FUEL POLICY

HL Deb 14 February 1968 vol 289 cc106-94

2.57 p.m.

LORD HAWKE rose to call attention to the fuel policy of Her Majesty's Government as set out in Command Paper 3438 of November, 1967, to inquire what modifications have subsequently become necessary; and to move for Papers. The noble Lord said: My Lords, I last moved a Motion on this subject in December, 1964, and the noble Lord, Lord Wynne-Jones, who am glad to see is going to take part in this debate, had a Motion fairly recently, in April of last year. In moving my Motion I used words to the effect that one must have plans. It: was quite certain that they would be wrong, but one could only hope that they would not be too wrong. How wise those words were! Because the various prophecies have all been very wrong by events that have occurred since.

In the White Paper of April, 1965, the estimate of the total energy demand in 1970 was pitched at 337 million tons of coal equivalent, but in the latest paper we are now discussing, Cmnd. 3438, the figure is down to 310 million tons. For 1975 the April White Paper wisely did not hazard a guess. In the 1964 debate I was unwise enough to suggest a figure of 360 million tons for that year, and the latest Command Paper has produced a figure of 350 million tons. The substantial drop that has occurred in man's ideas over the years represents the vanishing of optimistic talk of economic growth; but when one considers the component parts of the energy balance, the first estimates prove to be still further out.

The White Paper of 1965 talked about 180 to 190 million tons of coal in 1970. The latest paper gives 139 million tons, but that is to be bolstered by Government interference to 152 million tons, and the figure for 1975 comes down to 118 million tons. The North Sea gas was not calculable in 1965, whereas in the White Paper we are discussing they say that it could be 25 million tons of coal equivalent in 1970 and 50 million tons in 1975, but it is going to be held down to protect coal.

What is going to be the effect on previous plans of this change in the overall situation? First of all, let us take electricity. Four years ago I suggested that we might be going to over-insure in generating capacity, and I think this view is now generally accepted and the programme has been slowed down a bit. It still looks, though, as if the generating capacity is going to be increased by something like 50 per cent. in the next five years. Four years ago I put in a plea for more gas turbine sets to cope with the extreme peak demands. I am glad to see that a big programme on this has been instituted, and by 1972 there should be something of the order of 1¼ million kilowatts of capacity from those sets; but, of course, it is an overall capacity of something like 60 million to 65 million—not a very big percentage yet.

I have asked Her Majesty's Government to give figures of the number of hours for which the top 1 million kilowatts, the top 2 million kilowatts and the top 3 million kilowatts, were used during last winter. From this I hope we can judge whether the use of these gas turbine sets, used at a considerable running cost but at a great saving in capital cost, would justify extension. The load factor in this country is still very unsatisfactory compared with the loads on the Continent. Here our main consumer is domestic: there, theirs is industrial. Our domestic consumers are much more volatile in their demands, and thus our peak load fluctuates very much. Until we get electric cars, I do not really see that we are going to get a great deal of assistance towards getting a better load factor, though, of course, the extension of night storage electricity heaters is helping in that way.

Then there are the pump storage schemes. This is the only way by which electricity can be stored on a large scale, and it could be of enormous help in minimising the generating capacity required. For instance, to take a rather far-fetched idea, suppose the possibility for pump storage schemes in this country was unlimited and geographically suitable in every case. It would be possible to carry on with a generating capacity far below what we require at the moment but churning away for 24 hours: when the consumers were not using the electricity, pumping the water up the top of the hill, and when they wanted the electricity, turning the tap on and bringing it down through the turbines. But that is a dream, because the geographical situation would not permit it on such a large scale. However, we have the very fine scheme at Festiniog in Wales; and I was hoping that some Scotsman would tell us what they are doing in Scotland, because I believe they have better opportunities there. But I again commend to Her Majesty's Government that exploration of this idea might be very profitable.

LORD WYNNE-JONES

My Lords, would the noble Lord forgive me for asking him a question on this point? Has he figures for the efficiency of pump storage? My opinion is that it is at best about 70 per cent. efficient.

LORD HAWKE

I do not have the figures, but it has been weighed against the enormous saving in the capital cost of providing the extra generating cost. That is a matter for calculation by experts, not by such people as me. I am suggesting exploration; I am not suggesting anything further.

Nature has been kind to us in the provision of North Sea gas. Of course, we have been importing liguid gas from North Africa for some time, and I wonder whether this is to go on. Last year we used ordinary gas to the equivalent of about 1,000 million cubic feet a day of North Sea gas. The White Paper assumes that this could treble within five or six years, and possibly quadruple by 1975. This means that gas in our energy balance could increase from today's 13 million tons of coal equivalent to something of the order of 50 million tons. That is a very formidable figure of a new fuel to dispose of. The policy at the moment seems to be to make it available to the present gas consumers, and it may well replace electricity for some uses. But it is going to be a problem to sell so large a quantity, except by replacing coal and coal generated electricity in the other markets to industry.

It is a pity that the Gas Council and the North Sea gas producers cannot come to terms over prices. I have always suggested that it is no use trying to fix a price so low that you discourage people from going on exploring, and in business one must always let the other fellow have a lick of the pot. Apparently there are two conflicting arguments at work. The producers would like a method of payment based on the commercial value of the product they bring ashore. The Gas Council, on the other hand, presumably backed by the Treasury, would like a system based on the return of capital on the cost of the exploration. This latter happens to have turned out a remarkably favourable one for the buyers, because an unprecedented number of drillings in the North Sea have struck gas. But one must remember, taking this particular formula, that devaluation has thrown it out, so that some revision would be necessary on account of devaluation. If you deny that, of course you are denying the basis of your return on capital.

If one reads the Press one would imagine that there is going to be some great difference in price to the ultimate consumer, depending on the bargain that is struck for this North Sea gas. But when one begins to look at the facts, I am rather doubtful how far this is borne out. At the moment users of gas pay an average of 22.7d. per therm. Of this 10.7d. represents the cost of the gas, and 1s. represents overheads and distribution charges. If you are going to sell three or four times the amount of gas, of course the overheads will go down in many cases, but you are increasing overheads in other respects. You have to have more pipe-lines; you have the very heavy cost of converting the consumers' apparatus, and so on. So the North Sea argument seems to be over a fraction of a penny, centring on 2¾d. or 3d. per therm. By the time the costs of distribution and overheads are added to the price of the gas, I doubt whether the ⅛d., or whatever the fight is about, is going to be a very significant proportion of the price of the gas to the ultimate consumer: that is, of course, if he is to pay an economic price for it.

In addition, of course, the Treasury is going to claw back quite a bit in taxation: as royalty, 12½ per cent.; in corporation tax 42½ per cent.; and in income tax on dividends, if the companies return a dividend. In fact, the Treasury could claw back something between 50 per cent. and 70 per cent. of any portion of the price which represented profit. If one takes the maximum assumption of 4,000 million cubic feet a day, each one-tenth of a penny per therm represents £6 million. This is spread over numerous exploring companies. Of this, they can hope to keep a maximum of £3 million and the Treasury could hope to claw back a minimum of £3 million in taxation. That is the size of the stake to weigh against the incentive to go on exploring for oil—I say "oil" because there is a chance of oil and gas as they get ever further out into the more difficult waters of the North Sea. If the inducement is such that they do go out into those more distant waters, and oil is indeed found, how kind, we could say, Providence had been kind to us!

When we turn to coal, we find that all our estimates of future coal consumption over the years have been wildly wrong—the Plan for Coal, the Ridley Committee, and so on. Why is this? I think first of all we have a sentimental attachment to coal, because it was on coal that our prosperity as a nation was based. We have a great regard for the miner, who risks his life going down the pit and who has provided the content of so many famous regiments who fought so well in both wars. The other fact is, I think, that we do not appreciate the value of convenience in other fuels. Apart from its special use in power stations and coke ovens, coal is losing its markets very rapidly indeed, both industrially and domestically. Everyone—whether in industry or as a householder is anxious to get away from the tyranny of the grate, if he can possibly afford it. So many people to-day live in places where only smokeless fuel can be burnt, and smokeless fuel is horribly expensive. I have figures with me which suggest that smokeless fuel—coke, anthracite, and so on—is something of the order of 25 per cent. or 30 per cent. more expensive than oil.

Faced with this rapid rundown of coal, the Government appear to have decided to try to support coal at a consumption of 152 million tons, instead of the natural level, which the paper estimates to be 139 million tons in 1970, although it means slowing down the use of both natural gas and oil. The extra coal is intended to be used in the power stations. I personally wonder whether these proposals are realistic. It seems to me that, with the best will in the world, people, other than Government-influenced power stations, may not be able to buy their planned quota, even though it is heavily protected at present.

Industrial and domestic coal is on a very rapid slide. Coal for most purposes is an obsolete fuel to-day, and its future is very difficult to judge. If I had to guess the consumption by 1975, it would be something of the order of 100 million tons, nearly all of it coming from Yorkshire and the East Midlands coalfields. In other areas there would just be the odd pit open to supply local needs and special qualities. We have for so long assumed that all our coalfields will go on being worked, but we have forgotten that the first rule of mining is that you mine a mineral so long as you can sell what you mine without loss, or to a profit. For years we have been digging coal and selling it at a loss. The other fuels have come along, and that era is going to finish.

We have the problem of the mining Areas entirely dependent on the pits. In other parts of the world, when mines are abandoned the townships—the mining camps—are abandoned, too. That does not happen in this country, because they are treated as permanent habitation. We have to try to get work into those areas. Where we cannot get work, we must provide retraining for the miners. The National Coal Board are able to offer many miners jobs in other fields—the Midlands and Yorkshire. There is a very considerable drift from mines because of other employment, so there is a constant demand for new miners. But retraining seems to me to be vitally important, in preparation to moving away to new housing, a new area and a new environment, where newly-acquired skills can be practised.

I read the other day that the Government hope to have 13,400 places available in industrial training units. They should be able to turn out 20,000 trained men a year. Does this apparently very puny effort measure up to the frequent speeches we have had from the Prime Minister, talking about technology and the redeployment of our resources, and so on? I do not think it does. I wonder whether the Prime Minister's colleagues take these things seriously. Twenty thousand men are able to be trained a year, when we know that the number of redundant miners runs into six figures, and there are redundant railwaymen in vast numbers, besides other people as well.

I am afraid the truth about coal must be very unpalatable to the National Coal Board and the National Union of Mineworkers. Many officials of these organisations are going to lose their jobs, and to see one's private army shrink at the rate at which it has been shrinking, and will still shrink, must be a most traumatic experience. To think it was not many years ago that the National Union of Mineworkers could muster something like one million votes on a card vote in the T.U.C! If my guess is correct, in ten years' time they will muster only 100,000.

I believe most of the miners will get new jobs; some will retire; some will go to the new coalfields. Others will be retrained and get new jobs. They may not necessarily get the same pay as they are doing at the moment, but one must remember that there is an element of dirt and danger in this existing pay, and one must not leave that out of account. I have heard three of the most emiment miners' leaders who ever sat in this House, Lord Hall, Lord Macdonald of Gwaenysgor and Lord Lawson, all say they looked forward to the day when no man would have to go down to the pit to earn his living; and I think probably their hopes are coming nearer.

In face of this rapid rundown, the National Coal Board appear to be involved in some rather desperate manœuvres. They have persuaded the Government to make the electricity industry take a lot of coal they do not want and now, judging from the Press, they are going ahead with some plan to offer the aluminium industry coal for twenty years ahead at a price representing the cheapest price to-day. That seems to be a very odd transaction, and I hope that somebody will represent the views of our children as future taxpayers before the bargain is finalised.

I should now like to say a brief word about atomic power. I notice that we still base our costs on 75 per cent. availability and a twenty-year life, against the American figures of 85 per cent. And a thirty-year life. We have backed the advance gas cooled reactor for our next design, and I have read that people are beginning to say that we have been right and the Americans have been wrong in backing the boiling water reactor. I hope we shall press on with our atomic energy programme and that we can demonstrate that our designs are right from the export point of view.

To sum up, I would say this. Watch the electricity plant and see whether more gas turbines and pump storage schemes would save capital outlay. Press on with atomic generation, at the expense of conventional, because it is the fuel of the future. The problem of selling North Sea gas in quantity is not going to be easy, save as a substitute for coal. Hurry up and fix a price; and remember that it does not pay to be too greedy. The problem of selling 152 million tons of coal in 1970 is, I think, impossible on a remotely economic basis. There must be better retraining and rehousing arrangements for the redundant miners. We are now a four-fuel economy and it is silly to try to distort use by too much interference and twisting about of one fuel against the other. My Lords, I beg to move for Papers.

3.23 p.m.

THE MINISTER OF STATE, HOME OFFICE (LORD STONHAM)

My Lords, there are 17 speakers on to-day's list, which I take as proof of the great interest in this subject and the debt that we owe to the noble Lord, Lord Hawke, for introducing this debate. But I am mindful of the fact that some fifteen sitting days ago I moved the Second Reading of the Coal Industry Bill, and we then took a pretty close look at the White Paper on Fuel Policy (Cmnd. 3438). Therefore I trust your Lordships will forgive me if to-day, perforce, I follow some well-trodden paths and explore several familiar avenues.

This White Paper is only the second on fuel policy ever produced. Tim first, also produced by the Labour Government, came out within a year of our taking office and it set out the basic policy objectives, which still stand. In a sentence, the Government's aim, through fuel policy, is to make possible the supply of energy at the lowest total cost to the community, having regard to the whole range of relevant considerations, economic and social, and to national and regional economic policies. The White Paper we are now discussing examines the changing pattern of the primary fuels, and reassesses the balance between them, against the background of the basic objective that we have set up. The production of this White Paper was a major exercise. The result is a substantial and extremely informative document which clearly shows the basis for fuel decisions years ahead. It is these decisions which, first in general terms, I now wish to explain.

The post-war years have seen rapid changes in the energy sector. As the noble Lord, Lord Hawke, pointed out, we are on the threshold of a change from a coal and oil primary fuel economy, to a four primary fuel economy, based on coal, oil, nuclear power and natural gas. North Sea gas and nuclear power form a valuable addition to our resources. They bring us a tremendous new potential for ample supplies of cheap energy, and in the process have a marked effect on the existing primary fuels, coal and oil. For coal, more than any other fuel industry, these developments accentuate existing economic and social problems. For some years coal has been losing ground to oil because oil is very convenient and it is cheap. Now coal is coming under increasing pressure from the newer fuels. Moreover, these developments are taking place at a time when the coal industry is in the throes of a major reorganisation as mechanisation increases and production is concentrated in the more efficient pits. This process must continue so that coal can improve its competitive position and supply, in an efficient and economical manner, the very substantial tonnage of coal we shall continue to need. Although I do not dispute the figures quoted by the noble Lord, let there be no doubt that we shall need large quantities of coal for as far ahead as can be reasonably foreseen.

It is in this context that we must get the impact of North Sea gas and nuclear power into perspective. We cannot yet make precise estimates of the North Sea gas reserves, but the recoverable reserves in the fields already discovered are roughly put at 25 million million cubic feet: enough to build up to a production rate of some 3,000 million cubic feet a day within five or six years, and to continue at that level for perhaps fifteen years, thereafter gradually declining if no more gas is found. But experience suggests that it would be most unusual if no more gas were found, and the rate of discovery in the United Kingdom part of the North Sea has so far been very fast. For planning purposes, therefore, we thought it right to assume that production from the United Kingdom part of the North Sea could reach 4,000 million cubic feet per day in 1975. As the noble Lord suggested, that is equivalent to about four times the present level of gas sales.

The noble Lord, Lord Hawke, referred to the delay in fixing the price of North Sea gas. But, my Lords, in this matter my right honourable friend the Minister of Fuel and Power is the custodian of the country's interest, and when agreement is reached, it will be one which will affect consumers' interests for many years ahead. On February 7 a leader in The Times Business News argued very sen- sibly, in my view, that the Gas Council was right to prefer protracted negotiations to giving in to the companies' demands. In a matter so vast we cannot ignore the importance even of fractions of a penny. The same leader, following a speech by Sir Henry Jones, said: If the Gas Council pays a halfpenny a therm more than it need pay for North Sea gas the cumulative cost to the nation on 4,000 million cubic feet a day, over 20 years would be an extra £600 million. My Lords, that is real money; it would have a real effect on what consumers pay and on industrial costs in the future.

LORD HAWKE

My Lords, is not the noble Lord giving a slightly misleading impression, because if one could judge anything from the Press the argument is not over a halfpenny but something of the order of an odd tenth of a penny?

LORD STONHAM

My Lords, I was giving the actual quotation from The Times leader, which was in fact quoting a suggested difference (and I accept no responsibility for these figures) from between 2.9 and 3.3 pence. I have quoted exactly what was said in that leader.

In this matter, my Lords, my right honourable friend's policy has been unwavering. He has consistently made clear to the parties concerned the Government's view that in the interests of the national economy and the balance of payments the price should be as low as possible, consistent—and this is important—with giving a fair return to the producers and to encouraging exploration. Of course, we had hoped that agreement would have been reached by the end of last year, but devaluation made it necessary for both sides to review their positions. Negotiations are continuing, however, and there is no reason to believe that decisions on the main issues will be unduly delayed. But this I can say: while price discussions are continuing they have not delayed development; it is proceeding enthusiastically, both in the production of the gas and in the steps necessary to receive it. It is expected to flow by the middle of this year, according to plan.

With nuclear power we believe that the stage has now been reached when it can be regarded not only as fully competitive in price but as a potentially major source of energy.

In the White Paper we have tried to look well ahead to the kind of energy pattern we might have in the 1970's, to weigh up its natural advantages and disadvantages, and finally to consider the transitional problems that may arise and how they can be managed. On December 12 I gave your Lordships an outline of the primary fuel pattern we expect in 1975. Of our enlarged total requirement for energy seven years hence, coal may be supplying rather more than one-third and oil two-fifths. Nuclear energy, providing about 10 per cent., and natural gas, with about 15 per cent., are likely to supply the remaining 25 per cent. of the total. These figures not only demonstrate the growing proportions likely to be taken up by the newer fuels, and the continuing decline in demand for coal, but also show the virtual stabilisation of oil's proportion at around the present level of 40 per cent. This is in strong contrast to oil's rapidly increasing share over the past decade. Ten years ago, it supplied only 15 per cent. of our total energy needs: to-day, it is 40 per cent.

In our review, we tested this new pattern of a four-fuel economy against each of the specific objectives of fuel policy; namely, adequacy and security of supply; fuel costs and prices; effect on the balance of payments; and efficient use of the nation's resources. Our conclusion was that the new pattern not only passed this four-point test but would bring substantial benefits to the whole economy. The introduction of the new fuels will bring us ample supplies of high-grade, clean fuel from our own resources; it will help the balance of payments and reduce the risk of our becoming overdependent on foreign sources; it will lower our energy costs; and at the same time it will promote technological advance. We believe we have set the pattern for a dynamic and vigorous fuel economy. This prospect of a cheaper energy pattern is vitally important. We simply cannot afford to jeopardise our competitive standing as an industrial nation by handicapping ourselves with unnecessarily high fuel costs.

Throughout, the Government were conscious of the particular difficulties which the transition from the present pattern would cause for the coal industry and the mining communities to which the noble Lord referred. But further decline in the market for coal could not be prevented by holding back the development of nuclear power and natural gas unless we had either increased the level of coal protection to an extent which would lead to a big increase in the level of energy prices, or heavily subsidised coal prices. Neither alternative was acceptable. Nevertheless, the pace at which we can accept the shift to cheaper fuels is governed by the rate at which it is practicable for the coal industry to contract, and for Government and industry to deal satisfactorily with the resulting employment and social problems. This is the reason for the 152 million tons—why we have tacked that on; because it would be wholly unacceptable to permit the coal industry to decline at the rate which would otherwise have happened.

In the longer term, this pattern holds out the prospect of advantages which we cannot afford to reject, and the experience of the Middle East war has emphasised the importance of the newer fuels on grounds both of security and cheapness. In the longer term, too, we judged that the rate of coal's contraction to the 1975 level was manageable over that time span. But in the short term the rate of coal's decline had to be moderated; otherwise there would be hardship in the industry and still more damage to the industry's potential for providing us in the 1970s with the very large amounts of coal which will still be an indispensable part of our fuel supplies, and which must be supplied efficiently and economically. Given the breathing space which the Government's new measures of short-term help to coal will provide, we believe that the coal industry can enter the 1970s in good shape to take its place with the other fuels, in the new and exciting pattern of cheap and efficiently produced energy supplies.

The noble Lord, Lord Hawke, in the Motion we are debating, has asked what modifications to the White Paper have become necessary since it was published last November. The answer is, none. The one question that would readily spring to mind is, what modification has devaluation necessitated? But the answer, again, is, none; because, as I said on December 12, the White Paper stands as a statement of Government fuel policy. In this field, the main effects of devaluation are the increase in the price of fuel oil and the possibilities of increased coal exports. Devaluation increases the schedule price of fuel oil by only three-farthings per gallon, and if you compare that with the relative twopence a gallon on which we did an exercise in the White Paper, which would have resulted in an increase of only 4 million tons in the consumption of coal, you appreciate how little effect that has had on the prospects. The only other effect would be in increased exports, where the National Coal Board hope to find markets for another 2 to 3 million tons per annum.

But these minor changes are not sufficient to have any material effect on the policy guide lines given in the White Paper. For example, they do not obviate in any degree the need for support for coal at power stations and gas works in the period up to 1970. With respect, I would suggest that we should pay less attention to the marginal impact of devaluation in this field and look rather at the basic trends and the policy framework established in the White Paper for shaping the basic trend to the national advantage.

The Government have never sought to persuade people that the White Paper forecasts will prove right to the nearest ton or the nearest million tons. The noble Lord, Lord Hawke, has quite rightly pointed out that all forecasting is hazardous, and energy forecasting particularly so. It is quite unrealistic to suppose that the marginal changes in the balance of fuels consequent upon devaluation, which come well within the normal margins of uncertainty associated with such calculation, could dictate a major change in long-term policy. Equally, we should not be led into thinking that the entire policy is brought into question by an individual project such as the method of providing power for an aluminium smelter, where the choice of fuel may be governed by special circumstances. The noble Lord, Lord Hawke, questioned the activities of the National Coal Board in relation to the field of aluminium. I would suggest that in making this attempt the National Coal Board is doing its proper job of trying to sell coal. If the Board believes that it can supply a particular need more cheaply or more efficiently than other primary fuels, then it is surely in the national interest that the Board should be given the chance to prove it.

The Government are now engaged in a detailed evaluation of the Coal Board's proposals as part of a general examination of several proposals which have been made for aluminium smelters. In our review we shall seek decisions which serve the national interest as a whole rather than any sectional interest. I would make it clear that in our evaluation the Government do not envisage a subsidy to the coal industry. The Board has made its offer on a commercial basis, taking into account expected increases in productivity, its large stock surpluses and the benefits of a long-term contract for half a million rising to a million tons of coal a year. It is on this basis that it is being evaluated as part of Alcan's more comprehensive proposal.

LORD HAWKE

My Lords, before the noble Lord leaves that point, may I ask whether he has any information about prices? From what one reads in the Press, one would imagine that the Board are offering coal at the cheapest price at which they can possibly dig it anywhere, to-day or twenty years hence, which is an extremely peculiar commercial transaction.

LORD STONHAM

My Lords, the question of price, productivity, and where the coal would be produced, are all matters which are being taken into consideration in the Government's evaluation of this proposal; and it would be the responsibility of the Minister of Power to ensure that if this project came to fruition it would be at a commercially practicable price.

My Lords, if I were attempting to define the ideal fuel for the country's energy needs, it would have to be one capable of fulfilling all the many roles that energy plays to-day. It would be indigenous; cheaper than imported alternatives; in supply ample for our whole needs; safe and clean in production and use; fully secure; easily extractable; readily transportable; easily stored, and conducive to the development of modern technologically progressive industries. No one of our four primary fuels has all these characteristics and so we have to consider energy not as a single commodity but as a collective noun embracing four fuels, each of which has its points of advantage and disadvantage. The job of fuel policy, therefore, is to seek that combination of the primary fuels available to us which as far as possible satisfies the ideal criterion. We have to take into account also both what the consumer wants and the wider social and economic considerations which fuel policy should bring to bear, among the factors which influence consumers in their choice. It is against this background that the position and promise of the four primary fuels must be examined.

The role of oil, for example, goes well beyond its uses as a fuel, essential as some of those uses are. It is the basis of several technologically advanced industries, notably petrochemicals, and has become an integral part of many aspects of modern life. In its competitive markets, oil used as a fuel will, in the future, face increasingly strong competition from natural gas and nuclear power, and this is a major reason for expecting its share in total fuel use to stop growing. It is difficult to predict the course of oil prices, but there are a number of reasons for expecting them not to become uncompetitive. The industry is continually searching for ways of cutting costs—for example, by the use of very large crude oil tankers and so on. And we do not believe there is need for further discrimination against oil on grounds of security. The White Paper mentions various ways in which we seek to minimise the risks of interruption in our supplies, and your Lordships remember that supplies were maintained last year despite the dislocation caused by the Middle East war. The Government have judged it right to base policy on the expectation that regular supplies of oil at competitive prices will continue to be available.

There is no doubt that nuclear power will make a significant contribution to our future energy requirements on its own economic merits. We have undertaken very careful studies into the prospects for nuclear power. There are, of course, uncertainties. But, acknowledging these, we are satisfied that there are ample grounds for confidence that the trend of reducing costs and improving nuclear technology will continue, and that the vast potential of nuclear energy will be fulfilled.

Natural gas fulfils many of the objectives of an ideal fuel. It is indigenous and relatively secure; its price and foreign exchange content are expected to be relatively low; it can be stored; it is flexible and easily controlled, and it is clean. The discoveries already made in the North Sea are on a scale sufficient to make it very worth while to convert our existing town gas system to the direct supply of natural gas. I have mentioned that we expect supplies to build up to nearly four times our present rate of consumption of gas. But that would represent only about 15 per cent. of the total demand for energy. It is a very important slice of the market, but not large enough to turn the whole energy sector upside down. For the gas industry, it means a major revolution, involving the wholesale displacement of existing gas-making plant and methods. We are only at the beginning of the development of North Sea gas and shall need to accumulate a lot more knowledge and experience before we can judge its ultimate place in the energy economy. But already it is clear that the potential benefits of this new primary fuel are substantial, and we believe it right to plan to be absorbing by the mid-1970s all that the fields so far discovered are expected to produce.

The glamour of the new fuels, however, should not cause us to overlook the solid worth of coal, or the major technical advances which have been, and are being, made in coal production. Although coal is still basically a labour intensive industry, the mechanised techniques, and even remote control, which are being introduced in the pits are a pointer to the industry's future promise. Hand in hand with the increasing mechanisation of coal-getting, productivity has been rising and manpower falling, because more machines mean fewer miners. The advance in productivity has not so far been sufficient to offset the upward movement of costs, but there is scope for further significant advances. Indeed, it ma) well be that we are at the point of a spectacular advance.

An illustration of the potential is to be found in the resumption, during recent months, of a high rate of increase in productivity. In the early weeks of this year it has shown a remarkable rise of 9 per cent. over the corresponding period of 1967—a 9 per cent. increase in twelve months. The industry's precise place in the energy pattern of the 1970s will depend on its success in realising this potential for still further efficiency and cost reductions. For this reason, and because it is obviously important that the sizeable share of our energy needs which coal must continue to provide should be supplied as efficiently as possible, it is essential to press forward with the industry's modernisation and concentration on the most economic collieries. In order to complete this process of streamlining and to equip itself to meet the challenge of the 1970s, the industry needs a further breathing space. It needs it also to cope with the redeployment of manpower which is the unavoidable accompaniment of this streamlining process.

Given this breathing space, the Government's view is that the coal industry should be able to provide on an economic basis a substantial, albeit declining, share of the country's fuel requirements over the years ahead. These major shifts in the pattern of employment take time if they are to be brought about with advantage to the national economy and without hardship to those involved. This we are now in process of achieving. But although it is vital to coal—and quite rightly, as has been said, the industry will need fewer men—it is vital to the nation that men should be released for more profitable employment elsewhere in the economy.

I have so far dealt only with the four primary fuels. I would now make brief mention of electricity and in particular of Lord Hawke's point about over-provision, to which he referred, quite fairly in my view. But this is something for which the Party opposite must accept some responsibility, and I think the noble Lord, Lord Erroll of Hale, would agree that they do so cheerfully. Looking back on the miserable memories of blackouts and load-shedding it was right that, however belatedly, the Government of the day should have taken steps to free the country of the burden of lack of power. We can rejoice that this winter, for the first time in many years, the margin of generating capacity has been adequate. This year the margin reached 15 per cent., and by next winter should be safely in excess of the planned-for 17 per cent. But this overestimation of demand by the Party opposite has brought its problems in another direction.

Load factor forecasts have had to be cut back substantially and the C.E.G.B.'s power station programme has been reduced to only one new station a year for the last three years. I cannot yet say whether one will be ordered this year. The Minister has said that investment cuts may defer the start of one power station, and I cannot be more precise than that. We have the prospect of more than adequate capacity during the next three or four years, but it is five years from start to commissioning of a power station and, with the continual annual revision of load forecasts, the electricity industry plans to keep plant capacity, in the long run, in line with demand.

LORD HAWKE

My Lords, if the noble Lord is now leaving electricity, does he intend to give me the figures for which I asked in regard to the top 1 million kilowatts of demand supplied?

LORD STONHAM

My Lords, I was going to leave that point to my noble friend. The figures cannot be given in exactly the form for which the noble Lord asks, but in the year 1966–67 the C.E.G.B.'s most expensive plant, that is, a coal and oil-fired steam station with a fuel cost of 1.2d. per unit or more, operated on an average for about 1,500 hours a year. I have mentioned that this is old plant fully written off and not suitable for supplying electricity continuously. The noble Lord asked, did he not, for the figure of kilowatts used in one hour, two hours and three hours?

LORD HAWKE

My Lords, I have not made myself clear. I asked for how many hours during the winter was the top 1 million kilowatts of demand supplied, and then 2 million, 3 million, and the position as to the "slices". My impression is that there must be very few hours in the winter when the top 1 million is called upon.

LORD STONHAM

My Lords, I cannot divide it into 1 million, 2 million and 3 million. I can only say that the period during the winter when the most expensive, least economical plant was used, perforce, in order to cope with peak demand, was 1,500 hours.

LORD HAWKE

My Lords, if the noble Lord looks at the C.E.G.B. Report, he will see that the gas turbine sets were used for an average of 600 hours each. But if his noble friend could give the information later on in the debate it would be relevant for future occasions.

LORD STONHAM

I hope my noble friend will be able to give that information, but in the time available we have not been able to have the figure subdivided in the way the noble Lord asks. To sum up, the pattern of future development in the energy sector is discernible, but not fixed. We have not aimed to settle market shares for each fuel in a rigid straitjacket; instead, the White Paper charts a course which allows each of the fuels full scope to develop its potential within a policy framework which leaves room for adjustment should one industry improve or another fall short of the high expectations we now have of them. The framework it sets is one in which all the fuel industries will find the climate propitious for vigorous development and progress towards the pattern which will give us energy at the lowest possible cost in resources. We are confident that this can be done and the newer fuels brought into use with overall benefit to the economy, and without dislocation in the coal industry or serious hardship to the people who depend on it. My Lords, if we achieve this, and I believe we can, there are bright prospects in this country for cheaper energy in the future and for the fuel industry as a whole.

3.55 p.m.

LORD ERROLL OF HALE

My Lords, I am sure that we are all grateful to my noble friend Lord Hawke for having initiated this important debate on fuel policy, with special reference to the Government's White Paper, Cmnd. 3438. I should like to depart from my almost traditional role of criticising Her Majesty's Government to say a word of praise about the White Paper. It is an admirable document, excellently compiled, dispassionate and objective; a document which enables all of us who take an interest in these matters to see what the Government are striving after and thereby to become better informed. In passing, I would say a similar word of commendation about the popular version of the White Paper, a small pamphlet entitled Fuel for the Future, which is very good value at 9d. I hope that very many people have brought it and read it. I found it much easier to follow than the main document itself; but then I like my facts and figures to be simple. It is accurate even to the extent of admitting that there is a false zero in the graph of coal output per manshift, which shows that a great deal of trouble has been taken in the preparation of this excellent document.

I should like to declare a personal interest in this debate, because I am either chairman or director of several companies engaged, among many other activities, in the supply of plant and equipment to the energy industries not only in this country but in other countries as well. However, to-day my speech will be devoted to outlining, so far as I can, the official Opposition attitude towards the White Paper. Before coming on to that, I should like to say that one could not do better than use the tenets of the book produced by the E.C.S.C. last November entitled Europe and Energy in which they say that the criteria to be followed by member Governments of the European Community in respect of power should be freedom of choice for the consumer and fair competition between the different energy sources. That could well be the text for my speech to-day. It is appropriate that one should have a text, since no fewer than three right reverend Prelates are down to speak in this debate, which lends lustre and distinction to our discussion. I am delighted to see the three who are going to speak so well supported by their right reverend colleagues. We look forward to hearing what they have to say.

It is important to establish from this Box this afternoon that we are not proposing to have a debate on "nationalisation or no nationalisation". We accept that the three industries are nationalised, and therefore we are not going to waste the time of the House in an arid debate on the merits or demerits of nationalisation as such. Here I should like to put in a personal point. I think we are very fortunate in having at the heads of the nationalised industries men of such outstanding character and personality. I was rather sorry that the Minister of Power felt it necessary the other day to rebuke them for appearing to air their differences in public over certain energy supply matters. In my view, it is a very good thing that they did. They are good men; they are loyal men; they know what they are talking about. And why should these differences not come into public view from time to time?

I like, particularly, the Welsh custom of attaching as an appendage to a man's name either the product he produces or the trade he pursues, such as "Evans the Fish" and "Thomas the Baker". So with these men, I always think of them as "Jones the Gas"—and a good man he is; "Brown the Generator"—also a first-class man. I had the pleasure of getting to know both of them when I myself was Minister of Power. Then, of course, we have "Edwards the Juice", who is Chairman of the Electricity Council; and, finally, we have "Robens the Prime Minister"—I beg your Lordships' pardon: I am so sorry; I meant "Robens the Coal". These are all men of powerful personalities, of complete integrity and great ability, and I think the country is very fortunate in having these men to look after these important industries, for they devote their time and energy so well to them.

I should like now to turn to what the noble Lord, Lord Stonham, described as one of the more glamorous fuels—namely, North Sea gas—because I think it is a matter which we ought perhaps to deal with first. I thought there was a certain element of apology in the noble Lord's speech on the subject of the pricing of North Sea gas, because it really is not good enough that the delay in deciding on the price should be continuing, month after month after month. I know that one can argue about whether is it one-tenth of a penny up or clown, and so on. There are plenty of arguments for delaying. But in this important and vital field I believe that the most important task is to get on with the job. The noble Lord said that there is still a good deal of research and development going on in the North Sea, despite the delay in pricing, but I think that development would be much more rapid if the price had been fixed by now.

LORD STONHAM

My Lords, may I assure the noble Lord that there is no evidence of that whatsoever? There is no evidence of any kind of abatement in the effort. Talking about delay, I would remind the noble Lord that the agreement reached in New Zealand last year on natural gas took three years.

LORD ERROLL OF HALE

My Lords, if we can go only at the pace of New Zealand in this matter there is not much future for us. I really am appalled. I speak rather strongly on this subject, because I was the Minister at the time when we had to take the decision to grid the British half of the North Sea and get the rigs out. I was told by the Labour Opposition (as it then was) that I was going much too fast, and that we ought to leave the whole matter over until after the Election. We all knew that if we left it over until after the Election, and if we lost the Election—which we did—nothing at all would be done. In fact, very little has been done since, except to endorse the rightness of the Conservative Government's policy in gridding the North Sea and issuing production licences and getting the rigs out into the North Sea.

Why was it so important to do it quickly? It was to get in ahead of the Dutch, who were slowly gridding their half of the North Sea. If the Dutch had got in ahead of us, all the drilling rigs would have been on their side of the North Sea, where much richer deposits are known to exist, and we should then have had to wait indefinitely until companies were prepared to come over to the British half of the North Sea. There is everything, therefore, to be said for getting on with this sort of job and not wasting time. I am very glad indeed that we were able to get on with the job and grid the North Sea and get the production licences out before the Election, and to find that, after a lot of grumbling and muttering, the Labour Government endorsed the rightness of our policy and issued a few more licences in the North Sea and elsewhere. Since then they have done nothing but delay.

I have a rather amusing annual telephone call from the energy correspondent of one of the national newspapers. He rings me up every November to ask me my views, as a former Minister, on the Government's progress towards agreeing a North Sea gas price. We have a similar date for this coming November, and I shall be very surprised indeed if we have yet found that the price has been agreed.

LORD STONHAM

Does the noble Lord want to bet?

LORD ERROLL OF HALE

I shall be very glad to bet with the noble Lord, but I should like to read about the Gaming Bill that has just been published before deciding on the terms. I should like to know whether or not there is a zero in any stake which he may suggest to me. But the point I would make now is that it would be far better if the Government had settled the price earlier. My information is that only a few weeks before devaluation they were within an ace of agreeing the price. The oil companies said, "Can we have a devaluation clause?", but the Minister of Power said, "Of course not. We are not going to devalue." It was very naughty of him because, of course, he knew at that time that we were going to devalue. He ought to have settled the price then and got a settlement without a devaluation clause and it would all have been through, instead of which, with wavering, delay and devaluation, the whole negotiations go back into the melting pot once more. This is no good at all. It is not to be surprised at, however, because we know that a Labour Government find it very difficult to take decisions.

May I offer the Government an alternative way out of their dilemma? Do not try to have one price for the whole of the North Sea gas. Have a price for each particular field, or for each particular company. Break down the negotiations into separate component parts. In a sense, a precedent has been set because there has been one price fixed with B.P. of, I think, fivepence a therm, which we know is a high price and not to be repeated or regarded as a precedent. But why must it he one price for the whole of the North Sea? Why not negotiate separate prices, or even let the Area Gas Boards conduct their own negotiations, instead of having it all centralised in "Jones the Gas"? I offer these suggestions in a constructive spirit. But I find it very sad that month after month goes by and the price is not fixed one way or the other. And I am quite sure that real major developments are being slowed down because of the Government's inability to settle the price.

On other aspects of gas, I must say that I am not entirely in agreement with the White Paper in its emphasis on sup- plies of domestic gas, although this is important and it will be great fun to be burning natural gas in our gas cookers instead of the present stuff. Here I am reminded of the old-age pensioner who, when he was having a new gas fire fitted a couple of years ago, said to the gas fitter, "Now I want my new gas fire connected up to the new 'High Speed Gas'. None of the old-fashioned gas for me." How right she was, because the new gas really will be super "High Speed Gas" and very much better!

But I think more attention ought to be paid in the White Paper to the use of North Sea gas for industrial purposes, and also for power generation. I think that among so-called experts there is a sense of thought that it is rather wrong to waste natural gas in power stations. But, of course, the other countries of the world which have experience of natural gas have all turned to using natural gas as an energy source in power stations, and I believe that here we have a great opportunity. The White Paper mentions the pilot scheme in Hams Hall station, which I understand is working extremely well, being able to switch from coal to natural gas, and vice versa, in one particular boiler. This idea should obviously be extended. But I should particularly like to see a greater use of gas turbines specially developed for this purpose, not necessarily with the highest degree of efficiency because of the extra capital cost involved, but providing that measure of flexibility which is going to be so much needed in the seventies when so much of our electrical generating capacity is base load plant.

I should have thought, too, that the White Paper could have developed rather more the great advantages of being able to store natural gas in summer as an aid towards meeting winter peaks. It was a Conservative Government, during those "thirteen wasted years" about which we used to hear so much, that passed the Gas Storage Bill through all its stages. But since then we have not heard very much about action by the present Administration to take advantage of this legislation to enable us to use natural storage resources underground in this island. Perhaps when the noble Lord, Lord Winterbottom, comes to reply he will be able to tell noble Lords what progress has been made. Certainly not much is said about it from my reading of the White Paper.

I should like now to turn to the coal industry, about which some kind things have been said and some hard things have been said. We all realise that the coal industry is going to contract, but we on these Benches opposite the Government believe that Britain should have the largest coal industry which can compete in modern conditions. We appreciate that the Government have adopted a policy of slimming the industry down to an economic level, and this policy we broadly support. However, we realise and accept the need that there should be some support for coal in the immediate future while this process is taking place, for several reasons: first of all, for human reasons—that we must help the industry to contract without unnecessary hardship—and secondly, for the most practical of reasons; namely, to avoid a collapse in morale and an over-rapid rundown of the pits, which would make the difficulties for the electricity supply industry so much greater because of its overwhelming dependence on coal as its prime resource of energy at the present time.

So we support the new Coal Industry Bill in another place. We support it in principle, although we would reserve our position on certain specific issues, such as the extent to which uneconomic pits should be kept open and the heavy cost of compelling the electricity industry to use more coal than it would wish to use. Also, we are suspicious of these diversifying activities of the National Coal Board, launching out into all sorts of things which are nothing to do with coal-mining, in an attempt to keep itself going.

As regards future policy, we would not support the wholesale closing down of regions, for very good reasons: first, that the profitable pits are not all confined to the profitable regions, and secondly, the addition of transport costs can in some cases make the delivery price of coal from profitable pits as high as that of coal from less profitable pits which happen to be closer to the user. So we would urge a flexible, pragmatic approach to individual pits in individual regions. We accept, too, the need, as stated in the Paper, for continuing the existing regional price differential. While this may make the fuel costs of individual industries and factories higher—in Scotland, let us say—we believe that the delivered price should reflect the full economic costs of supply and that help to the regions should be given explicitly rather than by concealed subsidies of their fuel costs.

As regards electricity—and I do not wish to detain your Lordships for more than a few minutes, although there is a great deal that I should like to say on this subject—I think that we must accept the fact that electricity demand will continue to grow in the years to come, although perhaps not at quite the high rate of the last few years. I thought that in a comparatively dispassionate speech the noble Lord's eye gleamed only once when he seemed tempted to suggest that Conservative Administrations had been rather lax in not proceeding more rapidly with their power station building programme. If he would really like to pursue that path a little further, I could remind him of the appalling mess-up we had in 1947, when he and I were both in another place and half the country was unemployed because of the complete mess-up over the supplies of coal through the maladministration of the Government of which he was then a supporter.

LORD STONHAM

My Lords, the noble Lord will remember, as we were both together in another place, that we had just emerged from a rather devastating war in 1947. But if he will read again what I said on this subject he will see that to some extent I was disagreeing with his noble friend, and congratulating the noble Lord, Lord Erroll, that when he was in power the Government had in fact stepped up the power station programme.

LORD ERROLL OF HALE

My Lords, I appreciate the noble Lord's generous gesture in admitting that we did our best in circumstances of some difficulty, because early in 1960–61 it was not really possible to foretell that the demand would continue to grow at such a rapid rate. There is no doubt that the last two winters have seen us free of power cuts, partly because they were mild winters and partly because of the increased amount of new generating capacity coming into commission month by month.

A great deal of discussion is rightly going on as to whether domestic demand should be catered for to the extent to which it is, and whether the pricing policy for domestic consumers should be altered to damp down that demand, or to make supplies cheaper for industry. I myself feel that although the domestic demand can cause a sensational peaking, particularly if there is a late-night boxing match on and everybody gets up and switches on the kettle after the show is over, that is surely something we ought to be able to accommodate, because one of the great civilising influences is to have an abundant and secure supply of electricity in every house in the land. It is not just for heating and lighting. The average home to-day probably has five or six electric motors in it. People do not seem to realise how many electric motors there are in the average home—the vacuum cleaner, the "fridge", the dishwasher, the electric razor, the hairdrier, the extractor fan in the kitchen, perhaps, and probably a central heating pump. There are seven motors for a single home, and probably many have more than that. So it is not just a matter of heating and lighting, but also the supply of electricity for labour-saving devices. I therefore hope that we can maintain a proud record of reasonably cheap supplies of electricity for domestic consumers as well as for industrial consumers.

As regards oil, I was glad to see that the noble Lord paid tribute to the free enterprise oil industry in enabling us to have supplies during last year without interruption, despite the blocking of the Suez Canal and the unfortunate troubles in Nigeria. This shows how valuable it is to have in the free enterprise oil industry an alternative system of management to those of the nationalised industries. Their flexibility is quite remarkable; and, by their competitiveness, they serve to keep the nationalised industries alert and on their toes, because they are all competing with each other. I hope, therefore, that there will be no demand by British people, or others, that we should give up importing oil and live on indigenous fuel supplies, because, while we have to import virtually all our oil, the net cost, while it remains at about £300 million a year, is not so great that we cannot absorb it, and it results in our having the benefit of this fuel supply for industry and transport—and of great value it is. So we should, I am sure, continue to maintain our oil imports and, as the noble Lord himself said, have as wide and d, verse a series of sources of supply as we possible can.

Of course, it is right that we should as far as possible refine the oil within these shores—a policy pursued by Conservative Governments and, I understand, being continued by the present Administration. We are well on the way to achieving a situation where the only oil that comes into this country is crude, apart from certain specialised products, and all the refining is done here, with a good deal of re-export as well. So we are getting security of supply through the diversification of sources, and we are, I believe, achieving adequate stockpiling, although this must always be a rather tricky matter of balance by way of cost, not only the cost of the storage tanks but the considerable tying up of working capital in the actual deposits of oil themselves while they are in store. I was sorry the Minister could not be a little more forthcoming on the oil duty, the 2d. a gallon, because this represents a severe impost on industry using fuel oil. We know that it is now regarded as an open form of protection for the coal industry, but we on these Benches think the time is coming when this duty ought to be looked at again with a view to its reduction or possibly its elimination.

My Lords, there is a great deal more I should like to say to-day, but there are many other speakers. I would conclude by congratulating my noble friend Lord Hawke on initiating this debate—a debate which I feel, by the time it is over, will have been of benefit to the country as well as to ourselves.

4.20 p.m.

THE LORD BISHOP OF DURHAM

My Lords, I speak yet again on fuel policy, and with a restricted purpose, because I am most anxious to keep the needs of the miners in focus and not least the miners of the North-East, an area where, as my right reverend Brother the Bishop of Newcastle will agree,, the lives and welfare of the miners are especially bound up with the lives and hopes of many other people and many other communities. My concern to-day is not, as it was earlier, with the redundancy problem, but with the younger, middle-aged and prospective worker.

The background against which I speak is set out in fine, careful, technical detail in two Papers on immigration and mobility in the North of England, Reports to the Ministry of Labour which have now been completed by J. W. House and E. M. Knight of the University of Newcastle upon Tyne, and entitled Pit Closures and the Community and Men-Leaving Mining. They include, for example, a chapter on the impact of these changes on households in the Houghton-le-Spring area which, since it is some 250 miles away, your Lordships will pardon me for saying is indeed a typical colliery area in the centre of County Durham. I hope these documents will be as carefully studied by the Ministry of Power as I know they will be by the Ministry of Labour. As I shall imply, a policy can hardly be adequate or convincing if it does not unite the predominantly economic interests of the Ministry of Power with the predominantly humane interests of the Ministry of Labour.

It is, I think, impossible to exaggerate the discouragement that uncertainty about Government policy is creating among the miners. The noble Lord, Lord Hawke, to whom we are indebted for this debate, has indicated what he thinks are the weaknesses, if not errors, in the White Paper. If his claims are well-founded, as they may well be, they show that the position of the coal industry is even more hazardous than it appears to be in that White Paper, and Government policy for coal more uncertain than ever. As the noble Lord, Lord Stonham, implied, at least here is a policy statement. Indeed it is—and better than none at all. But the determining question is: Is it the best or the most reliable? That spectacular advance in productivity which was mentioned by the noble Lord, Lord Stonham, is a tribute to the calibre of the miner under discouragement rather than a tribute to the quality of what the White Paper contains.

Let me give three examples of how the ordinary man in his working man's club or outside the employment exchange sees the position. First, there is the pro- longed delay in reaching any decision about the type of power station at Seaton Carew, which hardly inspires confidence that a clear policy is being vigorously pursued with great dynamism. It is when decisions are so much delayed that rumour thrives; and when rumour thrives, morale declines. Is this the way, if I may echo phrases from the White Paper, in which a policy provides an incentive for vigorous development and progress? There is nothing very exciting at Seaton Carew. The noble Lord, Lord Beeching, recently reminded the House that an advantage of nationalisation, if not its main raison d'être, is that it makes it possible in coming to industrial decisions to consider factors which otherwise would have to be dismissed as irrelevant. The White Paper makes a similar point when it speaks of the Government seeking to ensure that national considerations are given their due weight among the factors determining the pattern of fuel supply and demand. These considerations, as the White Paper remarks, include not only economic factors but social and human consequences. To the human consequences I shall return in a moment. But, no doubt, we have an example of the possibility of this wider planning in the special permanently-coupled trains which move continuously between colliery and point of consumption as well as in the fact, of which the White Paper reminds us, that the National Coal Board are in close contact with the British Railways Board". But—and this is my second point—has there been sufficient marriage of the fuel and transport policies? Long-distance electrification, which has also proved to be one of the most successful developments which British Railways have pioneered, has now been dropped from Weaver Junction to Carlisle. That may be a right decision when all the features are reckoned with, but my relevant question is this. Was it ever considered, in coming to that decision, that it would mean a preference for oil, and consequently the loss of a further possible use for coal, electricity-wise?

Which leads me to broaden the point as my third example. It is clear from the White Paper that the expansion of oil has been the main cause for the declining demand for coal. Yet, as the White Paper makes clear, there are problems about oil. I read: For oil we are at present wholly dependent on foreign sources and this raises difficulties both in relation to the balance of payments as well as difficulties arising from political unsettlement in the Middle East. Nigeria has been mentioned and must be added. Now if I may take up a point referred to by the noble Lord, Lord Stonham, it might have been supposed in recent months that devaluation on the one hand and (though this is another point) what I myself believe to be more realistic foreign policy, on the other, would both point to a fuel policy with a greater preference for coal and the electricity which may be generated from it. But I have heard no appropriate change of policy of the kind we might expect if, as the White Paper assures us, there is to be a constant and continuing review.

Again, I am not saying that there may not be good reasons for all this. The noble Lord, Lord Stonham, gave us what might be called a fractional dissuasive in relation to devaluation; but it is extremely difficult to put that point over to the miners in the North-East and, I should say, to miners elsewhere whose overall impression is: "What a magnificent opportunity devaluation gives us!" We have then to say: "Ah, but there is this dissuasive fraction"; and the whole picture gets muddled and cloudy. The conclusion is that the coal policy set out in the White Paper, it seems to me, is depressingly unconvincing.

In short, I am not so impressed as was the noble Lord, Lord Erroll of Hale, about the character of the White Paper. It may be a good Paper; but it is on a very doubtful theme. I recall that in an earlier debate the noble Lord, Lord Stonham, was rightly anxious to insist, as he did again to-day, that there is no intention on the part of the Government to see the coal industry eclipsed or virtually destroyed. But the noble Lord, Lord Hawke, spoke of an obsolete industry and was wondering whether some proposals are serious. I submit, with respect, that there are passages in this White Paper which encourage such misunderstanding, if misunderstanding it be, and may well in effect lead to that very disaster which the Government are no doubt anxious to avoid.

Let me illustrate. We read in the White Paper that there is a decline in the demand for coal…already vaster than was anticipated in the 1965 White Paper and that even without the new fuels coal would have continued to decline Again, that the demand continues to decline is said to be not the result of Government policy; it reflects a continuing trend in consumer preferences". There is even a suggestion that the cost of coal may be so high that coal demand will fall more quickly than is at present envisaged. And finally, coal must expect to lose markets to newer fuels because of their inherent advances in ease of handling, cleanliness and price". This is a somewhat pessimistic saga. No-one asks: "Why not face the problems of handling and cleanliness?" There is nothing dynamic here. Yet, on the other hand, in the same White Paper it is said that the electricity industry…has a strong continuing interest in the health of the coal industry"; that technically the British coal industry is among the most advanced in the world; in relation to many other countries it is particularly far advanced in its approach to the use of electronics and computers". But this would seem to be blowing hot and cold at the same time, which is singularly unfortunate—and I am approaching the human question—when, as the White Paper declares, the industry needs continuing recruitment of generations of young men to maintain the balance of its labour force, even at a time when it is reducing its total manpower". Is it not obvious that we shall never attract—and still less keep—keen workers by using such depressing words as "declining" and "diminishing", in which the White Paper absolutely abounds in those sections on coal, and when the graph relating to coal consumption shows not only steady, but increasing, decline; so that anyone with the most naïve mathematical eye will naturally extrapolate fairly well beyond 1975 to a year when there would be a virtually zero consumption? If ever we are to attract the keen young men whom the coal industry needs, the first requirement, surely, is for an optimistic, enthusiastic policy based clearly on a realistic budget for coal. This would not only encourage the young; it would hearten the old and remove that growing malaise which afflicts our people.

May I put it like this? The picture the White Paper left in my mind was that of a ship which is getting lower in the water every day; with the owners declaring enthusiastically that it will never sink. "On the contrary", they declare, "it incorporates wonderful technical developments and we want young and enthusiastic men to board her". But we see that the older men are being removed as fast and as skilfully as possible and—rightly so—financially helped, simply because of the ship's diminishing height. What a muddle that all seems! Yet it is with this confusing and incoherent picture in mind that the miners are working to-day. We can see that in the minds of the miners and their families there is muddle and uncertainty sufficient to create that despondency and despair which afflicts so many of them to-day.

My Lords, the cost of having policies which are incoherent, either because of some intrinsic weaknesses or because of their ill-fit with other policies in the same field, is always and inevitably paid for in human lives. That generalisation is well illustrated in a letter in to-day's Times on what I think is called the Woolwich case. It is certainly equally true of the coal-mining industry. I hope that the Government, in terms of decision and action, will show more clearly what they positively hope for from the coal industry; and show it in such a way that, whatever it is, however disappointing it is to some people, at least it encourages old and young alike.

4.32 p.m.

LORD WYNNE-JONES

My Lords, the right reverend Prelate the Bishop of Durham has shown very clearly why a fuel policy has to be devised; has to be formulated. He put his finger on some of the most important consequences of what is decided in this realm. The real problem with which we are concerned, to begin with, as has been discussed in previous debates in your Lordships' House and as was pointed out by the noble Lord, Lord Hawke, is the question of the supply of energy, which is the currency of industry. The fuel with which we work can be regarded as the backing of that currency, and the problem which the right reverend Prelate has pointed out is that if you change the backing of the currency from, let us say, gold to silver, you create problems in all the mining areas where you have been producing the fuel. That is the problem with which we are faced, and that is why we must have a policy.

As the noble Lord, Lord Erroll of Hale, said, we must be grateful to the Government for having produced this White Paper. Despite many criticisms which one could make, I think that the Minister of Power has produced a White Paper of considerable significance; a White Paper which analyses very carefully the various contributory factors towards a policy for fuel, a policy for energy. I do not want to go into all this in great detail: it has already been done adequately by the noble Lord, Lord Hawke, and by the noble Lord, Lord Stonham. They have both given us many of the facts. But I suggest it is important that we understand that this question of the position of a particular fuel industry, such as coal, is one which is necessarily and inevitably determined, in the end, by economic factors. It is impossible to go on mining coal at a cost, let us say, which is ten times that of some other fuel and still assume that it will be possible to sell it. One of the problems with which the Minister of Power is faced is the amount of coal which is lying on the ground at the moment; coal which has been mined and has not been got rid of. This is a real problem.

At the same time, my Lords, the coal industry has shown remarkable progress. Its mechanisation and its application of modern methods are, as has been stated, some of the most advanced in the world. The productivity in the coal industry has gone up enormously. In fact, if the productivity of the rest of our industry, including some of our most modern industries, had increased as much as the productivity of the coal industry, the whole economic condition of this country would be very different. It is one of the surprising things that, when you look at the increasing productivity of many of our so-called modern industries, you find that it is far poorer than the increase in productivity in the mining and agriculture industries, both of which are regarded in comparison as being more or less backward.

So, my Lords, the coal industry is not to be regarded as an industry which has failed to do a good job. I believe the real problem is that it is necessarily saddled with a number of pits which cannot be brought up to date and, therefore, have to be closed. This is the first point. And these pits are not few in number. The right reverend Prelate referred to a report which has just come from the Department of Geography in my own University. I strongly recommend that report to all who are interested in this problem. It refers to pit closures and the community, and it is an extremely important and significant report. If one reads it, it becomes clear that a vast number of small pits in the Northumberland and Durham region will have to be closed because it is impossible to bring adequate mechanisation into them. But this closure of the small pits necessarily brings in its train enormous human problems, and I do not think one can possibly say that we can ignore the economic problem. If we do, it means that we are not doing for the country what any fuel policy should do; that is, supplying cheap energy for the country as a whole. So that must be the priority.

If one turns to the other points in the White Paper one finds that reference is made to natural gas, an extremely important matter. I do not find myself, I am afraid, in agreement with the noble Lord, Lord Erroll of Hale, when he argues that the Government ought to accept the first price offered by the oil companies. It seems to me that the noble Lord would not advocate that in private business. He advocates it for the nation, but I think that the nation is as entitled to get cheap fuel as any private business. I do not see why a particular private business should be allowed to arrive at especially favourable terms for itself but the nation as a whole should not be allowed to do so. It seems to me that it is the job of the nationalised industries to come to proper terms with the oil companies with regard to price, and if this causes some delay I do not believe that it causes any technical delay. It causes delay in arriving at the final price, but not, I believe, in making all the arrangements for bringing the gas ashore, which is the important matter.

There is one point on which I do agree with the noble Lord, Lord Erroll of Hale. I am rather surprised by the argument in the White Paper that essentially the whole, or the first, of all the gas brought ashore should be devoted to what is called the premium market—that is to say, the humble ones, the domestic consumers, who are prepared for one reason or another to pay a much higher price than industry is prepared to pay. I do not see that this is a very sensible argument. When I read Appendix II of the White Paper, which gives the arguments for this, I was not impressed, because I noticed that whereas the technical arguments all lead in one direction, the so-called economic arguments led in the opposite direction, and it was admitted that whereas the technical arguments could be quantified, the economic ones could not. It seems to me that to mix a conclusive technical argument with a vague economic argument is not very satisfactory and there is a lot to be said for following the certain technology rather than the uncertain economics.

Turning again to the Report on Pit Closures and the Community, there are matters in that Report which are of such vital importance that we must bear them in mind in considering the impact of fuel policy. In its conclusions, the Report refers to the transfer of miners who have been displaced either as the result of the closing down of pits or because of increased efficiency. This is the comment made by the authors, after examining in detail individual cases over the area of closures. Individual hardship after transfer was common and had hidden effects on community life. As many as 82½ per cent. had a longer journey to work; 52 per cent. had a decrease in leisure time; 49 per cent had lost contact with former workmates. As a result, personal life was impoverished. Additional financial loss was experienced by 61 per cent., with a certain impact on the community's spending power". When one interprets that in terms of the life of the community, it means that a whole community is having its standard of living depressed. This is a consequence of our policy. I believe that this policy is inevitable, but I do not think that we ought to tolerate the social consequences without finding some proper means of alleviating them. It becomes a real responsibility of the Government to see that this is done.

Throughout our past industrial history the miners have been the people who, at enormous risk to their own lives, have supplied us with the energy with which we have maintained our industrial output. Only 15 years ago we were urging the miners to work Saturday shifts and produce more coal. They were virtually being driven down the mines. They did it; they produced the coal. Are we entitled to-day to say to them: "Thank you very much; you have done your job excellently; we will reward you with a lower standard of living. For having saved the country, we reward you with a depreciated community." I do not believe this country can tolerate that sort of thing. I believe that the policy of the White Paper is right, but I think that there must be an addendum to it. That addendum is that we, the community, pay our debt to those who have served us so well.

4.45 p.m.

LORD SHERFIELD

My Lords, I rise to speak on one aspect of this Motion. It is the place which nuclear energy takes in the plans for primary fuel use in the next few years. I will try to amplify the short passage which the noble Lord, Lord Hawke, gave to this subject. The noble Lord, Lord Stonham, has said that we must get nuclear power and gas in perspective in relation to the prospective needs for coal. I should rather like to put coal in perspective in relation to the economic advantages and the promise of nuclear power and natural gas.

Unlike coal, nuclear power has no lobby. It is capital intensive, not labour intensive. In fact it employs very few people. It puts no burden on the transport system and, at least until recently, the nuclear industry has not been strenuously interested in exports. It has suffered in the past through guilt by association with nuclear weapons and also by the extent to which nuclear energy was over-sold to the public in the early years. It is therefore quite easy to revive prejudice against it, as spokesmen for the coal industry sometimes appear to try to do, a pastime in which, according to the evening Press, the Russians have recently joined.

There are indeed only a limited number of people who speak up for nuclear power, besides the Atomic Energy Authority and the Central Electricity Generating Board, whose Chairman has been notably resolute in proclaiming his confidence in it. I advance the proposition that publications and statements of the Government are inclined to soft-pedal the achievements and prospects of nuclear power, and sometimes seem to have, I think probably sub-consciously, a built-in bias against nuclear power in relation to coal. In saying this, I do not intend any captious or partisan criticism of the spokesmen in your Lordships' House of the Minister of Power, who has the difficult job of trying to hold the balance between powerful and sometimes embattled State monopolies. It is almost inevitable in these circumstances that the White Paper which we are discussing should reflect this balancing act. It is full of "on the one hand" and "on the other hand". As the late Lord Somervell used to say, "How I hate those bloody hands!"

Take, for example, the treatment of nuclear costs in Appendix III of the White Paper. We are given the ground rules on the basis of which these costs are calculated—a 20-year life, as opposed to 30 years for conventional stations; a 75 per cent. load factor and a 7½ per cent. interest rate. We are told that the generating cost of Dungeness "B" is expected to increase by .05d. per kWh. over the 1965 estimates. This is a result of including further items in the construction cost. It is not due, except for inflation, to the increased cost of the nuclear plant. The estimated cost of the Drax coal-fired station has been increased by .04d. per kWh. as a result of increased coal costs and higher capital costs. We are then told that a new method of calculating load factor has been chosen and that this method minimises the disadvantage in fuel costs of conventional plant as compared with nuclear plant.

Next, it is said that the interest rates on the construction of nuclear stations has been increased to 8 per cent., as against the 5½ per cent. used by the C.E.G.B. Elsewhere it has been stated that the interest rate over the life of the station has also been increased to 8 per cent.—incidentally, a modification since the White Paper was published. And, in the end, there is an admission that these ground rules might be thought pessimistic in two respects: first, a longer amortisation period"— than 20 years— might be justified"; and, second, a higher availability or greater system savings might be attainable … Indeed, I believe all components of nuclear stations are in fact designed to have a life of 30 years at 85 per cent. load factor. Both these changes", it is said, if reflected in the ground rules, would favour nuclear power…Nevertheless, proclaims the White Paper, it has been felt proper, for the time being at least, to retain the use of the more severe ground rules". My Lords, I can understand that it may be inconvenient, or undesirable or impolitic, to do full justice to the facts about nuclear power, but I find it difficult to see why it should be improper. Could it be that the more favourable figures might bring a blush to the cheeks of the noble Lord, Lord Blyton? One is left with the impression that every conceivable charge has been loaded on to nuclear costs, which of course also include a royalty payable on the advanced gas-cooled reactor stations, but that, rather annoyingly, the nuclear station comes out on top. However, the result is—and quite rightly—that the atomic energy programme from now onwards will pay for itself. Will the coal industry do the same? The prospects do not seem to be very bright on the basis of the write-off and loan provisions which are referred to in the White Paper.

It is sometimes felt, I think, that predictions about nuclear power have been too optimistic in the past. So let us turn from predictions to performance. The early Magnox stations, condemned sometimes as "white elephants", have, as the White Paper recognises, been extremely successful. By May, 1967, Bradwell, the first to start operation, had already achieved a cumulative load factor of 78 per cent., whereas Hinkley Point, in a shorter period, had achieved a cumulative load factor of 80 per cent. With the exception of Trawsfynydd, which has had a lot of trouble with the conventional side of its plant, almost all the Magnox stations have exceeded their design capacity, and have progressively improved their thermal efficiency. The nuclear fuel has performed some 20 per cent. better than its target, and this has enabled the refuelling cycle to be advantageously extended. So, after all the gloomy predictions, and in spite of the unforeseen changes in the economic factors since the original estimates were made in 1955, the later stations in the Magnox programme will be, as the White Paper says, competitive with contemporary coal-fired stations for the supply of base load electricity.

One must, of course, recognise, as the White Paper points out, the social factors involved in fuel policy, particularly the problems which are inescapably involved in the rundown of a great industry, and to which the right reverend Prelate the Bishop of Durham, and the noble Lord, Lord Wynne-Jones, have just so movingly referred. But nuclear power brings with it important positive social advantages, which can indeed be picked out from various parts of the White Paper—small demand for labour, virtually no burden of transport, perfectly clean air (no sulphur dioxide, no "smog", no coal tips); no danger to life or health. And, in addition, as the White Paper says: much may be expected of the expansion of nuclear power as a spur to the wide range of engineering industries involved in research, development and construction of nuclear plant and equipment for the home and export markets. I accept, of course, the extreme difficulty of getting the balance between the various fuels right. The Government claim that, in framing their measures, they have been at pains to avoid distortion of the desirable long-term pattern of development in the energy sector, even though this is heavily qualified by the words, "to the maximum extent possible". But the implication is that they have not avoided it in the short term. In other words, industry will not get power as cheaply as it could get it in the next few years, solely because of the extent to which the coal industry is being protected. This is a drag on our economic performance. The prime question is whether it is an acceptable drag.

But even if, as the Government maintain—and as the noble Lord, Lord Stonham, with some support from the Opposition Benches, has emphatically reasserted to-day—the coal industry must have this heavy protection against oil, against imports, and so on, I still think it is a mistake to muffle the achievements and the prospects of nuclear energy in the United Kingdom. For one reason, it has a thoroughly bad effect on the export prospects of our nuclear industry. There has been increased criticism of our failure in this respect in recent years.

But it is not just the fault of the nuclear industry. The Central Electricity Generating Board hesitated for two years, in 1963 and 1964, before placing an order for an advanced gas-cooled reactor. This was the period when they were toying with the idea of ordering American reactors. This was also the period in which the American and Canadian nuclear industries broke through into the world market, and when official endorsement of the advanced gas-cooled reactor might have had a significant effect. We in this country have been "faint but pursuing" ever since. A much stronger official endorsement than we have had of the merits and performance of our system in this country is now required if an impression is to be made on the foreign purchaser. The Select Committee on Science and Technology in another place drew attention in this respect to the economic advantage to this country of an increase in the size of the present nuclear programme. There is no reflection of this recommendation in the Fuel Policy statement.

My Lords, in 1967, United States public utility companies ordered 30 reactors, with a total capacity of some 24,000 megawatts. At the end of last year, the reactors built, building and projected in the United States totalled 60,000 megawatts. Yet, the new Consolidated Edison power station near New York, using a boiling water reactor, will generate electricity for 0.49d. per unit, while the new Hunterston station will generate it for 0.46d. per unit—that is markedly lower—and two American water reactors built in Italy and Belgium are now both in trouble. Against the background of this massive expression of American confidence in nuclear power, and against the powerful efforts of American salesmanship, the muted tones of our own official statements are far from effective.

It is certainly stated clearly in the White Paper that the costs of the advanced gas-cooled reactor stations now ordered are expected to be lower than the estimated costs both for the Drax coal-fired and for the Pembroke oil-fired stations which are being built, and that further reductions in nuclear costs are confidently expected from further developments of the system. But, in other parts of the White Paper, the prospects of the A.G.R. are rather qualified in one way or another. We need the same emphatic confidence in our system, which is abundantly justified by our achievements, as the Americans have in theirs. In this respect, the choice of power plant for the proposed aluminium smelter is of special significance. There is, of course, the further question of whether our nuclear industry is properly organised, but this is not, I think, germane to this debate, and I will leave my comments on it to a later occasion.

In conclusion, my Lords, it is scarcely necessary to stress the importance of cheap power to the growth of our economy in the next few years. Yet we shall not be getting power as cheaply as we could, solely because of the extent to which it has been decided to protect the coal industry. We are repeatedly told that one of the principal aims of the Government is to improve the technological performance of this country, yet one sometimes has the impression that while the majority of people in a position to influence our technological progress are striving manfully to bring this country into the last quarter of the twentieth century, a substantial minority are trying to drag it back into the last quarter of the nineteenth century. The treatment of nuclear energy, in the present context of fuel policy, bears many traces of the struggle between these two conflicting forces. I most earnestly hope that the forces on the side of technological advance will prevail.

5.2 p.m.

BARONESS ELLIOT OF HARWOOD

My Lords, I do not propose to follow the noble Lord, Lord Sherfield, into this remarkable world of nuclear energy, in which he has played so conspicuous a part. It sounds to me like a wonderful Utopia which I hope I shall live to see. If as many people put as much energy into the forwarding of nuclear energy as the noble Lord has done in the course of his career, perhaps it will all happen before I die. In the meantime, my intervention in this debate is really a quite simple one. In a discussion on fuel policy, I feel that it is necessary to have a voice that speaks for the consumer, on power, which we are all discussing so interestedly.

I want to speak to-day simply and solely as one of those people who is interested in the consumption of certain fuels, notably, electricity, gas and coal. I have not reached the stage where nuclear energy has entered into my life. I suppose I am in the same position as a great many other people to-day. I have listened with interest to what has been said about the production of North Sea gas, oil and nuclear energy, but for the purpose of my remarks I shall confine myself almost entirely to electricity, gas and coal. Sometimes people ignore the users of these important fuels. Most are, after all, engaged in industry and are engaged in trying to encourage the export trade, and so on.

If one looks at the statistics in this White Paper, and at other statistics, one finds that a vast proportion of these fuels are domestically consumed. In the White Paper the definition of the purpose of the nationalised industries is clearly stated. It says: Nationalised industry should provide goods and services which consumers want and are willing to pay for at prices which reflect their (the industry's) own costs as accurately as possible, and keep these costs at the lowest levels consistent with providing satisfactory conditions of employment and earning a proper return on capital. To achieve this, normally one would see that there was competition between the companies producing coal, gas and electricity. The housewives would look out for what was the cheapest and best form to use. But, of course, the competition is between the great companies, the Electricity Board, the Gas Board or the Coal Board, and not, as it would be in other conditions, between different companies producing any of those single fuels. So one is dealing with great monopolies producing individual fuels, and those mono- polies are competing with each other. The average person has no opportunity of, as it were, shopping around to see whether or not they can buy electricity cheaper in one place or in another. However, there is help for the consumer in the various Acts that have been passed in connection with the nationalised industries, in that there is provision for what are called consultative committees, or consultative machinery on which consumers are represented. The influence of these committees has been studied recently by my Council, the Consumer Council, because we are concerned at the fact that in our opinion they do not have sufficient influence in the production and the marketing, and the price of these fuels.

I have in my hand a copy of a report which has recently been published. This report was commissioned by my Council through the social services, and a survey was carried out by the Gallup Poll in 1966. It throws quite an interesting light on whether or not these consultative councils—which are supposed to represent the point of view of the consumer—really are effective. The sample taken by the Gallup Poll reflects interesting statistics about the consultative councils of the nationalised industries. Twelve per cent. of the 5,000 sampled claimed to have heard of the electricity consultative councils. Of the 19 per cent. who had complained about electricity and who took action, 35 per cent. of that number—less than 1 per cent.—took their complaints to a consultative council. Among those who had gone to a council were some who later discovered that they had confused the council with the offices of the area board, whether electricity or gas. A similar minute proportion of the complainants about gas took their complaint to a consultative council. In our opinion this is too small a say in the question of the influence of the consumer in the production of these fuels.

The report also covets transport, but in this debate to-day we are not thinking about transport. I and my Council would like to see the consultative committees better known, and on page 67 of the report we make some suggestion as to how these committees could become better known and be of more value to the consumer. We suggest, for instance, that the councils should advertise their existence in offices, workshops and local industries. There should be more discussion and talk by council chairman, members and secretaries, educating local consumers in the fact that if they are dissatisfied with the service they get, they have opportunities to discuss these matters with representatives of the council. When annual reports are issued by the councils—as many of them do—they should give Press conferences and make sure that the work they do is really known to the public. They might produce films which could be shown about the work they do. We should like to see the consultative committees in each industry securing wide publicity for any stand they take collectively on the issues of national policy. We should like to see closer liaison by the council with Members of Parliament in their areas in order to develop what is potentially useful co-operation between themselves and those Members, having regard to the latter's reponsibility for the general consumer interests of their constituents.

We feel that these councils should play a much more important part in the work of the nationalised industries, and we also feel that they should have a rather different membership. We suggest that consumer members should be appointed to the Electricity and the Gas Councils to provide a channel for the point of view of the consumer. We suggest that a part-time member should be appointed, for instance, to the Electricity Council. Such a member would provide a permanent channel for the representation of the collective viewpoints of the electricity consultative councils at a national level, and would be concerned specifically with the consumer aspect of the Council's policy, having an independent right of access to the Minister to establish and maintain close liaison with, but to remain independent of, all the consultative councils in the industry. The part-time member would direct an independent research staff and be able to consider complaints brought to that level by the councils, or individual complaints, and each of the two consumer members should be appointed to the membership of the Ministry's Energy Advisory Council to represent the domestic consumer.

We should also like to see, in the case of the domestic coal consumer council, that there should be appointed a part-time ex-officio member of the Coal Board to speak for the Council at board level, and to be consulted by the Board about the consumer implications of its plans and policies, and also to be appointed a member of the Ministry's Energy Advisory Council to represent the domestic solid fuel consumers' interest on that body.

My Lords, these things would all help to keep informed those people who are running these great industries in regard to one section of their purchasers; namely, the domestic purchasers. This problem has arisen because before we did this survey it came to the notice of many people working in the country, and also in my office, that there seemed to be a great gap fixed between those people who complained of the service being given to them, and who had no idea how they could get any nearer to the great Boards running the industries, and the Boards themselves. There are the consultative committees, but they are so little known that people simply do not go and put their complaints to them. We feel that they should be given a much bigger say on the management side of those three industries about which I am speaking in particular—electricity, gas and coal.

There is one other matter which I think it is pertinent to raise in this debate, because it also affects these questions; and that is the question of central heating. Central heating, as we know, can be served by any of those three forms of fuel but it is, on the whole, a rather complicated matter, although one in which domestic consumers are particularly interested. At the present moment there is an organisation called the Heating Centre. This is a voluntary organisation which gives advice to people who want to install central heating. Up to the present time it has given that advice free. It gets no subsidy of any kind from the Government, though it makes a most valuable contribution to the domestic consumer, because from time to time, and particularly in connection with people moving into new houses, we receive complaints on the subject of the lack of advice in regard to central heating.

I should like to suggest to the Minister, who might pass this on to those people who are running the great nationalised industries, that it would be to their interest, as they are sellers of fuel for heating, to see that it is used in the best possible way. That an organisation like the Heating Centre—which, as I say, is financed from voluntary sources and from the industry itself, and is at the moment in very low water financially—should have had to cut down its staff and give up a good deal of the work it has been doing, and is now to charge for its advice, is not in the interests of the sellers of fuel of any kind. I hope that I may draw the attention of the Minister to this matter when he reads this debate, and that he may be interested in the fact that the Heating Centre is, in my opinion, a great ally for these nationalised industries.

In the course of my work as chairman of the Council I have had some communication with the Minister of Fuel and Power. He knows about this Heating Centre; he is interested in it, but I cannot get very much out of him. He has simply said that he is considering the matter. I think it would be a valuable thing if, in the course of our debate to-day, this information could be passed on to the Minister of Fuel and Power, and it should be considered as a matter worthy of support on the part of the Boards of the nationalised industries. It is interesting that the National Board for Prices and Incomes, in its report on gas and electricity tariffs, published in 1965, recommended that there should be an official body which would provide impartial advice on space heating for consumers. This is actually impartial advice, it is in connection with space heating, and at the moment it is entirely done without any charge on any of the nationalised industries.

My Lords, that is really my contribution in this debate. I hope that the future of these other forms of fuel which we have heard discussed—nuclear energy, North Sea gas and, of course, oil, which is now largely used—will all be used not only with an eye to industry but with an eye to the domestic consumer, who is a very big purchaser of these fuels and to whose standard of living and comfort in life they make an enormous difference. In my opinion, the representation of consumers on these Boards is inadequate. It should be more powerful, and there should be more scope. I should therefore like to commend to the Minister the recommendations in this Report, which I hope he will be good enough to study, and I hope that in any reorganisation which may take place in the future what I have said may have some effect.

5.18 p.m.

THE LORD BISHOP OF MANCHESTER

My Lords, in the first place I should like to thank the noble Lord, Lord Erroll of Hale, for the kind and appreciative way in which he viewed the serried ranks of Bishops lined up opposite to him. I would only say, for myself, that it is sometimes a real relief to retire from ecclesiastical debate, which so often produces heat and friction, to the atmosphere of this House, where the debate so often produces light and comfort. It may seem strange that a Bishop should wish to say anything on a technical subject such as this—fuel and power—but perhaps it should be expected: does not the B.B.C. itself connect "Gas and Gaiters"? True, I do not know whether it is natural gas or supernatural gas—I leave that to others to say.

All I wish to speak about is one particular point in this White Paper. It is the human problem, and in regard to that there is one special reference in this White Paper which is before us. It appears on page 51, paragraph 125—and I quote: The Government are also prepared to make extra funds available for improving the infrastructure of these areas and for other measures of assistance. Immediate steps are being taken to authorise additional expenditure on roads in order to improve local travel-to-work opportunities. Other use of these additional funds requires further study to ensure that the localities derive the maximum benefit from them; it could include such objects as improving access to the area and clearing derelict land. I do not suppose there is any place in Europe where there is so much derelict land as there is in the North-West. It is a disgrace; it makes one ashamed to travel through the area. And I refer not only to pitheaps but to all kinds and types of derelict land: little pieces, middle pieces, vast areas. Here is a task which this country should long ago have begun to tackle, but has anone really set his mind to the problem? Here is an opportunity.

First of all, the miners are a proud and independent race. They do not primarily want subsidies; what they want is work, interesting work and creative work. Surely no better body of people might be recruited for a pilot experiment in the reclaiming of derelict land than the miners. There would be a very ready welcome, I think I might say, from industrialists as well as from the general population of the North-West. Some of your Lordships will know that we are already attempting in a small way by voluntary effort under the dynamic leadership of William Mather, the chairman of Mather & Plans, to try to clear up some of our area. If the Government would he so good as to take seriously what is said here, not leave it as a pious hope but to form (I am not familiar enough with the techniques of administration to say how it should be done), of course in co-operation with the local authority, some pilot experiment of drafting in people who would gradually, bit by bit, transform this derelict land, then I believe that something really great would have been achieved for our country, and this debate to-day, which may not issue in a very great deal except light and illumination, as I have said, will not have been in vain.

5.23 p.m.

LORD CITRINE

My Lords, the noble Lord, Lord Hawke, introduced this debate in his customary objective fashion. It is quite clear from what he said that he had given a good deal of time to the study of the White Paper, which to my puzzlement seems more like a Blue Book—I do not mean in any pornographic sense, but it has a blue cover, and why we call it a White Paper I am not quite clear. The noble Lord was generally, I thought, fair in his criticism. The one thing I rather regretted was his reference to the rundown of the industry entailing the miners' leaders losing their jobs. I thought that was a little out of line, because the miners' leaders are a responsible body of trade union officials who are performing a difficult, job, particularly at the present time, and worthily doing that job as a useful element in the community.

I thought there was little justification for a modification of the present policy which the Government are pursuing, and I was not surprised to find that the Minister had taken the same line when questioned in another place. He made it quite clear that the policy was under continuous review and that the changing circumstances would, of course, justify on occasion some change in the policy. I think that the noble Lord, Lord Stonham, in his statement, made it quite clear that nobody could do more than, as it were, set broad guidelines on a policy of this kind, as it is impossible to see so far ahead and envisage every kind of contingency that might arise. So the White Paper, so-called, is, so far as I can see, quite an objective and useful review—and, I might say, one of the best reviews I have seen on this subject.

With regard to the run-down of coal, I suppose that this is one of the tragedies of our industrial life. I was a member of the National Coal Board for a short time. I was in charge of recruitment, among other matters. In those days we employed 700,000 miners. To-day the numbers are less than 400,000; in fact the last figures I saw, a week ago, were down to about 387,000 miners. For a great industry that is in itself a tragedy, and particularly when it is translated into the circumstances of homes and the future of human beings. I think, therefore, that this, as what I would call it, catastrophic fall is something that in normal circumstances would alarm any community. Fortunately, as seems to be almost inevitable in the life of nations, something comes along and helps to alleviate what would otherwise be a very serious catastrophe. Nuclear power, in its way, and oil, of course, have both played their part in maintaining this country's fuel supplies, which might otherwise have been in a very serious condition.

The Coal Board undoubtedly is up against it. There is no doubt at all that fuel and power will be sold, and will continue to be sold, at the lowest price: and if the Coal Board is incapable, because of the economic situation in which it finds itself, of selling coal at a price lower than oil or nuclear power, or whatever alternative fuel may be available, it cannot hope to survive. I have been personally very interested in watching the valiant struggle, as I would call it, of the noble Lord, Lord Robens of Woldingham, in endeavouring to stem the tide, as it were, to prevent the decline from being as rapid as perhaps the economic circumstances would justify. He is in my opinion a man of great ability. I saw him first as a delegate of the distributive workers' union at the Trades Union Congress in the days when I was its Secretary. I was impressed by the originality of his thought and the vigour with which he always presented his case. He does not appear to have lost anything of that in recent controversies.

He has among other qualifications, of course, the fact that he is an ex-Minister; and, like most ex-Ministers, he knows all the means of dealing with opponents in controversy. He is a most dextrous and unflagging publicist—in fact, a good many people in private business are rather jealous of his skill. He is challenging all corners. It is not often that a middle-weight can take on a heavyweight, particularly when there are two of them; and Lord Robens is throwing his hat into the ring and saying, "Come on, it doesn't matter who you are or what your prospects are, we will have a go at you".

More recently, that sort of what I might call confident readiness to meet opposition has been shown in the case of the Seaton Carew projected nuclear power station. He has offered to provide fuel at 3¼d. a therm. When you remember that the Generating Board is burning coal and is purchasing it at 5d. a therm, not in a comparatively small quantity, but something like 67 million tons of coal, as in last year, you will see how difficult it is for fair-minded people to believe that that can possibly be an economic tender. The natural consequence of that is to make people think that, at that low price, the Coal Board could undercut the best of the nuclear stations. I am informed on competent advice that that is not so; that nuclear power, if used instead of coal at the Seaton Carew Station, would probably save at least £1 million a year. So that is something with which Lord Robens, with his great dexterity, has to contend.

I was a little surprised that Lord Stonham, who on these subjects always speaks with a broad outlook and a sense of fairness, thought that it was a good thing for the Coal Board to offer low prices in order to do business with Alcan for the purpose of producing aluminium. I thought he said something to the effect that that is Lord Roben's job, to sell coal. Well, that raises serious questions. What is the economic justification for selling to one consumer at what seems to be a completely uneconomic price, when charging an infinitely larger consumer a price that may be even double what is being suggested?

LORD STONHAM

My Lords, will my noble friend allow me to intervene? He has read rather more into what I said than I actually said. What I said vas that if the National Coal Board thinks it can sell coal for a particular purpose, efficiently and at an economic price, it should be given the chance to prove that it can. I then went on to say that, in my case, the Minister of Power would be able to ensure that the price charged was commercially viable. I said no more than that.

LORD CITRINE

My Lords, the noble Lord did not use exactly that language. As a matter of fact, he undoubtedly indicated that the Government would review this question from the broad policy point of view. But I must say that it is a most extraordinary position when an infinitely larger consumer than any other in the country, taking something like five times as much coal as, for instance, the gas industry, is being charged a price which, in effect, will subsidise the low prices charged to a consumer like Alcan. I do not think there is any doubt about that. We will await the outcome of the Government's review, but I must confess that I find it difficult to accept an argument of that kind.

I spoke about the Generating Board being the largest consumer. This is not a case where the electricity supply industry is going to take less coal from the National Coal Board in the future. This is a case where in fact the consumption of the Generating Board is likely to go up considerably. So far as I am aware, the Generating Board has on order and under construction some 20,000 megawatts of new coal-fired plant. I have had no chance of checking this sort of calculation, but I have many times been informed that a 2,000 megawatt station consumes about 5 million tons of coal annually; and if the programme, that I have spoken of is carried out and they operate at their full capacity, it will surely mean something in the nature of 50 million tons of coal being consumed. That is an enormous increase. It is not out of line with what has happened in the last twenty years, but it is a good prospect for the coal industry itself.

I think it must be agreed that the electricity supply industry, which is so vital to the industries of this country and to the wellbeing of its people, is entitled to get its coal, or whatever fuel it finds available, at the cheapest price. Oil has become a serious competitor. Perhaps noble Lords do not know the background of the way in which the electricity supply industry became a large purchaser of oil. It was simply because the National Coal Board could not guarantee to the electricity supply industry, during the years that I was its Chairman, the amount of coal that we needed. It was estimated that we would need 70 million tons of coal by 1965, and the most that the Coal Board could offer at that time was 53 million tons. Naturally, we were driven to look round to find some means of supplementing what we thought was a quite inadequate supply. I am not saying that that estimate was a settled one and was not later amended, but we had to plan on the basis of the figure which was given to us.

Consequently, and naturally, we turned to oil as the only readily available fuel in the quantity which was needed. I was authorised to sign contracts with the Esso Company and BP for up to 10½ million tons of oil. From that time, so far as my information goes, oil has proved a most satisfactory fuel for the power stations, and on technical grounds I do not think there is any reason at all to be dissatisfied at our having to resort to it, because it is strictly competitive despite the tax that has been put upon it, which of course indirectly favours the coal industry.

As to North Sea gas, I suppose it must be known that the electricity supply industry is doing its best to persuade the Gas Council, so far as it can at reasonable prices, to provide it with natural gas. At this moment, there is a turbine running in the Hams Hall station in the Midlands fired by a boiler which is using exclusively natural gas; so if that gas can be made available in large quantities and can be used in power stations it would be a great advantage to the supply industry, and indirectly to the country.

A point has been raised about the plant capacity of the industry. Your Lordships know the history fairly well. In the post-war period there was a succession of power cuts. It is no good trying to look objectively at a question like that, sitting in a room with a plan before you. When the power cuts took place the newspapers and public united in their condemnation, not of the circumstances which brought about these power cuts, but of the Board operating the industry. That is exactly what happened.

The industry finished the war with no margin at all, and in our first years of nationalisation we really were up against it the whole of the time. One would have thought that we were the manufacturers of the plant. In point of fact we bought everything from private industry—and they were up against problems, just as we were. The industry is aiming for a 17 per cent, margin of plant. It has been suggested—although I am not clear whether it was in this debate or not—that that is too large a margin. But you have to allow for all kinds of contingencies in these matters. You have to allow for what is called "outage", for breakdowns in working conditions preventing you getting the capacity out of your machines, for flotsam coming down the rivers and blocking the screens for the cooling water thus cutting down the capacity of the generating station.

There are all kinds of things which one cannot put in any detail in such a discussion. The figure of 17 per cent. is a reasonable amount, and I took the trouble to look up some of the percentages of spare plant available in other countries. In the United States, for example, they have a summer plant reserve of about 18 per cent., but in the winter months it is up to 25 per cent. We are not proposing that. Similarly, in nearly all the countries in Europe the figure is definitely higher than that which is contemplated by the Generating Board.

There is another aspect of this question which must be considered. A cut has been imposed by the Government, quite understandably, in the construction programme of the Generating Board. This year they will have to spend £17 million less in capital expenditure on plant and other things. That might seem to have no direct consequences except to the Generating Board and the consumer, but it has very serious consequences indeed for the manufacturers of electrical plant. I am told on good authority that at this time there is no manufacturer with a new order for heavy plant on their books. They have existing orders which were placed some years ago, but I am informed that they have no new orders.

If the industry is run down, as may easily happen, I do not know whether the electricity supply industry will be able to face up to its obligations if and when this country recovers its capacity and some measure of economic strength. I hope that some notice will be taken of this point. This is a very drastic cut. I know that the programme is a big one and is expensive; but electricity to-day is an indispensable commodity in the life of the community, and I am certain that the Government will be apprised of the difficulties which I have mentioned. To sum up, my Lords, I support the White Paper with the blue back, for it is a first-class study of the problem, and I am pleased that there has been none of the carping criticism from the Benches opposite, as is sometimes the case on these occasions.

5.42 p.m.

THE LORD BISHOP OF COVENTRY

My Lords, I shall not detain your Lordships long, but I speak to-day as a voice from the Midlands. During these past few years I have been greatly impressed by the courage of the mining community in the Midlands, by the way the miners have tightened their belts and have increased their efforts to meet the challenge created by the discovery of other sources of power. During the past two or three years they have increased their own output from 38 to 48 cwt. per manshift. This surely is deserving of the highest possible credit, both to miners and management. But there is no doubt that they are gravely handicapped by the sense of insecurity they feel, and certainly by concern for the future of the mining industry.

They would undoubtedly be greatly helped and encouraged if they knew that Her Majesty's Government were weighing up with every care the possibly narrowly cheaper cost of power, through the use of oil and nuclear energy and under-sea gas, against, first, the grave social unhappiness caused by redundancy in the mining industry; secondly, the vast capital expense of building nuclear stations, and also in running them, with the necessity for importing uranium; thirdly, the unknown lasting availability of uranium; fourthly, the fact that the United States, with reserves of oil and natural gas, has, strangely enough, increased its coal consumption over past years; and, lastly, the increasing cost of importation of oil owing to devaluation, together with the political uncertainly of the areas from which oil is derived.

The mining industry are realistic, and they know that their future is uncertain. Forewarned is forearmed. We cannot put the clock back, and therefore we must take all possible steps to ensure that unnecessary unhappiness is prevented. Already steps are being taken to make redundant men of 55 and over, but in some quarters it is maintained that all that is needed for these men is that they should be financially recompensed, and one is grateful for the fact that nine-tenths of their salary is guaranteed for the first three years after they have been made redundant. But these men are not content merely with money: they want work.

Some months ago I spoke in your Lordships' House on the subject of redundancy, and I pleaded that adequate steps should be taken for the retraining of redundant men for other work. Nothing is more soul-destroying or more conducive to ill-health than an inability to make use of leisure, accompanied by the feeling that you are no longer wanted and of no further use in the country. I have not been greatly encouraged this afternoon by what I have learnt of the steps which are being taken to retrain redundant men. It seems to me that, although in some respects the steps are adequate, they are not fully adequate to meet the alarming situation which confronts the coal industry for the future.

I realise with all my heart the difficulties of redeployment of miners—difficulties engendered by the fact that contraction is greatest in those areas where alternative employment is most difficult to come by. I plead with the Government to do everything in their power to assist the Coal Board in their redeployment measures and also to provide the means for the retraining of redundant workers to acquire other skills.

We as a nation are now seeing with increasing clarity the dangers of building a community around one industry; and the larger the community, the greater the danger. Certainly in my own city of Coventry we have all been seeing acutely in recent years the danger of building a large community around one industry. A community which is too dependent on one industry is an insecurely based community. Our town planners, in the building of new towns, are desperately seeking to overcome this problem. One hopes that it is not too late to overcome it in those parts of the country which have too long been built around the extraction of coal. As an ordinary citizen, I should like to pay tribute to the Government's efforts to bring new industry to areas where long-established industries are no longer desired or effectively competitive. The 45 per cent, grants for investment in new industrial plant in these areas, compared with 25 per cent. grants elsewhere, should be having good effect, but while the number of Government training centres for the training of workers in these areas is to be commended, it is still inadequate.

This debate has brought out clearly the gravity of the situation in the coal industry, but the ordinary British workman is a philosopher who will accept a grave situation and make the most of it, provided that he feels he is being treated with respect as a man, not as a cipher or as a body. He knows that the coal industry is up against serious competition, but he has shown during the past few years that he will work as hard as any other first-class worker in the world. All credit to the miners of our country who have helped to make our country prosperous, and who now, in their hour of difficulty, deserve the last atom of sympathy, support and encouragement!

5.50 p.m.

LORD HIRSHFIELD

My Lords, I spent many years of my early childhood within a mile or so of Aberfan. Presently, I am very much connected with the invested reserves of the coal miners of the Durham area and of some other areas of the National Union of Mineworkers. I am concerned, too, with certain negotiations which, if they soon culminate successfully, could bring to a sector of our nationalised fuel industry the prospect of a materially increased export trade and a useful reduction in imports. I mention those few facts initially in case your Lordships consider that they are interests, perhaps a little remote, which nevertheless I should declare before proceeding.

There are three aspects of the Government's fuel programme which I believe deserve very close examination and on which I should like to concentrate in my contribution to this debate, for they raise vital social and political problems. The first concerns the critical problems faced in those mining communities where the source of livelihood for generations is abruptly closed and where there is little or no alternative employment available. That really concerns our regional economic policy. I should like to develop that point in a moment. The second issue which I would raise concerns the future boundaries of the public and private sectors in the fuel industry which are developing now. The Fuel Policy White Paper says very little about the subject, so I shall mention certain issues concerning it which I believe are very important. Lastly, the pricing policies of the fuel industry are matters on which there has been a good deal of discussion already. Recently, the General Council of the T.U.C. has made an important statement on pricing policy in its Economic Review for 1968. I believe that this is also a subject to which your Lordships' House should be giving serious attention.

I am sure that both sides of this House would agree that the most serious social consequence of the Government's fuel policy involves the rundown which is envisaged in the coal industry. The White Paper on Fuel Policy states at paragraph 82: The manpower and social implications of developments in the feel sector are important not only for economic reasons but also for the human problems involved. To achieve a major shift in patterns of employment inevitably takes time and can cause serious hardship to individuals. In the energy sector, the coal industry faces the most difficult problems of redeployment, rendered more acute by the fact that contraction is greatest in those areas where alternative employment is most difficult to come by. Further contraction and concentration of the industry are necessary and inescapable. Over the past three years the Labour Government have made substantial efforts to induce more private firms to move into the development areas and provide alternative employment. There is the new regional economic planning machinery, the considerable programme of advance factories, the investment incentive scheme with its very heavy bias in favour of development areas, the regional employment premium and the whole range of industrial training facilities. All these are important and they are a major contribution to the provision of more employment in those areas. But recently a number of factors have given us cause for concern. The news that a considerable number of new advance factories remain unfilled, the resignations and threatened resignations from the regional economic councils, and the pleas which the National Union of Mineworkers has been making for a more vigorous employment policy stress the importance of looking carefully yet again, and urgently, at our regional development programme.

It is an unfortunate fact that numerous firms are still not "sold" on advance factories in development areas. Advance factories in those areas are reported to be still empty and attracting insufficiently serious notice from private industry. I understand that at the end of last year, out of 100 advance factories built in development areas since 1959, 32 were still untenanted. I hardly think there could have been much improvement in the position in the past six weeks. Is it that too few firms even now are sufficiently expansion-minded, or could it be in other cases that too large a proportion of the financial assistance offered by the Board of Trade is in loan form, and too little is a straight grant towards the real costs of moving?

I have some personal experiences of trying to persuade industrial firms to move, partly if not entirely, into a development area, and one has to admit, quite frankly, that there is often another reason for the lack of enthusiasm to move into a development area, and that reason is at the management level. Directors and senior executives, chiefs of production or vital technicians just will not uproot themselves, change family environment, interrupt children's schooling and leave the long-accustomed circle. Is there sufficient incentive for them to do so? Is there any incentive for those who are not merely concerned about lines of communication, productivity, economy and company or national advantage? Is the answer perhaps to be found by adopting some new direct fiscal incentive; perhaps some supplementary personal allowance for income tax purposes on a regional basis to encourage key people to move? Departmental reaction lo such a proposal should not be too swiftly negative. The notion might merit a little more thought.

We cannot deal in this debate with all the issues raised by current regional planning, but I would stress the importance of at least three in this context. First, I think we must pay closer attention to current weaknesses in both the scope and the operation of the regional economic planning councils and boards. They need much more information to plan effectively than they have at present. I refer here particularly to the fact that they do not at present have access to information concerning the capital investment programmes of the nationalised industries. They really cannot be expected to develop comprehensive employment plans in their regions without such information. Secondly, a number of councils have complained about the inadequacy of their links with Whitehall, particularly with some Ministries which seem to pay scant regard to their existence. I think those links should be examined to see what improvements can be made. Thirdly, many of the councils still do not have adequate research staff to back up their work, and this is a problem which certainly needs urgent attention.

When the new regional machinery was first set up in 1965, I believe it marked a major breakthrough in the development of more effective regional economic and manpower planning. Whatever the ultimate findings of the Royal Commission on Local Government, I believe this machinery should have a permanent place in our system of economic planning, because I think the issues raised by fuel policy in terms of the rundown in manpower in the coal industry display clearly the need for us to strengthen the machinery in every way possible, so that adequate alternative employment is developed fully.

There is another broader issue which I should like to raise. We have seen in the past three years some movements of private industry into the development areas under the impetus of substantial Government funds. That is most welcome. But the movement there has been is not large enough or sufficiently rapid. In too many areas of the country there are signs that, despite the size of the assistance, there is a continuing absence of sufficient industrial development. Many of the coalmining areas suffering from pit closures see little or no sign so far of major new industrial development despite the volume of Government funds available.

There is a fundamental issue here which we must face. Is reliance on inducements to the private sector adequate as a means of providing sufficient alternative employment, or must we look much more than we do at present to the public sector to participate in development area policy? In the 1961 Labour Party statement, Signpost for the Sixties, the idea of new public enterprise as an instrument of regional development policy was stressed. I believe that idea should be re-examined now. I realise that there are difficulties here. In particular, a new administrative structure in the form of some sort of public holding company might be needed as the catalyst of such enterprises. But I think it is an issue which demands urgent attention.

Some Members of your Lordships' House and of the other place have had an opportunity to see what has been achieved by public enterprise in the development or "special areas" of some other countries—such, for example, as Italy and Israel. In Israel, there was an urgent economic need to carry new industry into the Negev Desert. Private enterprise was unwilling to finance the erection of production plants in barren regions because of the problems of manpower, difficult and costly communications, lack of water and power and the prospect of no profits, but rather of losses, in the early years. The first factories were accordingly planned and built, financed and managed by the joint enterprise of the Israel Government and the trade union movement. Now, with plants constructed and operating in several places, and with housing and labour adequately organised, private enterprise is following the lead. There are even instances where private enterprise has since acquired interests in Government or trade union sponsored industrial plants.

The second aspect to which I referred earlier is one of central concern to the Labour Party. It is the role and scope for public enterprise in the developing fuel programme. There is little mention of that subject in the White Paper, but I think it should be given serious attention. In the debate at last year's Labour Party Conference, there was a very full discussion on the proposal from the National Executive Committee of the Party for the establishment of a National Hydro-Carbons Corporation. A number of reasons were given; and, in my view, the most important one was the need for such a Corporation on the grounds of effective economic planning. That report noted: By 1970 it should be possible to confirm or reject these estimates"— namely, of the reserves of natural gas in the North Sea— In the meantime, the Minister of Power has recently suggested that the immediate problem may be absorption of the amount of gas likely to be available by 1970 into the economy. This may be only a temporary problem of adjustment, but it illustrates clearly how urgently it is necessary to plan the exploitation of this new indigenous energy if the country is to derive the maximum possible benefit from it". The report went on: It is also essential that there should be some degree of public control over the rate of production for in contrast to coal the total recoverable amount of oil and gas depends upon the rate at which they are produced—and the interest of the oil companies and the public interest may conflict. I think we need to look fully at the planning issues raised by North Sea gas and at what I believe is this very important proposal from the Labour Party.

Finally, my Lords, there is a whole range of issues raised by the question of pricing. I shall concentrate on one which has particular importance, because the T.U.C. General Council has recently stated it clearly in its Economic Review for 1968. That Review says: A major policy question (attached to the pricing policies of public corporations) concerns the extent of the trading surpluses that public corporations should be expected to achieve. The issue has not yet been fully resolved.… The 1967 White Paper reflects an advance in thinking, but the General Council do not believe that the policy which it prescribes takes full enough account of the public policy considerations. The General Council are concerned at the cost-inflationary consequences for 1968 of major price increases by practically all the public corporations in response to rising costs and falling surpluses during the recent period of demand deflation. The General Council then went on to criticise in particular the decision to increase electricity tariffs last October. Those increases, it notes, had a major effect in reducing real disposable income during the winter of 1967, not least among low-income households, therefore offsetting the reflationary steps taken in the summer to check the rise in unemployment and (put in simple terms) amounting to a complete contradiction in Government policy. There are two issues to be stressed here. First, future pricing in the fuel sector must take more adequate account of the social factors involved in price changes. Second, it must be more closely integrated with the overall management of the economy of which it is an integral part.

My Lords, I am sorry to have occupied a little more of your Lordships' time than perhaps is expected of a Member addressing this House on the second occasion. When recently I hastened to prepare a "maiden" for Abortion, I was one day too late, for the Bill passed in your Lordships' House the day before my Introduction. But I hope that in this debate I have sown some seeds for tackling some of our vital contemporary problems.

6.7 p.m.

LORD BLYTON

My Lords, as many of your Lordships will know, I spent 32 years of my life underground in the pits, and I am also a member of the Miners' Union. I hope that in the course of my remarks I shall not bring too discordant a note to the debate. I should like to thank the right reverend Prelates, the Bishop of Coventry and the Bishop of Durham, who spoke so feelingly of the miners in the hour of strife which they are now facing in the coal industry. During my remarks I shall have something to say about nuclear costs.

When I spoke on the Coal Industry Bill I gave my views about the White Paper on Fuel Policy, suggested an alternative and expressed the angry views of the miners. To-day I shall reinforce the case I put then, though not for one moment do I think that it will have any impression on the Minister or the Government. The Miners' Union are dissatified with their meeting with the Minister, and are now asking for a meeting with the Prime Minister. There are 78 pits in jeopardy, and 32 are certain to close this year. The Miners' Union are very upset at the Government's policy in regard to coal. We think that the Government's policy of closing pits too rapidly and creating twilight villages in the coalfields is a disastrous policy. At pits which are now closing with such rapidity we are finding that, under the Minister's scheme, all men are being made redundant at 55, and there appears for them to be no transference to other pits.

In our area, unemployment is very high indeed; there is no visible sign of any jobs coming into the district, and the receiving pits have reached saturation point. There is no doubt that the Minister's scheme for redundant men is very generous, but there is an awful feeling among all miners now that at 55 their days as miners are numbered, and when the Government scheme ends for them, when they are 58, they will languish on National Assistance, since under the present law, their unemployment benefit will have run out. They now feel as if they are being regarded as too old at 55. And while these men face redundancy in the closure of their pits, saturation point is reached in the receiving pits.

The most loyal people who have supported our Party through thick and thin over the years are really disillusioned at the Government's fuel policy which creates so much misery for them. I am grateful, therefore, to the noble Lord, Lord Hawke, for making it possible for us in this House to debate the fuel policy White Paper. The other place, as we all know, have not yet been allowed to debate this White Paper, and the Minister has made it clear that he has no intention of publishing any revision of the White Paper. But I think it important to press for its publication. There have been pressures in the other place for a debate but, so far, a debate has been denied them but I can assure the House that if ever it is debated there, the fuel policy will be severely criticised. The Minister of Power insists that the White Paper has not been withdrawn, despite the fact that this was the impression given after devaluation. He also said that there is no intention to publish any revision of the White Paper since the changes in the situation caused by devaluation do not require any material change in the figures of the various fuels. It is my intention, in my remarks this evening, to give a number of good reasons why the Government should revise their figures and publish new ones.

I find the Minister's attitude very difficult to understand, since he has himself announced that, because of devaluation, he expects the demand for coal in 1975 to be 5 million tons higher than the White Paper forecasts. This may not seem much, in terms of the total energy requirements of the country, but it is equivalent to about 5,000 men's jobs in the pits. It is important news for the mining areas and it ought to be spelled out in a new Government policy. But what are the consequential effects of increasing coal's share of the market? I hope that the extra 5 million tons will be in place of oil, with a consequent benefit to our balance of payments; but unless the new figures are published we shall not know what the intention is.

Devaluation made all fuels except coal more expensive; but since the White Paper was published in November there have been other developments that should tip the balance in favour of giving coal a bigger share in the market. The most important consideration, apart from oil, is nuclear power. First, there have been two increases in the estimated costs of electricity from Dungeness "B", the first of the new series of nuclear power stations. These two increases in the three months since the White Paper was published mean that the cost has now risen by no less than 25 per cent. in the two and a half years since the station was announced; and there are still two and a half years to go before the station will produce any electricity.

The stark truth is, my Lords, that no-one really knows what the eventual cost of this station will be. The advanced gas-cooled reactor was regarded three years ago as a great export potential. We have not yet sold one abroad. We know what the estimated cost was and we know what it is now. Yet, on this performance, we proceed on a nuclear programme. What private investor would put money into such a speculative venture in which the costs are escalating so rapidly? Yet in this programme of nuclear stations based on the untried advanced gas-cooled reactor, the White Paper proposes that the nation should invest £117 million more than would be necessary if coal-fired stations were built instead.

My Lords, there has been another significant development in the nuclear energy versus coal argument. The Alcan company have said that they have not considered nuclear power; and that they prefer coal to generate electricity for their proposed aluminium smelter at Invergordon. I listened last week to their representative in a Committee Room upstairs, and I was greatly impressed with their case. Not only would electricity with coal be cheaper, he said, but so also would be their capital expenditure. They seek no capital from the Government except the development grant to which they are entitled. This is the first time a commercial company in Britain has had a choice between nuclear power and coal; and they chose coal. I consider that the Alcan decision must be respected. Apart from the public utilities, they are the biggest producers of electricity in the world; they know the power station business; and they have chosen coal.

Since this announcement by Alcan, the Swiss Aluminium Company also want to build a smelter in Britain, and have said that they too would prefer to use coal. These two decisions by two large companies knowledgeable in electricity affairs must throw grave doubt on the wisdom of the Government—and on the wisdom of the Electricity Board—in plunging so heavily for nuclear power. If these two private firms can have confidence in coal, why cannot the Government and nationalised electricity have the same confidence? Yet we are "doing down" the coal industry and causing untold misery and hardship to our mining community. Surely these two recent developments, the recent increase in the cost of Dungeness "B" and the choice of coal against nuclear power by two international companies, justify the setting-up of an independent inquiry into the technical and financial aspects of nuclear power costs.

When I spoke on the Coal Industry Bill I urged the Government to accept the recommendations of the Commons Select Committee to have such an inquiry. Nothing has been done, because the Government refuse to face the fact that nuclear costs on which the White Paper is based have not yet been proved. The view of the Select Committee on Science and Technology in the Commons of this conflict of costs of future nuclear generating programmes was somewhat ambiguous. The tenor of the remarks was in favour of an increase in the size of the present nuclear power programme. They accepted the proposition that so far as the A.G.R. programme is concerned electricity produced by nuclear fission could be cheaper than coal, assuming the commercial and technical forecasts were correct. This is really begging the question, and as they go on in their Report they urge an independent examination of the costs.

This second nuclear programme is equivalent to over 20 million tons of coal and the jobs of many thousands of men in the coal industry. The Minister has accepted the recommendation of his independent Committee on the siting of nuclear stations; why will he not agree to an independent inquiry into costs? Is there something to hide? One wonders very much. There is plenty of time for a thorough inquiry to be held. The Minister has said that the probable effect of restrictions on capital investment by the electricity industry will be to defer the start of one of the nuclear stations. In the meantime the demand for electricity is rising more slowly than was expected and we need be in no hurry to start either of the next two nuclear stations at Seaton Carew or Heysham. At any rate, it is a scandal to build a nuclear station on top of a coalfield. Let the Minister refuse to authorise any of them until an independent inquiry has been made into their cost. This would save the country many millions of pounds which could be used for many other laudable things.

The Government have already approved three advanced gas-cooled reactor stations. On the Minister's own figures we know that the first one will never produce electricity as cheaply as the best coal-fired stations now coming into operation in the coalfields. He can only hope that the second one will; or if not the second, perhaps the third. In my opinion there is no reason at all why he should gamble the spare capital of the nation on a fourth and fifth "runner" until he sees what happens to the first one. The Minister's decisions are vitally important for the future of the coal industry. If Seaton Carew and Heysham are both built as nuclear stations, 21,000 fewer jobs will be available for miners.

My Lords, so far as natural gas is concerned it is right to exploit it as fast as possible so long as this is consistent with a healthy coal industry. My union—and I agree with them—take the view that natural gas from the North Sea should replace imported fuels though it should be remembered that even natural gas has a foreign exchange content. It is well to note that if the Minister's original estimate that the flow of natural gas would be 3.000 million cubic feet per day in 1975 had been upheld in the White Paper, a further market of 12½ million tons coal equivalent would have to be met by an alternative fuel. A slowing down of the rate of exploitation would help the coal industry in the long-term, provided that it was given preference over imported fuels in the manufacture of gas.

I put these submissions to the Minister: that an appraisal, however approximate, should be made of the social costs involved in the Fuel Policy White Paper and its alternatives; that the full amount of support possible be given by the gas and electricity industries up to 1970; that if the sale of coal exceeds the assumption contained in the White Paper, the difference should not be deducted from the support to be provided by the gas and electricity industries; that the support for coal should not be terminated in 1971 and that the import of fuel oil should be minimised; that a further examination of the capital structure of the coal industry be made in the light of the decline of coal consumption since 1965; that the Minister tell us what implications his fuel policy has for the capital structure of the coal industry in the long term, in view of the uncertainty associated with nuclear power costs, the marginal differences in cost between coal and nuclear power as stated in the White Paper, and the likelihood of even cheaper nuclear processes in the future; and that the size of the second nuclear programme be cut back. I hope that some consideration will be given to these recommendations.

Management and men in the coal industry have repeatedly been told that there is nothing to stop their selling more coal if it can compete in price. Well, my Lords, the miners are responding magnificently. Productivity is 10 per cent. higher than a year ago. In fact, it has gone up 5 per cent. in only three months, an increase of 5 per cent. since November of last year. Where is there another industry in Britain that can make a similar claim? Yet their reward is that the industry is to be contracted in favour of nuclear power, whose costs are suspect, and pits are closed at a frightening rate. The industry is becoming more efficient in another way too, and given fair treatment in a revised Government fuel policy it could be entering a long term of stable industrial relations. Piecework has been abolished from the mines, and what is the result of this great change? There has been a tremendous reduction in the loss of coal through disputes. In fact, last year it was only a quarter of the loss in 1966, and productivity is soaring in the way I have described. The coal industry confidently expects to be producing 70 million tons of coal at 3¼d. a therm two years from now.

The tragedy of all this is that unless the Central Electricity Generating Board go on building coal-fired stations and running existing stations on base load, this abundance of cheap fuel will be wasted. There will be no new business where it can find an outlet. It seems to be the intention of the Central Electricity Generating Board not to build any more coal-fired stations beyond those already planned, and this policy seems to have Government support. Yet the Board have a number of good sites where already existing stations could be doubled in size, saving capital by using services already provided for the existing stations. In terms of capital required, this would be far the cheapest way of building new generating capacity.

For the reasons I have given, I think the Government should reverse their fuel policy, use more coal and publish their revised figures. I say it quite sincerely—the Government owe it to the miners. It would be a way of acknowledging the tremendous efforts that they are making. I am against the White Paper. My people expected something better from a Labour Government. They did not expect the closures they face now would come with the swiftness they have. They expected the coal industry to have more security under Labour than they had under the Conservatives, and they are disillusioned and disheartened that what they face now comes from a source they never expected.

LORD DOUGLASS OF CLEVELAND

My Lords, may I ask a question at this juncture, because I have a tremendous sympathy with the miners. As a steel worker, Mr. Chairman, I have been redundant at a time when there was no redundancy pay. My sympathy is with the miners I have lived with all my life. Could my noble friend Lord Blyton give some indication as to whether the British Steel Corporation, the British gas industry and British electricity industry will be allowed to purchase coal at the same price as that paid by the Canadian Alcan and the Swiss company which my noble friend quoted in his speech? I think this is most important.

LORD BLYTON

My Lords, all I can say is that the C.E.G.B. was offered it for Seaton Carew, and they turned it down flat.

LORD DOUGLASS OF CLEVELAND

My Lords, I am asking the broad question about these three important British industries with which I am familiar and whose future is being decided on the price of fuel. I am asking whether British industry will have the same privileges as foreign companies inside this country.

LORD BLYTON

My Lords, my noble friend should perhaps address that question to the noble Lord, Lord Robens. I do not know the commercial position.

LORD DOUGLASS OF CLEVELAND

I thank my noble friend, and I shall address my question to Lord Robens.

LORD SHACKLETON

My Lords, may I remind my noble friend that we do not have a Chairman. It may be that my noble friend Lord Winterbottom will be able to answer his very pertinent points, which I am sure he has noted. Another noble Lord is about to speak.

6.34 p.m.

LORD JACKSON OF BURNLEY

My Lords, I should like first to associate myself with those who have congratulated the Minister of Power, the Ministry and those senior representatives of the coal, gas and electricity industries upon what I believe to be an excellent treatment of a very complex and difficult subject. On the other hand, the White Paper is inevitably no more than a summary of the studies and prolonged discussions which have taken place prior to its publication and while I find it excellent as a summary, I am left unsatisfied by the need to accept some of the judgments and decisions which have been taken without the opportunity of making a deeper study of the more basic issues involved.

I imagine that I am not exceptional among Members of your Lordships' House—or perhaps I ought to say that I hope I am not exceptional—in feeling like this, because the White Paper on Fuel Policy seems to me to illustrate a situation in which this House and another place are likely to be placed increasingly. I am of course a newcomer to your Lordships' House, but it seems to me crucial to the satisfactory handling of issues such as are raised in this White Paper, and to some of the decisions which in a sense we are endorsing, that some of the Members of both Houses of Parliament should have an opportunity of becoming involved at a much earlier stage in the processes of appraisal and of analysis leading up to the kind of decisions which in this case the Minister of Power is taking.

In this connection I attach great importance to the recent setting up in another place of a Select Committee on Science and Technology. Unfortunately, from my point of view, the Members of your Lordships' House are not permitted to participate in the work of this Committee. I understand this perfectly well. But we have no corresponding machinery. No doubt if we had, it might wisely be of a different kind. I hope that this matter is receiving attention in the discussions now taking place, which no doubt will lead to desirable changes in the functions of your Lordships' House. I sense the danger that unless Parliament—and I mean both Houses of Parliament—finds a way of getting to grips more effectively with scientific and technological issues its functions in these respects may become little more than the endorsing, on limited knowledge and understanding, of decisions already taken at ministerial level.

In the Coal Industry Bill debate I expressed my sympathy with the Coal Board in its attempt to see the industry through its present and future difficulties, and also with those of its employees whose livelihood is being placed in jeopardy and for whom new possibilities of employment must be opened up through schemes of retraining. The same point has been made by several other speakers this afternoon. On that occasion I expressed my concern about what I considered to be the quite inadequate number of Government training centres. I should now like to say, with limited satisfaction, how pleased I was at the recent decision of the Ministry of Labour to increase the number of Government training centres, from the present figure of 38 to 55 by the end of 1970, by which time there will be 27 Government training centres in the development areas. May I endorse the anxieties expressed, in particular, by the noble Lord, Lord Hawke, and by the right reverend Prelate the Bishop of Coventry, and say that I remain deeply concerned about this situation, because there will be many men who will need retraining long before 1970.

However, notwithstanding my sympathy with the coal industry, and contrary, I am afraid, to the views expressed by the noble Lord, Lord Blyton, I strongly support the Minister of Power's decision to put his faith in the future in nuclear power for the generating of electricity. I hope that, having made a declaration to this effect, the Minister may now be able to give early consent to the proposed new nuclear power stations at Hartlepool and Heysham, with which there have already been longish delays. I have here in mind very much the point made by my noble friend Lord Citrine. I think that the power industry and the heavy engineering manufacturing industry are likely to be considerably embarrassed unless steps of this kind are taken. As the noble Lord, Lord Sherfield, said—and I endorse all that he said—the electricity utilities in the United States are ordering nuclear power plant at a rapid rate, notwithstanding their access to coal at less than half the price of its availability in this country. There is a grave danger that we shall lose what lead we have earned in this field—if, indeed, we have not lost it already.

My confidence in the future prospects of the nuclear-powered generating station did not prevent a feeling of disappointment, however, at the modest provision to be made, initially at any rate, for the use of North Sea gas as a replacement fuel at coal-fuelled and oil-fuelled stations. The White Paper says that one boiler is to be converted. I appreciate the need for cautious experiment. I should have thought that this did not call for very difficult experimentation; and I understand well enough that the price of North Sea gas has not yet been fixed. But I am perhaps rather impatient—and not merely because I am an electrical engineer—to see the price of electricity kept down or, still better, brought down to the lowest attainable level as quickly as possible, because I believe this to be a matter of the greatest national importance, not only to the general consumer but particularly to industry.

LORD WYNNE-JONES

My Lords, may I ask the noble Lord whether he thinks that the use of North Sea gas is better for the production of electricity rather than directly for thermal purposes?

LORD JACKSON OF BURNLEY

My Lords, I should not care to give an explicit answer, one way or the other, on this point. I should not wish to intrude into the use of North Sea gas for normal distribution to consumers. But I should like to see a substantial amount of it used as a replacement fuel for oil, particularly, and also, where necessary, for coal. In other words, I do not regard the two uses as mutually exclusive. I think I would perhaps give a little precedence to its use as a fuel in electricity-generating stations, but that will not perhaps be unexpected, since I am, as I said, an electrical engineer.

LORD WYNNE-JONES

Despite the thermal inefficiency?

LORD JACKSON OF BURNLEY

I am not sure that it would amount to thermal inefficiency. But this is indeed one of the points I had in mind in making my earlier statement about my concern as to the difficulty of getting access to enough of the basic information.

In conclusion, my Lords, I wish to touch on a matter which is not raised explicitly in the White Paper, and I hope it is not improper that I should raise it. I do so because I believe it to be fundamental to the aims of those responsible for our coal, gas and electricity industries. Your Lordships will understand that each of these industries must, without question, have a research and development establishment of its own; it must formulate a research and development programme within itself, and it must employ for this purpose a substantial number of qualified scientists, technologists and engineers. The present scale of the research and development effort of these three supply industries is considerable but again I do not know its precise scale, and I hope that the Minister, to whom I have given notice of this question, may be able to give us some information as to the recurrent annual expenditure and the numbers of qualified manpower employed on research and development within the establishments of the supply industries.

I am raising this point, not because I wish to appear critical of the quality of the work being done in these establishments: I have no ground for doubting that the quality is high. But what I want to do is to express anxiety about the scope and scale it may come to acquire, and to point out the dangers which I believe to be associated with research and development work conducted in physical separation from the environment in which the design, manufacture and operation are carried out. I am particularly concerned about research and development work which requires for its successful exploitation the later participation of outside private manufacturing industry. I believe that, wherever possible, research and development work should be carried out within the organisation which is to be responsible for the later design and manufacture, so as to facilitate close cooperation between, exchange of information between, and movement of men between, the successive phases of the whole process.

I consider, therefore, that the policies of the fuel and power supply industries should be, wherever possible, to sponsor and finance their necessary research and development within manufacturing industry, rather than to build up their own resources and their own manpower for this purpose. There will of course be occasions when it is desirable and necessary for the work to be done within the supply industry itself. I should like the opinion of manufacturing industry to be sought before a definite decision is taken on such a matter. But where it is agreed that the work should be conducted within the supply organisation itself, I believe it to be essential that at the point of transition from research and development to design, manufacture and operation the men who have done the research and development work should move with the job at this transition point. I believe that as a country we impose a great handicap on ourselves and that we retard the progress of our technology by lack of adequate manpower mobility of this kind. We have a remarkable ability to lock qualified manpower up in limited environments for life.

Moreover, I fear the possibility that the research and development establishments of the supply industries may move, and move their organisations, towards becoming design authorities. The leading manufacturing industry would then produce equipment for whose design it does not carry direct responsibility. I should regard this as dangerous, even though at present many senior staff members of the research, development and design departments of the supply industries are men who have had considerable experience of manufacturing industry. This will not be the case ten to twenty years from now, with many of the young men who have been recruited during recent years, and who have had no manufacturing experience prior to recruitment, unless the supply industries make a more deliberate attempt to ensure the kind of mobility to which I have been referring. I hope, therefore, that the Minister of Power will do all he can to safeguard these issues, not only within his overall and heavy direct responsibility for the supply industries but also with his indirect responsibility for the part which private manufacturing industry must play in helping to ensure their overall efficiency and economy.

6.48 p.m.

THE PARLIAMENTARY SECRETARY, MINISTRY OF PUBLIC BUILDING AND WORKS (LORD WINTERBOTTOM)

My Lords, I am certain that we are all grateful to the noble Lord, Lord Hawke, for having given us the chance of holding this debate to-day. I have not been in your Lordships' House a great time, but I have wound up a few debates and I am becoming something of a connoisseur of their flavour. May I say how much I have enjoyed the flavour of to-day's debate. May I also say how glad I aril that many noble Lords on both sides of the House, and on the Cross-Benches, have been able to congratulate the authors of this particular publication—the White Paper on Fuel Policy—upon its presentation and the information that it has given to the people of this country. We have heard, in fact we have heard only recently, from people competent to judge, that: the amount of information which Government give to informed public opinion in this country is too limited; that there should be more of it. Well, let us hope that this particular White Paper on Fuel Policy is a step in the right direction of creating a better informed democracy.

Before I answer various points raised in this debate, I should like to make one point which in fact bears strongly on the subject we are discussing. I think we have heard more to-day of the problems which fuel policy—the necessity of creating a fuel policy—bring to important sections of the people of this country. We have heard of all the difficulties and dangers and unhappiness caused by these changes in policy. But the hard fact of the situation is that in the field of fuel policy we are travelling hopefully. We have had a stroke of luck in the finding of the North Sea gas fields, and we have even had a period of good management, during which we have created a new source of energy: nuclear power. That is, in my view, extremely important, and I, for one—and I hope my noble friends will forgive me—would not weep at the funeral of King Coal. It is a dirty fuel, produced through a dirty and dangerous job.

These new sources of power which we are creating will give us a clean environment. They will give a clean and modern way of life for workers in the energy industry. That is why I say that I believe we are travelling hopefully. We are going to have a cleaner Britain, with men working under far better conditions. This is really where I must join issue with my noble friend Lord Blyton. The Government must be, or try to be, above vested interests. Every aspect of fuel policy has its own vested interests, and it is right they should express their opinion. But it is the Government's job to listen to all the points made and, at the end of the day, on the basis of the information collected, form a policy; and that is what the Government have done.

If I asked my noble friend, Lord Blyton, the simple question, "Would you like to drive a generation of young men underground as a matter of conscious policy?", would he in fact follow that policy? I cannot believe it. We have not tried to produce any new thinking. What we have done is to try to state as clearly as possible the trends in the fuel industry—what is happening in the normal course of events—and having assessed those trends, we are saying: "What is this going to mean to human beings? In particular, what is it going to do to the various mining communities in this country?".

As a man who has worked all his life in the Midlands, I do not consider we must think only of the development areas, Northumberland, Durham and Cumberland. I know very well that in Derbyshire and Nottinghamshire there are remote mining villages whose whole livelihood is based on a single pit and who are as much threatened as are whole regions in the North of England and Scotland. What we are arguing about is what we do about the problem forced upon complete communities of human beings in this country during the period of transition when a proportion of the coal output is becoming less competitive than the new sources of energy, and that point of equilibrium which we are going to reach when coal produced as economically and as efficiently as possible remains an essential source of energy for this country. Because this is going to happen.

The right reverend Prelate the Bishop of Durham made a very valid point: it is a question of presentation. I think we ought to tell the miners of this country, when an equilibrium is struck between North Sea gas, between nuclear power, between oil and between coal, that there is still going to be a big coal-mining industry in this country. My noble friend Lord Citrine has pointed out that there are 25,000 megawatts of coal-fired power stations under construction in this country at the moment. He has said that this would represent a consumption of 50 million tons of coal a year. If the calculations in this particular Blue Book, or White Paper, are right, this represents a consumption of 50 million tons of coal a year for 30 years, and we know, with the power stations under construction today, that we are ensuring for the coal industry a base consumption of 50 million tons of coal in the year 2000. Of course, we shall be consuming probably more coal than that. I expect that in the year 1975—I am a betting man and I would bet on this—in ten years from now, we shall have struck a balance between these various new forms of power.

The noble Lord, Lord Blyton, and other speakers to-day, have made the extremely valid point that the coalmining industry is doing a magnificent job in increasing its productivity. I am glad that to-day's debate has highlighted that point: that in the past 12 months the coal industry has increased its productivity by 5 per cent. I wish to goodness British industry as a whole had done the same. But we have still to face the fact that, with this increase in productivity, if the consumption of coal remained level, in about 1971 we should still need 100,000 less miners. If ever an industry was working itself out of a job it is the coalmining industry. That is all credit to them. I wish a great many other industries in this country were working themselves out of a job.

Having said that, we must acknowledge the fact that many communities, large and small, are going to suffer as a result. Whereas I believe an important section of the future lies with the new sources of energy, nevertheless, coal is going to remain with us for a long time during the transition between to-day and the complete new equilibrium struck between four sources of energy. We have to take steps which will protect those families and those communities which are affected by the change. Perhaps your Lordships will permit me to go into some detail of what is being done to ease this change.

The first step that the Government are taking is straightforward cash help. We are asking the electricity industry, and to a lesser degree the gas industry, to continue to use coal when they might otherwise switch over to other materials. We have said—and I think it is with the general agreement of the House as a whole—that the end product of our policy must be energy as cheap as we can achieve. This we shall get at the end of this transition period. During the transition period, when we are asking the sources of primary energy to do things which they would not do for economic reasons, we are willing to pay them for the loss. So up to £45 million is being made available to the electricity and gas industries to use coal instead of other fuels. That is over a period of approximately three years. Then, as pits close down—as close down they must—we are making a very special payment to those 26,000 miners who are over 55 and will find the transition to new forms of work, and places of work, much more difficult. We are giving them a guarantee of most of their average earnings in the past few years, subject to certain safeguards, to ease that particular generation over this particular problem. The sum of £35 million is being made available for that purpose.

In the recent past we have given the National Coal Board £8 million to enable them to defer closures until the beginning of the present year. Finally, we are helping the Coal Board to meet the various social costs involved when the collieries close. The social costs are the moving of men to new jobs, retraining, transport and the rest. We are allowing £45 million for this particular operation. So up to £133 million of cash is being made available over the next three years in order to finance social policies which we are imposing upon the Coal Board. That is something.

On the other side of the coin, we are trying to bring the men who are leaving the pits into productive employment. This, of course, in many ways involves retraining. Before I go on to a rather long account of what has been done in the field of retraining I should like to say with what sympathy I heard the right reverend Prelate the Bishop of Manchester talking about the restoration of the environment. As someone who has spent a large part of his working life in the North I think this is something that the southerners should recognise. The Industrial Revolution has left enormous blemishes upon a very beautiful landscape in the North, and if this is something that can be done; if, shall we say, men in remote villages near tips can be usefully employed in re-creating an en- vironment for the next generation, this surely should be encouraged.

The noble Lord, Lord Jackson of Burnley, in fact gave a number of the figures about what is being done in regard to the training of men. His figures were precisely correct, but what I should like to say is that although the numbers may seem small compared to what people think the need will be, one of the facts of the situation is that there is at the moment no waiting list, and when we get down to the job of completing our programme of training centres I hope we shall be able to compete with the demand. If your Lordships will forgive me, I will not repeat the figures, because the noble Lord, Lord Jackson, has already given them. But there is a point which my noble friend Lord Wynne-Jones told me in private conversation, and that is that there are cases where men who could undergo these particular courses are unwilling to leave their home environment. I believe that Cumberland is a case in point, and I think this is a subject to which the Government must pay particular attention.

Administrative action of this sort is fine, but outside the administrative field, the thinking that is done in the centre, there are specific problems which have been highlighted by the social surveys carried out by the University of Newcastle, which were mentioned by my noble friend and by the right reverend Prelate the Bishop of Durham. Not everywhere, thank goodness! is like the South of England. For this reason the special regional problems must be considered, and of course I would support the noble Lord, Lord Erroll of Hale, on the point he made earlier in the debate, that the simple closing down of a region of the Coal Board is highly undesirable. We must choose rather selectively where we close down pits, as he said, and not just take a region and close it down without carefully studying the inter-actions involved.

May I now reply to various points made in the debate and to questions which I have been asked? Perhaps I may turn first to the noble Lord, Lord Hawke, who sparked off this debate; and we are all grateful to him. He asked me for a very complex calculation. He asked me to give him information on his own terms, and although mathematically I may have been unable to satisfy him by the end of this debate, I will undertake to give him the best calculation I can to answer his question.

LORD HAWKE

My Lords, I did give notice to the Government last week that I should like to have this particular information, and I should like to receive it for some future occasion, at any rate by letter.

LORD WINTERBOTTOM

My Lords, I will undertake this. May I say that I received the noble Lord's advance notice, for which I thank him, only about two days ago, and we could not "do our sums" in time. However, I think the subject is worth pursuing, because in fact the load factor on the electricity supply industry in this country is rather lower than it is in Europe, and the various proposals he has made on pumped storage, off-peak heating and the rest are valid and worthy of consideration.

The noble Lord, and also the noble Lord, Lord Sherfield, raised the question of the exporting of British nuclear plant, particularly the advanced gas-cooled reactor. I am in great sympathy with the noble Lord, Lord Sherfield. As I said at the beginning of my speech, this is a field in which we are travelling hopefully, and we may even arrive. I think we have perhaps been wrong, because of the pressures on Government, in not saying clearly enough the progress that we are making in this country in the field of nuclear power. I hope that the trumpet call sounded by the noble Lord this evening will be heard outside the walls of this Chamber. The present "state of play" is that recently there was a British tender for a Franco-Belgian scheme, on which we lost out, but meanwhile tenders have gone out to the Argentine and Belgium and will shortly be offered in the Netherlands and Italy. A licensing agreement giving a Federal German firm the right to sell advanced gas-cooled reactors in that country has also been negotiated, and discussions, including in some cases prices, have been held with a number of other countries. So I think that the attack on the nuclear market has been mounted. Late, I agree, but better late than never.

It is true to say that the noble Lord, Lord Hawke, in his note to me, asked about the comparability of the boiling water reactor system and the advanced gas-cooled reactor system. Unfortunately, this is a field in which technical argument can prove almost anything, but fortunately this is also something where strong salesmanship can convince the customer. But the one hard fact in this argument is that when a British firm, offering an advanced gas-cooled reactor to the Central Electricity Generating Board, and a British firm offering a boiling water reactor, quoting on exactly level terms, put their offers before (I believe) an impartial authority, that authority chose the advanced gas-cooled reactor.

Although there is no doubt that the Americans must be gaining substantial information and making progress from the large numbers of nuclear reactors which they are now preparing to sell, nevertheless we must have advantages in labour costs in this country. We all know that we could sell turbines in the United States of America with great ease if American protectionism allowed us to do so, and I believe that we have a very good chance of selling this equipment, if we have the will to do so—and the will is the first of the essentials. I think the noble Lord's point about generating plant has been answered, and also in connection with turbo-generators and boiling water reactors.

May I now turn to one or two points made by the noble Lord, Lord Erroll of Hale—and I hope his visit has given him comfort. I appreciate very much that he has taken an impartial view of this particular study, and I agree with many of the points which he made. A subject which I personally would underline is the whole question of the proposed usage of natural gas, as outlined in the White Paper before us. I think that being a fair-minded man the noble Lord will agree that we are still at very early days in this particular field. I believe many of us were pleasantly surprised when we found natural gas in the quantity in which it has been found, and I think many of us would probably wait a little before we decide exactly how to use it. The White Paper seems to ignore almost every other usage than supplying domestic gas to premium customers as soon as possible, yet I believe there is a strong case for using natural gas as a feedstock for the chemical industry, and there may be other industrial usages as well.

Criticism has been raised that at the moment only one power station, or rather one boiler in one power station, is in fact using natural gas as a fuel. But at the moment there are not large quantities of natural gas about. After all, you do not want to duplicate experiments, and if the Hams Hall experiment proves satisfactory others will follow. We shall have hard facts to go on. Prices will be negotiated, technical factors will be assessed, and we shall really know what it will cost to build a large power station of a traditional type fired by natural gas. If this turns out satisfactorily, I am certain that the Central Electricity Generating Board has no vested interest in any one source of energy, and if it is the best it will be used. This must apply also to gas turbines. I can see the advantages of natural gas in gas turbines.

The noble Lord made an interesting point about the underground storage of gas. I have a note on this, but I have misplaced it. If I am wrong, I will let the noble Lord know. The fact is that legislation exists which empowers underground storage of natural gas—and again this must be the subject of study. The ability to store large quantities of fuel underground in this country for both commercial and strategic reasons must be of great value, and I am certain that the Gas Authority, which has been proved so forward looking and so technically inventive, will certainly not ignore this possibility.

I should like to answer one point of criticism the noble Lord, Lord Erroll of Hale, has made, without, I hope, either embarrassing or egging on my right honourable friend the Minister of Power. He was twitting us mildly about the delay in reaching an agreed price for natural gas from the North Sea, and he was also saying: "Do not be tied to a single price". May I deal with the second point first. Of course we are not going to be tied to a single price. In fact there are obviously going to be variations of price with variations of circumstances, but the sort of price we are talking about is going to be the average price, with the actual price to the individual customer varying on either side of the average.

The noble Lord suggested that we should have foreseen devaluation with greater clarity and should have hurried up and got our price fixed before this particular event took place. I am afraid that many of us have had to "eat crow" following this particular event, so I think it was unkind to blame my right honourable friend the Minister of Power for insisting that he was not going to consider a devaluation clause: because I am certain he never foresaw this any more than I did. But agreement: was very close when devaluation took place, and had it not taken place we might have known the final average price of gas by now. Negotiations are continuing, and while for obvious reasons I can give no details about progress, my right honourable friend sees no reason why the main issues should not be resolved before Easter. Since I am a betting man, and November was the date the noble Lord mentioned, I would take a bet on that.

I found the speech of the noble Lord, Lord Wynne-Jones, was most interesting. I picked up the point he made about uses other than simple gas fires for natural gas, and I have also tried to touch on the very valuable point he made about the relationship between pit closures and the impoverishment of the community as a whole. I do not know what we could do about this. I wish that I could give a message of hope. But when there is change, naturally some people get hurt: it is an unfortunate law of life. We all know that change must come. It is through change that society grows. All we can do, as a society, is to do the best we can to buffer the impact of change on the individual and on the special community. I know that more can be done than is mentioned in this particular Blue Book. I think the studies of the University of Newcastle must be of value. The suggestion of the right reverend Prelate the Bishop of Manchester, about using the labour thrown up by closures of the pits for improving the environment, must be of value, and this is a most important point that I am sure we should not forget.

I have agreed with the noble Lord, Lord Sherfield, who, like the noble Lord, Lord Blyton, was stating a partisan case for a single energy source. But, for better or worse, his is an energy source of the future, while my noble friend's source of energy is one that is declining, although it is going to be with us for my lifetime. I should like to repeat what I said before and to underline what he has said: that the British achievement is great; it must not be undervalued, and it must be used. And his speech to-day will, I am certain, help those who are battling to let its virtues be known.

May I turn to the noble Baroness, Lady Elliot of Harwood? I think she was talking about something about which I have learned from my preparation for today's debate. I think she was talking about what is known as secondary fuels. I believe that primary fuels are what we are talking about to-day, and what she is talking about is secondary fuels—that is, therms and units coming out of the gas cooker and electric meter.

BARONESS ELLIOT OF HARWOOD

My Lords, I was really drawing attention to the fact that one of the great consumers of these fuels, whether in the form of gas, electricity or coal, are the domestic users, and I was keen that their point of view should be represented in the makeup of the nationalised industries. It is supposed to be represented, but at the moment it is very feebly represented.

LORD WINTERBOTTOM

My Lords, the truth is that a unit of electricity, whether it comes from coal, oil or nuclear power, and a therm of gas, whether from the North Sea or from oil or coal, is, to the consumer, the same thing. I am certain that the point made by the noble Baroness will be noted, and that she will fight for this particular representation outside this particular Chamber. It is important, but I think it is a secondary fuel and a secondary stage of to-day's debate.

Turning to the noble Lord, Lord Citrine, here again I thought we had a very interesting, as it were, split mind on the subject. He spoke of the tragedy of a run-down of the coal industry. He spoke about the catastrophic fall in manpower and the output of the industry as a whole. He expressed sympathy with my noble friend Lord Robens of Woldingham, and he clearly understood the impact of the change on the mining community. Yet at the end of the day he came down firmly for cheap energy. I felt that his argument that some coaled stations are being built now but that the future must lie with the new forms of energy was decisive. He, after all, has been forced to reach decisions between various sources of energy, and at the end of the day he came down on the side of the future rather than on the side of the past.

Finally, may I turn to the speech made by the noble Lord, Lord Jackson of Burnley, which I found extremely interesting. I am most grateful to him for being good enough to give me advance notice of some of the points that he was going to make. This enables me to answer him. I am certain that he was on the side of the future. But one point which he made was quite original: his discussion on the use of research workers within the various energy organisations. This, I thought was of great importance, because when we try to draft our fuel policy we must not forget that there are many economic advantages arising from the fact that we are following certain fuel policies in the way that we do. I believe the fact that the Central Electricity Generating Board has been able to think ahead in terms of the type of plant it is going to install has enabled British plant manufacturers to create a strong position for themselves competitively in the world. This is a development that we ought to follow.

If I may, I will read the noble Lord a reply to the point that he has made. This will enable me to get it as right as I can. In the current financial year, 1967–68, the programmes of the three industries provide for estimated expenditure on research and development, including capital provision, by the National Coal Board of £5 million, by the Gas Council and the Boards of £5,650,000, and by the Electricity Council and Boards of £10,650,000. The qualified staffs employed on research and development by the National Coal Board and the Gas Council and Boards in 1966, the most recent year for which information is readily available, was 356 and 340 respectively. The corresponding staff employed by the Electricity Council and the Boards in the current year is about 900 in number.

The noble Lord discussed the extent to which research and development should be carried out within the supply organisation or by the manufacturing industry. There are many facets of this problem, the importance of which is fully recognised by my right honourable friends the Ministers of Technology and of Power. In the case of electricity, arrangements for collaboration on research and development between the supply and manufacturing industries have been extended and improved over the past few years, and ways of making further improvements are continuously being assessed. In the case of the coal industry, the Minister of Power's Advisory Council on Research and Development has advised him that the research and development effort in the National Coal Board's establishments is being increasingly reinforced by research and development carried out by the manufacturers of mining equipment. This, I believe, is much in line with the noble Lord's thinking.

That reply does not in fact answer a point which the noble Lord made in regard to particular technologists travelling with the project—shall we say, from the Electricity Board to the operating field. They would cease to be scientists and become technologists. I am certain that this point is noted, because I know that the debates in your Lordships' House are noted, and I hope it will be acted upon. I will send the noble Lord a copy of this particular statement for his records.

I hope that I have answered the main points in this debate, which I have found to be extremely interesting. Providing we avoid the blame of future generations for having failed adequately to deal with the problems imposed upon large sections of our community by the rapid transition from one source of power to another which this change must impose, then I believe that we can only benefit from the change. We are dealing not with a major, deep-rooted problem, but with a problem of transition. I feel that this is recognised on all sides of the House. We are going now in the right direction, but in the next three or four years we have to make certain that unnecessary suffering is not imposed upon those individuals who are forced to change their whole way of life because of a change in sources of energy in this country.

7.26 p.m.

LORD HAWKE

My Lords, I should like to thank all those who have taken part in this debate for giving it support and providing an interesting debate. I think it is fair to say that almost all speakers were in favour of an economic use of fuel with the minimum of distortion, with perhaps the exception of the noble Lord, Lord Blyton, who has a special interest, and the noble Lord, Lord Hirshfield who, for ideological reasons, would prefer things to be more planned. If he sits for another twenty years in this House and studies Government planning at first hand, I do not think that these views will last the twenty years.

I am glad to have received some support for my remarks about training centres. I hope that some noble Lord will put down a Motion for debate on this subject, because we want to know much more about it; and particularly we want to know the results that come from this aspect, and the attitude of the unions to the people who are trained by these training centres. Finally, I should like to say how pleased I am to have been able to provide a platform from which the noble Lord, Lord Sheffield, may blow the trumpet of Britain in nuclear energy. My Lords, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.