HL Deb 03 February 1972 vol 327 cc1016-45

5.56 p.m.

EARL FERRERS

My Lords, I beg to move that the Mineral Exploration and Investment Grants Bill be read a second time. This is a very short Bill of only two clauses, excluding the Short Title, and the Bill incorporates two quite separate pieces of legislation. The purpose of Clause 1 is to give effect to the scheme which the Government announced last summer to encourage exploration and evaluation of non-ferrous metals and certain other minerals in Great Britain. It is a fairly safe prediction that over the next fifty years, taking the world as a whole, the pace of industrialisation will continue to increase. This, in turn, means that world demand for minerals and especially for metals is bound to continue to grow. The supply situation is, however, less clear. Some people have already claimed that the reserves of various non-ferrous metals are dangerously low. That is possibly an exaggerated view of the situation, but we have certainly reached the stage where some metals are becoming increasingly difficult to find and to mine, and the price of these metals in real terms will in the long term tend to rise.

Over the past century this country has become very dependent on overseas sources for its non-ferrous ore supplies. There is now a growing realisation that even these sources are not inexhaustible and, with political pressures growing also, we clearly should no longer rely too complacently on them without further examination of our own indigenous resources. If these could be economically developed there could be substantial benefits in terms of balance of payments, security of supply and, in some areas, new employment opportunities. Modern technology now holds out the prospect of improved methods of mining and treatment of low grade ores. Fortunately, we are well placed to take advantage of these developments. Size for size, this country has as varied a geology as any country in the world, and it is widely believed that substantial deposits exist here which could be economically worked.

A number of the largest mining houses are interested in prospecting in this country. These include not only R.T.Z., Consolidated Goldfields, and other companies based in Britain, but also companies from Canada, the United States and Europe. If we are to take full advantage of this situation we need to know more about the location and extent of our mineral resources, and only the mining companies are fully equipped to provide this information. The mining industry is international and deploys its exploration effort where the prospects seem most promising. We must therefore try to ensure that conditions here, if not the same, are no less favourable than those offered in other parts of the world. Mineral exploration is, however, a risky business and also a very expensive one. Fewer than one in ten exploration projects lead to the development of a mine. The cost of trying to prove quite a small deposit may amount to £1 million, while a major project could cost £5 million or more. This is of course quite separate from the investment which might be required later in actually establishing a mine, and which could be anything up to £100 million or more. Even where the result of the exploration is favourable it will frequently be at least five years before any return is seen for the money invested. For all these reasons, we decided to introduce this scheme. The response has been very encouraging. We have already received more than 100 applications for assistance towards exploration work costing over £3 million, mainly in areas such as Scotland, Wales, the North Pennines and the South West, where there is a need for more employment. We have given the go-ahead, subject of course to this legislation, to over 50 projects. The minerals involved include copper, tin, nickel, tungsten and fluorspar.

Clause 1 provides the financial authority for the scheme. It restricts the total sum to £25 million with provision for a further £25 million by Order. The contribution to any particular project will be limited to 35 per cent. of the qualifying expenditure and will be in the nature of a loan; if the project is successful and leads to minerals being extracted, we shall get our money back with interest. Whether the project is successful or not, however, the geological information obtained as a result of assisted work will be made available to the Government and to the Institute of Geological Sciences. The Bill permits contributions to be made in respect of any minerals but, for the present, the scheme will be confined principally to non-ferrous metal ores and three other minerals—barium, fluorspar and potash—where there are good arguments for encouraging exploration. It will not apply to hydrocarbons for which exploration is proceeding satisfactorily and there is no need for an additional incentive. But, later on, if circumstances change so that there are good reasons for bringing other minerals within the scheme, we shall be able to consider this.

The scheme will be discretionary—the Bill permits the Secretary of State to impose such terms as he thinks fit—and I would like to say a few words about how we envisage it will be administered. We shall want to satisfy ourselves that the work proposed and its cost is reasonable in the light of the known geology of the area, and that the applicant has the financial and technical resources to carry out the work. Overseas applicants will be welcome, but they will be asked to form a United Kingdom-registered company. Some people have formed a mistaken impression about the implications of the Bill for the environment. We have gone into this with great care and we believe that adequate measures exist for its protection. This Bill is concerned only with the exploration and evaluation of mineral deposits. Mine construction and commercial extraction do not benefit. The effects of mineral exploration on the environment are very slight. The first stages involve geochemical and geophysical surveys which produce negligible disturbance. This is normally followed by drilling. Exploratory drilling involves very small diameter holes—a matter of a few inches—from which the core is extracted and samples are sent for analysis. Some rather bulky equipment is sometimes, but not always, used in this process and this is removed once the operation is completed. Within a few months it would be difficult to identify the spot where the work had taken place.

In the later stages of exploration, rather more substantial work may have to be done, but in all cases involving interference with the environment, even of a temporary nature, planning permission must be sought. This scheme will in no way affect the operation of the normal planning controls. It is open to planning authorities to impose conditions under the Town and Country Planning legislation on the way the work is carried out, and to require reinstatement of the site afterwards. I am quite confident of the adequacy of these procedures as a safeguard. The Bill provides that before making a contribution the Secretary of State must be satisfied that planning permission has been obtained or is not necessary, and if there is a serious breach of planning conditions he would withhold the grant. If at the end of the day the company decide that it would be worth while to construct a mine, then entirely different and more serious planning issues arise. The planning authority will have the opportunity to consider all the implications and we are satisfied that the planning machinery is adequate.

The problem of the environment arises, quite irrespective of the present Bill, wherever a mineral is extracted. Most of the minerals currently being worked in this country will not be affected by the Bill. The fact that an exploration project may be supported under the Bill will not be relevant when an application for planning permission is being considered. Very few exploration projects will lead to a mine; this is the nature of mineral exploration. But when it leads to the possible construction of a mine, there will be full opportunity to consider afresh the whole question of whether such construction in a certain area is in the total national interest—environmental and economic.

I turn now very briefly to Clause 2, which modifies in two minor respects the provisions of Section 1 of the Investment and Building Grants Act 1971. As the House will recall, the Act put into effect the Government's decision to end investment grants by, in general, precluding the payment of investment grants on expenditure incurred after October 25, 1970, unless it consists of a sum payable under a contract made on or before that date. Since the passing of the Act, it has become clear that, in so far as they relate to hired assets and to ships, the provisions are more restrictive than I believe Parliament intended when it passed the Act. The purpose of Clause 2 is to remedy these two small defects. I hope that your Lordships will approve the provisions in this Bill. My Lords, I beg to move.

Moved, That the Bill be now read 2a.—(Earl Ferrers.)

6.7 p.m.

LORD DIAMOND

My Lords, I want to thank the noble Earl for his clear explanation of some of the reasons for introducing this Bill. I want straight away to relieve him of any anxiety that he may have, by saying that we on this side welcome the Bill, but I shall naturally have to carry out my responsibility of examining certain of its aspects. I think there are three matters to which I would invite your Lordships' attention. The first is why we need a subsidy; the second is whether the incentive to exploration has been reasonably balanced by an incentive to restoration—a matter upon which the noble Earl touched; and the third point is that I should like to relate the situation in this Bill to a very important mineral.

First, then, on the question of the subsidy, as the noble Earl probably knows, and as the House knows, the Labour Government did a great deal to prepare the way. Indeed, it was my lot to play a totally unimportant part in this when I had discussions and negotiations with representatives of the landowners, and when I had to deal with this aspect of the matter in the Finance Act which escaped the General Election. I want to make it clear that, with agreement all round, very special trouble was taken to see that, whatever else the Election chopper may have caught—and I have some dim recollection that the Election chopper catches even Cabinet Ministers from time to time—it should not prevent the very considerable easement of taxation to landowners in respect of the receipt of mineral royalties going through both Houses before the Election, and that indeed was achieved. But the arguments then for doing that were not wholly the same as the arguments now for doing this. A major argument then was the pressure of the balance of payments. That is still an argument—it is always an argument; but it is nothing like so pressing an argument now as it was then. But the greater difference lies in the fact that, then, the situation was understood to be that, whereas there were companies queueing up and anxious to start exploration, followed by development or exploitation, there were landowners whose tax position all told was such that they had no interest (using that word in its real sense; they had no real interest) in coming to terms with the would-be explorers and entering into licence agreements with them. Therefore, special provision for the landowners had to be made so that explorers could be enabled to do what they were bursting to do.

Why, then, is it necessary to give the would-be explorers this £50 million incentive? The noble Earl did not explain that. He has left it to me, therefore, to give your Lordships the explanation—and it is a simple one. What has changed since then—the reason why the Government have now to give to the explorer an incentive which the then Government did not need to give at that time—is that the Government have withdrawn the incentives which were available to investors. The investment incentive of the investment grant has been withdrawn by a most unwise act of Government policy, with the result that it is necessary now to find some incentive to attract those who would have explored had the ordinary investment grants been available to them. The noble Earl did not mention that. He may have thought it was not necessary to mention it as it had been explained by his honourable friend in another place; but, perhaps, as we want to be complete in our knowledge in this House, I will be forgiven for quoting what the Minister for Industry, Sir John Eden, said on introducing this Bill for Second Reading in another place on November 10. At column 1025 he said: Most metal mining companies exploring here have little or no United Kingdom profits available and, because of the long time lag before capital allowances relating to exploration can he claimed,"— and may I say, in parenthesis, that your Lordships will appreciate that capital allowances are what the present Government have introduced in place of the investment grants which previously obtained— their value"— that is to say, the value of the capital allowances— in discounted cash flow terms is much reduced. It was becoming clear that, in face of the problems I have outlined, momentum in their exploration effort was being lost. The Bill is geared to their special needs and provides an additional incentive for exploration mainly in the metal mining sector". That is what the responsible Conservative Minister said in the other place, and what I am adding and underlining is that it does not apply only to exploration; it applies to all investment. What we are seeing here is the compulsion of facts upon a Government to withdraw from a foolish policy in a particular area where the compulsion is so great that they needs must do so. As we all know, if a company is not making profits then allowances from the tax which is based on those profits is useless. What we also know is that if you are engaged on an investment as to which it will take several years (as has been made clear by the noble Earl this afternoon) before any return is possible, then the incentive effect of that, the likelihood of getting some relief from profits—if you make them—in four, five, six, seven or eight years ahead, is not sufficient to encourage investment, either in this field or in any similar field. Indeed, as the noble Earl has made clear (and I hope I shall not be accused of taking on some of the atmosphere of yesterday's debate in what I am now going to say, in its being a little Irish) the only time when the incentive is likely to be paid is when it will not be paid: because by that time, in order for capital allowances to be relevant, the company will be making a profit, and, as this incentive scheme is drawn, if it is making a profit then the Government will ask for repayment of the subsidy given—and I very much support that attitude. So, my Lords, what I am making abundantly clear is that the change in the situation is due entirely to the Government's having changed the policy on investment grants. They have withdrawn incentives from would-be investors in many fields—and that is one of the reasons why we are suffering from such a lack of investment in the economy, and in particular in this field—and that withdrawal has had such a drastic effect in this field that they have had to produce a special subsidy in order to cope and to compete with what is readily available abroad.

My Lords, the Bill is a very curious Bill, in that it has one clause dealing with what we have been discussing and another clause (and the noble Earl did not explain this) apparently dealing with something totally different—on the surface, at all events. Because Clause 2 talks about the alteration in the Act providing investment allowances for ships. One might think, at first blush, that if a shipowner wanted to know where he stood under the law with regard to expenditure incurred on a new ship, with a view to obtaining some tax relief or an investment grant relief, he would not immediately think of looking for a Bill headed "Mineral Exploration". He would think this an unusual combination of ideas. But, of course, the Government are right to put in the alteration of these two minor matters of investment grant. The Government are right to put Clause 2 here, because it relates to investment grants, and this Bill is about the withdrawal of investment grants. Had it not been for that reason, the draftsman would have suggested that Clause 2 should be tacked on to some other, more suitable, Bill. So that, my Lords, is why we have this Bill; and I wanted to make it very clear before turning on to the second aspect; that is to say, the aspect of conservation.

I listened very carefully indeed to what the noble Earl had to say, because he and I and I am sure all of us are equally interested that there should be a reasonable balance between those who explore and then, we hope, win minerals for the benefit of the country's economy generally, and those who are interested in maintaining the beauties of our countryside for the benefit of the population generally. With the greatest respect to what the noble Earl said, I should have thought that giving a subsidy to one side of that pressure alone was liable to get the pressure out of balance unless one is very careful. Now I know the noble Earl said —and I took his point—that this is not a new situation; that this applies to all kinds of exploration and exploitation and the winning of minerals, whether they are covered by this Bill or not. I realise that. But the noble Lord is proposing, and I am agreeing, that we should provide up to £50 million to encourage exploration and subsequent development. I should have thought, especially having regard to some of the debates that we have recently heard, that it would not have hurt to provide a tiny fraction of that sum for those organisations which are concerned with the preservation of the countryside, who need to stimulate public opinion and to counter, even in a modest way, the pressures that are going to be put on by this particular subsidy. So I ask the Government to consider whether they are quite satisfied that they are not upsetting the balance unduly in favour of the despoiler rather than the conserver of the countryside.

I realise that planning permission, where appropriate, can require restoration of the site, but I want to go into one detail about that aspect because I think it is relevant. I could be wrong, but, as I understand the position where exploration is concerned—and I am not talking about the later development now—some, but not all, of the processes are subject to planning consent. We therefore have a situation in which exploration can take place without necessarily having planning consent. Once exploration has taken place and a lot of money has been invested in it, there is additional pressure built up for development. Indeed, there is no point in the explorer and the taxpayer contributing to an exploration unless it is in the hope that it will be followed by development, by exploitation. Therefore I should have thought that, notwithstanding what the noble Earl has said about application for planning permission at the development stage, one wants to anticipate the pressures that are going to be brought to bear then by making sure, so far as possible at the start of the exploration, that if it is going to be a successful exploration one is not going to run into unnecessarily difficult planning situations. If you do, it is a matter which ought to have been faced at the start and before great pressures have built up.

I am saying this on the assumption that what I said earlier is correct: that there is at present no compulsion to have planning permission for all the processes of exploration. If there is this compulsion, then it is already under control. If there is not, there is an area through which activities might be started, money might be spent and great processes opened up, and difficulties and unnecessary pressure will be put upon those who wish to hold the balance of conserving the countryside. My assumption behind all this is that noble Lords will share with me the view that there ought to be a balance; that nobody is going to think wholly of the countryside and nobody is going to think wholly of minerals; that there should be a reasonable balance of both. That is all I want to say on that point.

I now turn to the third point: that is, the relationship between this Bill and a very important mineral indeed called coal. The noble Earl said that the money to be provided under the Bill, a total of £50 million, would be available as a subsidy to all minerals although he had certain minerals in mind at the moment. I want to remind the Government that we are at the moment in the depths of a coal strike. If the noble Earl says to to me, "We discussed this on Monday, only three days ago", I shall say that that gave the Government an opportunity for considering the questions I then asked, questions to which they will no doubt be ready to reply to-day. But the difference between now and Monday is that the country has in the meantime lost £6 million—£2 million a day, which is the cost of the coal strike. And £2 million a day, every day, is quite a lot of money—even ignoring all the hardships and all the difficulties which stem from the Government's inaction and unwillingness to do what most of those who spoke in that debate are asking for; namely, to encourage a compromise, a movement from both sides or a movement from all three sides.

I look at this figure of £50 million and ask why, for example, one quarter of it could not be allocated to a particular mineral whose exploration and, indeed, development, should be going on at the moment but is not doing so because of lack of funds, because of the lack of a small amount of money. A quarter of this figure allocated to that purpose would produce sufficient to pay the miners an additional 11 per cent. as compared with last year and with what they are being offered at the moment, which is an additional 7 per cent. or 8 per cent. Such an allocation would mean an additional 11 per cent.—and that would mean that the miners would be getting an increase of exactly the same percentage as the average increase in wages for the whole year in the private sector. The figures published on Monday showed that the average settlement throughout the private sector during the year amounted to 11 per cent. Eleven per cent. for the miners would give them an increase in their standard of living of 1 per cent., of one penny in the pound. This could hardly be called very inflationary, especially as we know that their increased productivity is of the order of 3 per cent. or 4 per cent. They would be getting one-third to one-quarter of their increased productivity and we should, in my view, be breaking the deadlock; because it is the Government's attitude, actions, statements and arm-twisting which is resulting in the Coal Board's being unable to offer more than they have offered hitherto.

Therefore I do not think I am taking up your Lordships' time unnecessarily, when we are dealing with a Bill to provide £50 million for one small group of owners, to have regard to the interests of nearly 300,000 men who are engaged in exploring and exploiting one of our most important minerals. I hope that the noble Earl will do what he can, either to say what is the present situation or the present posture of the Government or, if he is unable to do that, to take the most serious account of what I am pressing upon him.

6.29 p.m.

THE EARL OF CRANBROOK

My Lords, like the noble Lords opposite, I welcome this Bill in general terms; it seems obviously sensible to try to develop such resources as we have. But, like him, I am exercised about the effect it is likely to have on the countryside; because by and large the minerals which are going to be looked for are those which are found in the most ancient rocks which make up places like Cornwall, Wales, the North of England and Scotland, the more spectacularly beautiful parts of our country and parts of our country which, more-over, tend to have animals and plants or assemblages of animals and plants which are of the greatest interest to biologists. It is with those that I am more closely concerned, because I am a member of the Nature Conservancy which administers a number of nature reserves and has designated a considerable number of sites of special scientific interest on all of which there grow, or live, animals or plants; or where there are geological exposures which are of the greatest interest. These could be destroyed, not only by the exploitation which the noble Lord, Lord Diamond, has said almost inevitably will follow a successful exploration, but also they could be destroyed by those very explorations to which the noble Earl referred, and the scars of which he said might disappear completely if properly managed and no exploitation took place. That is true of the scars of exploitation which could disappear quickly. We no longer see the ridge and furrow exploitation of ironstone in the Midlands or of opencast coal mining and the like. In both those cases the top soil is replaced and agricultural and forestry may flourish as they did before, and little harm may be done.

The things in which I am particularly interested, these assemblies of animals and plants which have grown up over thousands of years, may be utterly destroyed by exploration and exploitation and nothing that is done can restore what was there before. In general, the sites where that sort of damage may be done are small. Probably it is true to say that on most of the larger nature reserves some form of exploration, and even exploitation, could take place; and although the amenities in the way of aesthetic beauty might be destroyed the scientific importance could be maintained if those sites of the greatest importance were avoided. The S.S.S.I., by their very definition, are places at great risk and obviously they demand special care. No amount of planning can provide for it because as the noble Lord, Lord Diamond, said, a considerable amount of exploration may slip through the planning net, in that you can go into a place for 28 days without having to ask for planning permission and during that period a great deal of damage may be done. What is essential is that before any licence is given for exploration the Minister should consult the Nature Conservancy which knows all these sites of scientific importance, and through N.E.R.C., could be told what damage may occur; and sites could be specified which otherwise no one may recognise. but which ought to be avoided at all costs.

This point was raised during the Committee stage in another place. An Amendment was moved and withdrawn, unwillingly, after the Minister had given an undertaking which did not satisfy the mover of the Amendment and which, I think, will not satisfy your Lordships. It certainly does not satisfy me. The Minister said that the Nature Conservancy which administers these reserves and knows about these sites would be consulted in advance about any work which might qualify for grant, and which would be detrimental to a nature reserve or to a site of special scientific interest. That means nothing at all because the only body which knows what sites are of importance is the Nature Conservancy. I hope that the noble Earl will be able to give an assurance that in every case the Conservancy will be consulted before a licence is granted. No delay would be involved because those who know could answer practically off the cuff, and the dangers to which I, and the noble Lord, Lord Diamond, have referred would be avoided so far as scientific sites are concerned.

6.35 p.m.

LORD ARWYN

My Lords, I think that the noble Earl, Lord Cranbrook, may take some comfort from the realisation that the big mining companies are very much aware of the need to conserve the countryside. I hear that Lord Zuckerman's Committee was in Cornwall this week, and is going to Scotland next week to report on the steps taken by mineral developers; so the matter is being taken very seriously. This Island, my Lords, is, considering its size, one of the most highly mineralised areas on earth. It is the source of our prosperity and it is our duty to ensure its maximum development by every inducement and incentive. I and my colleagues in the mining industry consider this Bill to be a risible attempt to atone for the abolition of investment grants. If the Government want to encourage investment in mining as they will be forced to do in the not too distant future, they must reintroduce something to replace the investment grant to provide at least an equal incentive, otherwise the present spate of exploration by major companies will die down.

The viability of mining ill this country will not be restored by dogmatic affirmation of the view that investment grants are a waste of money, or by a back-door, halfway house of advances for exploration only. The comparison must be international and the present mouse of a Bill does not put the United Kingdom back to where it was in the international league when investment grants were on offer. I venture to say that the development of tin mining in Cornwall would not have started but for the encouragement offered by investment grants. Inadequate as the Bill is on the fiscal side, it completely fails to deal with the problem of the inadequate basis of mineral rights in the United Kingdom. There cannot be a prosperous future for mining in this country unless at a time when the company is prepared to commit funds for exploration it has pre-emptive rights to mineral tenures in the area it seeks to explore. The Government started out by saying that they were examining this problem. But they have abandoned this issue entirely, and I presume that they cannot afford to upset the landowners. It is their doctrinaire view on this point which prevents any attempt to solve this basic problem. Until it is solved it is no use offering incentives. This Bill is an attempt to put the cart before the horse.

When the Government decided to abolish investment grants and replace them by accelerated depreciation the effect of the change on certain industries in terms of comparative values was catastrophic. There was no comparison between the old and the new. One of the industries adversely affected was the mining industry. The C.B.I., commenting on the proposed changes, advocated the retention of investment grants for the mining industry in particular. I do not think that the Government can ignore the advice of the C.B.I. The effects of the withdrawal of the investment grant is described in detail in an article published in the Financial Times of February 15, 1971, nearly a year ago. It was written by Mr. Alun G. Davies, an executive director of R.T.Z. who was also President of the Overseas Mining Association and Chairman of the Taxation Committee of the C.B.I. I will quote two passages from that article. The first is: Mining men have often deplored the indifference of the British fiscal system to the development of mining in the U.K. It is true that the Treasury and the Inland Revenue have been on the whole allergic to any preferential treatment for mining. What is also true is that the availability of investment grants in the development areas put the U.K. at one step among the leadership of the world league in fiscal stimulus for mining enterprises. By the abandonment of the grant last October (1970), how are the mighty fallen! The derisory benefits of the new so-called investment incentives will undoubtedly lead to the exit of the exploration teams from this country in pursuit of minerals elsewhere. That which was forecast by Mr. Alun Davies in February of last year was too serious to be ignored, and in my opinion, in order to stem the retreat of the mining companies and to make the mining companies continue, the Bill that we are now discussing was thought up. I now quote another passage from this pungent article by Mr. Alun Davies: The finding and mining of natural resources creates wealth inside a country in a way that no other industry can. Industrial societies have a desperate and increasing demand for raw materials as a feed for industrial plants. Without them any country, and this country in particular, would be unable to survive industrially. Unless we are prepared to pass into the stage of a semi-pastoral Utopia we will have to continue to import minerals on a vast scale. We should not lightly pass by a rare opportunity at little budgetary cost to re-create a mineral industry of very large proportions in these islands. This reference to "very large proportions" is the first that I have heard from a director of a company of this size. The article continues: But a quick movement on the fiscal levers is urgently necessary. My Lords, the whole article from which I have quoted extracts should be studied very carefully by the Treasury and the other Departments involved; and I think it fair to give notice that later on this year, unless there is evidence of rethinking, I shall table a Motion asking for specific reasons why the Government persist in this attitude. For reasons which are still not clear to me, the last Labour Government missed an opportunity, by not taking earlier action, to give the mining industry the incentive which my right honourable friend the Leader of the Opposition in another place outlined in a speech as far back as June 20, 1961 (cols. 1513 to 1526 of the Commons OFFICIAL REPORT), when he moved a new clause in the Finance Bill to provide a "tax holiday" of three years after a mine was first brought into commercial operation. In his speech he referred to the proposal as one put forward by the very important Committee set up by my noble friend Lord Shinwell. My right honourable friend said: That Committee produced one of the most important Reports produced in the immediate post war years. He was referring to the Mineral Development Committee. This Committee was composed of geologists, industrialists, the then Director of the Royal School of Mines, economists, mining engineers and members of both Parties. There are two noble Lords in your Lordships' House, Lord Thorneycroft and Lord Balogh, who sat on the Committee, and I wish they were here this evening. I, too, had the honour of being a member. The recommendations we made are far more viable today than they were 25 years ago. I beg the Government to have another look at that Report.

I am going to refer to still another article, written by Mr. Nigel Hawkes in the Daily Telegraph Magazine of December 3, 1971. It is evidently the result of deep research into the position of world mineral reserves, which I would recommend as an additional study in assessing the need for a complete change of attitude on the part of the Government. It is headed "Living Beyond our Resources", and one of the features is an assessment of world mineral reserves and the estimated life according to the known reserves. Oil is exhausted in the year 2001; the present reserves of coal will last indefinitely, as I implied in my speech during the debate on Monday on the coal industry; copper is exhausted in the year 2010; lead in 1988; Zinc in 1988; nickel in 2030; uranium in 1988 —but breeder reactors can greatly prolong the reserve lifetime; mercury in 1984; tin in 1995; and iron ore will last at least 250 years. These calculations are on the basis of present known reserves and present rates of consumption. They ignore future new discoveries—that is what we are talking about today—and also the expected growth of population, which can upset everything.

My Lords, I have been in this fight for recognition of the need to develop our mineral resources since 1937. It was the subject of my presidential address to the Institute of Cornish Mining Engineers 35 years ago. Old colleagues of mine, especially Mr. J. H. Trounson, another ex-President of the same rare vintage as myself, are still in the fight Goodness knows how many Lords and Knights of the Treasury have been and gone during those 35 years, but it is certain that not one of them has earned the respect of the mining industry.

It would be apt on this occasion to ask, in view of the great and growing importance of developing our own mineral resources in this country, how many mining engineers there are on the Treasury staff. There is an ample number of economists and statisticians among the senior ranks, but I cannot recognise one mining engineer. There may be one down the list, but it is unlikely that he would be of any rank to carry sufficient influence on the deeply entrenched attitudes of Treasury academics. Is it fear of being unorthodox which breeds this attitude? If so, I should like to point out that they are alone in this world. Every country where there is a base metal mining industry provides substantial incentives. There is no need to go further than Ireland to prove this, North as well as Eire.

The Labour Government had to unravel the interests in the minerals industry shared by no fewer than seven Departments, apart from the direct over-riding interest of the Treasury. It was not until this was done and the number reduced to two that the task of mineral by mineral analysis was begun at the Ministry of Technology, with the honourable Member for Swansea West in another place in charge. The conclusion of the two years' analysis unhappily coincided with a change of Government; but the results are there in the archives, and I hope that they will be used and not be smothered by the dead hand of the Treasury. A study of the debate on this Bill in another place on November 10 reveals quite a lot of important information when one considers the doubtful value of this Bill, particularly the contribution of the honourable Member for Swansea West, to whom I have just referred. My first speech on this subject in your Lordships' House was on an Unstarred Question, which ran: What steps the Government are taking to provide for the situation that will arise as a result of the rapid depletion of the world resources of tin? That was several years ago. Since then I have made several speeches on the need to provide incentives for the mining industry. One might regard it as a waste of time and cease to fight, but in fact I intend fighting a damn sight harder.

By comparison with the investment grants which put us fourth in the world in terms of attractiveness for mineral investment, where are we now? I know it is unfair to ask the noble Earl to answer such a question without prior notice, but it is one which has to be answered in order to assess our present attractiveness to international mining companies. There is another question that I should like to ask—I do not require an answer but I want to register the question—what steps are being taken to safeguard against the fantastic escalation of terms that a mineral landlord can demand once it is established that his land contains minerals of value? The Member for Falmouth and Camborne who sits in another place, during the debate on this Bill on November 10, gave an example within his knowledge of an application to lease the rights to mine china clay over 40 acres. This was a poor agricultural holding—really no more than a smallholding—and its value shot up from £35,000 to £150,000 after it was known that it contained china clay.

In the absence of adequate protection of the mineral rights legislation which was in the pipeline of the Labour Government and until recently in the Conservative Government's programme, this Bill will be considered as a mineral landlord's answer to prayer. It may perhaps slow down the decline in exploration, but in terms of the cost of setting up new mines the contribution, in terms of encouragement, is risible, as I mentioned earlier, and the mining industry regards it as a half-baked attempt to atone for the abolition of investment grants. Let the Government invite the opinion of the big international mining groups: it is their money we are after.

During the debate on Monday, my noble friend Lord Diamond suggested splitting this £25 million between the miners and the mineral explorers. I suggest that in view of what has occurred in the coalmining industry since this Bill was drafted the whole amount be handed to the N.C.B. to get the miners back. That is now our first priority. Let us tackle the problem of mineral rights afterwards. I suggest meanwhile a drastic overhaul of the Institute of Geological Science. What do we pay these geologists to do? Can they not be organised and equipped to carry out the function on which it is proposed to spend £25 million? They should have amassed enough data over the last 25 years to give them a flying start. Here is another question to answer: has this Institute become a lush home for academics, a record office, or could it not function, in combination with the N.C.B., as a spearhead to reduce the £360 million a year we now spend on importing just copper, lead and tin? I would remind your Lordships that the country's total mineral imports were over £2,000 million in 1969. During Monday's debate several speakers, myself included, asked the Government to frame a fuel policy. I suggest that we also need a minerals policy. Time is running out. One last question: Do the Government propose to wait for some hoped-for dramatic results from this Bill before they can reconsider the harm they have done to the development of the minerals industry?

6.56 p.m.

LORD HURCOMB

My Lords, like the noble Earl, Lord Cranbrook, I have been closely connected with and am still very much interested in the work of the Nature Conservancy. The noble Earl raised a point on which it seems to me your Lordships are entitled to much more definite assurances than we have yet had from the noble Lord in charge of the Bill. If I may say so, I think he is wrong in assuring us that the planning machinery and the planning authorities look after the problem to which the noble Earl, Lord Cranbrook, and the noble Lord, Lord Diamond, have both referred. It may be that so far as the amenities of the countryside go, the planning authorities can do a very great deal to control adverse developments. But that I will leave to the noble Lord, Lord Molson, to deal with, since he is much more closely concerned with that aspect of affairs than I am.

As regards the effect upon the natural life of these areas—many of them very ancient and little interfered with hitherto by man—I think it is a great mistake to say that even exploration can do no harm. Perhaps no one but a naturalist or scientist realises what the effects can be of a mere disturbance of the soil over a small area. I believe that the public at large are beginning to think more and more about what may happen if water is diverted and streams put through lead or copper-bearing areas, even by very slight alterations. I would feel content if the noble Earl who is in charge of the Bill could give us an assurance that even before exploration on a small scale, and certainly any interference on a bigger scale, is approved, the Nature Conservancy or NERC, or the Secretary of State for the Environment are brought into consultation. Those decisions ought not to be left to the Minister who is directly responsible for the development of the industries which are seeking his approval.

It seems to me that there is a particular obligation upon the Government, in working out any machinery of consultation in these matters, to take into account the situation to which President Kennedy drew attention some years ago when he assumed office. He found competing Departments backing competing interests in the United States and he said that he was not going to tolerate any longer one Department or one interest spending its time and the taxpayers' money on frustrating the policy and undoing the efforts of another.

I agree with the noble Earl, Lord Cranbrook, that as a rule very little harm will be done to scientific interests and the wild life of the country by explorations designed to find out what minerals are there. Indeed, that process will have some compensating advantages. But one does not know, and the decision ought to rest with people who are acquainted with all the circumstances attending the environment and its possible alteration or deterioration. If, therefore, the noble Earl gives an assurance—because, as my noble friend Lord Diamond pointed out, there are gaps in the planning machinery—that the scientific people who have the knowledge, and are responsible to Parliament for the protection of the environment, will be consulted before work is allowed to proceed, then we might be content. That assurance, I hope, will not be hedged about. It should apply to any nature reserve, whether the land is owned by the Conservancy, leased by them or protected under agreements, and whether or not they have full national status, or are merely designated under the statutory machinery of sites of scientific importance. I hope, therefore, that we shall get an assurance of that kind. If that assurance can be given, so far as I am concerned I have nothing to say about the general principles of the Bill.

7.2 p.m.

LORD SHINWELL

My Lords, based on experience of opencast coal operations and the restoration of land which has followed those operations, I should imagine that our amenities, wherever they are, will be effectively safeguarded. That is my assurance to the noble Earl, Lord Cranbrook, and also to my noble friend Lord Hurcomb. Conservation is a very important matter indeed. Nobody would suggest that we should be careless, despoil the land and interfere with amenities which ought to be properly safeguarded. As I have said, I have long experience of the opencast coal operations, and nobody could complain about the land restoration that followed those operations. That is all I want to say about that aspect, and I do not want to say very much more because no one would wish to detain your Lordships' House at this time. However, I am bound to make one observation. Yesterday, in a full House, we spent the whole day debating with considerable excitement destruction and devastation. Here we are in your Lordships' House in wide open spaces with hardly any attendance worth talking about—except for its quality.

THE EARL OF LONGFORD

My Lords, may I interrupt? I came in specially when I heard that the noble Lord was speaking.

LORD SHINWELL

That is very kind of my noble friend; but I repeat that we were discussing a grave issue which may have its repercussions for many years to come. I hope they will not be as tragic as recent events. Here we are discussing development, something constructive, yet hardly any interest is evoked.

My noble friend Lord Diamond, with his usual ingenuity, sought to relate this Bill to the position of the coal-mining industry and the present dispute. Of course if we had the choice of injecting into the coal mining industry such national finance as is available, in order to bring this dispute to its end, or using it for the purposes of exploring the possibility of producing more non-ferrous materials, the former would obviously be more gratifying. But that is not the issue before us. The issue is whether it is proper for the Government, even at this somewhat belated stage, to find the necessary finance to provide the essential incentive in order to put exploration on its feet for the first time for many years.

I had a long experience—a rather tense experience—of this subject as far back as the time of the first Labour Government in 1924, when I was Secretary for Mines. The matter came before me in a variety of ways, as did the whole subject of the production of by-products from coal. A great deal can be said about that. It was only the absence of finance that prevented us from proceeding as we should have wished to do. When it was my turn to become Minister of Fuel and Power in 1945, again the subject was revived. I regret to say that it was the inaction of the Treasury (the Treasury are more inclined to inaction than to action, when it comes to doling out funds) and their attitude that prevented us from proceeding with the schemes to which my noble friend Lord Arwyn has been referring.

This matter of exploration is of the highest importance. It is just possible—indeed, it is probable—that as a result of further exploration delving much deeper into the earth than we have done hitherto—and this would cost a great deal of money— we might assist the coal-mining industry, in addition to assisting the production of non-ferrous metals which are so essential in our industries. But the question is whether this Bill will do it. My noble friend Lord Diamond was right; the Government have produced this belated incentive because of the absence, on their own volition, of investment grants. If investment grants had been continued, they would have done the trick. There were many companies ready to enter into the exploration field if the investment grants had been available. In the absence of investment grants, this is the best alternative, in the circumstances, although it is subject to considerable criticism, not only as regards the change in Government policy but as regards the financial details. I am not going to enter into that matter: it is too late, and in any event it would not matter very much.

The question before us is: do we want to explore? In my opinion we should. It was my experience (and this was mentioned to some extent by my noble friend Lord Arwyn) that when we were faced with the cessation of development in the tin mining industry in Cornwall it was maintained by those associated with the industry that there was much of that material to be exploited, but the question was one of finance. The Government of the day would not furnish the necessary finance. There was not only tin; there were the lead mines of Scotland in the Ayrshire and Dumfries-shire districts which have never been properly exploited, although it is well-known to geologists that there are "parcels" (let me use that term) of lead, and indeed, other materials available if an attempt were made to exploit them. What about the possibility of silver, and even gold, in Wales? There was a time when gold was produced in Wales. The wedding ring of Queen Alexandra, the spouse of King Edward VII at the beginning of this century, was made out of gold found in Wales. I am sure there is still plenty of it there, if we dig deep enough and are prepared to provide the necessary finance.

In any event, without proceeding further along these what might be called romantic and fantastic lines, although I think there is a great deal of material in what I have ventured to put to your Lordships' House in these few words, I welcome this Bill. My noble friend Lord Diamond was correct in his criticism, wise in his criticism, as he usually is, even if I do not always agree with him—but that is by the way; let us set that aside. The Government are doing something that is necessary, and it is about time they did something that is necessary. Before very long they will have to change their minds and their policy to a remarkable degree, as they have done in this particular instance. So we welcome the Bill. Let us go ahead and, at the same time, let us preserve and conserve the amenities. But let us use our resources to the utmost in the interests of the nation, for the purpose of providing employment and the raw materials out of which our industries can prosper.

7.12 p.m.

LORD MOLSON

My Lords, like all those who have previously spoken, I support the Bill which has been introduced. At the same time, I should like to echo what has been generally said about the importance of making sure that this encouragement of mining activity in this country does not unduly affect our environment. I am bound to say that I was unable to follow the argument of the noble Lord, Lord Shinwell: that because a good deal of excellent restoration has been done in the case of opencast coal, that was a reason for being complacent about the provisions in this Bill. There are at the present time some 150,000 acres of derelict land—those are the official figures produced by the Department of the Environment—and very slow progress is being made in restoring them. Admittedly it is being speeded up at the present time, and I welcome that, but no one who has been Member of Parliament for the High Peak and seen the devastation done there in those limestone areas can feel entirely happy about any Bill encouraging mining and quarrying which does not contain adequate protection for the environment. I was most grateful to the noble Lord. Lord Diamond, for what he said about the difficulties which amenity societies and others have in fighting proposals for development. It is immensely costly, and often those who are concerned with the exploitation dispose of sums of money ten or a hundred times larger than the money at the disposal of the voluntary bodies.

I am quite sure that the Government intend that their Bill as drafted now should contain adequate protection, but I am not quite sure whether it is entirely adequate. I would ask the noble Earl what exactly they contemplate in cases where, as the Bill says, planning permission is "deemed not to be necessary". There has been a good deal of exploration in a seismographic survey in Dorset where charges of explosive have been sunk into the ground and exploded and, as a result of the waves through the different strata of the earth, scientists are able to deduce what is underground. In this case it was deemed that planning permission was not required. I ask the Government whether it is not reasonable that in all cases where exploration is going to take place and where planning permission is deemed not to be necessary, they should at any rate consult the local planning authority in order that it may make representations to the Government that the effect of the exploration would be harmful to the environment. We must bear in mind that the Minister who is going to be responsible for administering this Bill is the Secretary of State for Trade and Industry, and he is naturally and rightly chiefly concerned with economic development. We therefore must make sure that those who are primarily concerned with amenity and the preservation of the environment are in a position to put forward their point of view.

I have spoken about amenity and preservation of the countryside. I should like to lend my support to my noble friend Lord Cranbrook in what he said about the importance of making sure that exploration does not do harm to areas of special scientific interest. It seems to me that it would be entirely appropriate in a Bill of this kind if the Government could give us their assurance that, before any grants are made in areas of that kind, the NERC should be consulted. After all, NERC is a Government body; it is financed by the Government; and one would think it was only appropriate that it should be consulted before public money is spent in doing what in some cases NERC might regard as harmful to the interests that it has been appointed to defend.

EARL FERRERS

My Lords, I am very grateful to noble Lords who have taken part in this debate for the views which they have expressed and I, for my part, have found it extraordinarily interesting. I thought the real nub of the whole matter lay in what the noble Lord, Lord Shinwell, said. What he said was: Do we want to explore? This was really the whole basis behind it, and I found it exciting. He put forward the prospects that lay ahead of possible exploration. Of course, this is exactly what this Bill is about. But, having said, "Yes, we do want to explore", then of course we bump up against all the other interests which are affected by such exploration. Several noble Lords have referred to whether there is adequate protection for the countryside—and a very real point this is. The noble Lord, Lord Arwyn, referred to land owners who have prevented exploration. But, there again, their rights must be, if not equated with, at least taken into account just as much as the rights of those concerned with the environment or those who wish to explore, both for the advancement of their companies and for the advancement of the country.

LORD ARWYN

My Lords, I want it to be quite clear that I was referring to people who are not aware they have any minerals at all on their land. The minerals are discovered by somebody else and the value of the land goes up sky high. That is what I want to make clear.

EARL FERRERS

My Lords, I quite agree. The noble Lord will concede that when one comes to mineral rights one comes to a complicated subject, and I do not think we would want to get drawn down that particular course.

I was grateful for the way in which your Lordships welcomed this Bill. Of course, the noble Lord, Lord Diamond, took the opportunity (I do not blame him for it at all) of saying that it was the Government's fault for having disposed of investment grants, and had they not done it this Bill would not have been necessary. This is a perfectly reasonable point of view which I expected the noble Lord to take, but I would just tell him this, if I may. Where the old investment grants operated in the development areas they were 40 per cent. and in the areas which were not designated as development areas they were 20 per cent. This Bill allows loans or grants of 35 per cent., so I think the noble Lord will concede that there is not quite the disparity here that might appear on the surface.

Of course, the noble Lord also took the opportunity of referring to the ships and other hired assets that come under Clause 2. The only reason for including this is in order to rectify something that obviously had never been intended as a result of the passing of the Investment and Building Grants Act, and I am quite certain that your Lordships will agree that what has been put in Clause 2 is entirely correct in order to ensure that those who do apply for investment grants, for instance, are not prevented from obtaining the grant (to which they were entitled because they had applied for it before the relevant date) simply by virtue of having assigned the benefit of their contracts to a bank.

The noble Lord, Lord Diamond, quite rightly asked whether we were upsetting the balance between the interests of the countryside and the prospector. Indeed, this was a point put forward by many noble Lords: whether planning permission is adequate and whether the planning authorities have sufficient powers. If one applies for planning permission to start a project or to explore, the inference is that, having explored and having found the minerals there, one will want to proceed with it. This is a very real point. It is of course difficult to say that you should apply for planning permission in order to develop a whole site, when possibly only one out of ten projects which will be stated will develop into a site, and when anyhow you do not know what the site will consist of or where it will be, or indeed how much of whatever it is you want to develop is going to be there. I think it is right that this should be taken one stage at a time and one should first get the planning permission for prospecting. When you have prospected and found out what it is that should be developed and everyone knows the size of it, then the second stage comes, which is the planning permission for the overall job.

LORD DIAMOND

My Lords, I am sorry to interrupt the noble Earl, but I do not think he has sufficiently taken the point which has been made by four noble Lords from all sides of the House. If the one in ten original proposals which the noble Earl has referred to as being likely to be followed by development is going to be made in an area where, irrespective of the size or the place or the nature of the digging (I do not know sufficient about the technical details) and although you cannot define it you know that you are in a sensitive area from the point of view of all the problems of natural life, beauty and the environment which have been put before us, then I should have thought there ought to be some machinery to cause questions to be raised at the start.

EARL FERRERS

My Lords, the noble Lord is entirely correct; had he restrained himself a little I was about to come to that because, as he rightly says, this was a point of view put forward by about four noble Lords. I think I can give him the assurance he requires, because the Government have always been conscious of the need to give special care and attention to the position of nature reserves and sites of special scientific interest, which is what my noble friend Lord Cranbrook referred to. These sites are administered by or in agreement with, the Nature Conservancy which is part of the Natural Environment Research Council.

The Department is in touch with this Council and has agreed to make arrangements whereby the NERC will be consulted before any application for assistance under Clause 1 of this Bill is approved. The National Parks and areas of outstanding natural beauty cover some 16 per cent. of England and Wales. In fact there are, I think, 154 nature reserves and 2,700 sites of scientific interest. My noble friend Lord Cranbrook, and the noble Lord, Lord Hurcomb, will therefore, I hope, be glad to know that in all cases where an application is received, irrespective of whether it covers these particular areas, there will be consultation with the NERC because they are the people who know where the areas are and whether such a proposal is likely to affect any area in which they are interested.

LORD DIAMOND

My Lords, I am sorry to interrupt the noble Earl again, but I did not notice it in the Bill and I should be grateful if he would draw my attention to the relevant clause.

EARL FERRERS

My Lords, it is not in the Bill; it is an assurance that I have given the noble Lord as to what the Minister intends to do. The noble Lord also invited me to comment on the fact that we were spending £50 million here and asked whether it would not be a good idea if a quarter of this was given to the coal miners to help during the present strike. My Lords, I have always immensely admired the ingenuity of the noble Lord, Lord Diamond. When he referred to this the other day during the debate, I wondered whether it might crop up again, but I could not really believe that it would. One of the joys of being in Opposition is to try to dig an elephant trap for some poor person to fall into. I can give the noble Lord the assurance that I do not wish to comment on the coal strike one iota in relation to this Bill, and indeed I am sure that he would agree that it really has nothing to do with it. I thought it was rather like saying, "I like Parliament Square very much, but on the whole I prefer Tuesday afternoon".

If I may say so, the noble Lord, Lord Arwyn, made a very interesting speech, and one acknowledges the depth of knowledge which the noble Lord has, and his interest in this matter. I do not wish to comment a great deal at this moment on what he said because he ranged fairly wide, but what he has said will certainly be taken into account. We realise, of course, the difficulties experienced by mining companies in gaining access to land and minerals, and the noble Lord will be glad to hear, I think, that at the moment we are considering the form which any amending legislation might take when the Parliamentary timetable permits it. As he knows, the subject is complex and we are anxious that any new legislation shall be as effective and as fair as it can be, not only to the developers but to everyone else who has an interest in it.

My Lords, this Bill is designed to provide an incentive to companies to explore and to prove the mineral resources. The noble Lord, Lord Arwyn, said that it was a "mouse" of a Bill. I thought this was a little unkind. Since the scheme was announced last July there have in fact been over one hundred applications from more than 20 companies, and of these 100 applications 50 have already been approved in principle.

LORD ARWYN

My Lords, I intervene only in a jocular way in reference to the noble Earl's comparing himself to an elephant just now. I do not think it is fair to him, and I will withdraw my description of a "mouse" if he will withdraw his description of himself as a "elephant".

EARL FERRERS

My Lords, if I were to withdraw my own description as an elephant possibly noble Lords opposite might not agree. However, I hope that I have been able to give noble Lords the assurances which they have been concerned to get, and I accept that this is mostly the environmental one. I hope they will find that this Bill will not in fact make undue and unfair inroads into the environment, and that there are planning authorities capable of controlling these undertakings, should this come about. I am very grateful to noble Lords who have taken part.

On Question, Bill read 2a.