HL Deb 06 March 1973 vol 339 cc994-1020

2.57 p.m.

EARL FERRERS

My Lords, I beg to move that this Bill be now read a second time. Last week, on a Motion introduced by the noble Lord, Lord Tanlaw, your Lordships discussed in a far-seeing and indeed fascinating debate the future prospects of energy from the point of view of the requirements for it, its availability and the sources from which it comes now and from which it may come in the future. If there was one thing that emerged from that debate it was that we know that we do not know all the answers. We do not know how much energy will be required in the future, how available it will prove to be and from where it will come. What was clear from that debate was the underlying opinion that we should keep all our options open. We heard how coal plays a vital part in meeting our energy requirements. It is a source of indigenous energy with vast reserves which could help to supply our needs for many years to come. But several speakers spoke of the uncertainties which surround alternative sources of energy, and because of these uncertainties, if for no other reason, it would be quite wrong to regard coal as a dying industry.

I recall these points because they show how this Bill, which provides support to the coal industry on a large scale over the next three to five years, is not an attempt to rescue something from the past but is essentially a forward-looking Bill, and it deals with an industry which has an important future. The importance of coal in our national life can be illustrated by two quite simple figures: it produces almost 70 per cent. of our electricity supplies, and it employs more than a quarter of a million men.

Despite the difficulties which have been caused by the declining trend in the market for coal, the Board made a small surplus in 1970–71. They hoped to repeat, or even to better, this in the following year, but unfortunately in the event they ended the year not with a profit but with a loss of £157 million. This, of course, was mainly the result of the miners' strike and the overtime ban which preceded it. I do not want to go into past history or to tread on tender ground, but we must recognise that there is a continuing result from this; namely, the continuing increased costs which have to be borne. The prospects about a year ago, were, therefore, for continuing losses. Without Government help the Board could only have remedied their financial position by a massive contraction of the industry. The fact that more than half of all pits were shown to be loss-makers gives an idea of how drastic this contraction would have needed to be. In addition to this, most of the pits which would have had to be closed if such a contraction had taken place are in the assisted areas, where unemployment was already high. And because there is often no alternative local work in the small mining villages which would have been affected, the hardship would have been even greater than current employment figures alone indicate.

Neither this Government nor, I suggest, any other Government, would have been prepared to face the social and human consequences which would have ensued had the industry been allowed to collapse. If we had allowed that to happen the decision would have been almost irrevocable. Pits, once closed, are almost impossible to re-open, and even more important is the fact that once the highly skilled labour force had been dissipated it would have been very difficult, if not impossible, to build it up again. It would have been very foolish to permit such a thing to happen, particularly so long as the current uncertainties surround our alternative fuel supplies—especially oil. This again was underlined by your Lordships last week. These were the reasons why the Government considered that help was justified, even if it meant help on a massive scale.

But the Government believe that the most important element of all in securing the future of the coal industry must be the efforts of those engaged in it, both management and men, to make it economic. It was for this reason that the Minister for Industry wrote both to the unions and to the management before framing this Bill, to ask what contribution they were prepared to make towards putting their house in order. He subsequently discussed their joint proposals with them at meetings which were unique in that the Government, the Board and the three unions concerned with mining were all represented.

The outcome was very encouraging. The two sides of the industry set out measures which they proposed to take, and which they believed would provide a real opportunity for the industry to be restored to a viable basis. The industry in their turn made proposals for Government help which we found to be substantially acceptable. They have been published and have been fully taken into account in framing the Bill. It was against this background that the Government decided to ask for the powers which are proposed in the Bill. The Bill falls into three major sections. The first deals with the valuation of the Board's assets. The figure on their books was unrealistic in relation to their earning capacity. There was also the burden of interest which was carried as a result of past losses. Our proposals will enable the Board to start 1973–74 with a clean slate on capital account.

It has been accepted by this Government and the previous Administration that there are certain social costs which are associated with running the industry which the Board cannot be expected to pay entirely on their own. The statutory provisions under which the Government help the Board with these costs were coming to an end. The Bill makes it possible to help the Board with costs, pensions, and redundancy payments up to about £50 million a year for the next three, or possibly five years. Thirdly, the Bill will enable grants, averaging up to about £125 million a year, to be made to the Board on operating account to give them a breathing space in which to find their feet commercially. Finally, there is a clause dealing with the membership of the Board and then the usual clauses and Schedules on interpretation and other legal points.

I will now deal with the individual clauses of the Bill. The Board's auditors, who are appointed by the Government, have been consulted about the earning capacity of the Board's assets other than those which are to be brought under the holding companies to which I shall refer later. They advised that the assets in question are over-valued on the Board's books by about £275 million. Secondly, by the end of the Board's current financial year, on March 31, 1973, the Board will have accumulated losses of between about £170 million to £180 million; the exact amount will not, of course, be known until the year has ended and the accounts are available.

Under Clause 1 of the Bill both these amounts will be written off the Board's accounts, and the Board's debts to the Secretary of State will thus be reduced by the total of about £450 million. This will save the Board interest of approximately £25 million a year, and their depreciation charges will be reduced by about £17 million. Some of the provisions of Clause 2 are consequential on Clause 1. The Board's present borrowing limit is £950 million, and in the light of the reduction in their debt this is being reduced to £550 million, but with provision for it to be raised to £700 million by Order. Similarly there is a new limit on the accumulated deficit which the Board may carry on their books. It will be £50 million which can be raised by Order to £100 million. In an enterprise of the magnitude of the Board the occasional deficit may be unavoidable. But the hope is that it will never again be of this order. The other provisions of this clause clarify and adjust the Board's borrowing powers and I do not think I need detain your Lordships with the details.

I come now to the second group of measures. Even with the Government help envisaged some pit closures are inevitable. There will be some cases in which reserves become exhausted, and it may prove impossible to avoid intolerably heavy losses in others. Government help will be needed to enable the Board to provide fair terms for the men affected.

Clause 3 authorises grants of up to 50 per cent. towards the Board's social costs associated with pit closures. The costs involved here are: redundancy payments under the Redundancy Payments Act; compensation for premature retirement and loss of prospects for the staff; payments towards rehousing and resettlement of men employed elsewhere in the industry, and maintenance of welfare activities. This is a continuation of powers which were first introduced by the previous Administration in 1965 and continued by this Government under the 1971 Act. Those powers expired at the end of 1973–74. The new powers run to March 1976, and can be extended by Order to March 1978.

Similarly, Clause 4 extends to March 1976 the Government's powers to make Redundant Mineworkers' Payments Schemes. These would have expired in March 1974. Under the present scheme a man made redundant over the age 55 can have his earnings maintained at 90 per cent. of their previous level for three years. An improved Scheme is being discussed with the Board and the unions, and when the discussions are completed the new Scheme will need to be approved by both Houses of Parliament. The Secretary of State has announced that the new Scheme will apply as from December 11, 1972.

Clause 5 authorises grants to be made to the Board towards the cost of improving the existing mineworkers' pension. The present rate is £1.50 a week, and discussions are going on between the Board and the unions on the basis of an improvement of £3 a week. This provision also runs to March 1976, but can be extended by Order to March 1978.

The third group of measures bears more directly on the Board's operations and less directly on the position of the men. In the short run it is possible that the Government's measures to control the contraction of the industry could lead to coal surpluses. These would either be sold to the Electricity Generating Board at suitable prices, or be put to stock. Clauses 6 and 7 will enable the Government to help finance these measures if they are needed. Clause 6 enables the Government to pay the costs of the Electricity Generating Boards if they burn more coal than they would have done solely on commercial grounds. The National Coal Board and the Generating Boards are negotiating on this "extra-burn". I do not wish to anticipate the outcome of these discussions, but naturally the Government will need to be satisfied with any agreement which is reached. This clause only runs to March 1976. Clause 7 provides for assistance with stocks. It will not apply to stocks over a total of 30 million tonnes, or below one-twelfth of the annual deep-mined output. This provision runs to March 1976 but it can be extended to March 1978.

Clause 8 will enable support to be given to the production of coking coal. This is prudent in view of recent world shortages of this essential material. The clause will enable the United Kingdom to participate in the coking coal subsidy scheme which is now under discussion between the members of the European Coal and Steel Community. Again the powers run to March 1976, but are extendable to March 1981. Clause 9 breaks slightly new ground for this country. I have already described the hardship which a collapse of the mining industry could cause in regional unemployment. The fact is that 90 per cent. of this industry is situated in assisted areas, and it is with that fact in mind that the Government are taking power in this clause to give grants specifically to moderate the contraction of the industry. Up to £210 million may be given for this purpose over the next three years.

Clause 10 will enable the Board to be strengthened by the addition of three further part-time members. We all recognise that the Board face a very difficult and complex task in restoring the industry to viability and in reorganising their ancillary activities. It is no reflection on their present skills that they will in the future be able to draw on outside expertise. The remaining clauses are really just technical adjustments.

We hope that this reorganisation will help the Board to bring the industry back on to its feet. It will be a big task and one involving large sums in public expenditure. I should of course point out that the amounts mentioned in the Bill are maxima. Actual payments will depend upon the performance and the prospects of the industry. The Government's commitment to the industry is not open-ended, and both sides of the industry realise that if it is to have a viable future it is essential that total costs are kept in line. But it cannot be stressed too strongly that the future must depend upon the industry's own efforts in increasing efficiency and containing costs. The productivity records which the industry set in November and December are promising. With that kind of effort within the industry I suggest that the Bill will provide a real opportunity for it to regain its feet as a competitive supplier of a large proportion of the country's energy needs. I am sure the House will wish the industry well in its task, and will wish it success. I beg to move that the Bill be now read a second time.

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

LORD DAVIES OF LEEK

My Lords, before the noble Earl settles down to listen to the debate I should like to ask him a question. If he considers that it should be left until the Committee stage I will accept his ruling. I was interested in his expression in dealing with Clause 9 when, if I heard him aright, he said that a further sum of £210 million would be granted to moderate the contraction of the pits. Is the noble Earl able to tell me whether that £210 million, which will be used in uneconomic pits, will be extra to the main amount granted, or is it within the main grant?

EARL FERRERS

No, my Lords, this is a special amount which can be provided over the next three years in order to help the pits to contract at a slower rate than otherwise would have been possible had the grant not been available.

LORD DAVIES OF LEEK

My Lords, I thank the noble Earl for that clarification.

3.13 p.m.

LORD SHEPHERD

My Lords, we on this side of the House, and I hope on all sides, express appreciation to the noble Earl not only for his speech in regard to its content but also for the general attitude that he had in his mind when making that speech. I say that because I think the House, and we on this side in particular, recognise that what the noble Earl has now said is in fact a complete reversal of what the Party opposite had in store for the coal industry when they achieved power in 1970. So while some of us may have had some suspicion of what were the real intentions, I believe that the noble Earl's speech, and particularly the manner in which he made it, will give us some assurance. I shall be particularly anxious to hear what my noble friends Lord Blyton and Lord Taylor of Mansfield, two Members of your Lordships' House who have not only an intimate knowledge of the industry but a continuing one with those who work in it, have to say, to see whether (as I hope they will be able to say) those who now work in the industry feel reassured as a consequence of the statement made last year by Her Majesty's Government and which is now contained in this Bill.

The noble Earl referred, I think on two occasions, to the fact that this Bill will put the industry back on its feet. The strike of last year had a devastating effect, not only on the financial condition of the industry but also on the structure of the pits. Like the noble Earl, I do not intend to say a great deal about that particular episode. It is, however, a matter of regret that there had to be this major injury to this industry in order that the miners could obtain pretty well all their demands as a consequence of the Wilberforce Inquiry into pay and conditions in the industry. It is a matter of regret that there was not the machinery available, or acceptable to the two sides, to find a proper solution (as eventually the Wilberforce Committee found) without having to go to the length of that disastrous strike.

I will return now to the subject of putting the industry back on its feet, for if one looks at the whole history of the coal industry since it was nationalised it can be seen that it has been one of gradual (but developing in momentum) improvement, not only in the conditions of its workforce, in which not only the Board but previous Governments can take pride, but also in increasing efficiency. One only needs to look at the various graphs that are to be found in the last annual report of the National Coal Board to see how significant those improvements have been. It is indeed gratifying to read in this report of the major improvements in productivity that the Chairman of the National Coal Board can report, following the strike. One of the remarks of the Chairman that struck me as of great significance was about the determination of the Board that as a consequence of that strike there had to be much closer consultation between the two sides of the industry. All the information that I have received during the past two or three weeks since I was asked to speak on this Bill leads me to believe that the two sides in the industry are now closer together than they have been for many years. That is indeed gratifying.

With regard to the Bill, a very large sum of money is being written off, and I think the Government are right. There is no purpose in having this sort of deficit around the neck of the Board. It is not only depressing but it also puts any future figures out of perspective, and if one is starting again after that strike I think it is right that one should start, as I believe the Minister in another place put it, "with a clean slate". If one has a clean slate, then the new figures, whether they are surpluses or deficits, will have a much greater sense of reality.

On this side of the House we particularly applaud Clause 9, which deals with regional grants. Those of us who have had any experience at all of the mining areas will know that a great deal needs to be done there, and if one can in any way slow down where retraction is necessary in order that new industry and new services may be brought in, so much the better. I suspect that at the end of the day the total sum that may be expended will not only be well worth while but in fact will be a great deal cheaper to the State than if it were left and had to be dealt with many years later. We applaud Clause 3 dealing with redundancy payments, the loss of superannuation and employment prospects; and also, in particular, Clause 5 which provides for mineworkers' pensions. All these provisions are not only right and just towards those who work in this contracting industry but I believe that they will help to create the right kind of atmosphere that is necessary for real co-operation between Board and management.

Naturally we on this side of the House fully support the Bill and we shall certainly help towards getting put on the Statute Book within a matter of weeks, because I see that some of the clauses require to be implemented from April 1, which is not so long away. The last thing I would say is this. I should like to congratulate the industry and the Board in particular on the extent to which this very dangerous form of employment is being dealt with. The way in which the number of accidents involving injury have been regularly and consistently reduced, particularly the significant fall in the last two years, is quite dramatic. Unfortunately, some 50 or 60 miners a year still lose their lives. Efforts are being made, I know, to reduce this number, and when one looks at the total figure of accidents and casualties there is reason to hope that the Board and the National Union of Mineworkers can, in the end, make this industry a great deal safer than it now is.

With those few words, and with a special commendation to the noble Earl and the Government for having introduced this Bill and for having changed their policy, we on this side of the House shall support this Bill and will see what we can do to get it on the Statute Book by the right date.

3.22 p.m.

LORD BLYTON

My Lords, during the miners' strike last year, I moved a Motion in relation to that strike and I dealt somewhat exhaustively with the financial position of the coal industry. I said then that sooner or later the Government would have to make a financial reconstruction as the industry could not carry the burdens they were then carrying. Everyone knew that it was impossible to make a viable industry under the financial restrictions from which they were suffering. The last capital reconstruction was in 1965, since when 230 pits have been closed and we have reached the stage where the National Coal Board can have an operating surplus of £100 million without the industry's accounts showing a profit.

All those pits have closed and the N.C.B. have been burdened with the payment of assets which have gone. Everyone knew that the debt was too high in the light of the assets and the decline of the industry. Payment of those assets—that is, the pits that have been closed and are gone for ever—has meant that we have been paying for and servicing debts on machinery which was no longer in use at pits which closed. Those with a knowledge of the industry know that the charge per ton in interest is higher to-day than it was in 1965 when the Labour Government knocked off £415 million. The burden on the industry since then has been the weight of debt, and it is higher to-day than ever before.

The coal industry has had no reorganisation of its capital debt since 1965, despite a contraction of about one-quarter of our market for coal and all the closures that have taken place. They lost £157 million last year and expect to lose £100 million this year. The accounts of the coal industry over past years have been severely affected by the artificial continuation of massive debt burdens, and we have seen large operating surpluses of the industry in the past concealed by the massive interest and depreciation provisions. Those who understand the industry knew that this could not go on. I remember that last year, when dealing with this problem, we were told that if the strike went on the men would be doing away with their employment; that it would all go. But all those cries of woe that I heard last year have been proven wrong: not one pit has been closed as a result of that strike and since the men went back to work their productivity has increased far more than private industry. We are producing over 45 cwt. per man shift, which is something like a 5 per cent. increase in production. The Board and the men are working hand in hand. They jointly put their case to the Government for capital reconstruction, and the Bill today is a result of the amicable negotiations between all parties concerned.

My Lords, I not only welcome this Bill but I welcome the change of policy that is embodied in it. It is clear that the Government have rejected the policy of the last 12 years of letting the coal industry find its own level without aid being provided. The Minister said in another place on December 21, 1972: … we rejected that course"— that is, that the industry find its own level— as one which would have led to intolerable consequences both on social grounds and because it would have imposed an unacceptable danger to the security of the country's supplies of energy"—[OFFICIAL REPORT, Commons, 21/12/72, col. 1601.] If I understand that aright, it means that coal is to play a more vital part in our future energy requirements.

For years in another place, when I spoke as a Front Bench Member in Opposition, the Miners' Union and the miners' M.P.s all put forward this point of view but we were always told that in competition with other fuels the industry had to find its own level. And what have we witnessed? In 1955, we had 705,000 men in the mining industry: today, we have 208,000. Over 400 pits have been closed during this period, and even in the period of my own Government 230 pits were closed. There was a write-off in 1965, as I have said, but as everyone knows, it became apparent early in 1969 that there was a necessity for the further write-off that is embodied in the Bill. After all these pits were closed, the capital debt hung around the industry's neck like an albatross, especially as the industry was so much smaller.

I want to speak now about what is to arise from this turn of events. Are we to get an energy policy in which coal will have a larger share? What should this policy be? What are its short term aims to the mid-seventies and the longer term aims after the mid-seventies? Much is written to-day about the uncertainty of the future availability and price of energy throughout the world. The Government themselves will have to make a judgment of the risks and the costs of alternative courses. All the estimates in the past have been wrong; each one that was produced "bashed" the coal industry, until our share of the market is now about 42 per cent., compared with 90 per cent. in 1950, of the total energy demand. Successive Governments, Labour and Tory alike, encouraged other fuels, like oil and nuclear power, imported liquid methane for gas purposes; that brought our industry down from 230 million tons of coal in 1950 to 141 million tons in 1971.

As we were running the coal industry down in this country, America and Russia five years ago saw the long term danger of this course; they encouraged the use of coal, and increased output to safe proportions within their own economy. In making a judgment of the risks and the costs of alternative courses the Minister said in December last year: In making that judgment, the Government must have in mind the virtually irreversible nature of pit closures, and the cost of sinking new pits. It must also weigh the effect on our balance of payments of the use of different fuels. At present we believe that it would be foolish to allow an over-rapid contraction of the coal industry."—[OFFICIAL REPORT, Commons, 21/12/72, col, 1601.] I am delighted, after all the years we have argued in another place and our representations have fallen on deaf ears, that there is this change of policy, though years belated, that I now rejoice so much about. The stage has been reached when contraction ought to end. I am not speaking of pits where reserves are exhausted; they naturally go out. I am certain that contraction would leave the country with an energy gap in the short term; but also we would be subjected to energy shortage in the long term if contraction were carried to any degree.

The miners for their part have shown how much they can contribute. Productivity has reached an all-time record, and the industry is now operating at the highest level of efficiency. That is there to be seen. We can compare this achievement with any of the coal industries of Europe, who are more State-aided than, or as much as, the Coal Board will be on the passing of this Bill. Only recently there were Press reports of the plight of the German coal industry, our largest competitor in Europe. It is known that the power stations of North Germany were able to buy British coal much more cheaply than coal from the Ruhr, even though German coal is at present much more heavily subsidised. Even before the overtime ban in 1971 and the strike in 1972 coal was being produced at a profit in our country, while in the Ruhr it was being produced at a deficit.

On December 11, 1972, the Minister in his Statement said that … fuels which appear to be expensive at present may prove to be rather cheaper in years to come.—[OFFICIAL REPORT, Commons, 11/12/72, col. 35.] This has been fortified by the statement made by the Chairman of the Coal Board, who said: While part of Europe's coal production is uncompetitive with oil and other fuels to-day, it seems likely that it will be much more competitive by the 1980s. Speaking about future trends developing in world-wide energy demands which make it vital for us to conserve our basic resources, the Minister said: Some major European countries and the United States are aware of the impending problems". There are immense problems. Nuclear power, which 10 to 15 years ago was to replace coal, is coming along very slowly. I still take the view that the coal-fired generating station in its proper place will outstrip any nuclear power station. Comparing like with like, nuclear power has not yet been competitive with coal. Millions of pounds have been poured into the nuclear energy programme, and we have not yet had any return from urging it on. Let me be quite clear. It is not that I do not want a nuclear programme. Before the Public Accounts Committee Sir John Hill said: So far we have not been able to generate more cheaply by nuclear means than by conventional means. This is confirmed by the fact that the C.E.G.B. Dungeness power station is now four years behind schedule, and its cost will be more than double the original estimate of about £80 million. It will be many years before nuclear energy has parity with coal.

The chairman of the C.E.G.B. has said that if the price is right the Board would take 75 million tons of coal or more a year. I ask that Drax B be put on coal, and that there should be an increase in coal-fired stations in the future. With the aid provided for the N.C.B. in this Bill I think the price can be right for them. Supplies of natural gas, a clean and useful fuel, are of limited duration. We should conserve this fuel as much as we can. Mr. John License, chief economist of the Gas Council, has warned that it would cost more and that it would be a great mistake to use this domestic fuel for raising steam in power stations. While I do not wish to appear in any way to criticise the C.E.G.B., I hope that in their annual report the Government will reject this idea that they should have more gas. We have to know much more about the amount of natural gas in the North Sea. I am sure the Government are not enthusiastic about letting them have it, and neither is the Gas Corporation. Until more is known, it is right that it should be restricted, especially when coal is still admirable for steam raising.

Now to oil, my Lords, which may be plentiful to-day from the Middle East, but it is going up in price all the way and this trend will continue. These oil producing countries are now determined to extract as much as they can get for their oil. The oil sheikhs are doing this through their organisation which is called OPEC and I only hope the Government will follow the example of the oil sheikhs in their approach to the royalties that are in the North Sea. However, the price of Middle East oil is steadily rising and is certain to go higher in the future to satisfy the needs of America, which we learn is to become a net importer on a huge scale. The dimensions of the United States energy crisis, which will have great impact on the rest of the world, can be judged by the estimate that the United States adverse balance of payments for oil alone can rise from 2 billion dollars to 30 billion dollars in 10 years or less. That is why America is aiming to double its output of coal in the 1980s and to recruit and train another 50,000 additional miners by 1975. Why, even the Committee of the European Coal and Steel Community have been urging Britain and her new partners to promote their own coal-mining industry in order to avoid over-dependence on non-member countries for energy requirements. Everyone knows my views on the European set-up, but at least it is something to see them change their attitude from the position they have taken up against coal in the past 10 years to my knowledge.

Do not let us pretend to ourselves that all our energy requirements will be solved by North Sea gas or North Sea oil. This welcome addition to our energy resources is not likely to be with us until 1974, especially oil, and then very slowly; and so far as we know it is of limited duration. It is hard and expensive to get, as expensive as Middle East oil, and it is known that Britain will never be self-sufficient in oil. Even the Chairman of Shell last year urged the Government to encourage the mining of all coal which can be got out of the ground economically.

I do not want to go over the clauses of the Bill. The Minister covered them excellently. I want only to say a word about Clauses 4 and 6. Clause 4 relates to redundancy payments. The time has come when these ought to be stepped up. A man at the pit with 45 years' service gets about £800, yet if he had been a docker with this length of service he would have got three or four times that amount. I hope the Government will be generous in this matter. Clause 6 refers to the sale of coal to the generating boards. I hope the Government will promote the burning of coal. If the electricity market for coal contracts it will make this Bill impracticable. Coal-fired stations in the right places should be built, to give this coal industry a chance in the future, at the same time preventing this country from being held to ransom on energy supplies. That is my case, my Lords. I wish the Bill well and hope it will soon be on the Statute Book.

3.45 p.m.

LORD TAYLOR OF MANSFIELD

My Lords, may I say first of all how very grateful we are to the noble Earl for a cogent exposition of some of the clauses of this Bill, which, when we read them, appeared to be somewhat complicated. Speaking for myself, after the explanation the noble Earl has given, they are much clearer than they were. May I ask a question to which I think the noble Earl can get the answer if he does not aready have it in his mind? Prior to 1970 there used to be a little pamphlet produced by the Department giving a mine of information, a lot of useful statistics about global output, output per man shift, absenteeism, and every matter connected with the industry. How many of us used to receive that I do not know, but I have not had one since 1970. This pamphlet presented a picture of the coal industry which was easily assimilated. Could the Minister say whether that has gone out of production? If it has not, speaking for myself, I should be very pleased to have one in the future.

The most significant pronouncement made by the noble Earl was that this coal industry has an important part to play in the future. Some of us have believed that for many long years. May I also say that the industry has been confronted with deficits and financial liabilities. Before the beginning of the strike of 1972, with one exception, the mining industry every year has produced an operating profit, but it has been crippled by financial liabilities. The amount of interest that has been paid out since the industry came into public ownership is really fantastic, and if a new approach, first in 1965 and now through the medium of this Bill, had not been made, so far as this industry is concerned those financial liabilities would have continued like an albatross around the neck of the mining industry. Like the speakers who have preceded me. I give a hearty welcome to this Bill because I believe that it holds out a better prospect for this industry and charts a new course, and it seems to me that this Bill is an important milestone, landmark—whatever one likes to call it—for the coal industry of Great Britain.

May I with all sincerity say this to the Government. The financial proposals in the Bill are by no means ungenerous, but what is of outstanding importance is that it recognises the necessity for a forward look and for facing the realities of the not-too-distant future regarding fuel supplies and energy requirements. To me, that is one of the most important indications of the Bill. No nation, particularly a highly industrialised one with modern techniques and sophisticated machine power, can afford to ignore the fact that energy is basic to the maintenance and improvement of the standard of living of the people.

Take our own country as an example. I know that this is elementary—there can be no contest, no quibble at all about it—but every section of our industrial and manufacturing processes requires fuel of some kind. Further, every household, every office, every building and shop, needs heat and light, and modern technology is such that energy produced by natural fuels of some kind, solid or liquid, is a "must". I submit that there is no escaping that fact. I suggest that on that point there is complete unanimity. There may be a difference of opinion as to which fuel, indigenous or imported, should be preferred, but one factor stands out very clearly, and that is where the preference of every post-war Government has been: oil, most of it imported, has continued, as my noble friend Lord Blyton has said, to increase its share of Britain's energy requirements. In fact, in the last decade oil has increased its share of Britain's energy requirements from 24 per cent. to 46 per cent., and mainly at the expense of coal.

I have held the view for some years now that every post-war Government has been mistaken in placing too many eggs in the oil basket. Why has that been my view? I give two or three reasons. No. 1 is the political instability of the areas from which the oil comes. I think we have been lucky in this respect; there has only been the Suez crisis and the cutting of the pipeline across the Syrian Desert jeopardising our oil supplies from the Middle East. Point No. 2 is that this colossal importation of oil has affected our balance of payments. Point No. 3 is that it has meant the contraction of the industry, with the social effects which my noble friend Lord Blyton described. Those three factors have led me to the view that we have put too many eggs in the oil basket.

May I at this point make a brief reference to the National Union of Mineworkers respecting the consistency of its advocacy of an integrated fuel policy based on the maximum use of indigenous fuels. For more than twenty years this has been the line of the N.U.M.—and since long before the discovery of gas and oil in the North Sea. This welcome additional indigenous asset does not detract in any way, in my view, from the validity of the fuel policy which the union have put forward for so long. In October last year—and note that this is since the discovery of oil and natural gas in the North Sea—the National Union of Mineworkers issued a statement, and I quote merely the first paragraph: If current trends in the fuel and energy spheres continue, then Britain and the rest of the industrialised nations could be facing an energy shortage which would destroy the fabric of society as we at present know it. They went on to say that there is no desire to exaggerate the situation, but simply to make out a case for increased coal production.

To learn what the trends were in this field of fuel and energy, I began a little research, and I sought knowledgeable and what I should regard as expert opinion on consumption and the reserves of fuel that would be needed to meet the energy requirements not only of the moment but of the future. My discovery was that energy consumption in the 50 years from 1900 trebled, but in less than half that time—that is, in 20 years—it trebled again. Present world energy requirements are increasing at the rate of 300 million tons of coal equivalent every year. This latter figure is the present combined output of coal in the whole of Western Europe.

The main increases in world energy use have been in oil and natural gas. However, world coal output has risen, except in Western Europe. It has been said by one authority that the decline of coal production in Western Europe must be regarded as misconceived. On the evidence that I have seen, energy requirements will go on increasing for the foreseeable future. May I give a figure that has been produced by the United States Department of the Interior and the United States National Petroleum Council as recently as 1971? They say that energy requirements in the world will double in the ten years between 1970 and 1980.

Now may I say just a word or two about fuel reserves, for the reason that projected energy requirements and fuel reserves are inseparable. I have found that few fuel economists could venture to say that our indigenous supplies of oil and natural gas will last much beyond the next 30 years at the present rate of consumption. Further, the United Nations Economic Unit has forecast that by the year 2,000 87 per cent. of all proven, probable and possible reserves of oil, and 76 per cent. of natural gas, would have been consumed, but only 2 per cent. of the reserves of coal here and in the remaining part of the world. If these forecasts proved to be correct so far as natural gas and oil are concerned, great emphasis, as my noble friend indicated, would have to be placed on nuclear energy or on the expansion of the coal industry, or both. Nuclear energy's contribution 10 years ago was negligible. In fact, until 1955 it was not even thought of as a possibility. Even to-day it is contributing only 3 per cent. towards our energy requirements. There may be problems—there have been problems—financial, certainly technical, and environmental, which no doubt have impeded the progress of nuclear energy.

Along with other noble Lords who have spoken, I very much welcome this Bill. It indicates to me, at any rate, that in Whitehall there has been a rethinking about the coal industry and the part it must play in energy requirements. To use the language of the Minister in introducing the Bill in another place on December 21, 1972, at column 1603 of the OFFICIAL REPORT: Our proposals will avoid contraction on a scale which would have been unacceptable on social grounds"— and I think this is perhaps the most important factor— and would have left us dangerously under-insured against a world shortage of energy. This Bill further spotlights and focuses attention on the important part which coal still has to play in energy requirements for a long time in the future. Since the end of 1956, almost twenty years ago now, the coal industry has had a very rough time in the sphere of contraction of output; redundancies, removals from one coal field to another, and the social consequences and dereliction arising out of the unprecedented contraction of the industry in some areas of the British coalfields has been alarming. It is no extravagant language to say that for almost twenty years the coal industry has had a severe battering, and in the process morale has been eroded. I do not propose, because it is so well known, to relate in statistical form the numerical decline in manpower and global output. The position was well put by the Vice-President of the National Union of Mineworkers at last year's Trades Union Congress. I quote his opening paragraph: In our opinion, the policies pursued by Governments who have allowed the catastrophic contraction of the mining industry to take place over the past years … will turn out to be penny wise and pound foolish and our nation will suffer as a consequence. This statement was made before it was known what was in the mind of the Government and before the publication of this Bill. In December last year, prior to the publication of the Bill, there was no evidence, so far as my recollection goes, that there was likely to be any change in policy respecting the coal industry. In fact, quite the contrary, if the pundits of Fleet Street are to be taken seriously. A columnist in the Daily Telegraph had quite a lot to say after the miners' strike about the mining industry. I will only quote from the Sunday Times of February 20, 1972, a headline which said: "Farewell King Coal: the King is dead."

My Lords, after reading this Bill and noting the speeches of the noble Earl and the Ministers in another place, my conclusion is that there has been rethinking about the part which our indigenous solid fuel will play in the meeting of our energy requirements for the future. I believe this Bill expresses the justified apprehension respecting the danger of relying too much upon imported fossil fuels to meet the energy requirements of the future. One could say quite a lot more about that, but I want to ask the Minister one or two questions about Clause 1. What will be the saving to the Board in interest payments? I understand that the slate is being wiped clean, but there will still be an outstanding financial liability in the form of a loan of £375 million. Perhaps the Minister could give some enlightenment on that particular point. Then I would ask, what is meant by payments to the Board for promoting the Electricity Generating Board in England and in Southern Scotland? The position at the moment is that the Electricity Generating Boards were reimbursed themselves for the amount of coal burnt.

My Lords, this Bill, so far as I have been able to ascertain, is welcomed by all in the industry. I think all in the industry have made a contribution to it, the Board and the unions. It will be of assistance in arresting further decline of the industry, which in my view would be detrimental in view of the possibility of growth in our energy requirements and the possibility of relying too much on imported fuels. My Lords, I welcome this Bill this afternoon.

4.8 p.m.

LORD WYNNE-JONES

My Lords, I must apologise, especially to the noble Earl, Lord Ferrers, for not having been able to be present when he introduced this Bill. Unfortunately I had to be present at another meeting. There are one or two reasons why I feel that the Bill should be particularly welcomed. I think the Government are to be congratulated upon the Bill. In the first place, as has been pointed out, it helps to put the coal industry upon a good financial basis, not only in the sense of cutting off its liabilities for the past but also in giving it a good probable future. As other noble Lords have said, particularly the noble Lord, Lord Blyton, and the noble Lord, Lord Taylor of Mansfield, the coal industry is going to play an increasingly important part in supplying the energy of this country.

In the first place there is no doubt, as has already been said, that coal ought to play an extremely important part in the production of electricity. It is eminently suitable for the production of electricity. It is not suitable for driving steam engines—the efficiency is far too low; it is not suitable for the ordinary domestic fire—again the efficiency is low and a lot of dirt is produced. But it is eminently suitable for producing electricity. It may be that one ought to look a little further into this point. At the present time probably the cheapest way of producing electricity is to have the electricity station at the pithead. But if we do this we then have to face the high cost of distributing electricity.

It is interesting to observe that if it costs, let us say, £1 for distributing a certain number of units of oil by pipeline, it costs £3 for distributing the same amount of gas in thermal equivalents by pipeline and it costs £10 for distributing electricity by means of a grid. In other words, the distribution of electricity is much more expensive than the distribution of oil; which is one of the main reasons why oil has been so popular as a fuel. If, however, one were to use a pipeline for distributing a coal slurry, I believe all the evidence is that it would be comparable in cost with the distribution of oil. So it may be that it would be more economical not to try to site one's electricity generating stations near pitheads, but to site them closer to the consumer and to distribute the coal by means of a pipeline to the electricity stations. It seems to me that it is in exploring this type of scheme that we could probably make a distinct advance in cutting our energy costs. All this means a good deal of expenditure in investigation, and this Bill should help the Coal Board in carrying out further investigations into the most economical ways of utilising coal.

I believe that it is also extremely important that the level and volume of research into coal and its uses should be maintained. It is well known that when an industry, especially an industry such as the coal industry, is faced with financial difficulties the first thing it will do is to cut its expenditure on research. It is therefore extremely valuable that in this Bill we have machinery for enabling the Coal Board to have resources which will help it to maintain research on coal, both in its own establishments and throughout the country, because it is only in that way that we shall get a proper utilisation of coal.

The final point to which I wish to make reference is raised in Clause 8 of the Bill, which interests me particularly: I refer to the question of coking coal. Here we have the link between the coal industry and the iron and steel industry. The importance of coking coal for the iron and steel industry is absolutely paramount. It is quite essential that we have good, hard coke produced for blast furnaces. In the old days, one had to go to those parts of the country where there was good coking coal. That is one of the factors that built up the reputation of the county of Durham from the coal industry's point of view. It had the best coking coal, certainly in this country and possibly in the world. It was superb coking coal. But as that coking coal has become exhausted we have found it absolutely essential to use other methods and by continued investigation it has proved possible to get just as good coking coal by blending other coals, which in themselves are unsuitable for coking. This has saved the situation in this country and elsewhere for the iron and steel industry. Therefore, I am particularly glad that in Clause 8 there is special reference made to … measures for securing supplies of coke for use in blast furnaces by the iron and steel industry in the United Kingdom", and that there is to be made available a sum not exceeding £75 million for helping in the supply of coke for the iron and steel industry. I think that these are very important steps, and that it is excellent that we should have this Bill, which I strongly recommend to the House.

4.15 p.m.

EARL FERRERS

My Lords, I am very grateful to noble Lords who have taken part in the debate on the Bill, and for the welcome which they have given to it. Indeed, every noble Lord who has spoken has been grateful for the Bill and I should like to thank them for their remarks. The noble Lord, Lord Shepherd and the noble Lord, Lord Blyton, could not help twitting the Government about their change of heart. The noble Lord, Lord Blyton, said that he rejoiced in the Bill and I am glad that it has given him an opportunity for rejoicing. I think that the message to be taken from the Bill is not so much the fact that there has been a change of heart, but that the Government have done what they always intended to do, which was to ensure that the right thing was done for the coal industry in all the circumstances which obtain.

The coal industry has many peculiarities. It is a labour-intensive industry, it has faced mechanisation on a considerable scale, it has faced a contraction of demand through no fault of its own, and it employs many men in small localities which have few alternative methods of employment. The coal industry also produces a type of energy which is vital, and because one does not know what future requirements will be it is essential that the industry is put on a viable footing and kept there. As regards the contraction of the industry, it might be helpful to look at the figures for the years 1955 to 1971, because they are interesting. In 1955, industry used about 45 million tons and it now uses 13 million tons. In 1955, the railways used 12 million tons of coal and they now use 0.1 million tons. In 1955, gas-works used 28 million tons, and they now use 1.1 million tons. In 1955, the total production of coal was 229 million tons and it is now 128 million tons.

I give those figures simply because they are the result of a change of circumstances. Everyone knows what has happened on the railways, but the fact that they now do not buy coal does not mean that the coal industry is a dying one. That situation has come about because of a change of circumstances, and that is the type of problem which the coal industry has had to face. I agreed with the noble Lord, Lord Wynne-Jones, when he rightly said that coal is an excellent fuel for producing electricity, and that is one of the reasons why 70 per cent. of the electricity generated is produced from coal. To quote those same two years again, in 1955 the electricity industry used 43.5 million tons of coal and in 1971 it used 67.7 million tons, and that increase underlines the point which the noble Lord made. I think it was the noble Lord, Lord Blyton, who quoted the chairman of the Central Electricity Generating Board who said, "If the price is right". If the price is right, there can be opportunity for greater uptakes of coal, and that is one of the reasons why we have made provision in the Bill for the extra burn.

My Lords, the noble Lord, Lord Blyton, said that coal is better than atomic energy for the making of electricity. I should not wish to go into the arguments between the two different types of fuel—indeed, the three or four different types—used for making electricity, but I would confirm that coal is a vital component for the making of electricity. The noble Lord said, not unsurprisingly, that he hoped that Drax B would be a coal-fired station. This station is in the programme of the Central Electricity Generating Board, but they have made no proposals for the construction of a coal-fired station at Drax B, nor have they any firm plans for major station orders at present; but the support for extra coal burn, which is proposed in this Bill, is the best way, I would suggest, of supporting coal demand at the present time. The noble Lord also asked whether the redundant mineworkers' pensions scheme could be looked at, and looked at more generously. As I said in my opening remarks, a new scheme is being discussed at the moment with the boards and the unions, and proposals will be put before Parliament when those discussions have been concluded and at the appropriate time.

The noble Lord, Lord Taylor of Mansfield, whose knowledge of the coal industry, like that of the noble Lord, Lord Blyton, is deep and, if I may say so, much respected by us, asked what had happened to the coal statistics. I will see that the noble Lord receives a copy of the most recent statistics in order that he may be able to digest them, if that is the correct expression. He also said that the financial provisions in this Bill were not ungenerous. My Lords, the noble Lord, Lord Taylor of Mansfield, is not usually one for an understatement, but I think that on this occasion he was possibly guilty of that slight error, because if one takes the first two clauses and considers the amount that has been written off the coal industry's accumulated debts and the amount involved in writing down of their assets, they total to about £450 million. The total provisions allowed for in this Bill, coupled with those which they may be allowed if the provisions are taken to their extremity by order up to 1978, is of the order of £695 million. So this Bill, at its maximum, could account for a sum of £1,145 million. I think that the noble Lord, Lord Taylor of Mansfield, will agree that that is not an ungenerous sum of money.

LORD SHINWELL

My Lords, I am sorry to interrupt the noble Earl, and I did not want to take part in this debate—my noble friends know more about it than I do—but the noble Earl has referred to the argument by Lord Taylor of Mansfield that the financial provisions of the Bill are not ungenerous on the part of the Government and is now saying that he thinks they were excessively generous. Let me tell him at once that if, since nationalisation, the coal industry had received from the iron and steel industry a price which was reasonable, instead of the coal industry selling its product to the iron and steel industry below cost, then it would just have balanced the provision that the Government have made by offsetting the debt of the National Coal Board, as they propose to do in this Bill.

EARL FERRERS

My Lords, I should not wish to follow the noble Lord, Lord Shinwell, in his nuances as to what would have happened if people had paid more. I should think that if he had used that same argument on the domestic sector or any other sector he might have come to the same conclusions; but I cannot really see the noble Lord using those arguments at the time when he is suggesting that they should have been used. No, my Lords: I did not say that this Bill was excessively generous. I was agreeing with the noble Lord, Lord Taylor of Mansfield; and I said that I thought that his expression of "not ungenerous" was possibly an under-statement. But I accept the point.

The noble Lord, Lord Taylor, asked what would be the saving in interest charges. The answer is, about £25 million a year; and there will also be a saving in depreciation of some £17 million a year. He also asked about the sums of money that have been spent previously in coal burn. As the noble Lord knows—and, indeed, I think he said as much in his speech—the payments for extra burn were made to the Central Electricity Generating Board, and the 1967 Act authorised £45 million for this sum. In the event, only about £20 million was spent, and that was between 1967 and 1969. As the noble Lord appreciates, any money now spent on extra burn will in fact be paid to the Coal Board and not to the Central Electricity Generating Board.

I was particularly grateful that your Lordships should have given this Bill the welcome that it has received. We wish to do the right thing for the men in the coal-mining industry. We wish to do the right thing for the assisted areas. We wish to do the right thing for the industry as a whole, to put it on its feet and to make it as viable as possible. Equally, we want to do the right thing for the taxpayer and the consumer, and also to make provision for whatever energy requirements may be forthcoming in the unknown future. It is in order to try to accommodate all these different points of view that the Government have brought this Bill forward. My Lords, we wish the Coal Board well in its new task. We wish the miners well in their new task. We wish well, too, the relationship, to which I think the noble Lord, Lord Blyton, referred as "this amicable relationship" among the Coal Board, the unions and the Government. This Bill, I hope, is tangible evidence of our support for the industry and of our hope that the industry will be able henceforward to go on with sure conviction.

On Question, Bill read 2a, and committed to a Committee of the whole House.