HL Deb 12 December 1967 vol 287 cc1020-4

3.28 p.m.


My Lords, I beg to move that this Bill be now read a second time. In considering the Bill, it is essential to discuss the White Paper Fuel Policy, which is its foundation. It has been said that the White Paper has been withdrawn. That is not so. It stands as a statement of the Government's fuel policy in the round. My right honourable friend the Minister of Power is re-examining some of the figures in the light of devaluation, but the pattern of demand for the different fuels is not likely to be more than marginally affected.

The Bill rests on two indisputable facts. First, in Britain, as in every other industrialised country in Western Europe, coal is losing ground to other forms of fuel. Secondly, the men in the coal industry, which has so long been a mainstay of our economy, are entitled to fair treatment. In very compressed form, the Bill reflects the changes which are occurring in the fuel industries—the technological changes in the coal industry which reduce its need for men, and the changing balance between the fuels. The story is told in terms of the price which the community must pay to minimise the economic and social consequences of these changes. The extent of the change is indicated by the White Paper estimate of the percentage of total fuel consumption which will be supplied by the four main fuels.

May I take them one by one? This year, on an estimate based on the first nine months of the year, coal will supply 55 per cent. of our fuel requirements. In 1975 that will fall to 34 per cent. of our total, enlarged requirement. This year oil is supplying 40 per cent. of our total needs; in 1975 it will supply 41.5 per cent. This year nuclear energy and hydro-electricity are supplying 4 per cent.; in 1975 that will increase to 10 per cent. of our total needs. This year natural gas is supplying 1 per cent.; in 1975, it is expected, it will be supplying 14.5 per cent. These figures indicate a continuing decline in demand for coal and virtual stabilisation of oil's proportion, with the newer fuels, nuclear power and natural gas, taking up growing proportions and in 1975 supplying together perhaps as much as a quarter of all our energy requirements.

No one anxious for our future prosperity would regret the advent of North Sea gas and the development of nuclear power. They are under our own control, and have only a modest element of foreign exchange costs. Moreover, on present evidence they will make possible the reduction in the overall cost of energy which is essential if we are to compete successfully in world markets. If we spurned the North Sea bounty, or neglected to develop the miracles wrought by nuclear scientists, we should be abdicating our position as a leading industrial nation and abandoning hope of maintaining, let alone advancing, the living standards of our people.

High fuel costs in Britain, even though they might cut fuel imports, would mean a net loss to our balance of payments if we lost markets for our manufactures overseas because we could not compete with competitors who have access to cheaper fuels. Oil imports cost this country a lot in foreign exchange. In 1965 the net cost to our balance of payments, after taking credit for the value of oil exports, was about £300 million. The difference between this figure and the cost of oil shown in the trade accounts is accounted for by the use of British tankers, inward investment of foreign companies and the costs and revenue from British companies arising or accruing to the United Kingdom. In addition, of course, overseas oil business brings further benefits to our balance of payments. Nevertheless, we have to find a substantial sum in foreign exchange to pay for our oil, although with the growth of refining capacity, the reduced rate of expansion in oil use and the changing proportion of the various oil products, the net import of fuel oil, which is now falling, should in the foreseeable future turn into a net export.

It is true that until now the main challenge to coal has come from oil, and, despite the protection of an oil tax of 2.2 pence per gallon, the use of oil has grown from 15 per cent. of our total fuel requirements in 1957 to the 37½ per cent. which it reached last year—a 2½ times increase in ten years. It is now running, at about 40 per cent., but with the introduction of North Sea gas and the advent of economic nuclear power the fast expansion of oil will be sharply checked. As I have said, on the White Paper trends the present 40 per cent. will rise to only about 411 per cent. over the next eight years. The fact that only 40 per cent. of our energy sector is supplied by oil compares very favourably with the state of affairs in most industrialised countries. In Italy, oil supplies are 61½ per cent. of total requirements, and, in Japan, 60 per cent.

The total of oil imports is sometimes quoted as if it were all competitive with indigenous fuels. But for many other purposes there is no alternative to oil. In fact, over 40 per cent. of current oil demand arises from non-fuel uses of oil. In ten years the number of cars on the road has increased from 4 million to 12 million. Oil is also extensively used in the production of synthetic fibres, rubbers, detergents, paint, fertilisers and weed killers, and many other manufactured and exportable products. Of course, energy supplies must be reasonably secure, and undoubtedly international problems could be a threat. There is, however, a growing surplus of oil and a steadily increasing diversification of world sources.

My Lords, I thought it necessary to set out briefly the position of alternatives to coal, our only fuel with no foreign exchange content, because they are both the explanation and the cause of the present and future position of coal. It is a fact which must be faced; a fact which could not have been avoided and cannot be changed. Consumers have expressed a choice, and it is not realistic to expect manufacturers to rip out oil-burning installations and substitute coal-fired ones. The White Paper tackles and attempts to answer the question: with coal, where do we go from here? It looks at the likely pattern of demand up to 1975, and I must firmly declare that no one knows what the position will be in 1980—and it would be less than honest for anyone to pretend that he does know.


My Lords, will my noble friend give way for a moment? If, under the econometric system—that is the present trends of fuel consumption—it can be taken up to 1975, why can it not be taken up to 1980?


Because anyone who has read the White Paper—and I know that my noble friend has read the White Paper very carefully—must be aware that there are a great many assumptions on which the present estimates are based. Anyone who has any knowledge of the assumptions and forecasts which have been made in the past knows how foolish it is—indeed, it is quite wrong—to go so far forward and make assumptions on the basis of wholly unsound evidence, if such evidence exists. Over the last twenty years there have been many expert estimates of our future coal requirements, all of them carefully thought out and well-meaning, and all of them over-optimistic. In 1952 Lord Ridley's Committee forecast a forward requirement at the end of the 'fifties of 240 million tons of coal a year. In the event, they were some 40 million tons out—nearly 17 per cent.

My Lords, it will be within your Lordships' knowledge that a Statement has to be made, and many of your Lordships who are very interested in that Statement have other pressing and important engage- ments which you have to attend. I therefore hope it will accord with your Lordships' wishes if at this stage I postpone the remainder of my speech and ask leave to resume after the Statement has been made and discussed.