Coal Imports (Hansard, 18 October 1989)

§ Viscount Ullswater
My Lords, my right honourable friend the Secretary of State for Energy meets the chairman of British Coal regularly to discuss all aspects of the coal industry.

§ Lord Dormand of Easington
My Lords, in the restructuring of British Coal's finances, which is soon to take place, will the Government give special consideration to the treatment that British Coal is 912 receiving from the electricity industry, bearing in mind that in recent years British Coal has reduced the cost of coal supply to that industry by no less than £650 million? Secondly, does the Minister accept that the obtaining of short—term contracts for coal on the spot market by the electricity industry, particularly in Rotterdam, will not ensure the certainty of supply which the British coal industry can provide for many years to come?

§ Viscount Ullswater
My Lords, it is not the Government's policy to restrict imports of coal. It would be wrong to compel coal users to purchase supplies from British Coal by denying them the right to buy from elsewhere. Restricting competition will not bring long-term security to the British coal industry and the best protection is to produce reliable supplies which are competitive on the world market.

§ The Earl of Lauderdale
My Lords, does my noble friend agree that the miners' fears about imported coal are largely exaggerated because the facilities for importing coal in bulk are small and, compared with production, the amount of coal traded is also small?

§ Viscount Ullswater
My Lords, I agree. It is important to put the imports of coal into context. During the past two years coal imports of about 12 million tonnes per annum have amounted to only 11 per cent. of inland consumption. Over 60 per cent. of the imports are coking coal for the iron and steel industry. They are needed because the UK pits can no longer supply sufficient quantities to meet our industries' requirements.

§ Lord Mason of Barnsley
My Lords, perhaps I may put the matter in perspective from our point of view. Is the Minister aware that, since 1985, 83 pits have closed and 91,000 men have been declared redundant, resulting in unemployment and misery in the British coal fields, while at the same time Her Majesty's Government import 12 million tonnes of coal every year—equivalent to the jobs of 6,000 miners? Where is the social justice and economic sense in that?

§ Viscount Ullswater
My Lords, the output of British Coal has remained constant for five years despite the closures. The productivity has risen enormously. However, the productivity of our main competitors—that is, Australia and the United States—is still more than three times as high and improving rapidly. There must be further productivity growth if the industry is to compete successfully and that means the continued spread of more flexible working methods.

§ Lord Ezra
My Lords, bearing in mind that during the past four years productivity in British mines has risen by more than 90 per cent. and that during the past two years imported coal prices have risen by more than 50 per cent., will the Minister agree that on economic grounds and bearing in mind the long—term prospects it would be highly imprudent for there to be further substantial substitution of indigenous coal by imports?

§ Viscount Ullswater
My Lords, the prices quoted by the noble Lord may be correct. It is still a fact that coal imports are substantially below the pithead price of coal in this country. The Government have invested £6.5 billion in the coal industry since 1979. We are continuing to invest at over £2 million every working day because we have faith in British Coal and in the ability of management and men to improve performance still further. I believe that that is a fine record.

§ Lord Williams of Elvel
My Lords, will the Minister kindly recognise that, again, here is a case of short-run price advantage taking precedence over long-run economic and social advantage? Will he recognise that we can close down an industry or a mine but we cannot open them up again? By their policies of encouraging imports the Government are not looking forward beyond their collective nose to see what will happen in the next century.

§ Viscount Ullswater
My Lords, the noble Lord is suggesting that we are trying to reduce the amount of coal produced by the pits. That is not so. The amount of coal being produced remains at about 100 million tonnes per annum. The future supplies to the electricity supply industry are now under renegotiation but we are committed to their remaining a major part of its fuel supplies in the future.

§ Lord Stoddart of Swindon
My Lords, do not the Minister and the Government understand the fact that while coal imports may now be cheaper than home-produced coal it may well be that at a later stage, when perfectly satisfactory British coal mines have been closed down and there is a shortage of home-produced coal, we shall be under price pressure from those importing and wishing to import more coal? Coal is a strategic industry and we allow it to decline at the country's peril. I sincerely hope that the Government will not put the country's fuel supplies in peril.

§ Viscount Ullswater
My Lords, as I have tried to explain, since 1985 the operating costs have fallen by 24 per cent. in real terms. British Coal has fully achieved the objective of a 20 per cent. reduction set by the Secretary of State in March 1987. However, continuing improvements can and must be made if British Coal is to be fully competitive.

§ Lord Cledwyn of Penrhos
My Lords, does the Minister concede that these exchanges show an urgent need for a clear statement of government policy on energy and the coal industry in particular? Will he tell the House and the country whether the Government have in mind to privatise the coal industry and whether their current policy is directed towards that rather squalid end?

§ Viscount Ullswater
My Lords, the question put to me by the noble Lord the Leader of the Opposition is wide of that on the Order Paper concerning imported coal.

§ Lord Dormand of Easington
My Lords, are your Lordships aware that it is a long time since we have had so many red herrings dragged across that Dispatch Box about the state of the British coal industry? When the Minister mentions that most of the coal imported is coking coal, is he not aware that that is due to the fact that this Government have closed the coking pits in this country, including all those in the North-East? How much emphasis do the Government place on the social effect on the mining communities of this country?

§ Viscount Ullswater
My Lords, I believe that the social effects are important and British Coal has sought to alleviate them wherever possible. It still remains that the production of coal must be competitive. I reiterate that the percentage of coal imported is coking coal which cannot be economically produced at this moment in this country.

§ The Earl of Lauderdale
My Lords, does my noble friend not agree that every Member of the Opposition who has bought a foreign car has helped to put a British car worker out of work?

§ Viscount Ullswater
My Lords, I note my noble friend's comment.