§ LORD SHINWELLMy Lords, I beg leave to ask the Question which stands in my name on the Order Paper. I should like to offer my apologies to the noble Lord, Lord Drumalbyn, and to your Lordships' House for not having been present when the Question was originally on the Order Paper for answer.
The Question was as follows:
To ask Her Majesty's Government to state the industries hived off from the National Coal Board; whether they are now considered to be viable; what losses, if any, have resulted from the Board's administration and who will be responsible for the difference in the cost of acquisition and any loss sustained.
§ THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN)My Lords, the National Coal Board are forming two holding companies to hold the shares in subsidiary operating companies to which the main ancillary activities will be transferred. The Board are also transferring to these holding companies their investments in joint enterprises. The principal activities affected are solid fuel distribution, brickworks, lands and estates, and computer services under one operating company; and the activities of Coal Products Division, which include coke ovens, secondary by-products, processed fuel and offshore gas and oil, under the other. The Board report that the ancillary activities are currently profitable and expected to remain so. The joint enterprises are also generally profitable.
1536 As the wholly-owned activities and the investments in joint enterprises are being transferred at existing book values, no profit or loss on transfer will arise. After transfer the Board will carry out a full revaluation of the assets of each holding company.
§ LORD SHINWELLMy Lords, may I ask the noble Lord whether it is true that part of the deficit incurred by the National Coal Board and met by the Government in the form of an additional subvention was attributable to the losses incurred by some of the ancillary undertakings? May I also ask the noble Lord whether he is aware of the rumours—though I cannot myself vouch for their accuracy or for the statements made in connection with them—that some of the officials of the National Coal Board were shareholders and some were directors of these ancillary undertakings? Is it possible for the noble Lord to tell us whether there is any truth in these statements?
§ LORD DRUMALBYNMy Lords, dealing with the first question, some losses were made, but as I said, on the average and taking one year with another, the profits in the ancillaries exceeded the losses. Last year, it is true, there was an overall loss on them because of a heavy loss on coke ovens, processed fuel and secondary by-products due to the coalminers' strike.
As to the second question, this is a matter for the Coal Board themselves. I have seen something in the Press about this, but I think it is a matter for the Coal Board to deal with.
§ LORD SHINWELLMy Lords, is it not the case that the National Coal Board have instituted an inquiry of their own into these allegations? Does the noble Lord not agree that it would be desirable, in the interests both of the country as a whole and of the Coal Board, that there should be an independent inquiry into these matters?
§ LORD DRUMALBYNNo, my Lords, this is certainly a matter for the Coal Board themselves in the first place. The noble Lord will be aware that there is a Select Committee on Nationalised Industries in another place which could also investigate the matter, if necessary.
§ BARONESS GAITSKELLMy Lords, may I ask the Minister why, if these industries have not in fact made a loss but a profit, they were hived off?
§ LORD DRUMALBYNMy Lords, so that the National Coal Board could concentrate on those activities which are their main business. It is not very easy to hive off enterprises which are not viable—who would buy them?
§ LORD SLATERMy Lords, is the Minister aware that when the nationalisation of this basic industry took place the Government, on taking over those assets, paid a tremendous amount in compensation to the previous owners? Ever since that taking over, these ancillary industries have been showing profits which came into the public account of the National Coal Board. Is the Minister aware that what has occurred here, whereby outside industries can enter into this field of operation, can only be looked upon as scandalous, because it ought to be kept under the control of the National Coal Board, just as is the production of coal itself?
§ LORD DRUMALBYNMy Lords, there are really two cases here: the kind of enterprise which was taken over along with the coal, and those enterprises which have been subsequently acquired. The main object must be to ensure the successful operation of the Coal Board in dealing with their main activities. All that is being proposed now is that those activities shall be grouped into two holding companies, and they will then look to the private sector for capital in order to expand.
§ LORD ORR-EWINGMy Lords, is it not true that for the year 1971–72 the Coal Board made a loss of £157 million, and this loss will have been increased as a result of the very large wage award made just a year ago to-day? Is it not therefore of paramount importance that the Coal Board should concentrate on making its primary task the raising and marketing of coal and should not concern itself with these very small, ancillary occupations, which can have no great effect on that gargantuan loss?
§ LORD DRUMALBYNMy Lords, that is the view of the Government, broadly speaking. The ancillary industries 1538 will be transferred to the holding companies of the National Coal Board.
§ LORD BESWICKMy Lords, would the noble Lord, Lord Drumalbyn, agree that the loss referred to by the noble Lord, Lord Orr-Ewing, is, in the view of some industrialists, a good reason for diversification? May I ask the noble Lord another question? He has said that these changes are for management and organisation reasons. Will he give us an assurance that the ownership of this new holding company will remain vested in the National Coal Board?
§ LORD DRUMALBYNMy Lords, as I have already said, they will remain within the ownership of the National Coal Board. After revaluation of the assets it will be possible for the National Coal Board to bring in private enterprise to the extent that they think fit, and with the consent of the Secretary of State.
§ LORD BLYTONMy Lords, is the noble Lord aware that in the days of private enterprise the ancillary industries were regarded with pride? What is wrong with the National Coal Board? Why should they not have the same as private enterprise had in the old days?
§ LORD DRUMALBYNMy Lords, I do not quite understand that question. The whole purpose of the Coal Nationalisation Act was to take over the interests in coal. The fact that there were other interests involved which were difficult to extricate from the coal interests made it necessary to take them over as well.
§ LORD BALOGHMy Lords, does the Minister imply that the Coal Board's North Sea oil interest will also be hived off, at a ludicrous price, to private enterprise?
§ LORD DRUMALBYNMy Lords, it will go into one of the two holding companies, as I said in my substantive Answer, and will remain in the ownership of the National Coal Board.
§ LORD POPPLEWELLMy Lords, regarding the ancillary undertakings that are being hived off from various nationalised industries, is the Minister able to say what kind of accountancy arrangements will take place, so that Parliament will know exacly how each of these undertakings stand? Is it not correct to say that some change took place regarding 1539 the accountancy arrangements of many of these public undertakings some two years ago? Instead of each undertaking being shown separately, the position now is that one is given only a global sum from the nationalised industries as a whole.
§ LORD DRUMALBYNMy Lords, so far as accountancy is concerned, these undertakings will be registered as companies and they will be subject to the Companies Act in the normal way. So far as the amount disclosed to Parliament is concerned, the noble Lord will recall that it is a matter within the power of the Secretary of State to specify in what way the accounts should be rendered to Parliament.
§ LORD SHINWELLMy Lords,—
§ LORD POPPLEWELLMy Lords, would the noble Lord say—
THE LORD PRIVY SEAL (EARL JELLICOE)My Lords, I do not think the noble Lord, Lord Popplewell, saw that the noble Lord, Lord Shinwell, who has a priority as the noble Lord who put down the original Question, had risen behind him. If I may suggest it to the House, perhaps after the noble Lord, Lord Shinwell, has asked his question we might move on to the next Question.
§ LORD SHINWELLMy Lords, I apologise. I have one simple question which I think is important. May we have an assurance from the Government that the holding companies which have been hived off, if they find themselves in financial difficulties, will not receive a subvention from the Government?
§ LORD DRUMALBYNMy Lords, as I have stated, at the present time these holding companies, taken overall, would be making a profit if they were in existence. I cannot guarantee what will happen in the future, or what action any future Government will take.