THE FUEL AND POWER INDUSTRIES

HL Deb 15 July 1959 vol 218 cc10-54

3.11 p.m.

VISCOUNT HALL rose to call attention to the present situation in the fuel and power industries; and to move for Papers. The noble Viscount said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I feel sure that my colleagues and I have no need to apologise to your Lordships for again asking you to give time for a review of the coal industry, which is facing a contraction far greater than that which was anticipated when the problem was last debated in your Lordships' House. I frequently go down to the mining villages in South Wales, where I spent the greater part of my life, and have talks with the men employed in the pits. I find now that there is greater anxiety than I have ever known before as to what their position and their future in the coalfield will be if the coal industry goes on receding as it is at the present time.

They read so much about nuclear power and oil being used in the place of coal, and of very much more being used in the future. I advised them not to have any anxiety in the valley in which I lived, because the Aberdare Valley collieries are amongst the most profitable in the country, and last year made a profit of over £2 million, or 11s. 7d. a ton. Even that does not reassure the men there, for they are anxious for their comrades in other areas who are not so fortunate. They are hoping that, as a result of this debate, we shall hear of the new plan giving the future prospects of the coal industry with an estimate of the coal required, and whether there are likely to be any further inroads into coal production by the use of other fuels for providing power energy during the period 1960 to 1965.

The position in the coal fields is grim. Since June of last year until the present time, there has been a reduction of some 30,000 men employed in the coal industry. To-day, fewer persons are employed, I think, than at any time during the last sixty years. From what the men read in the Press, it appears to them that many pits are likely to be closed during the next year or two. The newspapers come out with headings about the closing down of 100 more pits. If that is to be so, it will mean the throwing out of employment of some 35,000 to 40,000 miners; and that 50 to 60 of these mining communities will lose their principal source of employment. Another statement which appeared in the Press stated that a secret list of the next group of coal mines to be shut was under lock and key at the London headquarters of the National Coal Board, and was not to be disclosed until after the miners' conference. I wish the miners, and particularly the miners' leaders, could be kept in touch with what is going to happen. If pits are to be closed down, arrangements should be made, not only by the officials, the Coal Board—or, indeed, by the Ministry of Fuel and Power—to give the men some intimation of what is happening in the industry. The effect of all this anxiety is that the younger men are not inclined to be recruited into the industry, which will mean a very sad loss in the course of a year or two.

I am sure your Lordships all know the amount of coal stocks we had in this country at the end of last year. The latest figures of stocks at the present time amount to something like 43 million tons, 28 million tons of which are undistributed. The value of the coal stocked and undistributed on January 3 of this year was no less than £85½ million, and if stocking continues at the present rate until the end of the year, it means there will be much more than £100 million worth of coal stocked in this country. During the first 23 weeks of this year, coal consumption, including exports, was 8½ million tons less than in the same period last year. With that number of miners being drawn out of the industry, the excess of production over consumption was 3½ million tons; and that amount has to be added to the already alarming stocks. It is also estimated that by the end of the year another 3½ million tons will be added to the existing stocks.

Whilst most sectors of industry use coal, the consumption of fuel oil continues to rise. Last year the increase was 50 per cent. For the first four months of this year the increase was 37 per cent. compared with the same period in 1958. To abandon coal production, or to stock more because of the narrow cost margin between coal and other fuels, is to many people in this country the height of folly, and if it is continued at the present time I am sure that it will do great harm to the nation's economy. In another place on June 15, the Paymaster General, replying to a question on the comparative costs of producing electrical power from the use of coal, oil or nuclear energy, replied that, in so far as reliable comparison is possible, the cost of oil generation would be roughly the same as that of generation by coal, and there is reason to hope that the cost of nuclear generation will fall below that of conventional stations within the next decade. I shall have something more to say about that a little later.

My Lords, why import oil for generating electricity to the amount of 6 million tons of coal equivalent in one year? The fuel oil consumption in Britain since 1956 has increased by 6½ million tons, a coal equivalent of something like 8½ million tons of coal. The output of United Kingdom refineries has risen by only 1¼ million tons: the remainder has been brought in from foreign refineries. Continental refineries have surpluses of fuel oil because of the increased production of gasolene and light oils, with the result, so I am informed, that fuel oil is being brought into this country at prices per ton far below the price per ton of the crude oil from which it is produced and which stand in no relation to any reasonable calculation of costs of production. If that is so, and it is the basis of the Government's freedom of choice policy, if the cost of imported fuels of any kind were reduced by, say, 5 or 10 per cent. below that of coal, the policy of the Government would cause almost every coalmine in this country to close. That, of course, is ridiculous.

It must be known that the imports of all kinds, of oil during the first five months of the year are running at a cost of about £500 million, of which fuel oils are running at about £70 million. Exports of all kinds of oil are running at about one-fifth of the value of the imports. In 1954, five years ago, the value of oil imported was £311 million. Then we exported coal to achieve a balance of payments, so far as we could, worth £60 million. For the first five months of this year the value of our coal exports was £9 million, and on that basis the total would not be £20 million by the end of the year. In this very large purchase of oil I should think the Government, and indeed both Houses, should have some thought of the balance of payments.

Ten years ago the gas industry was nationalised, and it is maintaining a tradition that has existed for 150 years of providing gas to its customers at low prices. A few months ago I read an interesting article written by Sir Harold Smith, the Chairman of the Gas Council, in which he said that ten years ago there were 1,000 gas undertakings, large and small. Up to date more than one-half have been closed, but gas supplied has; increased by about 20 per cent. with many fewer men employed. He said that in the years to come it is expected that conventional plants for making gas from good-quality coal will gradually diminish in number and that a much wider use will be made of small low-quality coals which are in good supply and which can be gasified at high pressure. He referred to a new plant which is being erected in Scotland and which is expected to be in full operation in 1962. It will use 350,000 tons of small coal a year, a saving of 50,000 tons a year on the use of an orthodox carbonising plant. The new plant will produce 30 million cubic feet of gas per day, using a very low-quality coal. A similar plant is expected to be built in the next few years by the Midland Gas Board for production of gas at high pressure from the same low-quality coal.

Apart from the use of this coal, further research is being made into coke oven gas and methane, or firedamp, from the collieries. It is interesting to note that the first coke oven gas to be supplied to gas undertakings was by the Powell Duffryn Company in South Wales in 1907. It was an experimental trial for six months, but it did not cease until the coke ovens were closed 50 years later. It now comes from a number of collieries with coke ovens, and the large steel works in Wales have extended their ovens to meet the increasing demand for metallurgical coke. Mr. Mervyn Jones, the Chairman of the Wales Gas Board, said recently that long-term agreements have been negotiated by the Gas Board with both the Coal Board and the steel companies, so that now over 80 per cent. of the gas sold by the Gas Board comes from coke ovens. Valuable too, only on a smaller scale, is the use of methane from the coal mines, which now provides about 3 per cent. of the gas sold.

My Lords, with this abundance of coal, with fuel oil from the refineries in this country, with coke oven gas, and now with methane, there is no scarcity of fuel to provide all the gas required in this country. The gas industry was, and still is, the second largest coal consumer in the country. In 1956 the amount of coal it consumed was 27,800,000 tons. Last year the figure was reduced to 24 million tons. This year it is expected to use about 22 million tons—a reduction of about 5 million tons since 1956. With the decline of coal consumption there has been a substantial increase in the use of fuel oil; 700,000 tons were used last year, with a substantial increase expected this year. Not being altogether satisfied with the fuels already used the Gas Council is now trying out natural gas imported from America. One shipment has already arrived, and I understand that others are to follow; and, there is, so we are told, the possibility that other ships will be built for the same purpose.

The gas industry, like the electricity industry, is progressive and well managed, and in a good financial position, mainly as the result of using coal. Why, then, are these industries encouraged to get fuel from almost all parts of the world to compete with an abundance of suitable fuel on their doorsteps? I trust that the attitude of the Minister and of Her Majesty's Government is not as expressed in another place by the Paymaster-General when dealing with a question on the gas industry. The Paymaster-General said [OFFICIAL REPORT, Commons, Vol. 608 (No. 140), col 861]: …the gas industry is having a very stiff fight with competition from other fuel industries. We all hope it will be successful. That is why, among other things, we encourage many of its experiments. I hardly see the purpose of experiments of this kind, and I should like to ask the Minister whether he can give us an estimate of the cost of these experiments. And, seeing that the experiment is being carried out, can he give us some idea of the value of it to the gas industry?

I suppose the other two industries which are in competition with the gas industry are the coal and electricity industries. I wish the relationship between these nationalised industries could be much better than it is at the present time. I should like to quote a statement which was made as the result of a conference held on June 23 between the Gas Council, the gas managers and other leaders of the industry. One newspaper heading said: No comfort for the coal industry…Gas industry prefers commercial approach. The paper went on to say: The Coal Board can now dismiss any lingering hopes it may still have that its traditional partner in fuel and power—the nationalised coal industry—intends to come gallantly to its help to solve its problems of overproduction and mounting stocks. There was universal agreement at a meeting in London yesterday that the gas industry's first duty is to itself. Sir Harold Smith, chairman of the Gas Council, representatives of all the area Gas Boards, and officials of all the unions in the industry shared one opinion: that gas is an industry in its own right, and no longer just an adjunct to coal. Then I see a reply which was given on June 15 in another place, again by the Paymaster-General, when he was asked about what was likely to be the increase in the production of gas between 1960 and 1965. His reply was [OFFICIAL REPORT, Commons, Vol. 607 (No. 125), col. 25]: The total gas supplies are expected to increase by nearly 5 per cent. during that period. As it is expected that coal consumption by the industry will fall slightly during the period, the whole of this increase will be derived from oil and other sources. The Minister of Fuel and Power is the co-ordinator of the three nationalised industries. As such, he has a great responsibility, for the thought in the country is that there is need for a long-term policy for the production and use of fuels. The fuel industries, including atomic energy, must be viewed as a whole, and plans must be made on that basis. We must consider how far Britain should depend upon imported fuels to meet our requirements, giving full consideration to our strategic position and to our balance of payments. I believe that that is most important, and I should like to think that it is uppermost not only in the mind of the Minister but in the mind of the Government as a whole.

As to the electricity generating stations, about nine of them will be burning oil instead of coal—I think that is about the figure. I think there were another four which were being considered. Those nine generating stations are using the equivalent of 6 million tons of coal a year. If that goes on for five years, no less than the equivalent of 30 million tons of coal will be taken up by oil for the generating of electricity. As already mentioned, it has not been argued that the use of oil for this purpose is cheaper or more economical than coal, and it must be remembered that, unlike the situation before 1957 when the tax was taken off fuel oil.[...] fuel oil is to-day greatly privileged. But notwithstanding the fact that there is no tax on fuel oil, coal can compete with oil at the price at which it is brought into this country at the present time. In view of the greatly changed situation in the coal industry, the general opinion is that we are fully justified in pressing for the reconversion to coal of the oil-using generating stations.

We all appreciate what was done by the Minister of Fuel and Power when he induced the oil companies to reduce to the present figure the amount of oil used, but I still feel that the case is stronger now than it was then. If the Minister will use his persuasive powers, even if it costs a little money in compensation, that will still be infinitely cheaper than piling up stocks of coal within a few miles of an electricity generating station which is using oil. I hope that the Minister will consider that.

When we last debated fuel policy in your Lordships' House, I expressed an opinion that the present programme of nuclear power generation of electricity should be spread over a longer period. I am still of that opinion; for nuclear power should be treated as a new recruit to the fuel industry when compared with coal, electricity and oil. As such, it is important that it should not attempt to do, or claim to do, too much in its infant stage. It can be a support and a stimulus to other fuels, but no one can claim that it can provide a complete solution to other fuel problems within the next 15 or 20 years.

A few weeks ago Mr. Robert McKinney, who was Chairman of the Congressional Panel on Nuclear Energy in the United States of America, and their representative to the International Atomic Energy Agency in Vienna, was speaking in another place to the Parliamentary and Scientific Committee on the subject of the Euratom (Western Europe) Atomic Energy Programme, which, like: ourselves, had at the time of the Suez crisis planned a large atomic programme for the generating of electricity which has now been considerably reduced. Mr. McKinney congratulated the public utilities of the Euratom countries for the hard-headed way that they faced up to the fact of the high cost of nuclear power by reducing their programme considerably; and, he said, unlike their British counterparts, they had refused to be stampeded into ordering large nuclear power stations.

He said that about the high costs of nuclear power the United States of America had no doubt at all, for in 1959 they had found that the real costs of building nuclear plants were much higher than estimated, for their nuclear power stations had cost more than double what had been estimated, and were still not finished. He suggested that the nuclear power planned for Euratom in 1956, to be completed in the next ten years, was completely unrealis- tic, and it is now likely to be replaced by an experimental programme of a few power stations. The article ended by saying that there is a great need, especially in Britain, for more informed criticism of investment programmes that commit countries to massive costs of capital expenditure or prophesy the requirements or costs a decade or more ahead.

In dealing with this matter, the Minister of Fuel and Power will know of the statement made by Sir John Cockcroft at Darwin on April 25, to the effect that 25 per cent. of United Kingdom electricity requirements would be met by atomic energy in 1966; 50 per cent. of them would be met by 1975, and 100 per cent. by the end of the century. I am sure that the Minister will agree with the reply given by his Parliamentary Secretary, when questioned about this in another place, which was that the Government had no responsibility for the statement Sir John made. Unlike some statements on this subject of nuclear energy, anything he says is worthy of considerable respect. I wonder whether the Minister will agree with another statement that was made by Sir John quite recently when he opened the nuclear centre in Teheran. I am going to quote from a report, which states: At the 1958 Geneva Conference on the peaceful use of atomic energy it has been stated, Sir John said, that the date at which nuclear power would become fully competitive with power from oil or coal was likely to range from 1962 to 1972, according to the country concerned. Since then the fuel situation of the world had temporarily changed due to the industrial recession, and coal and oil were temporarily in surplus and could be obtained at lower prices. As a result, the break-even dates for nuclear power are likely to have receded a little. For countries which had ample supplies of lost-cost fuels, such as oil, nuclear power was, however, unlikely to be attractive for at least 20 years.

My Lords, if the Minister is going to follow out his idea of the free-for-all programme, then I take it that that means the cheapest fuels for the production of electrical power and for industry. But if nuclear power is not going to become competitive, or the generating of nuclear power is not going to become competitive, within the next twenty years, what is the use of going on building twelve power stations to be completed in about the middle of the present decade, with the electricity costing, as I saw reported in the Press a short time ago, between, say, some 10 or 20 per cent. more than the electricity which is generated from thermal power?

It is known that, if coal prices remain steady, a modern thermal station built on or near the coalfields can now provide electricity for less than 0.6 pence a unit, which has been assisted by the spectacular fall in the cost of construction of new thermal power stations from an average of £70 to £75 a kilowatt about five years ago to a level for stations planned now much nearer £40 per kilowatt—much less than a half of the cost of nuclear construction. The cost of the earlier nuclear power stations was £180 per kilowatt. With the very heavy capital costs, and the cost of uranium, which I understand is still, and will be as long as the contracts last, around £10,000 to £11,000 a ton, it is estimated that nuclear power stations coming into production during the next decade are going to produce electricity from atomic energy costing from 10 to 20 per cent. more than that from the most modern type of thermal stations.

My Lords, there are only two reasons for building nuclear generating plants which a large number of persons think commendable but which alone do not justify the size and the rush to get through the present programme. One was the need to gain technological experience and to make progress in the nuclear field; the other was national prestige. We have that national prestige. We are proud of what has been done. But we must not overdo that, and I trust that the Minister and Her Majesty's Government will take head of what has been asked—that is, the extension of the programme to beyond the present date of completion.

To assist the coal industry there is an urgent need for the intensification of scientific research into the utilisation of coal and its development for new uses, such as smokeless fuels; and also into the use of coal as a raw material for the extraction of valuable chemical byproducts, and particularly oil. I was pleased to read a week or two ago of the opening of the Warren Spring Laboratory by the noble Viscount the Lord President of the Council. This Laboratory among its other activities, will have two projects of the former fuel research station, one of which is research on the Fischer-Tropsch process for making oil from coal. This is no new process; nor is producing oil from coal new, as some forty years ago, by the low temperature carbonising process, millions of gallons of oil were produced in this country.

I should say that the best place to see the Fischer-Tropsch system at real work is in South Africa, where a few years ago I saw the largest and best oil-from-coal plant in the world. It came into full operation in 1956. It cost a lot of money—£48 million; not as much as a nuclear power station here. In 1958 this plant produced from coal 55 million gallons of petrol and 6½million gallons of diesel oil. It also produces liquid petroleum and twelve other valuable chemical liquids. After making losses for the past three years, it is estimated that a profit of some £500,000 will be made from these works. The chairman of Sasol, as the plant is called, has said that with another five such plants South Africa has sufficient natural resources to produce from coal all the fuels she needs. I should say, to be quite fair, that the price of coal in South Africa is cheaper than the price in this country.

Much is said about coal being out-priced. I know the price of coal is high; so is the price of everything else. But the blame for the high cost of coal cannot be charged to the coal miner. At the present time we have the highest output of coal per man-shift in Western Europe, and the cost per ton saleable of our coal at pithead is lower than that of Western European countries. It is not the actual cost of bringing the coal to the pithead which makes it so dear; the margin between the pithead and the retail price is far too high. Last year the cost per ton of coal saleable output was 83s. 11d. per ton, of which wages and related expenses were 49s. 8d. per ton; materials, repairs, and power were 19s. 9d.; depreciation and other expenses, 14s. 6d. To the domestic consumer, the average cost per ton for transport charges from the colliery to the merchant is 26s. 4d. The average allowance for the retail merchant's costs from his depôt into the home is 30s. 6d., making a total of 56s. 10d. In and around London and the South, the cost, unfortunately, is over 100 per cent. above that of the price of saleable pithead coal. The merchant is now free to charge his own price to the householder; and it is suggested that there are far too many small, overlapping merchants, and that there is a lack of modern methods in their distribution. The demand for house coal in London and the South of England has fallen sharply in recent years, largely because of that very high price.

My Lords, in conclusion, may I say that there are very many important reasons why the Government should have a coal and fuel policy. First, coal is our only indigenous fuel. We have plenty of it. No one can deny our means of access to it—which cannot be said about uranium and oil, and particularly oil from the Middle East, from whence we get nearly 80 per cent. of the oil which we use in this country. It must have its proper place in the nation's economy, to which it can make a greater contribution than it is making at the present time. The Government should state what that place is, and should assist in building up around it. The Government have not failed to do something like that for other industries. They help the agricultural industry. They tell it what is required, and pay very substantially to enable it to maintain its place in the national economy—and rightly so. They assist the cotton industry—and rightly so. The coal industry is quite as important and deserving of Government consideration. It is not asking for subsidies: it wants only a better understanding of the coal problem and of the value of coal before the importing from foreign countries of fuels which cannot provide the nation's requirements at costs as low as, or lower than, our own indigenous fuel.

I think the Minister and the Government should follow the advice given recently by the newly designated chairman of I.C.I., Mr. Chambers, who suggests that the effort to mitigate Britain's natural commercial handicap in world trade should be pursued along three lines, one of which was that we should try much more vigorously to foster home markets for coal. I trust that that is going to be the object of the Minister of Power. I beg to move for Papers.

4.0 p.m.

VISCOUNT STONEHAVEN

My Lords, I should like to start by congratulating the noble Viscount, Lord Hall, upon bringing this important matter before your Lordships' House again, and I am sure that all noble Lords will join with me. I should also like to congratulate him on the moderate and sincere manner in which he has presented his case. I do not want to say anything controversial and I certainly do not want to be provocative, but there are two things which he said which I should like to take up and amplify, although there was a great deal in his speech with which I agreed.

The first point which I should like to elaborate is about Mr. McKinney, who, I understand, has now resigned from his post in Geneva. He is not unknown to me. Whenever the Americans enter the atomic field we must remember that they have still failed to produce a commercial plant which they can offer to anybody and they are very sore about it, and Mr. McKinney's views are to a certain extent coloured by that position. The only nation that can supply that plant is Great Britain and that is against America's commercial interests, as they see it.

VISCOUNT HALL

My Lords, I am sure that the noble Viscount will remember that America has received a contract to build an atomic energy plant in Italy. They say that they are not going to build in their own country because it is too expensive, but they are open to take contracts from other countries and, fortunately or unfortunately, they obtained this contract.

VISCOUNT STONEHAVEN

My Lords, I understood that the contract in Italy was obtained by ourselves, but I may be incorrect in that. The second point I should like to elaborate is about the Sasol plant. I do not want to detract from that plant, but the approximate cost of coal there is in the order of 5s. a ton, which makes it very difficult for us to compete over here.

I would apologise to the noble Lord, Lord Mills, for giving him no advance notice that I would be asking certain questions. I had not anticipated being able to be here this afternoon to participate in the debate, and I hope he will forgive me. There is one point which I should like to have elucidated. It appears to me that for the last year or so—I am not trying to be controversial here—the coal mining industry has been largely clear of the curse of unofficial strikes. That is a very good thing and of benefit to everybody. But is it a sign of better understanding between all sides of the industry and management, as I sincerely hope it is, or is it because it appears to the miners that their position is not so secure as they thought? I think that this question should be elaborated.

The increased efficiency, which is a continuing trend in the industry, is something that we can all commend, and I think everybody should be congratulated heartily on it. But I would say, "Bury the word 'nationalisation'—that has nothing to do with it". If I say something that may be controversial, it is not on that score. The increase in coal stocks is worrying. The problem is one of small coal and not of large coal, because I believe that the large coal that is being produced is being taken up—I shall be corrected if I am wrong. Therefore, we come to the question of how to utilise small coal. It is my opinion that Her Majesty's Government have taken energetic measures in this direction, but I think it is too early to expect concrete results from these measures. For example, a large coal-burning power station will consume in the order of three to four million tons of coal in a year, but it takes about three years to build such a station. Therefore I cannot see that we can hope for large results too quickly.

I agree with the noble Viscount, Lord Hall, that the uncertainty of the position is undesirable, and if it were possible I should like a clear statement of what we may expect. We should know the worst and, in particular, we should be told about the closure of pits. If pits have to be closed, then the people who are affected should be taken into the confidence of the authorities. The fact that they do not know well beforehand is very unsatisfactory. I know that there may be various reasons for this; nevertheless, I urge that the clearest knowledge of what is occurring should be given beforehand, so far as it is possible to do so.

What is coal worth? In my opinion, coal is worth exactly what the customer is prepared to pay for it—not a penny more, no matter what the economists or anybody else may say. Therefore, we have to consider the nuisance value or, if you like to call it, the ease value of oil. The two conflict. I think that coal ought to be considered much more in that bearing than purely and simply on the economics of coal production. In agriculture, we are commonly enough told that we have to brighten ourselves up a bit and become more efficient because our produce is only worth what we are going to get for it. Up to a point, the same applies to coal.

One thing we must bear in mind is continuity of supply. We must all remember that as recently as four years ago the cry was, "The last lump of coal at any price!" Then, we were short of power and of everything else. We have moved away from that, be we still live in an era of power bargaining, and that is a fact which we must realise. When we consider the position of having three strings to our bow—nuclear power, coal and oil—we can hardly blame the Government for their wisdom, in the context of what has gone before. The bulk outlets for coal are the power stations and, to a lesser extent, the gas industry. The power stations use the worst coal under the best possible conditions. Their technology is simply magnificent. But there again, one is apt to talk about the cost of coal generators and other types. That is influenced by the geography of the coal supply and the coal power station. There are certain power stations where the extra cost of getting the coal there would make oil an attractive alternative.

In the gas industry we hear a certain amount about complete gasification in which everything is turned into gas and there is no coke resulting as a by-product. This kind of production conflicts with the interest of people producing smokeless fuel, because coke is the basic ingredient of that. Nevertheless, there is one plant under construction. That is in the Fife coalfield and it is completely integrated with opencast coal on a long term basis I understand, of something of the order of twenty-five years—at any rate a very considerable length of time.

The other plant is in the planning stage only and is situated somewhere near Birmingham. That, I am told, will operate on deep-mined coal. The success or otherwise of running these two plants for a reasonable length of time will decide whether the Gas Board will go ahead and build many other plants to utilise this coal, or whether they will not. That clearly illustrates my point. One plant will be in production in 1962. Then one must allow two or three years to see whether the thing is successful, because you have to allow for teething troubles. The Birmingham plant is still subject to planning permission and all the other paraphernalia, and I cannot see any early possibility of these projects altering the dumped stocks position one jot or tittle. We cannot look to the absorbing of small coal on that score for the next six or seven years, which will be a rather sticky period. If I am right, I think we ought to be told that everything is in hand and have as up-to-date a progress report as possible on how we are going along and what the real position will be. It is this insecurity which we find so tiresome.

The importing by the Gas Board of methane and also the direct production of gas from oil are projects which, I am told, are purely experimental. Their effect on the quantity of coal used at the moment is entirely insignificant, and is unlikely to be significant for a long time, if ever. I would not say that the coal industry which, as our basic industry, is entitled to every consideration, has the right to say "Coal at any price and no progress". We must allow the experimental work to go ahead. We could not possibly stop it in any case. But we should agree that it is right that it should be carried on.

Then there is the other thing coming along which will counteract the loss of coke, or should do if complete gasification is successful. These are the low-temperature carbonisation plants which the National Coal Board have under construction. There, again, smokeless fuel could be produced from another source and not at the expense of anybody. These two things are complementary and that is something we ought to congratulate ourselves upon.

Another smaller market—the domestic fuel market—represents something of the order of 20 per cent. I gather that the position there is that they would prefer to see stocks going but they are not unduly alarmed. On the other hand, let there be one cold snap and the probability is that as much as a million tons would go in one week. Here is something else which we might consider. In Germany the Rhur Coal Company, or whatever it is in German, go round to industrialists and install efficiency devices and instrumentation on approval and free of charge for six months, or some other lengthy period, with no obligation to the industrialists to buy. There has been only one case where an industrialist has taken out the equipment and gone back to his old usage. It would be a very good thing if we could get something like that going in this country.

We have an excellent institution called N.I.F.E. They will give very good advice on fuel efficiency but not on the efficient burning of coal and the desirability of burning coal. We have no one who goes out and says "Coal is best; buy coal." No one "plugs" coal. Private industry have their oil travellers. Oil is coming into this country, not even refined, and travellers are going round and giving a discount of 6d. a gallon. They are also, I was going to say bribing, but at any rate encouraging people by installing tanks and such equipment on loan or easy terms. None of these advantages is available to coal. I think that that is unfair competition which ought to be looked into.

Another place where I think a little action might be taken is in the smoke control areas where oil-fired equipment, under certain conditions, is exempt from the requirements of the Act. Bituminous coal, burnt smokelessly, is not generally exempted and I think it should be. If you get the same result under the same safeguards there should be no discrimination between coal and oil. I think that coal burnt in these conditions should be exempt in exactly the same way as oil is. I do not know whether it can be done, but I think it is well worth drawing attention to.

A lot of figures have been produced about atomic power. Everybody rides his own hobby horse. Luckily we have a Minister who has to consider all these hobby horses and draw a direct balance. On that score, I would underline that the Minister of Power is responsible not to one industry, however great and fundamental that industry may be: he must consider the country as a whole and not one section. It could be that neglect of one section would jeopardise the whole country; but that is why we have a Minister of Power.

I should like to end by making another apology to the Minister. I am afraid I must leave before he replies, because I have a train to catch; in fact, I did not think I was going to be here. No discourtesy is meant, of course, and if the noble Lord wishes to challenge me on anything that I have said, I hope he will do it now. I wish the coal industry the greatest prosperity commensurate with great efficiency. I do not think there need be any worry about the future of coal for many years. It is a fundamental and a great industry, and the people in it are great men.

4.21 p.m.

LORD MACDONALD OF GWAENYSGOR

My Lords, there are eight other noble Lords to follow me in this debate and thirteen speakers who wish to take part in the next debate. In view of the fact that there are twenty-one speakers to follow me, I feel that I must make my remarks as brief as possible. I find debates on fuel and power most interesting: there are so many phases of the subject and so many questions to be referred to. I have jotted down the number of matters referred to already by the only two speakers who have so far spoken, and they include: nuclear power stations, fuel oil, planning, closing of pits, coal stocks, gas, electricity, balance of payments, atomic energy, generating plants, scientific research, cost of delivery of coal, unofficial strikes, large coal and small coal, the price of coal, opencast coal and the country as a whole. I am not sure that it makes for an effective debate to have too many aspects dealt with. The Minister will find it difficult to give an adequate reply to all the points raised, and he would prolong the proceedings unduly were he to do so; and a sketchy, scanty reply is just as unsatisfactory, if not more so. However, I promise that I am not going to raise any additional points, although I may underline some of those already raised.

To me, the main reason for this debate to-day is the fact that the coal stocks are increasing; and that is the disturbing factor with coal to-day. If our coal were coming to the pit top and being sold, as it was in the days gone by, I do not think we should be having this debate to-day. But when we find stocks on the surface increasing substantially almost weekly, that causes those of us who know the industry some concern and uneasiness. I want to refer to those stocks in the words of the Chairman of the National Coal Board, Sir James Bowman. He dealt with the matter in a speech he made less than a week ago, speaking at the Annual Conference of the National Union of Mineworkers. He then said—and let it not be forgotten that he speaks with tremendous authority, not only as Chairman of the National Coal Board but as one nursed in the industry and one who knows it from every aspect: I want to refer especially to the problem of stocking—putting coal on the ground in massive quantities—a measure psychologically bad, and costly indeed. Yet we must know that, in the absence of a solution involving political decision, there has been no readily acceptable alternative in the circumstances to the stocking of surplus production. So far this has been a very important help indeed to us in our efforts to weather the storm. The other alternatives open to us would have included a steep cut in production involving the closure of many collieries. All I can say is that stocking cannot go on for long at the rate it is going on; it is bound to stop. If production continues as it is, and consumption stays as low as it is—or goes even lower—then, obviously, at the moment there is no alternative to stocking; but it cannot go on for long.

What I am concerned about—and I feel that the Minister must be fully aware of it—is the need to deal with this matter immediately. I notice another sentence from Sir James Bowman's speech which underlines that very fact. He said: …the problems of stocking such vast quantities of coal as are already on the ground are formidable indeed, and …the opportunities for adding to them—for using them as a cushion, as we have not hesitated to do—become less and less with each passing week. I was a little disturbed at what was said by the Paymaster General when dealing with this question in the other place in May. If I may say so, I regard the Paymaster General as one of the most up and coming men in the Government; I think he will be "going places"; whenever he speaks on anything he speaks well and with great authority. But he did make this reference in his speech [OFFICIAL REPORT, Commons, Vol. 605 (No. 106), col. 59]: The fact is that we must not be misled by the temporary large stocks that we have. I like the word "temporary"; that is a sign of confidence and optimism. He went on: They are a great problem both physically and financially, but a sharp upturn in industrial activity in this country and throughout Western Europe could soon make stocks diminish; and any panic measures which led to any excessive closing of pits or to the cutting down of the capacity of the industry below what we might need in the future would be very unwise. I am not the man to suggest cutting down production by the closing of collieries immediately, but I think it is worth while considering when we should decide that we cannot stock any more.

My noble friend Lord Hall, in a very fair and helpful speech, referred to the fact that to-day the coal industry employs fewer men than it did sixty years ago—and he is usually accurate in his statements. If the employing capacity of this industry is going down for various reasons, let me say, quite frankly, that I should not regret it at all, provided that adequate provision was made for those who can no longer work in the industry. I should not mind if the day dawned when every ounce of coal in this country was brought up from the pits by machinery, without the men going down. But it presents a terrific social problem, and that is what worries me. I hope that some genius will enable the fuel needs of this country to be satisfied without anyone risking his life or limb in the coal mines; but adequate provision must be made for those who are to-day getting the coal and for those who would otherwise be getting it later.

Last week we had a debate on uncertainty as a factor in industry. I believe that doubt, fear and uncertainty are big factors in industry—bigger, indeed, than is sometimes appreciated. It was said last week, quite correctly, that we must try to remove uncertainty from the minds of the people of the country in order to get the best out of industry. If uncertainty needs removing from any industry, it needs removing from the coal industry.

Seven years ago, almost to the day, I asked in this House—and I have asked on other occasions since then—that there should be a co-ordinated policy. I know that the Minister himself is a co-ordinator. It is his job to see that coal, gas, electricity and all the fuel-producing industries are doing their job. He is expected to do that. But I would beg of him to decide what quantity of coal will be required for the next five years. The Minister ought to welcome some help in the form of a council of some kind which could co-ordinate the fuel industries in the country and get the best out of them. It was suggested by the noble Viscount, Lord Stonehaven, that we ought to have a sort of "catch-as-catch-can." If oil can get in and push coal out, all right. That is no good for the nation. I am sure we do not need an unregulated production of the fuel production in this country, which is what the suggestion of the noble Viscount would mean: that the collieries and the Coal Board should produce coal as cheaply as possible in order to oust oil. No; to me, that is not the way to handle the fuel requirements of this country. It is far better to handle it in a sensible way.

Surely somebody can decide how much coal we are likely to require in the next five years. I am sure that we can decide approximately how much coal will be required this century. If that were done, as in my opinion it should be, then the mining communities throughout Britain would be aware of what was required of them—and it is vitally important that they should be if this fear is to be removed. These people had some gruelling experiences less than 30 years ago, and they visualise the possibility of the same type of experience returning. I cannot believe that it is beyond the ingenuity of this Government, even though it is a Tory Government, to find some way of providing for the fuel needs of the country which would enable those engaged in the industry to know exactly the requirements. If 100 pits have to be closed—as I am told they will: I do not know—then they will have to close. What do the unions say? They do not resist, provided that adequate provision is made for those displaced. That is not asking too much.

I hope that the noble Lord the Minister will look again at this question of setting up a co-ordinated authority which will indicate to those responsible on both sides of the fuel industry what is going to happen in the years to come. It would help immensely. We have been asked: Why do you yourself not produce a policy? I see that the Labour Party has produced one. I do not suppose the Minister has seen it yet—he has? Then we shall be able to go along side by side.

THE MINISTER OF POWER (LORD MILLS)

I have not only seen it, but I might have written it.

LORD MACDONALD OF GWAENYSGOR

Let us take the short term first. I hope that the publication of the Labour Party policy will be an inducement for the Government to do likewise and to make public their policy. I cannot believe that the Government are a "no policy" body of people. I cannot believe that of the Minister himself. Throughout his industrial life he has been very much a policy man, and I am sure he is now. But I wish he would disclose his policy. When I have disclosed this Labour Party policy, I am hoping to find somewhere the Conservative Party policy on fuel and power.

Let us take first the short-term position, because that is very important as things are to-day. This is what the Labour Party say: Among the problems which must be examined is the programme of conversions of power stations to oil. It is probable that the costs of re-conversion to coal would be less than those involved in maintaining large numbers of miners on unemployment and redundancy pay and the creation of derelict communities. Additionally, there should be a further review of opencast coal operations. It should be possible thus to give the coal industry sufficient breathing space to plan for its long-term target. Finally it is essential that provisions should be made at once to bring new industries into areas affected by closures, and for plans to be made for areas likely to be affected in the future by any contraction of the industry.… The problems of such communities are too serious to be left to chance… There is the Labour Party policy for the immediate future. Let me read further from the policy statement: This situation, which has arisen within the last two years, stems first from the failure of the Tory Government to maintain full employment and economic expansion and, secondly, from their failure to have a coherent plan for the production and consumption of the nation's overall fuel requirements. We recall that at the end of the war Britain faced a desperate coal shortage. The reorganisation of the coal industry following nationalisation and the response of the miners to the nation's appeal, enabled Britain to recover from the effects of war and to raise industrial production to record heights. The fuel shortage has now come to an abrupt end. However, the mining community can rest assured that the Labour Movement will not leave them to bear alone the weight of the burden which should be shared by the whole nation.…. The first essential is that there should be a rapid expansion of industrial production, especially in the heavy industries. Labour's plans for expansion and higher living standards will achieve this and a consequent increase in the demand for coal. Secondly, we need a long-term policy for the producution and use of fuel. The fuel industries—coal, gas, electricity and atomic energy—must be viewed as a whole and plans made on this basis. We must also consider how far Britain should depend on imported oil to meet our fuel requirements. Full consideration must be given to the strategic and balance of payments issues involved. I have nothing more to say with regard to the Labour Party plan. I hope that the Minister and his colleagues will be more forthcoming about how they intend to handle this very difficult but very human problem.

A suggestion was made to me by an old retired industrial leader, and I was asked to mention it in this House. He put it this way: "Do you think that anti-nationalisers can run a nationalised industry well? Do you not think that the trouble comes from there: that those handling this industry in the Government are mainly against nationalisation?" Then he went on to put this point to me, and I want to put it to the Minister. He said: "Do you not think that a Minister who is opposed to nationalisation of some industries may not be too keen on making the nationalisation of this industry too great a success in case it breaks down the case against some other industries which they are contemplating nationalising?"

LORD MILLS

I suggest that the noble Lord might add that to his list of points. It is a new one.

LORD MACDONALD OF GWAENYSGOR

The noble Lord considers that a new point? That is a point of view. He and I may not like hearing points of view, but if they do exist it is not a bad thing to know about them. After all, there are those who are suspicious and uneasy; who think that this is a Government which is against nationalisation and, therefore, cannot be expected to work very hard to make nationalisation a success. That point was put to me, and I gave the undertaking that I would put it in your Lordships' House. As the Minister knows, I have a rather important engagement to attend, but I hope he will be able to find time to make some reply to that point. I sincerely hope that this debate, like other debates, will help us to deal with these difficulties in the mining industry, in the coal industry in particular, and I would add, in all the fuel industries. It is necessary that we should as a country be able to handle these matters to the best advantage. Our future depends on the good handling of our fuel-producing industries.

4.40 p.m.

LORD FERRIER

My Lords, I should like to join with those who have already thanked the noble Viscount for bringing this matter to your Lordships' House, for, as the noble Lord who has just spoken has made abunadntly clear, it is a matter which affects every single person in this country. The first striking feature was made by the noble Viscount, Lord Stonehaven; that is, the extraordinary swing which has taken place. It is hardly possible to realise how short a time age it was that there were imports of coal, shortages of supply and even incentives to the training of men for the pits. Now the catchword is that "coal has priced itself out of the market." Let us call it a catchword, accept it or reject it as we like. What are we going to do about it? That is the important problem as it appears to me to-day.

Stocks have been mentioned. That is the immediate problem. After all, the price of coal is not only a question of first cost. One has to remember that coal is costly in comparison with oil or electricity in its operation, and of course, in its use—certainly in domestic use in the open fireplace—it can be thermally very inefficient. There are various palliatives and very few real remedies which are to hand for the position as it is to-day. One of the remedies which I believe is right to hand is to increase the use of electricity now. As the noble Viscount, Lord Stonehaven, said, the question of increasing plant and equipment to supply electricity as a whole is a long-term job. It is a gradual process. He mentioned a period of six or seven years before increased plant can become available. And of course it is vastly costly to install, although, as the noble Viscount who moved the Motion pointed out, costs per kilowatt are steadily declining.

But how can we increase the usage of existing generating equipment? I believe that can be done in a short space of time by the tackling of rate adjustments for off-peak tariffs. I mean that there should be a definite encouragement by sharply reduced rates for users to use it at night time and over the week-ends Surely every extra unit of electricity that can be sold "off-peak" means so much more fuel used at the powerhouse. And the fuel used is small coal, fuel which otherwise is difficult to use and, further, is the type of coal which is most heavily featured in the stock list. I suggest that serious and early consideration should be given to the drastic reduction of charges for electricity at off-peak hours. The very size of those stocks now postulates the need for early action in this matter.

The complexities are great, and I do not refer to technical complexities; I mean complexities in the inter-relation between the various authorities concerned. It is in this connection that I particularly appeal to the noble Lord the Minister of Power, because, as other speakers have pointed out, he is the co-ordinator and it is within his power, if it is within the power of anybody, to bring together all the authorities concerned in this urgent and important matter. Surely it is cheaper to the nation as a whole to shade the profits of electricity rather than to pay unemployment benefit to men who are out of work, quite apart from the human and social aspect. And what about the interest charges on the £100 million now tied up in stock on the ground? That is a costly price to pay for the present situation. It must be appreciated that the measure of reduction of the electricity rates which I have in mind is a massive one. The off-peak rate to-day is, say, 87d. per unit. In order to build up the load I visualise, and build it up quickly, it means a reduction down to the running rate which is somewhere about ½d. per unit. This is a shocking suggestion, I know, from the angle of the Electricity Board, but it seems to me worth considering that a substantial reduction is necessary to bring about what is so urgently required, a growth in the use of electricity from existing power plant in order to attack the present stock position in the coal industry.

It can be truly said that the price of electricity has increased over the last two years at a much smaller rate than overall commodity prices, but this is only as it should be. With increased off-take and vastly improved efficiency in generating machinery, this is only what should be expected. And when we have this efficient machinery, what is wrong with our load factor to-day is that it is too low. I think it is in the neighbourhood of 52 per cent., against something like 60 to 61 per cent. in the United States. In other words, compared with the United States our plant is not being used for as long hours as it could be. A massive reduction in the off-peak tariff such as I suggest would, I believe, bring a substantial increase in the load factor of the generating plant throughout the country. There are too many replacement jobs going on in terms of space heating, industrial space heating, commercial space heating; replacement jobs, many of which I know of personally, which are going to oil because the current rates for off-peak electricity are not low enough. There are potentialities for pumping loads and there are even process loads which could be created if only a low enough rate was available at week-ends and overnight, not to mention the usage of off-peak energy for the charging of batteries for battery locomotives and battery delivery vehicles in urban areas.

Incidentally—and here is a point which I think I am probably right in saying is a concern of the Treasury—could the noble Lord the Minister go into the question of purchase tax on thermal storage heating equipment? At the moment the domestic consumer is denied the possibility of storing heat in one of these excellent machines because of the purchase tax angle. To do something of this sort and to set free thermal storage equipment would enable some domestic space heating to go on to off-peak hours. I have heard it said, "What is the use of cutting rates for electricity if you are then going to have a swing back and in years to come you find you have got a big off-peak load which you do not want?" I believe the answer to that question—and I hope the Minister will be able to answer it—is that the time will come when atomic stations will be carrying so much of our load that it will be necessary, in order to get the highest possible efficiency out of those generating plants, by virtue of their special nature, to have a rate then which will consume large quantities of energy during off-peak hours, so as to keep this complex apparatus going for twenty-four hours in the day.

But what do we see? In fact, we have a case—I speak as a Scotsman—of electricity rates going up. Here, I am not talking of off-peak tariffs. The overall rate in the North of Scotland area has just been increased. I heard only yesterday that a new factory being erected in Inverness, having wired its new building throughout for space heating by electricity, has, because of this increase in rates, switched over to oil, leaving the wires in place. I mention that matter because it seems to me to be an absolute pointer to this close inter-relation between the cost of electricity to the public and the consumption of coal by the electricity industry. I believe that this increase in the North of Scotland hydroelectric area is quite unjustified—I speak of the overall picture. One appreciates that in their area costs have gone up and that interest rates are higher; but taking the overall picture of the electricity industry in the country, rate increases are to be deprecated at a time like this.

I have only two other small points to make in contributing to this debate. One is to hold out a little warning about the Outer Seven trade agreement which is now under discussion, and to beg the Minister of Power to keep his eye on this problem in the light of the threat to the paper industry in Scotland. They are a large consumer of coal—consuming something in the order of 800,000 tons a year. That is a large figure in tons of coal consumed by the paper industry, which is showing some anxiety in connection with this trade agreement.

One last point—it has already been made, not only by the noble Viscount, Lord Hall, but by my noble friend Lord Stonehaven. It is: are we satisfied that the distributors of household coal are really pushing sales? My own experience is that too many of them are still infected with the "Take it or leave it" attitude which was engendered in the years when you were lucky if you got any coal at all, and also if it would burn. I wonder how many noble Lords have had Coal Board salesmen such as the oil companies are sending round to suggest that there is an outlet for coal, and asking, "Are you satisfied with what you have got?" Far is that from the truth! I was talking to a friend yesterday, who told me that last year he had stocked up with coal at summer rates. He had decided not to do it this year because the coal he got during the summer of 1958 was of such poor quality. That is bad salesmanship, bad business and bad for coal distribution. I urge that the Coal Board impress upon their distributors the importance of modern selling methods—by the use of slogans or what you will. I believe that a good deal more coal could be sold in the summer months if there were more energy and drive behind the selling organisation.

My Lords, the problem of our coal stocks and the future of the mining industry is, as we all appreciate, a most important one. In the long run the future is hard to discern; but in the short run I feel that energetic treatment, a bold approach and a tackling of this interdepartmental difficulty which is inevitable, and really energetic ingenuity in every way, could have a marked effect upon the position as I see it to-day.

4.55 p.m.

LORD WOLVERTON

My Lords, I shall be very brief in the few observations which I wish to address to your Lordships because I know that there are still a number of speakers and also another debate to follow. I should like to thank the noble Viscount, Lord Hall, for initiating this debate to-day, because it is of vital importance to this House and to the country, and for giving us an opportunity of expressing our views on this urgent matter. As we all know, the demand for coal in the last two years has gone down by 20 million tons, and it is estimated that in this half year it will go down by another 10 million tons. These figures were given only the other day by Sir James Bowman, the Chairman of the National Coal Board, to the Federation of Miniers' Unions at their annual conference; and it has been mentioned to-day that there is unfortunately a large amount of distributed and undistributed stocks. I understand that on July 4 there were 28 million tons of undistributed stocks and 15 million tons of distributed stocks in merchants' hands, making a total of 44 million tons. That compares with the figure at the end of last year of 37.2 million tons. So it has gone up by 6 or 7 million tons.

I want to devote the few moments for which I shall detain your Lordships to asking whether further urgent consideration can be given to the possible distillisation of coal into fuel oil. I do not believe that we can hold up progress. A large number of people, not only in the domestic field but also in the commercial field—in the big steel works and so on—changed over to oil fuel at our instigation when we were short of coal. If we could conduct more research to see whether we could cut the cost of distillisation of coal into oil and chemicals, I think it would help a great deal to reduce some of the surpluses. I have been supplied with some figures by the Ministry and they are most helpful.

Last year there were produced 3 million tons of crude tar and 125 million gallons of benzole. Those are average figures. In their way, they are good figures, but I hope that it may be possible to increase them. I was pleased to see that the Minister has appointed Mr. A. H. Wilson, the Director of Research at Courtaulds, to be Chairman of the Special Committee upon which many eminent scientists are serving, to look at these matters. My noble friend Lord Stonehaven has been telling the House about two experimental stations for the complete gasification of coal. I hope that they will be a success because I think that the trend in the next ten years or so, with the shortage of labour in the domestic field, will be that many more people will burn gas, oil and electricity, rather than use the open fire which is not too efficient.

I should like to endorse what my noble friend Lord Ferrier has just said—namely, that the price of domestic coal should be seriously considered with a view to seeing whether it can be brought down. I believe that the domestic consumer would buy more coal if only the price were a little lower. He is a most important consumer in the table at page 40 of the Economic Survey of last year. Whilst the domestic consumers consumed in the neighbourhood of 53 million tons, the electricity power stations consumed 46 million tons; so that the domestic consumer is a most important element in this matter. But the coal has been too expensive.

Then we must pay increasing attention—as I believe we now do—to smokeless fuel to try to get the cost down. My experience as a county councilor in West Suffolk is that nearly all our modern schools, old people's homes and fire stations and so on—the new ones—are now using oil fuel because our experts say it is cheaper. Even compared to a comparable modern coal plant, automatically fed and burning small coal—we had some of these plants installed after the war—they still say that oil fuel is cheaper and easier to regulate with the efficient automatic regulators. We have to consider the economics of the thing and the ratepayers' pockets. If something more could be done in the way of trying to convert (the noble Viscount, Lord Hall, mentioned this point) some of these coal stocks, which I understand in some cases are of very good coal, into oil and tar which can be used, then I think some of our problems, at least, would be solved. But it is a great problem.

I am a great believer in freedom of choice for the consumer. Before the war I was a director for ten or fifteen years of an electric power company, and I am sure that we kept the gas industry on their toes by being a great competitor. And it was in the interests of the gas industry that we were a great competitor. The two industries were competing and great technical advances were made in both industries. Therefore, as I say, I am a great believer that nationalised industries, and industries generally, should have freedom of choice of the fuel they use, as other consumers should. I believe that the coal industry is more efficient than it has been in the past, and if it could get over some of its remaining difficulties we should see a brighter position than exists to-day. But it is shown clearly on the graph which was published in the Financial Times last Friday, which some of your Lordships may have seen, that there has been a great increase in oil consumption in the last two years, an increase of nearly 100 per cent. The increase in coal consumption has been going up a little in the last six months, but nothing comparable to that of oil. I welcome this debate, and if anything can be done, particularly by recommendations to Parliament from this committee of eminent scientists, to utilise these coal stocks it would be helpful. The country must have stocks, but at the moment they are too high.

5.3 p.m.

LORD BROCKET

My Lords, the debates in your Lordships' House are always interesting because they produce expert speakers in all ways. Even yesterday on the Street Offences Bill we had an interesting debate, and to-day we have experts speaking on coal and power. The Minister of Power is almost, I think, in the most important position of any Minister, because he has to decide between different interests. This debate has been mostly on coal, but he has control also over the other interests, such as electricity interests; and, of course, oil comes into the question very greatly. On the question of economics, speaking as an anti-nationaliser—a subject about which the noble Lord, Lord Macdonald of Gwaenysgor, was talking—I think it is very nice to be able to say that we will go in for the fuel which produces power or heat in the cheapest possible manner. There is one business with which I am connected where we converted our heating from coal to oil at a saving of £10,000 a year. That is unfortunate from the point of view of the production of coal, naturally; but as one represents one's shareholders it is rather difficult, when faced with these alternatives, not to do what is best for one's business.

I feel that the Minister of Power will eventually become a sort of arbitrator and will have to regard these nationalised industries—I am not going to say it is because they are nationalised or in spite of their being nationalised—as very unsuccessful. We have the railways losing an immense sum every year. We have the mines also in a very unfortunate position, and I think it is owing to their misfortune rather than necessarily to their running. The railways themselves are becoming partly obsolete, and coal is becoming partly obsolete because of the new inventions. I think it will be the duty of the Minister of Power and Her Majesty's Government to decide how far the Minister will have to be weighted one way or the other. I am personally in favour of employing coal miners and not having them unemployed, from the social and other points of view, and it may well be that electricity power stations will have to continue to be run on coal and the atomic programme slowed up a little to that end.

I am myself interested in the production of smokeless fuel, and we are in the unfortunate position of not being able to get enough to sell. We have no stocks. We are expanding our plant considerably and we hope it will be in operation by next winter. Therefore I know a little about the subject. But smokeless fuel (and I am not saying this at all by way of advertisement) has one advantage in that its smoke is less full of waste products when it comes out of the chimney than is oil smoke. There are certain people who have gone over to using oil for central and industrial heating, and the greasy, black stuff which comes out of their chimneys and settles on one's car and on other places is far worse than the smoke from smokeless fuel. I think that that point should be taken into account. I drive a car a good deal and I am continually getting these horrible diesel fumes down my throat from buses and lorries, and I believe that that is very bad for one's health. We have been told that smoking is bad and is a cause of cancer, but it is quite possible, and I think probable, that consuming considerable quantities of diesel oil fumes may also be bad for one's health.

I am not going to say anything further apart from commenting on one point which my noble friend Lord Ferrier mentioned, and that is on the question of rates for off-peak loads for electricity. In Ireland we have the Shannon scheme and it is a very efficient producer of electricity. I heat my house, as many people in Ireland do, by space heating at night because there is a very favourable rate from 8 o'clock in the evening until 8 o'clock in the morning; and instead of having to go in for central heating by oil or coke or anthracite we go in for space heating because the rates are so favourable. I should like to back up the plea for very much reduced off-peak rates, and I think that more electricity might be sold and more coal produced in that way.

Apart from the fact that I may speak on the subject of pigs later this evening, that is all I have to say. But I believe that the Minister and Her Majesty's Government have to decide how far such industries as the coal industry and the railways should be regarded as public services. Even though it may cost a certain amount, it may well be worth while to regard these very important industries, which employ hundreds of thousands of people, as public services. But that is a decision which only Her Majesty's Government can take.

5.9 p.m.

LORD MERRIVALE

My Lords, I should like to add my expression of appreciation to the noble Viscount, Lord Hall, for initiating this debate. The last debate on this subject was held approximately six months ago. As my noble friend Lord Wolverton said, the debate to-day gives your Lordships with an interest in this matter an opportunity of expressing your views; and if I may respectfully say so, it also gives the Minister an opportunity to give the House a sort of progress report.

To-day I wish to confine my remarks to one aspect of this country's fuel situation, that is, the increased or increasing undistributed coal stocks, for I believe, in the words of the noble Lord, Lord Mills, of January 21 last—and I quote his actual words [OFFICIAL REPORT, Vol. 213 (No. 28) col. 690]: Coal is our only major indigenous fuel and therefore there is a proper anxiety to see it used to the fullest possible extent". As the Government's general fuel policy is to maintain competition between the fuel industries in this country, certainly further uses must be found for coal. On January 21 last the Minister mentioned that the Scientific Advisory Council was looking into the question of expanding the use of coal; and, as has been mentioned already by the noble Lord, Lord Wolverton, on April 16 last it was announced in another place that there had been set up with this object in mind a committee under the chairmanship of Mr. A. H. Wilson. I should like to take this opportunity of asking the noble Lord the Minister whether he can give the House any indication, even a vague indication, as to when it is expected that this committee will be able to report—because I believe it is a duty of the committee to report to Parliament on this, as I think, most important aspect of the development of the use of coal.

I am certain that all your Lordships will agree with me that, of our three main primary fuels—coal, oil, and atomic energy—coal is by far the most important. Britain as an industrial power has been built on indigenous coal: indeed, the steel industry has been built up on some of the world's finest coking coals. Surely, my Lords, now is the time for the National Coal Board effectively to combat the increasing competition from oil, and to decrease these coal stocks which have already been mentioned by several noble Lords. Here I should like to take the opportunity to ask the Minister whether he can give to the House any figures as to the magnitude of oil competition: because, on January 21 last, the noble Lord the Minister did say [OFFICIAL REPORT. Vol. 213 (No. 28), col. 692]: Oil now supplies 15 per cent. of our total fuel consumption, as compared with 7 per cent. before the war. I am advised, my Lords, that in 1954, with a total inland fuel consumption of 254 million tons of coal equivalent, already 15 per cent. was contributed by oil and 85 per cent. by coal.

According to Dr. G. H. Daniel a few years ago (I believe that he was a member of the then Ministry of Fuel and Power) the requirements of this country between 1954 and 1960 would increase by 30 million tons. Surely, my Lords, as we approach 1960, the percentage of oil competition must exceed 15 per cent., in view of the decreasing consumption of coal in this country. I believe that in 1956 the inland consumption was approximately 219 million tons, and in 1958 it was approximately 203 million tons. As for our undistributed coal stocks, about five and a half years ago they were 1,154,000 tons. I was under the impression that to-day they stand at 26,800,000 tons, but several noble Lords have mentioned that they are 28 million tons, which makes the picture even worse. But I think it is interesting to note that within that later figure of 28 million tons there are 4 million tons of carbonisation coal.

Surely there is a case for disposing of these vast stocks at cut prices. Several noble Lords have already mentioned the question of whether or not it would be practicable to reduce the price of coal in order to decrease the quantity of our stocks. Without wishing to weary your Lordships with a number of quotations, I should like to read just one or two. One is from the Daily Telegraph of May 28, 1959. It is a leader article, under the heading "Prospects for Coal". In it, the paper says: Now the challenge is to reduce the industry's great surplus of certain types of coal. Later, it goes on to say: But what the ordinary public cannot understand is why so little has been done to dispose of the vast stocks of small coal at cut prices. Then, further down, the article says: …there is a great new market for smokeless fuels". On this question of smokeless fuels, my Lords, I should also like, very briefly, to refer to a letter written by a correspondent to the Daily Telegraph. The writer says: Local coal merchants are at their wits" end to meet the present demand for the manufactured fuels". Then he goes on to say that deliveries made are in approximately six weeks, and he ends up by saying: The inference to be drawn is that the bottleneck lies in the manufacturing… He goes on further, but I will not weary your Lordships with the whole of the letter. I think, therefore, that there is a case for manufacturing greater quantities of smokeless fuels. While on this question of price, I should like to refer your Lordships to a part of paragraph 181 of the Robson Committee Report (Cmnd. 446). This Report says: "They"— the National Coal Board— also emphasised that while the general level of the Board's prices is determined by the aggregate costs of production and imports, the prime criterion of the price of an individual coal is its average value in use as interpreted by them and not its cost of production". So, my Lords, there may possibly be a case for decreasing the cost of the coal in these coal stocks.

I should like next to touch on the question of smokeless fuels. It has already been mentioned by several noble Lords, but I think the development of smokeless fuels is a highly important question. A British Electrical Development Association publication states: With the introduction of the Clean Air Act of 1956, public interest has already been roused in the creation of Smoke Control Areas. Every Local Authority faced with the task of setting up these areas will be concerned in the first place with the availability of smokeless fuels… The publication goes on: Clean Air must obviously depend upon everyone in a Smoke Control Area using one or other of the smokless fuels which are to be made available. Local Authorities will have to satisfy themselves that sufficient supplies of these fuels will be available… So, my Lords, this question of the sufficient availability of these smokeless fuels is an important one.

In that respect, I welcome the statement that was made in another place by a Government spokesman, that last year the National Coal Board spent between £300,000 and £400,000 on the development of briquetting techniques and on the by-products of coal. I also welcome his statement that the Board's output of "Warmco" is to be stepped up this winter to a yearly output of 500,000 tons, and that they are working on two further smokeless fuels for the domestic market, though I understand that these will be available only some time in 1960 or 1961. Of course, there are other smokeless fuels made, such as Phurnacite, the total quantity of which I believe is in the region of £1 million.

Under the heading of carbonisation of coal then; is an interesting passage in the publication Fuel Research, 1957, and I should like to quote a few words from it. It says: All the cokes were excellent smokeless domestic fuels and all were much more reactive than high-temperature coke made from a normal gas coal. The cokes produced in the narrow retorts at the lower temperatures ignited more easily and give a good fire more quickly than those produced in the intermittent chambers,… I should like to mention what can be obtained in a narrow retort from washed small coal. These figures refer to a blended coal such as would be obtained from the Douglas Colliery. From 1½ tons of coal there were obtained 15 cwt. of smokeless fuel, 30 gallons of crude oil, 3,000 cubic feet of gas, 15 lb. of sulphate of ammonia, 3 gallons of crude lighting spirit, and 1½ cwt. of producer fuel as a coke residue. All these by-products are from a small retort with a through-put of 1½ tons an hour, and the figures are approximate for one hour's output.

Finally, I should like to stress that these are interesting by-products, and I sincerely hope that the Government will see fit to give every assistance to private enterprise considering setting up such schemes. I particularly have in mind D.A.T.A.C. assistance and that orders for pilot plants are worth considering either by the Ministry of Power or by the National Coal Board. From the point of view of the consumer I should like to add my plea to that already made by other noble Lords to the Minister to see whether he could not recommend to the National Coal Board that they should reduce the price of undistributed stocks of coal to the private industrial consumer.

5.25 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords, we have heard a great deal this afternoon about coal versus oil, and what has profoundly shocked me in reading the daily papers during the last two or three months is how the miners' leaders have castigated the Government for their fuel policy. To read some of the things that the National Union of Mineworkers have said one would imagine that the noble Lord, Lord Mills, was a Satanic influence determined to destroy the miners at the instigation of the wicked Tories and the oil Barons. Let us look at the facts for a moment. In 1946, so far as I remember, it was the Labour Government which first of all, and quite rightly, encouraged Indus-strial plants to convert to oil, and something over 1,000 of them converted. In 1951, the Trades Union Congress and the Federation of British Industries approached the Government because they were extremely worried over the shortage of coal, and through their instigation the Government set up the Ridley Committee. So far as I can see, the Government have carried out the recommendations of that Committee. We come to 1955, when there was an acute shortage of coal, so acute that the Government had to enter into contracts with the oil companies to bridge the gap. If they had not done that, many of our domestic users would have been short of electricity and many of our factories short of power. What a howl there would have been from certain quarters if the public and the factories had had to go short of fuel!

I understood the noble Viscount, Lord Hall, to say that the coal industry had not been subsidised, but surely only a short time ago the coal industry had £1,000 million which I presume is added to our National Debt of £27,000 million. I cannot understand why the noble Viscount says that the coal industry has not been subsidised.

VISCOUNT HALL

My Lords, will the noble Viscount excuse me? I did not say that the industry had not been subsidised; but if I had said it, it would have been true. The Government have done to the coal mining industry what they have done to the other industries which have been nationalised: they have loaned them money to bring about improvements which had to be brought about to make the industry efficient.

VISCOUNT MASSEREENE AND FERRARD

My Lords, I understand that. It is true that they have loaned them money but I think there is little likelihood of this money ever coming back, so from the point of view of the country's economy it amounts to a loss of £1,000 million. We are told that the coal shortage is due to the shortage of recruits to the mines and the fact that the easy seams have been worked out by the wicked capitalists, but I think that if £1,000 million is spent on new machinery the public have a right to expect that those difficulties ought to be overcome. But is not the true reason—though I quite understand that it is unfortunate to say it—the deplorable record in the nationalised coal industry of absenteeism and strikes? Is not that the chief reason why in 1955 and 1956 we had this acute shortage of coal?

VISCOUNT HALL

My Lords, that really is absolutely untrue. Does the noble Viscount know that the Miners' Federation has not made a single strike official since nationalisation? I think it will be found that there have been fewer strikes since nationalisation than there were before—very much fewer.

VISCOUNT MASSEREENE AND FERRARD

I agree that you have not had any official strikes, but you have had quite a few unofficial strikes and absenteeism. I think that if the miners' leaders had only advised miners to produce more coal when the country required it, they would not now find that we have turned to oil. But the Government had no option but to turn to oil. I think it is rather a case of "never missing the water until the well runs dry." It is rather late now to complain. I do not blame individual miners at all, but I think their leaders ought to have foreseen this situation. The public have, quite rightly, always had great sympathy for the miners. Before the war I went down mines three times myself. It is certainly a job I should not like to do. I went down merely out of curiosity. It is an extremely dirty and dangerous job, but I think the miners have rather forfeited some of the great sympathy the public held for them, and I beg them not to forfeit it any further.

It appears that the Government—and the oil companies, I understand, have been very decent about it—are going to change back, as far as possible, to coal. Are the miners leaders, when the country is again more dependent on coal, going to have their tantrums and going to be difficult, as I think they have been? Because if so, we cannot have the Government one moment changing to oil and then going back to coal and the miners having a tantrum and the Government going back to oil again. It rather makes the miners the darlings of industry. I think we have to reconcile ourselves to the fact that mining is a declining industry; and provided it does not entail any hardship to the miners, I do not think we ought to regret that, because underground labour is highly unpleasant and if it can be dispensed with it need not be regretted. Personally, I think that if the Coal Board had been run by private industry there would have been greater advance made in research into all the by-products of coal. I have always understood that coal is really too valuable to burn; and I hope that a large part of this capital that has been put into the mines is being used on research for these by-products. I know that this is being done, but I only hope it is being done really forcibly.

It is a great tragedy that owing to the decline in coal our seaborne coastal collier traffic has virtually disappeared, and so, too, owing to the decline in exports, has our ocean coal traffic. But I wonder if these huge stocks of undistributed coal—amounting, I understand, to 43 million tons in all—could not be sold abroad at knock-down prices so that we could cut our losses? Surely, if it is kept for any length of rime it will only crumble into dross; and it would help our depressed tramp shipping industry. It seems crazy that in Ireland, for instance, they find it cheaper to buy Polish coal than to buy British coal. It is an absolute tragedy. Surely with these huge stocks we could sell cheaper than Poland and cut our losses.

I should like to ask the Minister one question about hydro-electric power. In isolated areas, hill country such as in Wales and the West of Scotland, the Hydro-Electricity Board cannot expect these schemes to pay for themselves. But it has been brought to my notice several times that because of the capital charges for connecting mains supply to houses in these remote areas a great many poor people—poor farmers, many of them—cannot afford to have electricity laid on. I should have thought that if the: Central Electricity Authority could only reduce these initial charges and spread them over a period of years with the charges for consumption, they would then get thousands of extra consumers in these isolated areas.

To conclude, I should like to thank the noble Viscount, Lord Hall, for putting down this Motion. I hope I have not shocked him too much. I can assure him that I have the highest regard for miners—I have seen how they work underground and I think they are splendid men—although I have not always had such a regard for some of their union leaders; but perhaps I am wrong about that. I should also like to congratulate the Minister of Power for adhering to a policy which remembers that one of the foundations of a progressive economy is ample, abundant and cheap power.

5.40 p.m.

VISCOUNT RIDLEY

My Lords, I apologise to the noble Viscount, Lord Hall, and to the House for not having been here at the beginning of the debate and I regret that I did not have the opportunity of hearing all that he and other noble Lords have had to say. For that reason, I will confine myself to a few points only. The words in the Motion, "situation in the fuel and power industries", as I understand it, mean at this moment the problem in the coal industry. This is not a new problem to those who lived in the colliery areas and have known the history of coal. After the First World War it was not many years before the export trade declined—at that time we lost our trade to Poland—and that and other features led to a general depression in the industry which lasted for many years. We have now reached an almost similar position, in that we have lost our export trade, this time, oddly enough, so far as one can see, more to America than to anywhere else. There are, however, other and even more difficult problems—namely, as has been said, the competition with oil and the third form of power which is now becoming available.

Here we come to the whole question as to what the fuel and power policy ought to be. That is a question which has been asked many times. Some years ago I had the honour to be chairman of a departmental committee which considered that very matter. We were considering it at a time of great shortage of coal and, indeed, a shortage also, although only temporary, of oil, at least available in this country. We formulated what we thought should be our guide in the suggestions we were to make and it was something like this—I have not had the opportunity recently of looking up the actual words: that the principle should be that every consumer of fuel and power, either as an individual or as an industrial consumer, ought to be able to have the fuel that suited him best, provided he would pay an economic price for it. That I think was the right policy at a time of shortage; and I think it is the right policy, also, at a time of surplus fuel, in that the corollary of that policy is to say that the consumer must have the fuel which is most efficient for his purpose.

I well understand the attitude of those in the mining industry who see their future threatened and ask that the Government should prohibit or reduce the use of oil by various sectors in industry and for other measures of that sort, and I have every sympathy with them. But I think we must look further than that. We must look back, perhaps, and think of the history of the growth of industry in this country. After all, it is quite likely that the old people who were making iron in Suffolk with charcoal were terribly upset that people should start making iron on the coalfields in the North and other parts of England; and we have read of the objection by the workers in the weaving industry to the introduction of machinery, and so on. The development in a new form either of power or of methods of production must inevitably react on industries which are already established and whose places they take. Those who work in the modern industries, such as the motor car manufacturers, the manufacturers of wireless and domestic appliances, should not, I think, feel that in working in an industry which is modern and up to date they are doing wrong in displacing others who were manufacturing in a simpler and more primitive way.

I believe there is a principle there, and if industry is allowed and, indeed, encouraged to develop on the line that is most efficient, in every case the result will be a net gain of resources to the whole community. It is only by the savings made by profits in industry and by individuals that a surplus is accumulated and can be used for the many purposes for which the country requires it to-day. I think, therefore, one must support the principle that the proper thing to do is to use the fuel, or whatever it may be, in such a way as to produce the most efficient result. The other theory which has often been stated is that it may well be wise to conserve coal in this country for the future and make it last as long as possible and use what fuel we can. That is a theory to which I have never subscribed, but it has been put forward at various times.

In thinking of the problem in the coal industry, one must have a good deal of sympathy for the Coal Board, who have been faced in a short time with a rapid change in the situation with which they have had to deal. They have been straining every nerve to increase output and have invested large sums of capital in improvements which are just beginning to come to a useful stage in their construction, and they suddenly find that they cannot sell the coal which they get out. I do not think one can fairly criticise the Coal Board for not having foreseen this situation, because I do not think anybody else foresaw it. It is true, as has been said, that Governments in the last twelve years or more have been encouraging the use of oil at different times as a substitute for coal, which has resulted in many cases in the users finding oil to be more efficient for their purpose. It is true, also, that there has been a Government fuel efficiency service which has supplied technical advice and help; and there were, I think, some tax concessions to firms installing plants to increase fuel efficiency. That, to some extent, has been successful. I think it is probably right to make the most use you can of the resources you have got, but that may have contributed, to some extent, to the problem with which the Coal Board have to deal.

There is also the problem with which they are being faced as a result of the Clean Air Act. That is an Act the principle of which I think all of us would support, but the result of it is that it has driven people away from the use of solid fuel because of the fact that, relatively speaking, little smokeless fuel is available. If all the consumers of solid fuel are to burn it smokelessly, then some increase, and I believe a large one, is inevitable.

As to the disposition of the large stocks of coal at present held, I believe that that and the price at which it is sold is a matter for the Coal Board to work out. They are responsible for the commercial policy of the Board, and they no doubt will deal with that in their own way. I hope, however, that they will give increased attention to experiments into some of the newer processes of converting coal into various chemical products, such as oil and others, and further development of low-temperature carbonisation which will result in more smokeless fuel for which it seems to be agreed there will be an increase in demand. Also one hopes that there will be experiments into the getting of small coal. Those are things at which one would have liked to see them working more energetically over the last few years, because those trends are inherent, whether coal is in surplus or in shortage. I hope also that the Government will make some decision about the progress of opencast coal. We have heard statements of a rather indefinite nature, but I do not think we have had one from the Minister or a member of the Government. It would seem wise policy at this time to stop that method of getting coal, and to keep what there is there as a reserve in a time of difficulty and shortage.

All this adds up to an inevitable contraction in the coal industry itself. I think the course of events will force that; indeed, the fact that the Coal Board are increasing their mechanisation, and have been doing so, has already led to a higher output per man. All these factors point to a smaller number of men employed in the coal industry. That is a matter which we all regret, and I submit that we cannot leave it at that: we cannot have large numbers of men unemployed, and with no future. But we have the opportunity here, which has not always been present before, of planning some alternative work for them to do.

There was no calculated foresight as to the demand for coal and the rate at which it would be consumed in the difficult time after the first war. We are now in a stage at which the size and scale of the Coal Board enable them to stock large quantities for a period, and to give time for a reorganisation which will result in a lower output and in fewer men being employed. There is, therefore, an excellent opportunity to make plans in that period of change to see that the men who are no longer required in the coal industry can be given other work to do.

A lot has been done in bringing factories of various kinds to the areas where collieries, steel works and shipyards fail, through no fault of their own. to give as much employment as they used to give before the war. That policy, carried out under the Distribution of Industry Act, has been successful on a small scale, but a scale which I think could have been kept up with equal success with good effect. The need during the last few years has not been there, so that that policy has, in fact, hardly been used. Here we have the opportunity for the Coal Board to plan very quickly what their rearrangements of production must be, and for those plans to be co-ordinated, so that factories may be built and all the steps taken, with which we are familiar, to see that there is employment there for the men who are put out of work. I hope very much that the Government are thinking along those lines, and will be very careful to see that such a scheme is carefully thought out.