great deal to be said for the finding of alternative work to coal mining for the generations to come, thus eliminating the heavy toll of fatal and serious accidents and disease to which the men employed in the mines are so subject. Probably in about ten or twenty years the prophecy of one ton of uranium doing the work of one million tons of coal will have materialised, and the research on Zeta will be so advanced as to provide power much more cheaply than from coal, and from something of which we have plenty in this country. and that is water.

I trust that Her Majesty's Government will face their responsibilities towards the men employed in the coal mines now being closed down, and that in the present and the future the Coal Board will give longer notice of the closing down of pits and will take constant measures to alleviate the possible increase of unemployment in the coalfields. When the Minister and the Government are reviewing the fuel policy of this nation, may I make a strong appeal to them that they will always give priority to the products provided in this country and particularly the product which has served this country so well—that is, coal. The coal industry has been, and may still be, the basis of this nation's prosperity. I beg to move for Papers.

5.17 p.m.

VISCOUNT RUNCIMAN OF DOXFORD

My Lords, I will not attempt to detain your Lordships by going over much of the ground which has been so ably and so eloquently covered by the noble Viscount, Lord Hall. I am not sure that I am in entire agreement with him on all points. I think one has to admit that, particularly for purposes of transport, the advantages of oil over coal are so great that it is almost impossible to go any substantial way back on them. I wish to detain your Lordships for a few moments on one aspect of a particular subject with which the noble Viscount dealt at some length, and that is the conversion of a number of waterside power stations to oil instead of coal. This is a matter in which I might be said to have some small interest, which I therefore declare to your Lordships.

Those power stations consume, or will consume when the conversion is completed, about the equivalent of 6 million tons of coal. The noble Viscount has already touched on the consequences to the coal industry and employment of that switch, and I do not propose to go further into it. I want to talk about it from the issue, at first sight perhaps rather narrow but, I think, wider than it may at first appear, of the shipping involved in carrying that coal or that oil. Some years ago the Central Electricity Generating Board gave an undertaking to the private shipowners engaged in that trade that they would use private shipping to the extent of about 40 per cent. of their requirements. I am not suggesting that they did that out of any motive other than good commercial sense, and I hope it has proved so.

In July of last year they had to tell these same owners, who had in the meantime been continuing their building programmes in the light of the earlier undertaking, that the Generating Board found themselves compelled not only to reduce their own tonnage but, in consequence or therewith, to cut the percentage of private charters from 40 per cent. to 20 per cent.; that is to say, halve the percentage of a smaller total quantity, a cut of more than a half in all. That was naturally a blow to both parties, and the result of recent developments in this field has been that the total coastwise fleets adapted for the carriage of bulk cargoes, including those owned by the Electricity and Gas Boards, has in the last eighteen months diminished by something like 8 per cent. net—that is to say, setting off those that have come in against those that have gone out—a rate of loss which I am sorry to say shows no sign whatever at present of being reduced. Indeed, the general indication is that for a few years to come at least there will be further cuts.

That is bad enough for the people in these trades, whether publicly or privately owned. It is bad enough for the people who have been employed in these ships, whether they be scrapped or sold foreign or laid up, and it is almost bound to be one of those things, because, as the noble Viscount justly pointed out, there is little export trade to compensate for the loss of the home trade. The only result, I think, will be that these ships, being redundant in these circumstances, will add to the general redundancy of tonnage on the market, and they will not only be of little use to anyone themselves but, by the ordinary processes of the market, will reduce the value of all the other coastwise tonnage of the same kind which is still going about the place. We are told that this is to some extent a temporary phase; that by about 1965 there will be a further demand, at any rate for private tonnage, for the purposes of carrying coal for electricity generation. But my Lords, when you are unemployed, whether you be an individual or whether you be a ship, five years is a very long time to wait, and I do not think I am being unduly alarmist when I say that if things go on as they are now, in five years' time you will not have the ships when you want them.

Against that, it may be argued that as the oil for these power stations is seaborne there is a sat-off; that this is merely exchanging one kind of tonnage for another, a proper, logical, progressive, even desirable development. There is, of course, some force in that argument, but I think it is not as strong as it might appear. I believe I am right in saying, as regards the two oil companies which hold at any rate the principal contracts for the carriage of oil to these particular generating stations, that in one case one of them, for the purpose of selling the oil c.i.f., and being therefore required to provide its own tonnage, did bring to this country some four or five tankers which has previously been operating in Venezuela under the Panamanian flag, clothed them in the respectability of the Red Ensign and employed them in the trade. In the other case, where the contract was f.o.b., the company concerned went out into the market and chartered something like the same number of rather smaller tonnage vessels which were already, I believe, under the British flag.

It may be argued that the importation of oil in any case gives employment to the British Mercantile Marine. I do not want to cast aspersions where they are unjustified, but anyone who goes past Fawley as often as I do may wonder how far that proposition can be sustained. If it could be shown that these hardships, and they are undoubtedly hardships, were being sustained by that particular branch of the British Mercantile Marine at considerable gain to the world at large and this country in particular, I think one would have no option but to say, "That is that." Those concerned, through no fault of their own, because they were no party to the decision when it was made, nor was it one which could have been anticipated by men of ordinary commercial prudence at that time, might say, "That is that. We have had it and we must make the best of a bad job". But I have not heard it suggested that, here and now, or over the next few years—and if I am wrong I shall be most grateful to my noble friend the Minister if he will correct me—the generation of electricity by oil is more economical than generation by coal. If I remember rightly, there are words in the annual reports of the Central Generating Board which bear out that point very conclusively. I think the noble Viscount, Lord Hall, made the same point, and I am fortified by the feeling that he is on my side in the matter.

There is, therefore, so far as I can see, no valid balancing advantage in the use of oil for this particular purpose, except, as the noble Viscount has already said, that contracts have been entered into for this purpose and that contracts have to be honoured—that, indeed, was the point made by the Paymaster General in another place, both last month and, I think, again last night. But I do not think there are many classes of contract, except perhaps marriage, which cannot be dissolved by agreement between the parties, even though a certain amount of cash may have to pass in the process. The noble Viscount, Lord Hall, suggested that this matter might usefully be looked at again, speaking from his point of view, which I take it, if I may say so, is more concerned with those who produce the coal. I look at it perhaps more from the point of view of those who are involved in carrying it, and I come to the same conclusion. No doubt it might be a tolerably costly thing to do. The oil companies concerned have been pressed, we have been told, and they have already made concessions. They may well feel that they ought not to be asked, at any rate for nothing, to do it again. But I venture to suggest that there is a situation there, largely of tangible things, but also perhaps of intangible things, which it would be worth having a look at again. The noble Viscount, Lord Hall, remarked, if I heard him aright, that when this country gets into trouble, either internationally or otherwise, one of the forms of the trouble is apt to be a shortage of oil, and one is more inclined to fall back on coal.

The point I should like to leave in your Lordships' minds this afternoon is this. It may be that a fall of 8 per cent. in dry-cargo, bulk carriage coastwise tonnage in this country over 18 months is not as bad as it looks. But even if it is not itself as bad as that, it has a number of what the doctors call side effects which can be very had indeed. I need not. I think, remind your Lordships of the probable effect upon the employment of seamen, a matter to which the noble Lord, Lord Winster, may be disposed to refer later from his intimate connection with the subject. But I do say this: that these particular contracts, more than anything else that has happened of late years, have persuaded those responsible for the bulk cargo carrying coasters round the shores of this country that their services are no longer required. Everything that has happened has discouraged them financially, and nothing much, I think, even by way of exhortation, has been given them in the contrary sense to lead them to regard it as a reasonable proposition to replenish, let alone to expand, that particular fleet.

I do not need to stress to your Lordships the defence arguments in favour of a substantial coastwise fleet. I do not wish to resort to a patriotic appeal—the "last resort of a scoundrel"—but I do say that even in time of peace you will almost certainly find, if you allow coastwise shipping in this country to disappear at the rate at which it is disappearing. in a few years' time that you want it; and then, quite certainly, it will be too late. You cannot produce ships or the capital to build ships out of the bag unless there is some continuing encouragement of their employment. I beg the Minister, if he is moved, as I hope he is, by what the noble Viscount, Lord Hall, said, to be moved also, even if it should be a difficult and possibly a costly matter, to curtail these particular contracts for oil and to think very seriously about the advantages which he might find, or the disadvantages which he might avoid, by doing so.

5.32 p.m.

LORD WINSTER

My Lords, I listened with the deepest interest to the important speech of my noble friend Lord Hall. If he will forgive me, I will not follow him in detail into that speech, because time is getting on and I want to deal with one specific aspect of the matter. But I should like to say that I noticed in particular what the noble Viscount said about the forecasts held out as to the possibilities of nuclear power. I have seen some of those forecasts, and I must say, in my ignorance, that the thought has often passed through my mind: why do we make these efforts to switch over to oil? Why do we not rub along with coal, as I am quite sure that we can do, and wait for the development of this nuclear power? It seems to me that in pressing this switch to oil we are pressing for the expenditure of a great deal of money which may ultimately be found to have been spent in vain.

I wish, in the short time that I hope to take, to call attention to certain aspects of the policy of the Central Electricity Authority in using oil instead of coal at their seaboard power stations. In doing this, I should say at once that I shall express the views of the Merchant Navy Officers' Association, of which I happen to be president; and although I cannot, of course, speak officially for the National Union of Seamen, I happen to know that in this matter the Union and the Association see eye to eye. The results are indeed very serious as has been emphasised by the noble Viscount. Lord Runciman of Doxford. He said towards the end of his speech that some of those connected with coastal shipping are beginning to wonder whether their services are any longer required and, having regard to the importance of a healthy, strong coastal shipping trade to the economy of this country, this is indeed serious news to hear from such an authority as the noble Viscount.

In the Merchant Navy Officers' Association I have seen and heard a good deal about some of these results. A company which has managed a substantial part of the Central Electricity Authority's fleet has already notified the personnel employed in their ships that fewer ships will be required in future: so that in coming years perhaps 20 ships may be withdrawn from that fleet—and in fact a number of ships have already been withdrawn. I have heard that the ships which served the Poole power station have been sold, and that the fleet of 46 ships which have been employed by the Authority will eventually be reduced to 25 ships. The colliers of which I am speaking are modern ships, specially designed and built for their work, and not readily adaptable to any other work than that which they have been doing in carrying coal to the power stations.

The Central Electricity Authority Report for 1956–57 seemed to me to rely upon nuclear energy as the best long-term means of meeting an anticipated fuel shortage, and they decided that the short-term fuel gap should be filled by oil imports rather than by coal. That was their policy in 1956–57, and, as we have heard to-day, they signed up with two oil companies for the supply of fuel oil for seventeen power stations. Some of these seventeen were to be converted; others were new; and with one exception all these oil-burning stations were to be convertible to coal, should the need arise. It was expected that by 1960–61 oil consumption would reach 5¾ million tons annually, equal to 9 million tons of coal. That was their thought in 1956–57, but at the end of 1956 the Suez adventure compelled the Electricity Authority to cut its oil consumption, and doubts about the future led to delays in carrying through the oil conversion programme, though it has since been partly resumed. However, millions of pounds have been spent to facilitate the use of oil instead of coal at the Authority's power stations. During the past year, 1958, fourteen stations were expected to be converted to oil burning.

When considering this oil policy it is often forgotten, but I think it should be remembered, that the public, as well as the Electricity Authority, have an interest in this matter. Coal is indigenous here; it employs a large labour force of perhaps half a million—the noble Viscount will be better acquainted with the figure.

VISCOUNT HALL

It is 700,000.

LORD WINSTER

Yes, about that. To switch to oil from coal means throwing not only miners but seamen out of work, and in fact some shipbuilders too, because the construction of these carriers of which I have spoken is highly specialised work; therefore shipbuilding labour is also in danger. Already, I believe, the National Coal Board are curtailing recruitment, and colliers specially constructed for carrying coal to power stations have been laid up or disposed of. As I have said, such ships are unsuitable for other employment than coal-carrying.

As regards coal-carrying, it is not only the coal trade here at home that has fallen. The European coal export trade has fallen from just over 26 million tons in 1938 to about 4 million tons in 1958—a tremendous drop in the export coal trade, which again makes the chance of employment for these ships still less rosy. And it is a fact that the ships which were ordered, in view of the Authority's agreement with private shipping companies that those companies should carry a large percentage of the coal required by the Authority, are now being delivered—at a time when the use for them has largely gone. They may become surplus, and the money which has been spent upon their construction may be found to have been wasted.

Yet I have been told that the National Coal Board can meet the current requirements of the Electricity Authority; and that they feel that, by mechanisation and recruitment, they would be able to meet the needs of a greatly expanded power of production. Seeing that we have the coal here, I believe most people will agree that where coal can compete economically with oil, it should be used. Surely it must be contrary to our best interests to follow a policy which makes production of power more dependent on oil imports, especially having regard to the policies of the Middle East, an area which is so unstable, but which is the only source of oil inside the sterling area. Having regard also to the fact that the Suez Canal is now under Colonel Nasser's control, I should have thought that this was more than ever a time when we needed to be turning round to see what can be clone with coal, which we produce here at home.

Increasing purchases of oil must affect the balance of payments, They will also provide money for those ship-owners who operate under flags of convenience—which it is agreed are such a serious threat to our whole shipping industry. The use of oil favours those who use flags of convenience, and at the same time our coal stocks are piling up at an absolutely unprecedented level. I do not know whether it is right, but I have been told that the National Coal Board are paying a stocking charge of 13s. 6d. on each ton of coal which is piling up. This is a policy of Bedlam: there can be no sense of any kind in it. I appreciate, of course, that the Authority's policy is dictated to it from above; but it cannot be reconciled with the assurances that we constantly hear about the maintenance of full employment and about encouragement being given to men to make a career in the Board's collieries, and exhortations to miners to increase production, on every ton of which the National Coal Board are to pay another 13s. 6d.

I have been told that the Electricity Authority accepted oil only when there were fears of a coal shortage, and that their engineers would be very happy to return to coal, other things being equal, economically and otherwise. Incidentally, if they have to instal gas washing equipment (which is very expensive) because of the "clean air" cry, they will be let in for very heavy expenditure. Oil consumption has now gone up from 282,000 tons in 1957, a modest figure, to the equivalent of 3½ million tons of coal. while millions of tons of coal, as I have said, are being piled on the ground. As I understand it, in terms of heat one ton of oil equals 1¼ tons of coal, so that the cost of oil is competitive with that of coal only if its price is proportionately less than that of coal.

I feel that I am quite justified in saying that the present policy, if pursued, will affect our national economy and our coastwise trade and the employment of British seamen and British miners. It is not yet too late to change it, and I think it should be changed. In the past, coal has been considered to comprise three-quarters of our coastwise trade—about 28 million tons—and three-quarters of that figure is consumed by gas and power undertakings. We ought to think very long and very deeply before we cut coal out of that use.

I mentioned the possibility of coal consumption increasing, but will that increase be at land stations or at waterside stations?—because if it is increased only at land stations that will be of no help to the shipping interests, and I speak for those interests perhaps more than for any other. As the noble Viscount, Lord Runciman of Doxford, and I have pointed out very firmly, coasting tonnage is dwindling; yet coastal tonnage, a strong healthy coastwise shipping, is essential to transport in time of war and in such a fuel crisis as we had in 1946–47. The existing situation is serious. It is not healthy. It is largely due to Government policy, and in my opinion Her Majesty's Government should now re-examine and reconsider that policy.

5.47 p.m.

VISCOUNT BRENTFORD

My Lords, sometimes one seems to pass a milestone in one's life, and a little more than sixteen years ago I thought I had passed a very big milestone when I sustained the ordeal of making a maiden speech in your Lordships' Chamber. It was an occasion of considerable difficulty, and most of your Lordships who are here this afternoon were not present then, although some were. It was during the period when, thanks to your Lordships' magnanimity and generosity, Members of another place were occupying your Lordships' Chamber. On that occasion I rejoiced greatly and felt I had passed another milestone and that never again should I have to make a maiden speech in your Lordships' Chamber. But "never" is a very long time and here I am again, but this time I am seeking your Lordships' indulgence at my second attempt to make a maiden speech in your Lordships' Chamber.

I venture to intervene in this debate despite my awareness of the very intense and particular interest and knowledge which many of your Lordships have in the particular industries which we are discussing, because during a period of about five informative years I spent at the Ministry which was then called the Ministry of Fuel and Power I came to acquire a deep and happy association with those industries and an exceedingly great interest in them. I hoped, therefore, that I might possibly have something which I could contribute to your Lordships' deliberations.

As the noble Viscount who moved this Motion intimated, there is no doubt whatsoever that coal is, has for a long time been and will continue to be, the fundamental resource for all the fuel and power industries which we have. I think it would be a very bold person who was prepared to wager that for a considerable number of years to come at least three-quarters of the heat and energy which are produced and used in this country will not be derived, directly or indirectly, from the raw material of coal. Therefore I should like to consider for a few moments the problems of that fundamental industry upon which the noble Viscount himself touched with his very broad and detailed knowledge.

There is no doubt that the industry has great, though by no means insuperable, problems at the present time. And, equally, those problems bring with them great, if not unique, opportunities at the present time. I think it is as well for us not only to look at the present situation in the coal industry but also to try to foresee something of the future situation in the coal industry, which can and should progress and improve arising out of the present situation. But in order to do that one must have some regard to the cause of the problems which are besetting the industry at the present time. If I may, therefore, briefly and broadly, paint the situation as I came to learn it in the industry, I think it may help us to see what has been happening and why the present situation has arisen.

Your Lordships know that the industry enjoyed an almost uninterrupted period of expansion and progress up to that phenomenal year of 1913 when it had a world's all-time record output and an all-time record export business. Almost immediately after that we were at war, and the industry suffered the necessary concentration that the war brought. After that period of concentration we fell upon troubled times in the industry and the general period of depression throughout all industry in this country. The result then was that the industry had no profits which it could plough back for purposes of research, development or modernisation. In fact, in the middle 'thirties the total profit overall on the average throughout the industry was only 2 per cent.; and most of that, as many of your Lordships know, was derived from the East Midlands coalfields, and even South Yorkshire and the West Midlands were not doing much better than breaking even. In consequence, in most of the rest of the coalfields of the United Kingdom considerable losses were being made, with the result, as many of your Lordships will remember, that collieries were being sold, not for the coal they could produce but for the quota of coal they were entitled to produce, so that those collieries could be closed down and their quotas added to some producing colliery.

Your Lordships know full well what sort of effect that business has upon any industry at all. Consequently it was in a period of very grave difficulty indeed that the industry had to meet the demands of an expanding general industry throughout the country with the revival in 1938. Again, almost as soon as it had that situation to contend with, once more we were at war, and the coal industry, of all industries, suffered probably worse than any. It resulted in uneconomic production in order to get the easiest coal the quickest possible way, without regard to long-term development of the pits. It resulted in shortage of manpower and, of course, the lack of mechanised replacements and renewals.

Then we came, at the end of that period, to the post-war period when, indeed, the industry might have looked forward to and hoped for a period of rehabilitation. It was worn out as an industry, both as regards the man power and personnel in the industry and particularly as regards its physical equipment. But no such period of rehabilitation was possible, because immediately after a period of expansion set in generally and the demands upon the industry were continually increasing for more and more production of coal. Then, after that, the industry was nationalised; and, whatever good things that may have brought to the industry, it undoubtedly brought many difficulties with it:, too. And when one comes to think of the tasks which Parliament laid upon the new National Coal Board at that time one realises it really is a most extraordinary thing for us to have done.

As many of your Lordships know, when one considers the problems of industry one recognises that big industry has normally grown by the developing of enterprises, and as they develop they may amalgamate with others, but on every occasion they choose their path of expansion and development. But not so with the coal industry. Parliament said, in effect, that in three months' time the newly constituted National Coal Board—if I may paraphrase a recipe from the notable cookery book by that famous lady, Mrs. Beeton—should take a 1,000 or so collieries and add as many coke ovens as they could. Then they should mix in a retail trade of considerable size and a very large holding indeed of agricultural property, making them one of the biggest land owners in the country. Then they should stir in some housing estates from all over the country, including Scotland and Wales, and should season with the addition of some boot factories, bakeries, canteens and things like that; add opencast mining operations to taste, and then cook well according to a blueprint of new organisation which had been provided by Parliament and which did not at the same time provide them with either divisional or area administration or offices, the latter being almost impossible to get at the time. Finally, my Lords, the recipe says: serve up, without profit or loss, to meet the needs of the nation and to improve the standards throughout the industry.

Of course, that was a pretty tall order for any newly constituted board of directors, and I think they tackled the job in a most wonderful way, right from the top to the bottom of the industry; and the task which they did was a noble task and a very wonderful one indeed. But throughout the whole of the period at the beginning of this decade the problem which they had to meet was what we used to call the problem of elbow room. The pressure of demand was continually increasing as business and industry were expanding. The standard of living of the people was improving, and the consumption of coal was increasing. There never was any time, any period at all, when the industry had the opportunity of sitting back and saying, "Now we can really organise ourselves". It is a fact that their problems were accentuated by a great many people of very wide experience leaving the industry at the time of nationalisation and the consequent necessity of continuous improvisation and continuous speeding up of promotion with the result that many square pegs got into round holes.

I expect that probably several of your Lordships have also experienced the opportunity of being underground in a pit where the pit bottom is being entirely redeveloped, replanned, and redesigned, and where it looks as though the engineers are creating nothing but chaos and confusion throughout the whole of the shafts and the adjoining roads and sections of the pit; and yet at the faces of the pit the coal has to be produced, the roads have to be kept open, and the coal has to flow from the face right up to the surface. They did it, and how they did it always amazed me when I was underground myself. But, of course, it was not an economic way of doing it, it was not a speedy way of doing it, and it was by no means a good way of doing it. There was therefore a continuous demand throughout the whole of the industry for room to manœuvre, for relief from the pressure of demand, and that was why we sought to grant the industry that opportunity by the means which have been referred to by your Lordships this afternoon—by getting electricity produced from oil instead of from coal, by the speeding up of nuclear power for the production of electricity, by the creation of gas from oil (which always seemed a most extraordinary thing; however, it happened to fall to my lot to have the honour to open what I believe to be the last coal carbonisation plant for the production of gas in London) and also by conversion throughout industry, commerce, and domestic consumption as well, from coal to oil, and, if that was not feasible, the use of coal in a far more economical and efficient way so that so much should not be used.

Now, my Lords, the results are being achieved, and elbow room has been won for the coal industry. I do not think that any of your Lordships can regret more than I do the necessary dislocation which that is bound to cause in the lives of a certain number of men employed in the industry, and I most wholeheartedly concur with what the noble Viscount said in his opening speech about the hardship which that involves, particularly as it affects the older people in the industry, who may have worked at the same pit for forty years or more. But, so far as others are concerned, in the industry there is, I think, much more mobility and much more interflow with ordinary industry than one often realises.

At times when the shortage of manpower in the coal industry was so acute that we could not get the production that was necessary we used to find that, as soon as there was a recession of any sort which was near a coal mine—quite a local one, for any cause, in any industrial sphere—labour used to start flowing into the pits and that the local problem was solved until the time when the recession passed, when the labour would then flow out from the pits into industry again. It is the same thing with regard to mobility. Many of your Lordships will know the situation in Cumberland and Scotland—how the pits are necessarily following the line of the seams from west to east, and the steps which have been taken to move families of miners, communities of miners, to follow the collieries as they are developing further in the east. Under modern arrangements, under modern conditions, and with the help which the Coal Board is giving them, in the case of active men and of young men that has worked to a very great extent far better than any of us would have thought some years ago, when the collier was regarded as an immobile person who lived in the colliery community and was never going outside it.

May I say one further word about the colliers themselves? I have always found—and many of your Lordships will, I know, bear this out—that they are loyalty itself, and if they can be made to understand that what is being done by the National Coal Board is for the good of the industry as a whole, then I am perfectly certain that they will be prepared to accept such personal sacrifices as it involves in order that the industry as a whole shall benefit from what is being done. But now is the opportunity for the National Coal Board. Now is the time when the pits can be overhauled; when they can be redesigned and laid out; when the administration can be replanned, and when the square pegs can be got into square holes and into their right places.

The industry has a unique opportunity now—an opportunity which has to a great extent been deliberately planned—and the Board, as I know, has the courage and the imagination to take advantage of its chances and to seize the opportunity. I am perfectly certain that the management and the unions themselves have absolute loyalty to the industry, and are prepared to play their own parts in the situation which must arise in order to modernise and reconstruct, and to put the industry on to a really sound basis. I, for my part, my Lords, am absolutely confident that the industry will again become the most efficient in the world, and that it will again be able to serve the other industries of this country and the nation as a whole in the way in which it would itself wish to do; and I know that the nation as a whole will be proud to see it do it.

6.8 p.m.

VISCOUNT STONEHAVEN

My Lords, it can fall to relatively few of us to score a right and a left in your Lordships' Chamber, and if Lord Brentford's right was as good as his left, it must have been a jolly good speech. I am sure that I echo all your Lordships' views when I say that I hope we shall hear him frequently in the future, and that we shall continue for a long time to hear him en these subjects, because he has given us a well-informed speech on this most important topic.

Coming to discuss the subject of this debate, I should first of all like to congratulate the noble Viscount, Lord Hall, and to thank him for bringing it before us—-and I am sure we all agree on that point, too. It is a subject of very great importance at the moment, and I find myself in considerable anxiety concerning the recent happenings. About eighteen months ago, or very recently, we all were thinking—we were probably badly informed—in terms of a shortage of coal. In Europe, the O.E.E.C. and E.C.S.C. were desperate for the last knob of coal, and did not appear to be able to get it. Now they are in almost the same position as we are in. If this is planned, my Lords, all I can say is that it would have been a great deal better if some indication that that was the plan had been announced before it happened. I do not know whether it has been planned at all, but I ant anxious and I am worried. Is this merely a temporary thing? Is it the result of planning, or have all the calculations of the various Governmental advisers in Europe and here been so vulnerable that for some reason they have been com- pletely upset? That is my fear, and that is what it looks like, without knowledge. That is why I am so glad that the noble Viscount has brought this Motion before us to-day.

My Lords, it is very easy to criticise and to blame other people. It is a process in which there is very little merit, and it is of no real value. Sometimes one says things that appear to be critical without meaning them to be so, and I hope your Lordships will accept from me that I do not wish to be critical or controversial at all. I think that this matter is miles above Party: it is much too important for that. As I see the problem there are two major points about the utilisation of coal. The first is that industry, both nationalised and private enterprise, must be assured of a certain and adequate supply of suitable coal at a comparatively economic price. The second is that means must be found of utilising all small coal produced.

Perhaps I may consider the second point first, because it is more involved. I have been told that the National Coal Board have spent much time and money in producing or adapting machines for cutting and loading coal which produce less smalls; but that is only a partial answer. It is certainly better than something that was had. But there is no getting away from the fact that smalls tend to increase and it seems to me that all forms of mechanical handling of coal tend to increase the quantity of smalls. If the overall production of coal is to be increased, equally the overall quantity, though not necessarily the percentage, of smalls will also be increased. We appear to be unable to use the smalls we are producing at this moment. Therefore, this is a point of importance and worry, on which we should like to be assured.

I would draw your Lordships' attention to the sterling work that has been done in this field by the National Industrial Fuel Efficiency Service. In their fourth Annual Report there are striking figures which I think everybody interested in this subject should read. I should also like to draw attention, in passing, to the extraordinary fact that all the nationalised fuel-using industries are sponsoring N.I.F.E.S.—with one exception: British Railways, who use a large quantity of large coal, which is the only kind of coal that we can export. If they are wasting, or unless they take every measure possible to check up that they are not wasting, coal, I think that something is radically wrong there. When all is said and done, if the Electricity Generating Board welcome N.I.F.E.S. and tare thankful for its co-operation and advice, there is nothing infra dig. in British Railways accepting the same measure of their own efficiency in their own house. I am quite aware that steam locomotives have had their day, but they have not all been abolished, and they will consume a vast quantity of coal before complete electrification is a fact. During that interim period a great deal of attention should be paid to the fact that they are using coal which we could export and which is in short supply.

N.I.F.E.S. also stresses the fact that surprisingly little large coal, or even doubles, is used in industry, and that industry is rapidly going over to burning the small fuels for which we want to find a use. When we talk about increased fuel efficiency and the saving of coal, we must remember that that does not necessarily mean burning less coal: it can equally well mean the production of two articles instead of one for the same amount of fuel, by using improved plant and increasing output. I think that that is the proper aspect of fuel efficiency, not cutting the use of coal. The situation in the propaganda changes so rapidly from superabundance to starvation that one does not know quite where one stands, and that is one of the things about which I am anxious.

There are one or two small palliatives that would help in pushing the use of small coals. I should like the Minister to give us a few details, if possible, of how some current experiments are going along. One use of small coals is briquetting, making little lumps into big lumps. I know that a certain amount of work has been done on this, and I wonder whether we have had full consultation with European concerns who have been doing this for a long time and who, I think, may be in advance of us—for example, the European Coal and Steel Community and O.E.E.C. They have done a great deal of work on this, and I do not know what the results are, whether we know what they are, whether we are working with them or whether we are off on a side issue. I should like to know about that, if possible.

Apart from gasifying oils, I understand that the Gas Boards have been experimenting with complete gasification of coals which are not carbonising coals in the true sense. I believe that they have been successful, and I hope that we may hear a little more about this, because it represents another use for small coals. Then there is the interesting experiment, which is being carried out by British Railways, with an injector type of exhaust blast used in the smoke-box of locomotives. It is claimed by the sponsors of this device that it gives an overall increase of efficiency of about 5 per cent., with the added advantage of being able to burn, and burn completely, small coals. Considering the vast amount of coal that British Railways have yet to burn before they are electrified, I am sure that this is something that should be gone into very carefully. I understand that the capital cost of this device can be written off in eighteen months or two years on the savings that will accrue. It is not a brand-new idea. I think that I am right in saying that it is used in some fifteen foreign countries already, so it is not a fresh invention, although perhaps it is new to this country. If possible, I should like to have a few words on that. I told the noble Lord, Lord Mills, that I was going to raise some of these points, but I am afraid that I did not give him adequate notice, and if he cannot answer I can blame no one but myself.

The two cardinal conditions that I started off with on coal utilisation to a certain extent overlap, but if your Lordships will bear with me I should like to go on to the first point; that is, that nationalised and private enterprise must be assured of a certain adequate supply of suitable coal at a competitive economic price. If one can take the figures of the chairman of the Seaborne Traders' Association as being accurate (I have no reason to suppose that they are not; but they are not official figures) one must point the finger of inquiry at the nationalised power industry. Many of their decisions were forced on them because my first consideration was not at that time being fulfilled by the National Coal Board—they probably could not fulfil it; I do not blame them, but am just stating the fact. The use of seaborne coal in the year 1958 has declined by about 4 million tons. It is normally about 28 million tons, and of this 21 million tons goes to the electricity authorities and the gas authorities, 5 million tons to private industry and 2 million tons to domestic users. I cannot believe that the last two categories of user, taking 7 million tons in all, have reduced their intake by 57 per cent. in one year. A large cut must be credited to the gas and electricity authorities.

It has been the Government's policy to convert the nationalised undertakings away from coal to oil; and here again I think there are palliatives that might possibly help and I should be glad if I could have some information on them. There are a certain number of oil-fired power stations which were originally built to burn pulverised fuel and are, or were, fully equipped to do so. The only one I know intimately is Little Brook Power Station, because the last job I did before the war as a junior engineer was to help put it up. That station at that time was fully equipped with grid moderators, coal-handling plant, pulverising plant and the rest. The difficulties of converting back and forth of a pulverised fuel furnace are relatively simple compared to those with other types of installation. Whether that station has been converted back I do not know, but I can see little justification for not doing it, because the whole installation is there—the jets, the lot. I do not know whether there are many other stations in that position, but that one certainly is.

There are also a number of coal-fired power stations projected and building in their early stages. My old firm is engaged on building one which I saw the other day. As a palliative, would it not be possible to design and build the coal-storage areas and some of the coal-handling plant at an early stage before you put the power station up? Instead of having coal dumped all around the pits, you could, at least, dump it there and sell it to the electricity authority who may use it three or four years hence. That might be worth consideration, because by so doing you would get a little bit back.

I am aware of the difficulty of oil company contracts, but I suggest that there is another approach to this problem—it may not be valid—and it is this. As I understand it, the Government or the power companies have contracted to take oil for a long time in a certain quantity. They have not contracted to burn that oil under their boilers. Why should not a portion of that oil be resold—you can bet your life the Government are getting it cheaply!—throughout industry, which is using the same type of oil in ever-increasing quantities, and the power stations go back to burning coal?

There are a few points to consider about this tragic sudden closing of pits. Unemployment to me is not just a dry figure. Some noble Lords know all about it, and I saw a little of it when I first started work. There is another category of person for whom I am sorry. There is the young collier whom you can move, but then there is the man who is living with his old retired parents, sometimes bed-ridden and sometimes invalid, and you cannot uproot them; they are retired, and the young chap must stay unemployed at his doomed pit. That is the type of case that can be multiplied. It distresses one to meet these cases, as one not infrequently does. Pits have to be closed, but surely, with a little forethought, it ought to be possible to close, for instance, a large pit down district by district and so soften the blow, sorting out those who must stay in the district and those who can be moved; and take longer over it. It is this sudden: "All right, chum, here's your chit", that is wrong, in my view. I am sure that that could be done.

On the question of prolonging the life of a mine which is more or less working out, I would ask whether the use of a sort of long-wall retreating underground gasification process to utilise the remaining coal there has been thoroughly investigated. This process, on which a great deal of work has been done, and I think successfully, requires a minimum amount of mining. That might be feasible, but I do not know; I am not an expert. You might, by planning ahead, produce sufficient work for your old people to see them out without disturbing them, and at the same time get in the form of gas the benefit of the unexhausted coal which it is uneconomic to work, and not resort to the gasification of oil. The same remarks apply possibly to methane drainage. The methane gas which is drained off in certain conditions is often too rich to use direct and has to be diluted. The gas you get from underground gasification is the reverse, and is rather weak. By mixing the two a palliative might be found. All I ask is that these things should be looked into by people who, unlike myself, know what they are talking about.

On the question of importing methane, natural gas, if you can get it virtually for nothing—it is waste product in the Middle East—I do not think you can be condemned. One has to admit that we must allow it as a source of power, even if it does compete with coal, if we can do so at a marked benefit in price. Otherwise I would say "No", because it does not help us at all to develop our own industry. Finally, I would make a plea for greater and more enthusiastic cooperation between the planning officials, the top-level union officials and the people who are using the products. I am sure that if everyone is taken into confidence all will see where they are going, and the public will get a little advance information.

6.30 p.m.

LORD LAWSON

My Lords, speaker after speaker has done justice to my noble friend Lord Hall in the way that he has laid a foundation for this debate. With that characteristic gift of his, a gift which I sometimes envy, he can deal with mass statistics and lay outlines of thought in a way which few in this House can equal. I want to address myself to that part of his speech in which he asked for a fuel policy. The Minister may say that he has a policy, and the Government may think they have one; but so far as I can see there does not seem to be any policy at all to face the present situation. The matter is urgent, because this coal business has a nasty habit of turning back upon you suddenly when you least expect it.

For long years there was unemployment in the coal fields when other parts of the country were very prosperous. I must have brought hundreds of men down to the south of England in groups, skilled miners who had something like an affection for their own trade, but who had come down and been dispersed in the south, doing all kinds of odd jobs, because not only had the pits gone down but people in the industry and in their village had lost faith in the industry. If your Lordships can imagine a state of bankruptcy of faith at any time in the history of this country, that certainly prevailed in the mining areas. But before we knew where we were, war was upon us, and people in responsible positions were begging those of us who had some influence with the industry to use it to re-establish this faith.

I know some of the talk which goes on. It is said that with miners there is always trouble. That is quite natural. Coal has been the central form of power for the better part of two centuries. The coal industry employs, I believe, a greater number of the population than any other industry. We had to set about re-establishing that faith that had been lost, and if it had not been for a man like the late Ernest Bevin, who helped to devise the idea of what became known as the "Bevin Boys", I do not know what would have become of us. Those of us who know this business had a very difficult task to perform in re-establishing faith in this industry. There was an idea that just as you had given the miners the sack and sent them away from the area, so they could be brought hack. People talk about "digging coal". There is no such thing. A man serves a long apprenticeship in the great art of extracting coal. I was saying to my noble friend Lord Hall that I was about twelve years on the way from the shaft to the coalface, learning all the tasks there were to learn, before I was allowed to extract coal.

It is not a question of satisfying the oil kings. I am not blaming the Government any more than I blame anybody else, because I know the difficulty in which they have been placed. Somehow or other they have had to get the forms of power to meet the needs. But I think they are a bit slow in apprehending the problem now before them, because if you are not careful it is going to be the old old story—people will lose faith in their industry. Young men in a colliery are so closely identified with their industry that they have something like an affection for it. You can see them to-day. They have their proper miners' clothes and caps, and you can see the pride with which the youngsters go to work. They really feel as though they are somebody. I can see signs of their faith being broken again, as a colliery here and a colliery there are closed—it may be a long way from them, but it has its effect. If the father begins to see that there is nothing in a colliery for his son, then this country will soon find itself in great difficulty.

We are living in a disturbed world. I read the headlines as little as possible, because both the newspapers and the radio seem to make it their business to make us jump—and there is plenty to trade upon to do that. We may be in difficulties any day. None of us wants to see it, but in the world in which we live that possibility cannot be ruled out. If we got into difficulties we should have a repetition of the kind of thing we had at the beginning of the last war. It was a good thing in many ways that people came in from outside: we improved the education of the country to some extent, at any rate. I remember one man who came from London. He was a real, true blue Cockney. He took to mining, and in fact is now a mine manager. But that is a rare thing, and you will not get a second chance, so far as I can see, with a great industry like this, if once again men lose faith in it. All I rose to-night to say was that I charge the Minister of Power, who has lived and spent a good part of his life in that great industrial area in the North, to see that immediate attention is given to this matter of a policy for the Ministry of Power which will meet this problem. That is all I have to say upon that matter.

I may say that one of the speeches in this debate which I heard with very great pleasure was that of the noble Viscount, Lord Brentford. I heard him make his maiden speech in the other House—and a very good speech it was; but to-night he made a speech that was very understanding of the problem with which we are dealing. I liked his description of the rough-and-ready place he saw down below, where everything seemed chaos—for that is just what a pit is, unless the men there know their way around. But it is a place that is easy to abide in, and a place of order, so far as they are concerned. I hope that to-night's debate will have the result at any rate of bringing the Ministry of Power into contact with all the influences and all the powers which go to make up and supply the fuel and power for this country, so that we may avoid the very bad mistakes—and they were very bad and very bitter for some of us who saw them at first hand—that were made in the past; because as I say, coal has a dangerous way of turning back upon you again.

6.43 p.m.

LORD HAWKE

My Lords, we all listened with very great pleasure to the speech of my noble friend, Lord Brent-ford. For him I hold a special affection because when I was a junior spokesman for his Ministry in this House he was one of the few Under-Secretaries who ever bothered to keep their junior spokesmen in the picture of what was going on.

We who have the welfare of the coal industry at heart must greatly regret the need for this debate, the general malaise which seems to have overcome the industry. Coal for a number of years has been a monopoly. I personally have nothing against monopolies, but a monopoly must satisfy certain conditions if it is going to get away with it with its consumers. It has to be able to produce the quality and quantity of the goods they require and at a price they think reasonable, and, above all, it must have good public relations, because a monopoly is always on the defensive against the charge of exploiting its consumers. I may say, in parenthesis, that if an industry is to contract, it is far easier to do this in the shape of monopoly industry than in any other, as we have seen in the case of cotton.

But I am sorry to say that the coal monopoly have singularly failed to satisfy any of these conditions, perhaps through no fault of their own. Until very recently quantity was rationed, the quality that was required was not often obtainable and the public relations of the Coal Board were by no means good. If only the Public Relations Department of the Coal Board had been able to put across to the general public the case that my noble friend Lord Brentford put this afternoon, the better educated the public would be, and how much more sympathetic to the Board! But they have just not been able to do it.

At the moment, as a result of the slight easing of demand in industry and the welling up of the consumption of oil, there is this surplus, perhaps temporary, and the consumers at long last are heaving a sigh of relief. They have had an anxious time for many years. But we are no nearer to the solution of the problem of price. In regard to this matter I am afraid the consumer must inevitably in his mind compare to-day's prices with what he used to pay before the war. The average cost of production in this country, according to the Reid Report, in 1938 was overall 16s. a ton; in 1957 it was 81s. 6d., and I think to-day it is probably a few shillings more. This average conceals, I think, a substantially larger proportion of the less valuable small coal. In 1957 23 per cent. was untreated smalls and 24 per cent. treated smalls. I have no figures of pre-war smalls but I do not think they were of that order of magnitude. As for extraneous matter, or dirt as the public call it, of course no figures can possibly exist, but the general opinion is that with mechanised mining far more dirt comes out of the pit and a very much larger proportion finds its way into the rail wagons than before the war.

As a result you can see from these costs that the cost of production has apparently increased about fivefold—rather more than fivefold; taking into account the quality and the larger proportion of dirt it may well be that the cost of production is six times that of pre-war for a similar article. We all know some of the technical answers to this—the thinner seams, the longer haulage—but there has been a great deal of money spent in investment, though the total for 1957 is still rather disappointingly low, £50 million. There are very big authorisations, sometimes, by Ministers in Parliament, but the actual task of modernisation depends on the spending of money on the spot, and sometimes they have not the engineers, and so on, to put the money to work.

The output per man-shift, according to the Reid Report, in 1936 was 1.17 tons, whereas in 1957 it is 1.23, a little increase; but considering the difference in dirt, and so on, probably the total of burnable matter was about the same, one ton per man-shift. The wages per man-shift in 1957 were £3. I have not been able to find any pre-war figures, but assuming that the proportion of labour costs to total costs was about the same as it is at the present moment, then the average cost per man-shift in labour charges before the war would have been about 11 s. 6d.; therefore to-day the labour charges are nearly six times as much per shift for winning a little more coal, but probably with more dirt in it.

The consumers are not interested in figures of this sort; the only thing that interests them is the figure that they have to pay for coal when it reaches their coal shed. From my old accounts I find that in January, 1939, we paid 40s. 10d. for house coal and to-day Grade 3, which is about the corresponding grade of coal, is £10 10s. per ton in my part of the world. Likewise, in January, 1939, we paid 39s. 11d. for coke, and to-day, in my part of the world, coke costs £10 1s. 8d.—in other words, roughly five times the pre-war price, whereas the general price level is in the neighbourhood of three times the pre-war level. What does this show? It shows that, by and large, the coal industry's costs are about six times what they were before the war, and the retail selling prices which include transport, handling and so on, are about five times for a product which, on the average, is probably a little inferior, while prices for other things have gone up about three times.

In these circumstances, the consumers have reacted in the obvious way. To them, coal fuel over the last few years has been very dear. They have practised every economy and they have searched for substitutes. Industry has improved its boilers and insulated its buildings; transport has gone in for diesel fuel and for electricity, and all, including domestic consumers, have gone in on a far wider scale for oil. Five years ago it was rare to go into a house wired for electricity and to see a portable oil stove working; to-day it is common practice. This has come about through the improved patterns of oil-burning equipment, both the forced-draught burners in furnaces and the ordinary domestic convector heaters. I do not know whether it is correct, but I read somewhere that when the new building for the National Union of Mineworkers was designed it was the intention to have an oil fuel installation.

I hear that the oil industry is likely to be still more active in the future; they expect an increase in consumption. I have no official information—it is merely hearsay from conversations that I have had with people in American oil companies, who tell me that it is the general practice of American oil companies where possible to spend the proceeds of their oil in the country where they obtained those proceeds, on stores, equipment and so on. Doubtless British companies do the same. In that way the money spent on oil in this country tends to be translated into pipes, pumps, ships and so on, and provides employment here.

I have no brief at all for the oil industry, and one must always recognise at the back of one's mind that there are possibilities of international difficulties at any time, But what is the coal industry to do in face of this threat? I think the first important thing to do is to try to get the price of coke down. That would save a great deal of the conversion which is going on daily of domestic and public buildings from coke heating to oil heating. Then, the utmost should be done to extend the use of electricity, which is the only way of piping fuel to the home and is the only method of heating in regard to which coal has a clear march over oil. Incidentally, when it became a question the other day of converting our church system, I was most disappointed to see how uncompetitive was the electrical system as compared with oil. I should have thought that with a Sunday off-peak load, churches would be ideal mediums to which to give a cheap tariff.

This slight contraction in demand has come as a rude shock to the industry, but, as my noble friend Lord Brentford has pointed out, it is also an opportunity. Incidentally, as regards the stocks which appear to be accumulating, I came across a passage in Sir Winston's great book referring to a Minute which he wrote in 1940 or 1941, to the then Minister of Fuel—I think a Member of your Lordships' House at the time—praising him for filling the dumps all over the country. He said that they would surely be needed before long, and of course they were. I have a feeling that the consumption of fuel is going to go up.

We must recognise that in the nature of things mining is not a permanent industry in any one place. Mining depletes the deposits until they are finished or they are too expensive to work; there are plenty of "ghost" mining towns in the world to bear witness to that. I am sure that miners must realise that if they want to keep in mining the whole of their lives, it may well be that during the course of their lives they will have to move from one place to another. This gives an opportunity to the National Coal Board such as never occurred in the past to plan mining villages and towns in a really splendid way. When they are building houses for active mineworkers I suggest that they should keep an eye on the building of old people's homes for dependants in the same towns or villages. That covers the point made by my noble friend Lord Stonehaven. I am glad to see that the National Coal Board have what appeared to be a decent redundancy scheme when I read it in The Times. They must set themselves out to be a first-class employer. But it is vitally important to get on with the job of these modern pits arid the housing to accompany them, because that is the quickest way to get the cost per ton down.

I am glad to see that shaft sinking and road driving appears to be going rather faster than it used to do. I read somewhere that a South African team was in this country. I do not know whether or not they provided a stimulant in this matter. But in the final result the National Coal Board mist somehow lower its cost per ton mined or it will continue to lose ground. At the same time, I believe it would be a correct policy for the Government to use to the full in the power stations that large proportion of small coal which seems almost inevitably to come out of the new mines, particularly in the East Midlands. I suggest that wherever possible there should be dual fuelling in any new power stations. I hope that the depression will be to some degree a temporary one and that the consumption of fuel will again go up, but on the question of price a great deal depends on whether the National Coal Board are going to get their share of the expanding market.

VISCOUNT HALL

My Lords, may I just remind the noble Lord that the cost of coal is lower in this country than in any other European country, and that the output per man-shift in this country is higher? On the latest figures I have seen, the British miner produces 1.6 tons in some of the best collieries, and at the present time the average is about 1.5 tons.

LORD HAWKE

My Lords, I am very glad to hear that the figure has gone up so much, compared with that given in the 1957 Report.

7.2 p.m.

LORD MERRIVALE

My Lords, we are indebted to the noble Viscount, Lord Hall, for initiating this debate at such a timely and opportune moment. I feel that without doubt our main sources of fuel in the foreseeable future will be nuclear energy, oil and our basic fuel, coal, but with the drawback that of these three natural resources only nuclear energy is a renewable natural resource. As conflicting dates have been put out by experts as to when the world's non-renewable natural resources will be totally exhausted, I will not weary your Lordships with any figures in that respect. The fact remains, however, that world consumption of fuel is steadily increasing, which means, I believe, that we should not rely too implicity on imported oil but should practise fuel efficiency to a greater extent—a point which has been mentioned by several noble Lords this evening—for in the future our resources and reserves will become more and more inaccessible. In other words, apart from opencast coal mines, with their amenity problems, coal will be extracted at increasing depths so that, in spite of increased mechanisation in the pits, the price must continue to rise. This need for fuel efficiency may be the reason for the National Coal Board's closure of the previously mentioned thirty-six pits.

At this point I should like to speak of the great satisfaction with which I read a recent Press report to the effect that the 550 miners employed in the Cannock Chase No. 3 Pit will be given work at other Cannock mines. I sincerely hope, too, that ultimately the National Coal Board will be able to grant jobs to the 4,000 miners who are affected and are not being given jobs, and who will be receiving only six months' redundancy compention. For in spite of a recent Act, the Distribution of Industry (Industrial Finance) Act, which provides for a Government grants and loans scheme for factory expansion which may give certain factories a possibility to employ a number of miners, I feel (and here, I believe, I shall be supported by noble Lords who have great knowledge of the mining industry) that the miners' interest is mining. Many of them have devoted their lives to this arduous and heavy task, and I feel that many of them would not wish to be drafted into other industries. Coal is their livelihood.

In many quarters it is said that oil is ousting coal. Not long ago I read in the Press that Sir James Bowman had said that the National Coal Board would go on spending annually £104 million to modernise the pits in order to compete with oil. It is my contention that one effective method would be to convert the surplus coal into oil. In that respect the booklet, Fuel Research, 1957, published by the Department of Scientific and Industrial Research, makes interesting reading, and I should like to quote a few words from page 13: The dependence of road and air transport in this country on imported petroleum products and the rapidly growing dependence of the gas, chemical and many other industries on such products emphasise the national importance of developing an economic process for converting coal into liquid and gaseous fuels. A few years ago it was difficult to foresee the availability of coal for such a process, but with the rapidly developing use of nuclear energy it is now possible to envisage a future surplus of low-grade coal of the kind now consumed by power stations.… Studies of the economics of such a combined process "— that is, gasification and synthesis— by the Ministry of Power have suggested that … economic success should be possible under present day conditions in the United Kingdom. Another method could well be the taking of increased interest in the work of the British Coal Utilisation Research Association. Possibly greater encouragement could be given, too, by the National Coal Board to research and the production of small-scale automatically controlled equipment for smokelessly burning small coal in medium-sized boilers. Another question which could be looked into to a greater degree is the mechanical handling of smalls, particularly washed slacks, in view of their high moisture content.

I should like now to refer back to the question of obtaining oil from coal, and the previously mentioned D.S.I.R. publication, from which it would seem that Her Majesty's Government are relying to a large extent on a combination of gasification and synthesis reaction by catalysts, with a view, I presume, ultimately to producing liquid fuels and town gas from coal. In Scotland a German Lurgi plant has been installed for complete gasification and is solely producing town gas, whilst work undertaken by the D.S.I.R. Fuel Research Station is mainly centred around the German Fischer-Tropsch synthesis process. But, my Lords, there is in this country a synchronised gas combustion gasification or carbonization process.

I do not want to weary your Lordships with too many figures, but I should like to quote one or two comparative figures regarding Cannel coal, of which large quantities may be found in Scotland, and retorting, distilling small coal. With regard to Cannel coal in Scotland, there are in the Lothians 27½ million tons; in Lanarkshire 1¾ million tons; in Fifeshire 74½ million tons, and in Ayrshire 5½ million tons. Naturally these are approximate figures, and they apply only to Cannel coal with a yield of not less than about 40 gallons of crude oil per ton. One ton of Cannel coal will yield 40 gallons of crude oil; 1½ gallons of refined spirit; and the residue, combined with a quarter of a ton of Cannel coal or small coal, will give half a ton of smokeless block fuel. On the other hand, one ton of small coal will yield 10 to 12 gallons of fuel oil; approximately 4 gallons of spirit; and the residue, if combined with half a ton of small coal, will give one ton of smokeless block fuel.

I am advised that the price of this smokeless block fuel would be sufficiently low for it to be attractive to the industrial user, as well as to the domestic user. Out of a total consumption in 1957 of 213 million tons of coal, industry consumed 37½ million tons, and the domestic user only 36 million tons. So it might well be that there would be an extra requirement if the price were right, as I am advised it could well be.

Bearing in mind the two problems which affect us most to-day, that of miner redundancy and the question of excessive coal stocks, I should like to ask the noble Lord the Minister, with great respect, whether he would consider setting up—or advising the Coal Board to set up—a small pilot plant which I feel would be the first step towards producing in this country a large amount of fuels from coal. The object would be to reduce the alarming size of the coal stocks—two-thirds of which I believe are above ground, the other one-third having been thrown hack into the pits—and also to provide work for the redundant miners, in areas in which they are used to working, handling a raw material which was described, in the words of a Govern- ment spokesman, the Paymaster General, on December 3 last in another place, as a raw material which will continue to be in the future as it is now, the greatest source of energy for the British economy". Finally, again with great respect to the Minister, I would suggest. that possibly Lanarkshire, with its 1,795 redundant miners, of whom I believe only one-third are to be offered alternative jobs, with its stocks of small coal, its deposits of Cannel coal and its £50 million steel project, might well be a satisfactory area in which to set up such a scheme.

7.15 p.m.

THE MINISTER OF POWER (LORD MILLS)

My Lords, I should like first to say how much I have welcomed this debate. It is fitting to recall that about a year ago, on February 5, we had a debate in your Lordships' House initiated by the noble Lord, Lord Macdonald of Gwaenysgor, on the development and use of our fuel and power resources. I think that these debates—and I like to think they are fairly frequent—are very helpful and very useful. This debate was to call attention to the national fuel and power policy; and, naturally, it has concentrated very greatly on the question of coal. But the noble Lord, Lord Lawson, reminded us that we were debating the national fuel and power policy of the Government, even though he thought the Government had not got one! I should like to refer to the maiden speech of the noble Viscount, Lord Brentford, which I found as informative as it was helpful, and I congratulate him upon it.

I think it would be well to explain to your Lordships the Government's general fuel and power policy and the reasons upon which it is based. Perhaps I could first of all remind your Lordships of the Ministry of Fuel and Power Act, and of my responsibilities under it. That Act charges the Minister with the duties of … securing the effective and co-ordinated development of coal, petroleum and other minerals and sources of fuel and power in Great Britain … and of promoting economy and efficiency in the supply, distribution, use and consumption of fuel and power, whether produced in Great Britain or not". The nationalised industries—coal, gas, electricity—have powers and duties prescribed by Parliament in their basic Statutes; and those industries, together with the privately-owned oil industry, are the means of providing our fuel requirements.

The enunciation of fuel policy goes back to the year 1951 when the Trades Union Congress and the Federation of British Industries jointly approached the then Government and urged them to adopt a "positive national fuel policy". They were concerned about the inadequate production of coal and the inefficient ways in which it was consumed. They thought that unless special measures were taken to economise in the use of fuel, future years would bring critical shortages and dangers to the national economy as a whole as fuel requirements increased faster than fuel supplies. In response to that approach, the then Government appointed, in July, 1951, a Committee on National Fuel Policy, under the Chairmanship of Lord Ridley. In their Report, which was a very full one, the Committee made some forty major and specific recommendations, most of which have in one way or another been implemented. But they did take the view that intervention by the central Government through administrative orders to improve the pattern of fuel use would be ineffective", and they gave their reasons. Those reasons were many, but in the main the Committee argued that the relative advantages of different fuels could not be positively and generally established, even for specific services.

Current Government policy follows the general lines endorsed by the Ridley Committee, maintaining a lively and proper competition between the different fuels—because competition is important as a stimulus to efficiency, and because efficiency in the supply of fuel is both necessary and important for increasing productivity, expanding national production, and keeping down costs. We take the view that the individual consumer should be free to choose what he considers the most efficient and the cheapest fuel for his particular purpose, for he is best able to judge, with whatever advice he may care to take, what suits him best. This policy, however, does not imply one of complete non-intervention in the pattern of fuel supply and use. A general oversight is exercised over the work and planning of the nationalised fuel industries, with a considerable measure of control over their borrowing powers and capital investments. We also seek to promote co-operation between the different industries wherever we can see fruitful but unexploited possibilities.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I am not quite sure whether I am following the noble Lord in regard to this co-operation. There are only two main descriptions of policy in these matters. The noble Lord started with competition as being practically the essential stimulus and life-thread. Then he went on to co-operation—although between what industries I am not quite sure. I feel rather anxious, however, because the words of John Ruskin have been with me all my life. Competition is death, not life. Only co-operation is life.

LORD MILLS

Competition can well be associated with co-operation, and I will give the noble Viscount two examples of what I have in mind. One of them has been mentioned. It was the Scottish Gas Board's decision to go ahead with the construction of the Lurgi plant in Fife, Scotland. That was for the total gasification of poor quality coal, and that stemmed from close co-operation between the National Coal Board and the gas industry. It is something of which we shall, I am sure, be proud. Large—very large—shallow reserves of non-coking coals will be here gasified to produce town's gas at costs competitive with gas from conventional gas works. Another plant of a similar kind will be constructed by the West Midlands Gas Board to use deep-mined poor quality coal. Second, as a result of co-operation between the refineries and the gas industry, arrangements have been made for surplus products from refineries—a new source of supply—to be delivered to gas works and processed into town's gas.

VISCOUNT HALL

Could I ask the noble Lord—and if he has not the answer now, perhaps he will let me have it—whether he could give an account of the cost of the surplus products from the refineries in relation to the gas supplied by them, compared with the cost of coal?

LORD MILLS

I will gladly supply the noble Viscount with that information. The arrangements have been made on a commercial basis. The extra supplies of gas were needed, the kind of coal necessary was in short supply, and the arrangements were made at an economic price. I will, however, let the noble Viscount have full particulars.

As I say, the Government's general fuel policy is to maintain competition between the fuel industries (and here I might say that competition can be life as well as death—and in well-managed affairs it is generally life) as a means of securing their greater efficiency, while at the same time encouraging co-operation between them wherever it is likely to prove economically worthwhile. I think that such a policy helps to give the consumer what I think he ought to have, namely, the opportunity to make an enlightened choice.

The policy I have just enunciated has been practised and followed in conditions of fuel shortage when the main problem was how to make the best use of scarce supplies—including, I would remind your Lordships, large tonnages of coal imported at high cost in hard currencies. But at present most fuels are in easy supply. That is not a condition applying solely to this country but is a consequence of the plans for safeguarding and advancing energy supplies—which must necessarily be of a long-term nature—being overtaken by a setback in world trade and the production requirements of fuel in each country.

The question I have to answer is whether, in view of the fact that fuel is at present in easy supply—and, in the case of coal, in surplus—it would be wise to take a different view of my duty of promoting economy and efficiency in the supply, distribution, use, and consumption of fuel and power, whether produced in Great Britain or not. I believe I should not take a different view. It should be remembered that the basis of a thriving and progressive economy is the supply of cheap and abundant power. That should continue to be our aim.

It is indeed necessary to take into account all the many factors influencing the provision and use of fuel and power in our requirements for production, for transport and for our general needs and comfort. Let us take a backward look at fuel requirements over the ten years since 1947: they have risen by over one-fifth. The use of electricity has almost doubled; use of gas is slightly up; use of oil has doubled; but the consumption of coal, excluding that required for the production of secondary fuels, has declined. Coal is our only major indigenous fuel and therefore there is a proper anxiety to see it used to the fullest possible extent. It employs a great labour force, most of whom have spent their lives in the industry and who deserve all the consideration which can be given to their well-being. I believe the National Coal Board are putting their policies into effect having full regard to that need.

Coal still provides the bulk of our fuel requirements—over 200 million tons a year—and is largely the product from which electricity and gas are made available, as well as being the source of an increasing number of chemical products. Here I should like to reply to the noble Lord, Lord Merrivale. The Government, the nationalised industries and private industry are all working on the technical and economic problems involved in expanding existing uses and finding new uses for coal in the form of gas, chemicals or oil. I have great hopes that as time goes on this very important work of research and development will create a variety of new demands upon our indigenous coal resources. I have recently asked my Ministry's Scientific Advisory Council, under the leadership of Sir Alexander Fleck, to study and urge the possibilities of this research to expand the use of coal.

But, my Lords, we have seen the general use of coal declining, due in some measure to its rising cost, and because the expense and labour of handling it contrast unfavourably in many fields with the relative stability of price, ease of handling, and cleanliness of oil. It was not until 1957, however, that stocks began to accumulate, and in that year it was in a relatively small way. It was decided immediately to stop ordering more coal from abroad, and no further contracts were entered into. This was followed by the decision last year to end coal rationing and to restore freedom to buy to the consumer. At the beginning of that year, the Coal Board, ever mindful of the position of the miner (and I believe and say this sincerely), decided to curtail recruitment to the industry, to cease voluntary arrangements for working extra hours—which meant the ending of Saturday working—and to increase stocks in order to continue employment for those in the industry.

At this time the Board's financial position was not a very happy one, and the cost of stocking coal added to their difficulties. It was not practicable to advance their prices against the competition of other fuels. There was also a general feeling in the country, which has been mentioned by noble Lords this afternoon, that prices were high enough. But the Coal Board and the men worked together to reduce costs, and the output per man-shift began to turn upwards. Consumption, however, was still on a descending scale, and it became necessary for the Board to review the position for the current year. On the basis that consumption would fall to 200 million tons, they proposed to the National Union of Mineworkers, who, I am told, took an even gloomier view, that opencast mining should be cut by some 25 per cent.—that is by about 3 million tons; that certain pits should be closed down over the year to a capacity of 3 million tons, and that it would probably prove necessary to stock a further 3 million tons this year. The pits which are due for closing are high-cost collieries which are either nearing exhaustion or, because of their nature, quite uneconomic to work in present circumstances. The Union is co-operating in movements designed to lessen the impact on the miners concerned.

Because of this present excess of supply over demand for coal in this country, it has been strongly urged that the Government should now take special measures of three kinds: further reduce the production of opencast coal; restrict the increasing use of oil fuel, and scale down the national programme for the development of nuclear energy. The Government are fully alive to the social and human problems, and to the other adverse factors resulting from unemployment among coal miners. They also realise—and I would ask your Lordships to be good enough to bear this in mind—that if the coal industry's manpower fell beyond what was necessary to produce the annual coal supply needed when industrial production resumes its upward trend, we could again face embarrassing fuel shortages of the same order that arose in the early postwar years. I should like to stress the point that the present state of industrial production is a temporary phase, and that we can look forward to the early resumption of an upward trend, with the increasing demands for fuel supplies, particularly coal, which would accompany it.

As regards opencast coal production, as I have said, the National Coal Board plan to reduce output by 3 million tons this year, although this is the most profitable part of their coal production. They cannot go further without breaking their contracts with an industry which holds special civil engineering plant to a value of no less than £27 million for the purpose of winning opencast coal. In going so far as a reduction of 3 million tons the Coal Board, as your Lordships will appreciate, are deliberately adding to their financial difficulties in the interests of deep-mined coal. In further consideration of this problem I need hardly say that the Government will keep in mind not only the needs of the situation but the agricultural and amenity aspects of the matter.

It is certainly a fact that the continued substitution of oil fuel for coal is a major factor reducing the demand for coal at the present time. Oil now supplies 15 per cent. of our total fuel consumption, as compared with 7 per cent. before the war. But the Government are firmly of the opinion that this is not a ground for restricting the use of oil. There are many reasons for that view, of which I will mention only three. First, it would be quite inconsistent with our general fuel policy, which I have endeavoured to describe to-day, and it would tend to raise the costs, or reduce the efficiency, of all those intersts which have chosen to use oil.

VISCOUNT HALL

All the interests which are using oil? Does that mean for generating electricity?

LORD MILLS

I am going to speak about that. Secondly, to restrict oil imports would be contrary to the Government's general policy of removing restrictions on international trade. Thirdly, we should never forget that British companies play a very large part in the world oil trade, and that their net earnings abroad—including exports from the great modern refineries built in this country, primarily to meet inland oil demand by refining imported crude oil—are an important contribution to our foreign exchange earnings.

LORD LAWSON

I am sorry to interrupt the noble Lord, but do I understand that statement to mean that there is going to be no interference with the growing amount of oil that is coming into the country?

LORD MILLS

The noble Lord understands correctly. We should be in danger of reducing this great credit item in the country's balance of payments if we re-restricted oil and our example were followed abroad. The noble Viscount, Lord Hall, referred to the fact that imports of these products worth £65 million were made to this country and that exports of £30 million were made to Europe. The noble Viscount seemed to think there was something wrong in that.

VISCOUNT HALL

I do not think I could have made myself clear. I said that the import of diesel, gas and fuel oil amounted to about £65 million. Out of that £65 million, imports from Italy, France, Germany and the Netherlands amounted to about £30 million. I said that I wondered where the oil came from, seeing that they were not oil-producing countries.

LORD MILLS

I think there is something wrong there. We import crued oil, diesel oil, fuel oil and other kinds of oil, and we have a great export business of that oil which is of considerable value to this country. I think the noble Viscount's interpretation of what he saw must he at fault. We do not, I think, import from Italy and those other countries; they import from us.

VISCOUNT HALL

I will show the figures to the noble Lord later.

LORD MILLS

The decision to convert a number of power stations from the consumption of coal to oil has attracted a great deal of adverse criticism. Oil conversion was decided upon early in 1955 when coal consumption was outrunning production and no guarantee could be given that coal could be made available in sufficient quantities to meet the expanding power station programme. It is well to bear in mind that this situation—that is, of consumption outrunning production—continued in 1956, when deep-mined coal production was some 300,000 tons lower than in 1955, although home demand had increased by more than 3,200,000 tons. To look back to 1955, when the decision to carry out a programme of conversion to oil was taken, it is clear that the country was acutely short of coal and the balance had to be made up by large imports of expensive coal costing hard currency. There was no prospect of ending this situation quickly, and, as things then looked, it was a sensible policy to convert power stations to oil.

VISCOUNT HALL

I am sorry to trouble the noble Lord, but we exported about 10 million tons of coal in 1955, for which we received £65 million. We started stocking coal in 1956. Apart from the distributed coal, we stocked about 3 million tons of coal undistributed in 1956.

LORD MILLS

The stocking of coal beyond any figure which was really necessary did not start until 1957. Be that as it may, I am sure the noble Viscount will appreciate that the question of exports involves questions of contracts, and imports also involve questions of contracts. In fact, when I announced in our debate of February 5 of last year that we had succeeded in getting a reduction in some of the oil contracts, the noble Viscount, Lord Hall, said [OFFICIAL REPORT, Vol. 207, col. 450]: We must adapt ourselves to this new situation. The Minister of Power and the Central Electricity Authority have acted on the right lines in taking the decision that the use of oil fuel in power stations is to be less than originally planned, and that two, if not three, of the stations which were to be oil-fired are now to be coal-fired. No blame should attach to the Government or the Central Electricity Authority for this change, because in 1955, when the decision was taken to switch from coal, they had the full support of the Opposition at that time because there were serious difficulties over coal. I was not here at that time, but I could only assume that everybody was in agreement that that was the right thing to do. But early in 1957, when the easing of demand for coal became evident, we took immediate steps to secure the agreement of the oil companies to vary the terms of their existing contracts to enable us to scale down the conversion programme. The result will be that oil used at power stations will year by year fall substantially after 1960, instead of rising, as in the original programme. Here I should like to pay a tribute to the great cooperation we received in these matters from the oil companies, who have voluntarily amended the terms of the firm contracts they held.

LORD GREENHILL

And it will be replaced by coal?

LORD MILLS

It will be replaced by coal.

LORD GREENHILL

Not by nuclear power?

LORD MILLS

No, it will be replaced by coal. I should like to add this. I have found the oil companies co-operative, and if we can do anything more without breaking contracts your Lordships can be assured that we will act.

VISCOUNT HALL

My Lords, may I trouble the noble Lord by saying that I am sure that his statement will be received with great gratitude?

LORD MILLS

The suggestion has been made that the use of oil at gas works in place of coal should not now be developed whether in the form of oil gasification plant, the use of liquid methane, or the utilisation of surplus products from oil refineries. I do not think that that is a view we can accept.

Let me deal first with the question of liquid methane. That is only an experiment. It is a tiny shipment in a small vessel, just to see what are the technical possibilities and the economics of the matter. I think it would be quite contrary to our general fuel policy to deny to any industry the opportunity to test the possibilities of increasing their fuel efficiency. At the same time, the gas industry will pursue with vigour the improvement of their utilisation of their traditional raw material, coal, and will in particular continue and intensify their present researches, which are widespread, into economic methods of utilising for gas making the lower grades of coal of which we have an abundance.

Now, my Lords, I come to the nuclear power programme. It has been urged that the nuclear power programme should be reduced so as to increase the market for small coal. I am sorry to hear that suggestion seriously entertained. I said earlier that the basis of a thriving and progressive economy is the supply of cheap and abundant power. We must not forget that certain other countries possess cheap power derived from more accessible sources of coal, from domestic oil, from natural gas and from water power resources.

Thanks to the work of our scientists and engineers, we found ourselves leading the world in the use of nuclear power to generate electricity. The practical way of making use of that lead was to develop an industry ever advancing in the applications of nuclear energy by designing and supplying reactors and associated engineering works. This we decided upon, and the result will be to cheapen the capital and operating costs, to the ultimate benefit of users of electricity, which means to the benefit of our world competitive power. I am sure, too, that that decision enabled us to start the export of nuclear power works—the beginning of which I witnessed in Italy a few weeks ago. Should we abandon the maximum advantages to be gained from this great achievement because we have had to stock a relatively small percentage of coal to lessen the impact on the industry of a reduced demand brought about to a great extent by world conditions?

I can, if your Lordships wish it, give you some figures this evening or let you have them later, but the tendency is for the construction and operating costs to come down. It is true that great improvements have been made in power stations operated by coal, but we shall reach a stage when the cost of nuclear power will really justify the faith we are giving to it.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Does that mean that the Minister is forecasting that the nuclear production of power will be cheaper than production by coal?

LORD MILLS

It is forecast that it will eventually, but not in these first stations.

VISCOUNT ALEXANDER OF HILLSBOROUGH

It has not happened yet anywhere.

LORD MILLS

It is being reduced now. The third station will cost less per kilowatt than the first two stations, and that is the tendency.

I trust that your Lordships will agree that, faced with a surplus of coal for the first time since the war, there has been no tendency on the part of the Government, or of the National Coal Board, to stand idly by and let things drift. Positive measures have been decided upon and followed, and have been discussed with the trade unions. These measures have had regard not only to the national requirements, but also to the well-being and the future of the coal industry and of those employed in it. The courses we have not pursued—and I make no apology, believing that none of us would wish it—are to break contracts or to forfeit the great advantages we are gaining in the nuclear power field.

I have not yet dealt with a number of points raised in the debate because I did not want to confuse the general picture of our policy in regard to fuel. I now propose to take a few minutes of your Lordships' time and do my best to answer the specific questions addressed to me.

VISCOUNT HALL

Before the noble Lord does that, may I say this? I do not know that I suggested that there should be a complete closing down of production by nuclear power. What I did suggest was that the time for this programme could be extended to 1970 or 1975, because I thought that even now the nuclear power is really in its experimental stage, as I attempted to say.

LORD MILLS

My Lords there are many things to be weighed up in considering a matter of that kind. In fact it has had continuous consideration because I realise that our fuel policy must be a flexible one. It has actually been extended by a year; that was done last year. And the equivalent amount of coal would not be 20 million tons but 12 to 14 million tons, which is rather a big difference. Perhaps I could take this opportunity of correcting that. We will continue to watch the matter. It is all bound up, as your Lordships appreciate, with the need to keep the industry moving forward. If one started to chop and change, one would soon have the industry ragged and unable to co-operate in the way one would wish it to co-operate.

The noble Viscount, Lord Hall, mentioned the question of exports, and that presents a rather sad picture. The Coal Board are doing their best. They have been up against three factors. One is the long-term American contracts entered into at a time when we were not able to supply; secondly, there has been com- petition from cheap Polish coal, and thirdly most countries are in a similar condition to ourselves, carrying rather large stocks of coal. But the Coal Board have not hesitated to cut their prices where they have had any opportunity of doing business.

I think I have replied already to the question on liquid methane. That is just an experiment. The noble Viscount, Lord Hall, also mentioned the question of briquettes, as did the noble Viscount, Lord Stonehaven. There are various kinds of briquettes. There are conventional briquettes and production is limited by what the market will take. They are made from ordinary fine coal agglomerated with pitch; they are expensive; they are not smokeless, and not very satisfactory. Phurnacite is a smokeless fuel and the production of that has been increased to 600 thousand tons a year. There were some stocks built up in the summer, but the whole of the make is currently being sold. It is a high-quality fuel especially suitable for closed domestic appliances.

I was also asked about the question of Shape. Shape was very promising in its experimental stages; efforts to translate it into full-scale production have had certain setbacks, but they are proceeding. Shape is the process of binding anthracite together without a binder. There are also a number of other processes which are being followed. I think I have dealt with the question of nuclear power. I only want to say that as regards some of the developments in this field, such as the fast breeder reactor, of the type being constructed at Dounreay, any practical results are probably ten or fifteen years away; and from Zeta probably still further. But they are all very promising developments, and what we are doing in the nuclear field helps in these matters too.

Then there was a question raised on the subject of shipping. I understand that there are conferences going on between the British Chamber of Shipping, the Ministry of Transport and Civil Aviation and the Ministry of Power. The Chamber of Shipping has submitted an appreciation of the situation which is being fully considered. We have that point very carefully in mind, and of course the switch from coal to oil has had an adverse effect on the situation. I can only say that what has been said this afternoon, as well as the representation made by the Chamber of Shipping, will be urgently and fully considered. Bath the noble Viscount, Lord Runciman of Doxford, and the noble Lord, Lord Winster, raised those points.

The noble Viscount, Lord Stonehaven, raised the question about small coal, and asked what was the position in view of the fact that still more small coal would be produced. The largest user of small coal, of course, is the electricity industry. In 1958, the consumption of small coal by power stations was about ¼ million tons lower than in 1957. That was due to the phasing of the oil conversion programme, but the upward trend is likely to be resumed in the course of this year and to go on continuing as far ahead as we can see. The major part of the power station construction up to the end of 1963 will be conventional power stations, and as they come into use the consumption of coal will be increased.

I should like to say a word about gasification, as it was mentioned. The position there is this. In 1955 my Scientific Advisory Council recommended that the successful experimental work on underground gasification which was then done jointly by the Ministry and the Coal Board should be carried forward on a larger scale. This the Board undertook to do. They are now completing a pilot gas generating installation at Newman Spinney near Chesterfield, and within the next few weeks it is hoped that gas from this installation will be generating electricity in a small, temporary power station erected there by the Central Electricity Generating Board. It is intended that electricity will be generated for a sufficient period to show that the pilot scheme has been successfully completed.

However, the fuel situation is much more favourable now than when this work was put in hand, and because of this it is most unlikely that it will be carried forward to a full scale plant. It is a most creditable achievement by all those concerned in the development of this technique, who brought it to a stage which, should the fuel situation change, would allow us to take it up again and perhaps bring it into full-scale use. But that is not a solution of anything at this time. On that point, the Generating Board programme for 1958 to 1963 will provide new installed capacity of 12,800 megawatts, and of this 10,730 megawatts will be steam driven—the bulk of it is steam. New coal-fired capacity will comprise 17 new stations and three extensions consuming some 25 to 30 million tons of coal a year when in operation.

I am just giving your Lordships this information to show that anything we can do in order to promote the use of coal is being done, and that the use of oil in power stations was on the basis that it would cost no more. The results show that it is not costing any more. All the same, it is our desire to the fullest extent we can without breaking contracts, to use coal in those stations. I think I have said enough to show our anxiety in the matter. I am painfully conscious that there are a number of detailed questions that I have not answered, particularly from the noble Viscount, Lord Stone-haven, but, if he will forgive me, I will see that he is supplied with the answers, and that everybody who has asked a question gets an answer. I think that in view of the lateness of the hour, perhaps that is the best course to take.

8.15 p.m.

VISCOUNT HALL

My Lords, I feel that I should apologise for keeping your Lordships here for so long. We are deeply grateful to the Minister for his full replies to the questions that have been put to him. I am sure that his speech will be read with a good deal of interest by everyone who is interested in the fuel programme, or indeed fuel of any kind in this country. I should also like to thank noble Lords who joined in the debate. I think the debate has been well worth while. I would congratulate Lord Brentford upon his speech. I heard his maiden speech which was made when the Commons sat in this Chamber. We are most grateful to the Minister for his reply. I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.

BOOTLE CORPORATION BILL [H.L.]

CALVINISTIC METHODIST ORPRESBYTERIAN CHURCH OF WALES (AMENDMENT) BILL [H.L.]

CITY OF LONDON (VARIOUSPOWERS) BILL [H.L.]

FALMOUTH DOCKS BILL [H.L.]

GLAMORGAN COUNTY COUNCILBILL [H.L.]

GLOUCESTERSHIRE COUNTYCOUNCIL BILL [H.L.]

HALIFAX CORPORATION BILL[H.L.]

JOSEPH ROWNTREE MEMORIALTRUST BILL [H.L.]

LANCASTER CORPORATION BILL[H.L.]

LEE VALLEY WATER BILL[H.L.]

LONDON COUNTY COUNCIL(GENERAL POWERS) BILL [H.L.]

MIDDLESEX COUNTY COUNCIL BILL [H.L.]

MILFORD HAVEN (TIDAL BARRAGE) BILL [H.L.]

RAILWAY CLEARING SYSTEM SUPERANNUATION FUND BILL [H.L.]

ROUND OAK STEEL WORKS (LEVEL CROSSINGS) BILL [H.L.]

ROYAL WANSTEAD SCHOOL BILL[H.L.]

SOUTH WALES TRANSPORT BILL[H.L.]

TEES CONSERVANCY BILL [H.L.]

THAMES CONSERVANCY BILL[H.L.]

Presented, and read 1^a.