Coal Industry Bill

HL Deb 26 February 1990 vol 516 cc515-67

3.10 p.m.

Viscount Ullswater

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(Viscount Ullswater.)

On Question, Motion agreed to.

House in Committee accordingly.

[The Chairman of Committees in the Chair.]

Clause 1 [Deficiency grants to British Coal Corporation]:

Lord Graham of Edmonton moved Amendment No. 1: Page 1, line 5, leave out ("may") and insert ("shall").

The noble Lord said: Those who follow these matters will understand that this amendment in the name of myself and the noble Lord, Lord Williams, seeks to bring a greater measure of certainty into the Government's intentions. Although Ministers in another place and here have not been prepared to accept that the raison d'être of this Bill is to prepare the coal industry for privatisation, the reality is that everyone knows that the Bill's intention, and this part of it in particular, is to give those who will be invited to invest in the future privatised industry a better product to buy.

On this side of the House we have no strong objection to action by the Government which is intended to write off very large sums of money in order to make the industry better and more viable. We object to the fact that it is to be done in the form of words as they stand at the moment in the Bill, which means that there is no guarantee that the Government will do it. There will be other amendments and other opportunities to amend the Bill. The whole purpose of these amendments at Committee stage is to probe the Government's intentions on a range of matters and to clarify the understandings that the Minister here and his colleagues in another place have given so far.

We are contemplating here considerable sums of money. The Government may say that they are not able to tell us precisely the sums of money involved until a later date. That is understandable. However, it is a habit on the part of the Government to write off large sums of money owed or to the debt of industry before that industry becomes privatised. I remind the Committee that we are speaking of possibly £5 billion or £6 billion. The Government have had experience of writing off comparable sums before. For instance, in the water industry they wrote off £6 billion in order to provide a sweet and clean industry for the private investor. For the British steel industry the sum of £4.5 billion was written off. For British Telecom the sum was almost £3 billion. By the time one has brought in British Telecom, one is speaking in terms of a sum approaching £20 billion. This Government are no stranger to writing off debts of public assets and publicly accountable industries in order to sell them on the open market.

Whether or not the industry is privatised we certainly agree that the accounts and accounting systems of British Coal over the years have been horrendous—some would say ludicrous—in comparison with the way in which other industries in this country and coal industries in other countries have had to be financed. We believe that the Government ought to be prepared to accept our amendment so that the clause will read: The Secretary of State shall, with the approval of the Treasury, make grants to the British Coal Corporation rather than, as it stands at present: the Secretary of State may … make grants".

So long as the word "may" remains in the clause, we believe that there is an element through which people may be cajoled, blackmailed or have a threat held over their heads. We do not want a lever or stick used against the management of British Coal to ensure that it complies with the Government's directions in this matter. So far as we are concerned the write-off is sensible and reasonable in the circumstances. However, we object to the fact that at the moment it is discretionary.

This amendment is an attempt to probe the Government's intention in this matter and to urge the Minister to say why, if he does not accept the amendment, he is not prepared to be more positive about the write-off. I beg to move.

Viscount Ullswater

To begin with I must say that this amendment is defective. It imposes a duty to pay sums of grant which are unspecified, except that they cannot exceed the expected accumulated loss next March. One cannot have a duty to pay out grants of unspecified sums. Who is to say, for instance, when that duty is discharged?

The amendment is not acceptable because it involves a potential conflict with our obligations under the Treaty of Paris. Under that treaty the European Commission is empowered to approve state aids to the coal industry. Deficiency grant is a state aid subject to the approval of the European Coal and Steel Community. In the unlikely event that the European Coal and Steel Community denied approval for deficiency grant, this amendment would force the Secretary of State to act in a manner contrary to the ECSC treaty.

The amendment could involve the Government paying out more grant in respect of British Coal's costs than British Coal in fact incurs. A large part of the estimated deficiency comprises provisions for concessionary coal (up to £2 billion) and deafness claims at half a billion. These provisions have been prepared on the basis of detailed estimates but the actual figures could be less. That is why the Government are proposing to pay British Coal grant in respect of these elements only when British Coal itself settles the concessionary coal and deafness claims and only in the amounts that British Coal itself pays.

I indicated to this Chamber on Second Reading that the Government intend to pay out a substantial sum in deficiency grant—but not the amounts relating to the long-term concessionary coal and deafness claims—once Royal Assent and the European Coal and Steel Community's approval of our proposals have been obtained, and that it was crucial for this purpose that Royal Assent was received before the end of the financial year. It is not possible to be precise about the amount as yet. That will depend on the corporation's trading performance over the remaining weeks of this year and on the amount by which the corporation's fixed assets have to be written down. The write-down of fixed assets has to be carefully consistent with the economic capacity that British Coal envisages in its forward strategic planning and that cannot be known with any certainty until the corporation's accounts have been finalised in July or August.

For those reasons I invite the noble Lord to withdraw the amendment.

Lord Williams of Elvel

The noble Viscount has been quite explicit in telling us why this is an enabling Bill rather than a Bill to explain to Parliament how much money the taxpayer is expected to pay in order to meet the accumulated deficit of the coal industry. It would have been perfectly possible for the Government to have put in Clause 1 that the obligation on the Secretary of State was subject to approval from the Coal and Steel Community. We would all have understood that. He has explained that and we certainly would welcome it appearing specifically on the face of the Bill.

The Minister went on to talk about deafness and concessionary coal, a matter which we shall address in Amendment No. 2. He then went on to talk about the possible write-down of assets, and at some stage we shall talk about the possible write-up of assets.

The principle remains that Clause 1(1) simply authorises the Secretary of State to take whatever initiative he may see fit, without the control of Parliament nor any decision from Parliament about what he shall or shall not do, to pay out certain amounts which at the moment are unspecified. We on the Opposition Benches do not feel that that is an appropriate expression of government intention.

I hope that the noble Viscount will be able to give the Committee some figures—they are reasonably in the public domain—about what the Secretary of State is proposing to pay out in grant from the Consolidated Fund and moneys provided by Parliament in order that we can have some idea about what the taxpayer is in for. Before deciding what to do with our amendment I should be grateful if the noble Viscount could elaborate on the matter.

Viscount Ullswater

I have given the Committee the figures for deafness and concessionary coal. The losses which have accumulated are in excess of £1 billion. The write-down of the assets is between £2 billion and £3 billion. However, as we shall discuss in detail in a moment, a figure has not been arrived at and possibly will not be arrived at until the end of the financial year.

Lord Dormand of Easington

I may not have understood the Minister. It could be implied from his comments that British Coal would be profligate in spending goodness knows how much money which, if our amendment is accepted, would be wiped off. In other words, it will take advantage of the situation. We are talking about a period of one month; the provision relates to the period ending 31st March 1990. Is the Minister saying that British Coal will take advantage of "shall" instead of "may" in order to spend more money on an item which it believes to be more useful to the industry, the miners or business generally? Is he saying that it will take advantage of a change of wording, especially when we are talking of a period of a little over one month? I repeat that the date in the subsection is 31st March 1990, and 1st March is on Thursday this week.

Lord Merrivale

Before my noble friend replies, I wish to seek clarification on what may be a simple matter. The amendment provides: The Secretary of State shall, with the approval of the Treasury, make grants to the British Coal Corporation". If the approval of the Treasury is not granted shall we be back to a state of "may"?

Lord Williams of Elvel

We are trying to provide that, subject to a proper review of the accounts and any accumulated group deficit at the end of March, which is not far away, the Secretary of State shall have an obligation. The review is objective and is designed to establish the balance sheet position at the end of March by normal accounting procedures. Under those circumstances, and to be absolutely frank, the Treasury will have little option but to agree to the Secretary of State's decision.

Viscount Ullswater

In answer to the noble Lord, Lord Dormand, it is the Government's intention to deal with the debts of the past—that is, the deficit which has mounted up to the end of March 1990, and the asset write-down required—in order to put British Coal on a better footing for the future. I have already explained the difficulty about the use of the work "shall" instead of "may". The sums are imprecise because they will be paid out for concessionary coal and deafness only as and when they occur.

Lord Williams of Elvel

I am sorry to take issue with the noble Viscount. At the end of March 1990 a balance sheet must be struck containing figures which are precise. I do not wish to speak about the next amendment but the amounts must be struck by the end of March 1990. That is what the Bill provides. If that is the case, how can the amounts be imprecise?

Viscount Ullswater

The balance sheet will be struck at the end of March. However, the amounts involved will not be known until the report is published much later in the year.

Lord Graham of Edmonton

The Minister has not satisfied me nor, I believe, the Committee. He says that the figures are uncertain but that at some date they will be made certain. Therefore, in jibbing at a change of words by hanging on to "may" and rejecting "shall" he leaves open the possibility that when the figures are known the Government may decide not to write off all the debts.

The Minister has not said that but the implication is perfectly clear. We understand the uncertainty about being precise. However, if there is no dubiety, whatever balance is struck on 31st March the Government will write it off. Therefore, why does the Minister not say, "Let us cut out this uncertainty. We shall write them off"?

While the Minister keeps within his power what can or cannot be done—that is the use of the word "may"—he is injecting into the situation a degree of uncertainty which is not good for the health of the industry. He said that the intention is to make British Coal healthier in the future, and we do not argue with that. We are daggers drawn across the Chamber in respect of what we know the Government intend to do with the industry and what we believe to be in the national interest.

I do not believe that at this stage we shall get any further with the Government. The Minister's collegues in another place, and also members of his department, cannot understand the fact that if the amendment is accepted there will be a sense of relief in many quarters and the value of the Bill to the Government will not be diminished one jot. However, he will not accept the amendment and I beg leave to withdraw it.

Amendment, by leave, withdrawn.

Lord Graham of Edmonton moved Amendment No. 2: Page 1, line 12, after ("accounts") insert ("which shall include provision for future liabilities arising from compensation for industrial deafness and concessionary coal").

The noble Lord said: The Minister sees the amendment as being a major matter, and I have no comment to make about that. We are using this stage of the Bill to obtain copper-bottomed guarantees in writing, if not in legislation, and therefore the Minister's words will have some meaning. The purpose of Amendment No. 2 is to ask for it to be written and understood within the Bill that future liabilities arising from compensation for industrial deafness and concessionary coal will be fully undertaken.

I believe that the Minister can help us by giving us some more detail. When I looked at the proceedings in another place I noted the words of Mr. Peter Hardy who, in Committee, said in terms that one does not need to be harsh or lacking in compassion when one prepares an industry for privatisation. There are others in this House today who are closer to coal mining communities than either the Minister or myself. I have been told that there is a certain amount of unease at the way in which British Coal has treated individuals who perhaps do not have the muscle or the ability to articulate which the Minister and I have in defence of our own interests.

I looked carefully at the words of Mr. Dennis Skinner who was a Member of the Committee in another place. He said that British Coal had already started telling widows who live in a tiny dwelling with only one fireplace that they will not receive the equivalent of five tonnes of coal per week and that the amount has been lowered.

We know that the incidence of deafness pro rata in the industry is higher than in other industrial processes. This amendment deals with people who, as part of their conditions, wages, pensions and way of life have received concessionary coal. That is part of what they have worked for and many have died for it. Sadly, a miner died last week working in a pit.

I am not saying that the Minister or the Government are unfeeling. However, I believe that the Minister can go a long way to diminish the worries and concerns as brought to us by those in another place who are much closer to the coal mining industry than either the Minister or myself. I beg to move.

3.30 p.m.

Viscount Ullswater

First, I should say to the noble Lord, Lord Graham of Edmonton, that the Government have no intention of writing down the amount of money put forward for deafness claims or concessionary coal. I believe that I should make that perfectly clear.

However, the amendment is largely unnecessary. The corporation included in its March 1989 balance sheet a provision to cover its estimated latent liability for deafness claims arising from its operations prior to that date. The Secretary of State has made clear that British Coal is expected to provide in its 31st March 1990 balance sheet for the full accumulated liability to that date in respect of concessionary coal, smokeless fuel and cash in lieu.

The amendment also requires a provision to be made in respect of future liabilities. It would be quite unacceptable in accounting terms to make provision this year for commitments and liabilities still to be incurred. Those will be a charge against the profits for the year in which they are actually incurred. Therefore, the amendment would be in conflict with the requirement of the 1946 coal industry's nationalisation Act that the accounts must be in a form which shall conform with the best commercial standards.

The limit on the proposed efficiency grant is set by the amount of the corporation's accumulated group deficit at 31st March 1990. The corporation has a range of liabilities and to the extent that those are properly provided for in its March 1990 balance sheet, those liabilities will also affect the corporation's accumulated group deficit to that date. The limit on deficiency grant will therefore automatically be sufficient to enable grant to be paid in respect of those liabilities. For those reasons, I ask the noble Lord to withdraw the amendment.

Lord Williams of Elvel

I should like to ask the noble Viscount a question about future liabilities to which he referred. It is clear from the corporation's statement of accounting policies that the charge which the corporation has admitted in its profit and loss in respect of noise induced hearing loss is made on a systematic basis. Those accounting policies in the annual report state that that is calculated over the average service lives of the employees concerned having regard to the current experience in the submission and the cost of settlement of claims.

We have had a variety of views in the past about what "settlement of claims" really means and, indeed, what current experience can show about future experience. It is perfectly proper in accounting procedure to have contingent liabilities. While the corporation may not wish to admit a real liability on its balance sheet, presumably it has up its accountant's sleeve—if I may use that expression—a view on what the contingent liabilities for the future may be. They do not pass through the profit and loss, are not at present mentioned in the corporation's balance sheet but certainly should be taken into account if the corporation is to be put on the sound financial footing which I believe the Government want.

Viscount Ullswater

I do not believe that there is much dividing us. The balance sheet will show the estimated liability it has for those two items—for the deafness claims and concessionary coal—both to employed and retired miners. However, it cannot provide for future demands of people yet to be employed or yet to become deaf.

Lord Williams of Elvel

It certainly could so provide if it was felt that this was a continuing measure which should be included in any balance sheet. For example if a nuclear power station—and I revert to a subject which the noble Viscount and I have discussed—knows that it has certain shutdown or decommissioning costs, then it is perfectly proper, although it is well in the future, for the company concerned to make some kind of provision. It will not necessarily be done on the balance sheet because I agree that those are provisions which are known at the time. However, it can be done through contingent liabilities in respect of employees who may be there but, nevertheless, are not liable to claim at that point in time.

I certainly go along with the noble Viscount in saying that it is not possible to determine for the year 2030 who will be employed and what provisions should be made for them. However, I think it would be appropriate for the existing employees or at least for employees who may be there in the short-term future, to make such provisions on a contingent basis even though we know that they may not be making such a claim.

Viscount Ullswater

I think I can agree with the noble Lord. Clause 1 talks about the accumulated group deficit up to the period ending end of March 1990. The corporation's accounting policy states that account is taken of its latent liability for noise induced hearing loss. Therefore, that takes account of its expected liability arising from its operations to date, not just liabilities relating to claims which it has already received. I hope that makes the matter clearer.

Lord Dormand of Easington

My noble friend Lord Graham of Edmonton referred to what our honourable friends in another place, Dennis Skinner and Peter Hardy, have said with regard to concessionary coal. The Minister may know that one honourable friend comes from the Yorkshire coal field and the other from the Derbyshire coal field. I live in the Durham coalfield area and exactly the same is being said there: that concessionary coal is to cease. I hope that I do not need to stress to the Minister how important concessionary coal is to mining families. It is not a gift. It was negotiated many years ago as part of the wages and conditions. It is part of the tradition. We have heard no argument that suggests that it ought to come to an end.

Our amendment makes provision for future liabilities with regard to industrial deafness and concessionary coal. I presume from everything that has been said on Amendments Nos. 1 and 2 that British Coal will fully take into consideration provision for concessionary coal. The Minister may say that it is a matter for the British Coal Corporation; it is a matter for management. We on this side say that it is nothing of the kind: it is a matter of a basic principle concerning wages and conditions in the mining industry.

We have given the Minister three different examples from three different coalfields. I hope that the Minister can now say that it is not the intention of the Government to make less provision. If he says that it is a matter for British Coal, perhaps he will comment on that.

Viscount Ullswater

I have listened carefully to what the noble Lord has said. If he has any specific instances that he would like to bring to my attention I can guarantee that I shall pass it higher up the chain, if I may so put it. As the noble Lord says, British Coal provides concessionary fuel under the 1984 national concessionary fuel agreement which was signed with the NUM. The corporation considers this agreement to be legally binding. I do not think that there is anything more that I can say about that. We are talking about the provision of sums of money in the accounts due at the end of March 1990 to provide for this concessionary coal.

Lord Graham of Edmonton

The Minister can take it from me that we accept the Government's intention. Certainly what he has said on the record will be helpful. However, perhaps I may ask him this. He said that it was not the intention to provide less money in the future than that which was provided in the past. The Minister knows all about inflation. He knows all about the slight uncertainty that exists.

On reading my papers on this matter, I understand that in the Yorkshire coalfield there is a considerable increase in the number of miners and retired miners who are successfully making claims for compensation for deafness. My noble friend Lord Dormand knows the Durham and Northumberland coalfields far better than anyone else in this Chamber. There has been an increase in the successful claims for compensation for deafness for miners in that area.

The Minister satisfied my noble friend and I when he said that the sums of money take into account the latent anticipations. In other words, an attempt has been made to assess the amount. The Government are not merely saying that it cost, for example, £500 million last year but that £543 million is in the account now. There is a genuine attempt to try to ensure that the balance sheet is true and fair. That is the purpose of the amendment.

My noble friend Lord Dormand has reinforced the point better than I could. The Minister has accepted it. It is absolutely central to mining communities and to my noble friend Lady Turner who sits on the Front Bench with me that whenever agreements are made they ought not to be to the detriment of existing conditions. The deal that is struck ought not to be detrimental to existing rights and privileges.

However the Minister cares to term it, we consider it a right—not a privilege—that many have worked for and many miners have died for. However, I am grateful to the Minister for his attempt to help us. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.45 p.m.

Lord Williams of Elvel moved Amendment No. 3: Page 1, line 24, at end insert ("; and (c) shall not be made unless the British Coal Corporation has first published an up-to-date itemised valuation of its assets").

The noble Lord said: We now come to one of the most vexed questions in the whole Bill, and indeed in nationalised industries in general. I am referring to the valuation of assets. We have seen over and over again in privatisations publicly owned companies—by "publicly owned" I mean owned by the Government, the public state, the taxpayer—being sold off without due regard to the proper valuation of assets. I do not need to mention the Royal Ordnance Factories and others that have been the subject of considerable debate and dispute. If the coal industry is to be put on a proper financial basis, it is very important that the assets that the coal corporation owns should be properly valued.

It is always a matter for dispute about what a proper valuation is. I accept that in the case of current assets a proper valuation would be established by the auditiors at the time when the balance sheet is struck. I have questions as to whether that proper valuation is on a first-in/first-out basis or a last-in/first-out basis. That is no doubt a matter on which the noble Viscount would be prepared to comment. However, I suspect that on the valuation of the current assets there are some points on which the Government Front Bench and myself could agree.

It is far from the case that we would agree on the valuation of fixed assets. In its annual report, the corporation values the assets on two bases: historic cost and current cost. We do not know which is acceptable and right. As the noble Viscount will be aware, some time ago it was decided by the Accounting Standards Committee of the Institute of Chartered Accountants in England and Wales that current cost accounting ought to be the one used in inflationary times. Since then, inflation having subsided in the early and middle 1980s, that has gone out of fashion. But it is a statutory duty on the corporation to provide those accounts on a CCA basis.

Now that inflation is at almost 8 per cent., and we are looking again at a possibly inflationary environment, it may well be right—I am not arguing it specifically—to take current cost accounting as the basis for a proper valuation of assets. It is almost the fundamental point in establishing what the accumulated group deficit is because if there is to be a write-down of assets—as the noble Viscount mentioned in answer to an earlier amendment—there could easily be a write-up of assets in a curious perverse way. If one adopts the current value of assets, they would be written up in the balance sheet and that would lower the accumulated group deficit because that write-up would pass straight across into the current cost account profit and loss.

We are therefore talking about accounting principles involved not only in the valuation of assets but also in the accumulated group deficit. In addition to that, there are no doubt a number of assets that the corporation holds that are not to be valued on a pure return basis. I understand the accounting policy that the corporation has used which is to value an asset on the basis of the commercial return that it believes it can secure from that asset. If the valuation thereby thrown up is lower than historic cost, no doubt the corporation will reduce or write off part of the historic cost to reflect that matter. That may or may not be fair. Certainly Ernst&Whinney, the auditors, endorse that accounting policy. I have no particular quarrel with that, subject to what I said about current cost accounting.

Nevertheless, there will certainly be assets in the corporation which are not used in its operations. It no doubt has land surplus to operational requirements; it may have housing surplus to operational requirements; it may have all sorts of assets which are surplus to requirements. It is those assets which have been severely stripped in the privatisations that we have seen over the past two or three years.

What we are arguing in this amendment is that the Government should ensure that the schedule of fixed assets has a detailed value placed on the assets according to some accounting principle that we can all understand and accept. If that is done and if it comes to privatisation, when the Secretary of State exercises his option to write off the accumulated group deficit we can then be satisfied that the asset valuations reflected are ones we can all agree on. I beg to move.

Viscount Ullswater

The effect of this amendment would delay any payment of grant until British Coal had completed and published a full revaluation of its assets. I can understand the noble Lord's desire to know more about the asset write-downs, given the large figures that may be involved. However, this amendment would delay the payment of any deficiency grant.

Lord Williams of Elvel

Before the noble Viscount continues, perhaps I may make it absolutely clear that this is a probing amendment. I am not asking the noble Viscount to explain what the effect of the amendment, if carried, would be. I am using it as a vehicle to probe the Government's view on what valuations they will put on the corporation's assets.

Viscount Ullswater

I was seeking to explain that the corporation was revising its business plans for its collieries and needed to adjust the detailed valuations in the light of that. Obviously, these are some of the fixed assets the noble Lord was speaking of. These detailed valuations will not be finalised until the corporation's 1989–90 accounts have been approved by its board and reported on by its auditors, which at the earliest will be in July and this year may be rather later than normal.

However, it would be quite wrong to require British Coal to divulge information in such detail that it could prejudice its ongoing negotiations with the generators on longer-term contracts. Nevertheless, British Coal has traditionally set out in its annual accounts the gross and net value of the assets in each area or group. The Government expect this to be repeated for the 1989–90 account so that the analysis by group of the asset write-down will be clear for Parliament and others to see.

There is no question of fattening up the industry. The fact is, as I emphasised on Second Reading, that over half British Coal's collieries are expected to show a negative cash flow over their remaining life and are therefore uneconomic. Many more will not recover their book value in full. The asset write-down simply reflects this reality, and it is this reality that we expect the corporation to face up to squarely in preparing its new business plans.

The noble Lord will know that the accounts are based on the historic cost convention. It is up to the board to lift the qualification which the auditors have placed on the accounts for a number of years. However, if they see a permanent diminution in value they should take action.

The noble Lord asked particularly about the land valuation. British Coal's land and property are already valued on a regular basis. At March 1989 they had a historic book cost of £207 million and a current value of £584 million, and the Government are encouraging British Coal to sell as much surplus property as possible in order to finance its ongoing operations. None of the assets write-down relates to land.

I believe I have answered all the noble Lord's questions and I therefore ask him to withdraw the amendment.

Lord Williams of Elvel

I do not find that to be an answer at all. I do not wish to be discourteous to the noble Viscount, but I wish he would address the problems I raised. First, the question of write-down implies that there is some convention which requires the corporation to write down its assets if they are assumed to have suffered a permanent diminution in value—I am quoting from the accounting policies which can be changed—unless investment has been undertaken to make sure that those assets perform better than they have in the past.

It is perfectly clear that under certain circumstances that accounting policy can change. For instance, suppose the price of oil were to double tomorrow. The collieries which, under his formula, on the present price of oil would be written down would be written up. What convention, what accounting policy will be adopted for the purposes of this Bill? It is for the purposes of this Bill that we are interested in establishing the accumulated group deficit.

Secondly, the noble Viscount said that disclosure of these facts to Parliament would prejudice the negotiating position of the corporation towards the generators of electricity under the negotiations which are taking place. I really cannot take that argument seriously. Every corporation, every company has to have a schedule of fixed assets. On the whole those schedules of fixed assets are reported quite extensively in the accounts. The fact that they may have adopted one accounting policy rather than another in order to write down or write up the assets is not something which the generators will fix on and say, "You are better off than we thought and therefore we will pay you less for your coal". That does not seem to me to make any sense at all.

Thirdly, the noble Viscount did not respond to my point with regard to current cost accounting. The corporation is under a duty to produce replacement cost accounting in its valuation of fixed assets. How will that square with the write-down that the noble Viscount is talking about? Replacement cost accounting demands that the replacement cost of an asset be put in the balance sheet. If one tried to replace a colliery, with all that that implies, one would find the value of the asset in replacement cost terms to be much higher than the historic cost of the colliery which is in the balance sheet. There will be no question of write-down; it will be a question of write-up.

I wish the noble Viscount would be a little more forthcoming about the accounting policies which the corporation intends to use in its valuation of its fixed assets so that we can establish in Parliament what the basis of the expression "any accumulated group deficit" may mean. I am still not satisfied with what the Government said about surplus assets—assets which are surplus to requirements. There may be current assets which are surplus to operational requirements; there may be fixed assets which are surplus to operational requirements. I am not happy that the Government have really studied this problem and I suspect—in the light of the data on previous privatisations this suspicion must be well founded—that we may again be in a position where the Government wish to sell off a corporation on the basis of hidden assets which can then be realised by the new owners.

Viscount Ullswater

I stress that the accounts are based on the historic cost convention, which I think the noble Lord accepts, and that it is the duty of the board and the auditors to make certain that if there has been a permanent diminution of value—the words he quoted—they should take that into account. Those things have not been taken into account over the past few years. It is in order to bring it into line with that permanent diminution that the reassessment has been made this year.

The noble Lord said that we need to look at individual collieries to see whether they were economic, but it would be unwise to deal with this matter on a colliery by colliery basis. That is why I stress that the process should be done on an area basis so that it does not prejudice any future negotiations with the electricity industry.

As I stated earlier, the corporation's accounts have to be prepared in accordance with best commercial practice. I am advised that the Statement of Standard Accounting Practice 9, which states that the last in should be first out, is not usually acceptable. Therefore, I would not expect the corporation to be making general use of that method of valuation when valuing its stocks.

4 p.m.

Lord Williams of Elvel

The discussion between us is now on three points. The first relates to non-operating assets which might be surplus to operational requirements. We are still not satisfied that the Government have instructed the corporation to itemise those assets and to value them at full present market value in establishing the accumulated group deficit.

Our second argument is on the meaning of the word "permanent" in the phrase "permanent diminution of value". I have argued that if the oil price doubles there will be many collieries which at the moment can be deemed to suffer permanent diminution in value because of the cash flow which will result on coal sales at the present price of oil but which, if oil prices double, would be profitable collieries. That is the real substance of the argument. All analysts who understand the oil industry—indeed, the chairmen of the major oil companies—state that in the mid-1990s the price could be as much as 30 dollars a barrel. If that is the case, collieries will suddenly become more profitable. Therefore, what is "permanent"?

We want some guidance from the Government on what instructions are being given to the corporation about "permanent". It is easy to say, on present values, that there is a permanent diminution in value, but if oil prices double, or whatever it may be, there will be a lovely lot of assets which can be sold off.

My third dispute with the noble Viscount is that I still do not see why the Government insist on the historic cost convention in establishing the accumulative group deficit rather than using current cost. After all, if we want to recreate a coal industry, as opposed to considering permanently an industry in decline, in terms of the replacement cost of assets there will be an enormous charge to be made.

Those are the three points on which I hope the noble Viscount will give me satisfaction.

Viscount Ullswater

I will take the three points one by one. It is up to British Coal to make a valuation. The method of valuation is the lower of the cost and net recoverable values. That is a matter between British Coal and its auditors.

The permanent diminution of value on the basis of the historic cost convention is one that has to be addressed at the moment. As I said, half of British Coal's collieries are expected to show a negative cash flow over their remaining lives and are therefore uneconomic.

The noble Lord refers to the possibility of a rise in oil prices and said that obviously that will have an effect. However, he is referring to the future, which cannot be predicted. What we must do now is recognise that there is at present a permanent diminution in value. British Coal—formerly the National Coal Board—has done its accounts on an historic cost basis since the industry was nationalised in 1946.

Lord Williams of Elvel

I do not think we are going to get very much further with this argument. I still believe that the Government should set some definition for the corporation as to what "permanent" really means. I ask the Government to please talk to the chairmen of the major oil companies to ascertain their views on what the price of oil will be in 1993. The Government will then be able to see whether there is a permanent diminution in the value of the colleries. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Graham of Edmonton moved Amendment No. 4: Page 1, line 24, at end insert— ("(4) Grants of not less than £100 million shall be payable for the development of clean coal technology to eliminate sulphur dioxide and nitrogen oxide and to reduce carbon dioxide emissions.").

The noble Lord said: First, I plead in aid the words of the Secretary of State, Mr. John Wakeham, who was quoted in the Yorkshire Post in January when he addressed the Coal Industry Society. He said: The industry should seek urgently to reduce the present levels of acid rain and global warming caused by burning coal if it wanted to keep its position as a leading source of energy".

It is from that point that we want to persuade the Government to be much more positive and foward-looking in the provisions made in this Bill.

We are extremely concerned at what I simply refer to as the turn of events. The noble Viscount must be aware of the situation which has occurred in recent times. I refer, of course, to the promise made by the Prime Minister last November to the United Nations. She proclaimed to the world—it was a good proclamation, and one with which we certainly do not quarrel—that the United Kingdom had a £2 billion programme to cut acid emissions from power stations.

We want the Minister to say a little more about the Government's position in regard to that programme. The Government's decision in regard to a fluidised gas desulphurisation programme certainly causes us a great deal of unease. We are extremely concerned at its impact. We do not know how the Government can, on the one hand, keep their promise of spending £2 billion on controlling and making more sweet these emissions and at the same time keep to the decision taken—as far as we are concerned, taken in the best of interests—to reduce the future costs of the industry in carrying out its obligations in that respect.

The Government and the Minister will, of course, be well aware of the impact in this nexus of the low sulphur coal imports. Therefore, we are saying that there should be proper provision for experiments, testing and seeking of solutions in this respect. Sulphur dioxide, nitrogen oxide and carbon dioxide emissions are poisonous to one degree or another. We therefore wonder where the Government stand.

For example, I refer to the table of expenditure on research and development by the coal board. Expenditure on R&D in relation to coal-based energy is shown in the accounts as 4 per cent. That is 4 per cent, of the total expenditure on R&D ranging over oil, gas, nuclear and various other sources of energy. The total amount spent on coal-based energy inquiries to satisfy ourselves that we are doing our best is only 4 per cent.

The Minister may be curious about the figure of £100 million and may want to know why it is not £50 million or £150 million. I have taken advice and guidance from people in the industry who tell me that £100 million is not very different from what is being spent in other areas and in other spheres. They believe that to have the figure of £100 million written into the Bill will go a long way to satisfying people. We cannot simply hand over an industry to the private investor without making sure that it will continue to seek to reduce the poisonous effect of emissions of this kind. I beg to move.

Viscount Ullswater

This amendment appears to introduce a new grant going beyond the scope of deficiency grant and to impose a new charge on public revenues. Clause 1 of the Bill is intended to introduce a deficiency grant to eliminate the corporation's accumulated group deficit at 31st March 1990 to enable the Secretary of State for Energy to continue properly to advance loans to the corporation. Under generally accepted accounting practice, further development costs cannot be taken into account when calculating this deficit and therefore would not be eligible for deficiency grant. The sums which British Coal has already incurred on research and development into clean coal technology will be extinguished by deficiency grant. This has been rising in recent years. British Coal has had a coal utilisation R&D budget of around £15 million a year, and within that the environmentally related work has risen from under 10 per cent, in 1983 to nearly 50 per cent. now. British Coal has also spent nearly £10 million on the Grimethorpe test rig over the past three years which will now be extinguished by deficiency grant.

The Government support the view that clean coal technology needs to be developed. The Department of Energy currently supports research into many aspects of clean coal technology, but it is appropriate that primary responsibility for funding continues to rest with the industry. It is for industry to undertake research and development in response to the opportunities which are available. The Department of Energy's present budget for coal-based research and development is about £2–6 million and will rise to £7–6 million in 1991 to support the development of British Coal's topping cycle project at Grimethorpe. This budget is used to support more than 20 projects, the majority of which are involved with the clean utilisation of coal. I should like to give some examples of the work the department supports.

It is providing support for trials of the British Gas Lurgi coal gasifier. This technology offers greatly reduced emissions of pollutants, and if incorporated into a combined cycle, would result in more efficient power generation. The United Kingdom through the Department of Energy recently joined the International Energy Association coal combustion sciences programme. This programme sponsors research into clean coal technology and specifically develops ways of reducing emissions of oxides of nitrogen. The Department of Energy is also funding coal combustion laser diagnostic work at the Atomic Energy Authority's Harwell technology laboratory. This investigates the fundamentals of coal combustion and will enhance understanding of pollutant formation.

The £2 billion figure given by the noble Lord is partly explained by the cost of fitting Drax power station with flue gas desulphurisation equipment, at about £600 million in capital costs. This is for four gigawatts of production. The Government are committed to ensuring that the United Kingdom complies with the large combustion plant directive, to which I think my right honourable friend the Prime Minister was directing her comments. The directive commits the United Kingdom to reducing its emissions of sulphur dioxide and nitrogen oxides from existing plants such as fossil fuel power stations but does not specify the means by which this should be done. Retro-fitting flue gas desulphurisation equipment will play a part in this, but the burning of low sulphur fuels may also contribute.

I have explained that the Government are undertaking their research and development projects seriously. The amendment goes beyond the scope of the deficiency grant and also introduces a new charge upon the public revenue. It is therefore not acceptable, and I ask the noble Lord to withdraw it.

4.15 p.m.

Lord John-Mackie

I am interested in this subject because I have been involved with forestry for a long time. If acid rain becomes worse there will be serious effects on our forests. Who do the Government expect to provide the money for the research? Is it to be the users? Who do they believe will do the research? Will the users provide the money and the Coal Board do the research? That would be the fairest way and it would not put all the responsibility on the Coal Board.

Lord Dormand of Easington

I am a little puzzled by what the Minister has said or is implying. In a debate in another place last Tuesday on the electricity industry a speech made by the former Secretary of State, Mr. Parkinson, in a debate on the coal industry, was quoted. This is what he said: I am able to confirm today that we have asked the privatised generators to continue to plan on the basis of installing 12,000 MW of FGD capacity during the 190s. He went on to say, and this is relevant to what we are discussing at the moment: If we were to revert to low-sulphur coal, we would have to import massive quantities from overseas. The fitting of Drax and other stations with FGD equipment will ensure that there is a substantial market for British Coal".—[Official Report, Commons, 20/2/90; col. 827.] Perhaps we would accept that to some extent; but, as my noble friend asks, where will the money come from? The former Secretary of State seems to be supporting in principle what we are saying in the amendment. But it will cost money. If the Minister is saying that the Government go along with low sulphur, and that we shall not destroy our environment or other people's environments, then we shall have to import, in the words of Mr. Parkinson, massive quantitites of coal.

Later today we are to debate the Associated British Ports (No. 2) Bill which is almost entirely concerned with the effect on the British coal industry of an increase—some think it will be a massive increase—in coal imports. If what the former Secertary of State says is the Government's view—presumably that must be the case—where will the money come from; or is the Minister now saying that the Government will agree to this massive import of coal?

Lord Lloyd of Kilgerran

I hesitate to intervene in this debate, but I do so in my capacity as vice-chairman of the All-Party Energy Studies Group of this House. The Minister referred to research being undertaken by the Government, and to the laser diagnostic work leading to better combustion of coal. Is he in a position to tell the Committee about the state of progress in that important research work?

Viscount Ullswater

If I may take the last question first, I am not in a position to do so now, but I take note of what the noble Lord says and I shall investigate further. I shall write to him on the subject. It was one of a series of examples of how the Government are seeking to improve the technology. I shall write to the noble Lord with the details.

To turn to the remarks made by the noble Lord, Lord John-Mackie, I do not need to stress, because it has been stressed by Government Ministers before, that we very much adopt the policy that the polluter pays. Therefore the cost of dealing with pollution is very much for industry whether it is nationalised or in the public sector. The retro-fitting of coal and oil-fired powered stations with the flue gas desulphurisation equipment is an important means of reducing emissions of sulphur dioxide which I understand to be the main component polluter of acid rain.

As I have said, contracts have already been placed for the retro-fitting of the 4 gigawatt Drax power station which is coal fired and further retro-fits are in prospect. But there are other means and not necessarily the massive import of low sulphur coal as the noble Lord, Lord Dormand, suggested, though I guess that some further imports of low sulphur coal will be made.

For example, there will be greater use of low sulphur natural gas in power stations which will not only reduce emissions of sulphur dioxide, but will help to control emissions of carbon dioxide. That is another important factor that we have to take into consideration when we speak about the greenhouse effect. That could prove very valuable in the strategy.

Lord Dormand of Easington

Perhaps I may comment on something which the Minister has just said in reply to my intervention. I think he said that there will be an increase in the importation of low sulphur coal. The former Secretary of State said that it will be necessary to import massive quantities from overseas. One assumes that that is an accurate description of what is happening. In view of what the Minister said a moment ago, is he prepared to say that there will be a massive importation of low sulphur coal with all the effects that that might have not only on the British coal industry but on the £20 billion deficit on the balance of payments?

Viscount Ullswater

No, I am not prepared to say that there will be massive imports of coal in the future.

Lord Dormand of Easington

That is a comfort.

Viscount Ullswater

It is perhaps just one way of dealing with this particular directive. It is up to the industry to take note of the large combustion plant directive and arrange its affairs so that it can comply with it. I have given the noble Lord an indication of how that can be done in other ways.

Lord Dormand of Easington

We have taken note on this side of the Committee that the Minister is contradicting what the Secretary of State said.

Viscount Ullswater

No. I am sorry to take issue with the noble Lord. I am not saying that what the Secretary of State said was not correct. I am saying that in order to do what the noble Lord has suggested and with no other means at all, then the Secretary of State could be correct. I do not see that there will have to be massive imports of low sulphur coal because there are other means of dealing with the problem including the retro-fitting of the flue gas desulphurisation equipment.

Lord Hampton

Does the Minister not agree that reserves of natural gas are limited, and possibly that the only reserve at the moment which is not limited is in the Norwegian fields? Does the Minister not further agree that it is wrong to encourage taking too much natural gas for large power stations?

Viscount Ullswater

It is axiomatic that all fossil fuels are of a limited nature; we are not making any more. How we use them for the generation of power has to be taken into account when we look at the environmental nature of the burning of fossil fuels. Coal has a deleterious effect on our environment.

Lord Hampton

I must pursue the issue a little further. Coal is one fuel and it is said that there are reserves of coal for at least 300 years still in the ground. On the other hand, natural gas is a much more limited reserve and a much more important one.

Viscount Ullswater

I take note of what the noble Lord says. I remind him that we also have a nuclear industry as well for the provision of electrical power.

Lord John-Mackie

I am sure that everybody agrees with the noble Viscount that the polluter should pay. I am asking for some mandatory system of collecting money from the people who might pollute and for that money to go into research if the Minister is not going to give my noble friend £100 million out of Government funds for such research. The money has to come from somewhere and the research has to be adequate. The Minister mentioned one piece of research, but I was hoping that there was a lot more than that.

Viscount Ullswater

In fact, I mentioned about four forms of research for clean coal combustion. The Government are providing a substantial amount of money for these technologies. The noble Lord mentioned acid rain and asked what we intend to do about that. It was to that question that I addressed the remarks that the polluter should pay.

Lord Graham of Edmonton

The Committee is grateful to the Minister for his attempts to clarify what is quite clearly a conundrum. Statements are made by Ministers in another place generally against the background of the commitment by the Government and not least under the EC large combustion plant directive. The Government are committed to reduce the emissions mentioned in this amendment by these amounts: 20 per cent, by 1993; 40 per cent, by 1998 and 60 per cent, by the year 2003.

The Minister has told us that the pledge made by the Prime Minister to the UN last November is not at variance with the actions of the Government to reduce the emissions because there are other ways of doing so apart from those which previously had been held to be the most direct ways. The noble Viscount sits here as a Minister from the Department of Energy and he must be well aware that his colleagues in the Department of the Environment certainly do not see things in the way that he does.

For instance, in an article in the Independent this morning, Mary Fagan, the technology correspondent, deals with this very point. I believe the Minister will be interested in her remarks. She says: In a move which has angered officials at the Department of the Environment, the generating industry and the Department of Energy claim that the reductions in sulphur dioxide can be met by using new plants called Combined Cycle Gas Turbines and importing more low-sulphur coal". My noble friend Lord Dormand has pointed out that we do not look at this matter in isolation because there are other consequences. The Government are hell bent on making the sale of the British coal industry as attractive as they possibly can by reducing the obligations and abandoning their responsibilities to the people of this country, not least in the context of the environment and clean air.

This is a very modest amendment. The Minister may very well be right technically that this is not the place in which this subject should be addressed; namely, in a clause which deals with deficiencies. He might have been a little more helpful. This is an argument that will run and run. However, for the moment I shall let the matter rest. In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

Clause 2 [Grants for workforce redeployment and reduction]:

4.30 p.m.

Lord Graham of Edmonton moved Amendment No. 5: Page 2, line 8, at end insert— ("2A) In subsection (4) after paragraph (b) there shall be inserted— (c) for which the corporation has published its projections for workforce deployment and reduction and a statement of the collieries which are expected to be affected, giving reasons for each colliery mentioned." ").

The noble Lord said: As the amendment makes clear, we are anxious to know how the Government see the future of the industry not only in terms of employment but also in terms of the impact of the change. The Minister surely cannot gainsay that there is likely to be a substantial if not a traumatic change in a number of mining communities.

I do not wish to enter into an argument about the fact that over the past 40 years, and certainly over the past 25 years, there has been more change in the physical environment of coal mining communities than there has been in any previous comparable period. We are attempting to encourage the Minister to tell us a little more about the picture of the coal mining industry in the future than we know at present. Of course, there have been statements and leaked documents, but I think that the noble Viscount can do the department which he represents a service if he is frank with the people who will be affected by the legislation.

Let us take, for example, the situation in Nottinghamshire. I have read the report of the relevant proceedings which took place in another place. My very good friend Frank Haynes, who is the Member of Parliament for Nottinghamshire, drew to the attention of Members in that place the difficulties which are being experienced by some county councils—he referred to his council—in trying to anticipate the possible rundown and in endeavouring to find a means of providing work and making other arrangements which will make the possible rundown and closure of pits a little more palatable.

The Minister may say that there are bodies such as British Coal Enterprise Limited and other such organisations in place. However, I must tell him that the coal mining communities are not enamoured by having such organisations put forward as the kinds of bodies which will protect them from the trauma they will face in the future. The amendment is a simple one. Moreover, like all of the amendments put forward today, it is a probing amendment. We want the Minister to tell us whether he is in a position—even if he does not accept the amendment—to say a little more about how he sees the future work complement of the mining industry when the Bill is enacted. I beg to move.

Viscount Ullswater

I can understand the wish of the noble Lord, Lord Graham of Edmonton, to know more about the possible closure or reorganisation of collieries and the consequential effect on the workforce. However, the fact is that there is no master plan for colliery closures. Moreover, if there were one it would change so frequently and radically as not to be very meaningful. I do not dispute that there may be some collieries which are physically running out of all economically recoverable coal where you can truthfully say, "Within a given timescale this pit will close". That is a fact of life. The workforce and the local community can take it fully into account in their plans for other jobs. However, in most cases there are simply too many imponderables.

For example, the coal industry has probably the most elaborate system for joint review of poorly performing units of any British industry. Indeed, many pits put into the review procedure have been pulled around and have survived. Even where it is accepted by the men that the pit does not have a future, the number of redundancies cannot accurately be predicted. That is because British Coal has invariably offered alternative jobs to any man who wishes to remain in the industry.

Moreover, requiring British Coal to produce projections of closures and redundancies could prejudice the ongoing negotiations with the generators on long-term contracts for the pits under threat of closure and thus serve to undermine the economic viability of the pit. That would not be in the interests of the workforce concerned.

Over the past three years British Coal has been able to carry out unprecedented restructuring of the industry without a single compulsory redundancy by offering exceptionally generous redundancy terms to its workforce. Such generous terms are only possible because of the Government's continuing support through the payment of restructuring grant which this clause addresses.

In seeking to raise the limit on the grant in the coal Bill, the Government are demonstrating their continued commitment to the industry and its workforce. I think that the noble Lord mentioned the success of British Coal Enterprise Limited. As I recall, on Second Reading we commented on the number of jobs which it has provided; that is, somewhere in the region of 42,000. Therefore, it is quite true to say that the Government see the restructuring of the industry to be the responsibility of British Coal. They are certainly providing the money and the restructuring grant so that that restructuring can take place. They are also providing additional facilities through British Coal Enterprise Limited for the employment of those who may seek redundancy. For those reasons, I invite the noble Lord to withdraw the amendment.

Lord Dormand of Easington

The Minister said that there was no master plan for the future of the industry. In literal terms that may be the case. However, he knows that there is a master principle; namely, whether a pit is making a profit. It is as simple as that. As soon as a pit begins to show a loss the position of that colliery is considered. There is no consideration given to the effect upon the community. Of course that is nothing new and I am not presenting a new issue to Members of the Committee.

However, it does not alter the fact that those of us who live in the mining communities realise the absolutely devastating effect which a pit closure can produce. I think that the Minister will probably agree with me that the multiplier effect is a factor of two as regards mining. The economists have said that. Again, we have seen that and we have talked about the effect upon local shops and local services and also the effect upon the firms which make mining equipment, and so on. The criterion which the Government apply to the situation is an extremely narrow one.

I was interested to hear the Minister say that the colliery review procedure is still in operation. If it is, I can tell him that it is an absolute formality. In fact, I suspect that this procedure, which arose out of the miners' strike, is not being considered. I fully support my noble friend Lord Graham of Edmonton when he talks about British Coal Enterprise Limited. This body has said that it has created some 30,000 jobs in the past two or three years, which is the period it has been in existence. However, the number of jobs lost in the coal industry since 1985—that is, since the ending of the miners' strike—is no fewer than 130,000. That is not the whole story as regards British Coal Enterprise Limited. I hope therefore that the Minister will have a closer look at the problem. I say that because when I was in another place I received many complaints about this aspect from people in my area who wished to take advantage of the opportunities available for this body, but, the hurdles which they had to surmount caused some of the applicants to give up. Moreover, I think I am right in saying—and this certainly was the case—that there are no grants involved with this body; in fact, we are talking about loans. That may or may not be a good thing, but I hope that the Minister is not trying to give the impression that these are soft options, that the money is available by the thousands or millions of pounds for former miners who wish to branch out into another form of enterprise.

Perhaps I may also refer to redundancy payments, as the Minister has not done so. I should be the first to admit that the initial redundancy payments offered when pits were being closed were very generous ideed. That fact was most appreciated by the miners. Last year that situation changed. Formerly the redundancy payments came from a generous government fund, but that is not now the situation. The fundamental change came from British Coal itself. That is very relevant. It places a totally different complexion on the matter. From the noble Lords's omission of those matters your Lordships may have gained the impression that redundancy payments are still very generous. That is not the case.

I hope that the Minister will say a little more about that matter. The devastation of mining communities continues. One of the difficulties about the way in which we live our lives is that when something happens again and again we tend to take less notice of it. That does not alter the fact that it is a very serious matter for the people concerned. I hope that the Committee will agree to support the amendment.

Viscount Ullswater

I am sure that the noble Lord, Lord Dormand of Easington, does not need reminding that British Coal has managed to produce approximately 100 million tonnes of coal over the last five years. There has been an enormous increase in productivity which has led to some jobs being lost by way of voluntary redundancies.

The restructuring of the coal industry has taken place before. In the years between 1974 and 1979 no less than 295 pits were closed, with job losses in excess of 190,000. As I stated at Second Reading to the noble Lord, Lord Mason of Barnsley, I am not trying to make political capital. I am asking the noble Lord to recognise that previously the coal mining industry had to be restructured by another administration. I do not make any point on that, it had to be done at a time when another administration was in power. The same kind of restructuring is taking place at the moment in order to bring the costs of producing coal closer to the international price of energy.

British Coal has almost a unique consultation process which is the modified colliery review procedure. I have mentioned the independent review body which is the last step in the modified colliery review procedure. That procedure was agreed with the unions in 1984. It is a matter for British Coal; the Government play no part in the review procedure. The procedure is in place and therefore it would be inappropriate for me to comment further.

The noble Lord asked me about the current redundancy terms. Very generous new redundancy terms came into effect on 1st January 1990 implemented by British Coal. A lump sum payment will be made of three times a week's pay for every year of service. That is subject to a maximum of £300 for a week's pay and for 30 years' qualifying service. A lump sum of £27,000 would be available as a redundancy term for a maximum for 30 years' service. Those terms are in place. They have served the industry well in the past and I am sure that they will serve it well in the future.

4.45 p.m.

Lord Dormand of Easington

I should have thought that a maximum of £27,000 is not a particularly generous payment for somebody who has been working in a pit for 30 years.

The Minister is once again perpetuating the myth relating to the 200 pits that were closed during the time of the Labour Government. What the noble Lord does not state is that at that time the miners were producing so much coal that it could not be sold. That may or may not be a good situation. The pits were producing the coal. There may have been bad marketing on the part of the Coal Board, or there may have been other reasons for that situation. I do not think that the Minister should perpetuate the myth.

I accept the point that productivity has increased since 1985. If one is trying to get coal from seams 18 inches high—I have been in such pits as, I am sure have other Members of the Committee—there will be the kind of difficulty that has been mentioned. Some of the new pits in Leicestershire and the Midlands have four foot seams. Obviously in those circumstances productivity will increase. I am not grumbling about that situation. However, I hope that the Government, the Minister and your Lordships appreciate that productivity does not come about automatically. The Government have instituted procedures, for example the closing of uneconomic pits.

I was unable to be present for the Second Reading debate, but I have read the report several times. The Minister paid tribute to the management for increased productivity and never addressed a word to the miners. I should have thought that that was a matter upon which the management and the miners deserved the utmost congratulation.

Viscount Ullswater

If I did not pay tribute to the miners in my Second Reading speech, that is a matter that I regret. I should have done so and I should now like to put that matter right.

I think that the noble Lord is wrong to state that I am trying to perpetuate an argument which does not have some effect. He suggested that in the period to which he referred the miners were producing too much coal and that it could not be sold. World energy prices have dropped considerably over the past few years and coal cannot be sold at the price which is required in order to make the industry economic. It is only by an increase in productivity so that the coal which is brought to the surface is of sufficient competitive price that the industry can be restructured and go forward.

Lord Graham of Edmonton

I have no quarrel with the Minister who has, as usual, tried to be helpful. The Minister and my noble friend Lord Dormand have mentioned the crux of the matter. We are not arguing that there does not come a time when a pit must close. We can argue about when one does so and the swiftness with which one does so once the balance sheet slips from the black into the red. We are not arguing against restructuring—the Government's euphemism for closures these days. We are not even arguing about the fact that there have been periods in the history of the British coalfields comparable to the current situation. However, one factor is present now that did not exist before. The Government are going to flog it off. They intend to get out of the business of managing or being responsible for, or to, the coal mining communities. They can wring their hands. They can decide that the British taxpayer or the consumer has to get rid of what the Government quite clearly believe is a burden to the taxpayer. The Government now intend under the Bill to produce the best possible product to sell on the open market.

The amendment is intended to suggest that, with this knowledge, the Government should do what other big businesses do. Businesses have a corporate plan, they know what they will develop and what they will close. I know the retail industry best of all and no big business exists that does not say to its shareholders from time to time, "We intend to seek to develop premises in these 20 large towns", or "in these 50 large towns", as many of them say now. "We intend in the fullness of time to close here, here and here, not least because the people who work for us are affected but also because the communities which they serve are entitled to be told of our intentions".

In the amendment we seek to say to the Government, "Why do you not treat the coal miners and the coal mining communities in the same way as other businesses treat their customers and workers?" That is all we say to them.

I believe that the social responsibilities—I hesitate to use the word "moral" but it is perilously close to that—which the Government have to the coal mining industry and communities could be better discharged than hitherto. All we are trying to do in the amendment is to say to the Minister, "Think again". Perhaps we shall come back to this at a later stage in the Bill, but in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Clause 3 agreed to.

Clause 4 [Licensing of coal working, and boring]:

Lord Graham of Edmonton moved Amendment No. 6: Page 2, line 27, leave out ("below ground").

The noble Lord said: I beg to move Amendment No. 6 and speak to Amendments Nos. 7 and 10. The amendments deal with the Government's intention to increase the number of miners who can be employed in a private mine. We wish to use this as an opportunity of debating the issue and persuading the Minister to be helpful not only to the Committee but to those who work in the mines and who are responsible for the safety record of the private mining industry.

The Government are entitled to justify the way in which they seek to make the present mining industry more disparate than it is. Clearly they believe that there are good reasons why private mines can be made more viable if the restriction placed upon them is removed. The Committee should be well aware that the official safety records in private mines are shown in a poor light in comparison with mines managed or controlled by the National Coal Board or British Coal. I am not saying that the record of private mines is appalling and that the gap is so enormous. However, we wish to know why, in the light of the bad comparison, the Government intend to put more miners at risk by increasing the number who can work in private pits.

The record is quite startling. In 1987–88 there were three deaths and 27 major injuries in a workforce of around 4,000 in private pits. That is compared with nine deaths and 780 major injuries in British Coal's workforce of 89,000. One can see from that that pro rata there is a greater chance of a miner being either killed or injured in a private mine than in the mines operated by the coal board.

The question we wish to ask is: what do the Government intend to do? Once they have washed their hands of the coal board, what will they do to ensure that the safety record of the private mines is at least as good as the record of British Coal? The number of miners is important. We understand that there is a Bill—not only the Act nationalising the mines—and other pieces of legislation which govern what happens in the private mines.

Our intention is to seek to ensure that in future the private mines are at least as safe as the British Coal mines. We should like the Minister to spell out why it is necessary in 1990–91 to increase the number of miners put at risk in private mines. I beg to move.

Viscount Ullswater

The effect of the first two amendments—Amendments Nos. 6 and 7—is to reduce the limit on licensed mine operations. The present limit of 30 men would apply to total manpower at the mine, which includes surface workers and management staff, not simply the manpower employed to work underground as at present. We cannot accept this. I explained in the Second Reading debate why the Government felt that an increase in the licence limits was desirable in terms of increasing the output of specialist coals, enhancing competition and creating jobs in depressed mining areas. I am sad that the noble Lord, Lord Graham of Edmonton, did not attempt to address the position on jobs.

I now wish to address the issue of safety head on. We believe that an increase in the maximun number of men allowed to work underground in licensed mines is essential to the development of modern, mechanised and safe operations in the licensed sector. It is therefore disappointing that noble Lords opposite wish to perpetuate the working conditions of over 40 years ago. That is precisely what the amendment will do.

The limit of 30 was set in 1946 and reflected the operating conditions and mining economics of the day. Those were the pre-mechanisation days of hand filling of tubs rather than conveyors. Accident rates in British coal mines were much higher than they are today and very much on a par with the rates that we have seen in licensed mines in recent years. In 1950, there were 476 fatalities in British coal mines out of a total of 688,000 men on the books. That represents one death for every 1,450 men. In the current financial year, the private mines employ around 1,700 men and there has been one fatality. Mechanisation has reduced the fatality rate in British coal mines to one for approximately every 4,000 employees. I find it hard to see the logic of the noble Lord's argument. If he feels that the very small mines are intrinsically unsafe—which I think is what he suggested—I should have thought that he would have argued for their complete elimination.

However, that is not the position. The position is simply to wish to condemn the private sector mine worker to the working methods and safety levels of the 1940s. We, on the other hand, believe that the most effective way of making mines safer for underground workers is through mechanisation. That is not simply the Government's view: it is the view of British Coal's own technical director who has been quite emphatic that the way in which British Coal reduced its accident rates was by the application of mining engineering technology. I am in no doubt that the out-of-date working practices that licensed mines are currently forced to use because of their size prevent the improving of safety standards.

Reports of the Mines Inspectorate on accidents in the licensed sector suggest that many of the fatal accidents recorded would not have happened had modern mechanised roof support and conveyer systems been employed. The investment required for that—that process does not necessarily require the most expensive modern technology—can only be generated by mines that are larger than the existing ones. Those mines need to increase productivity by multi-shifting or working two faces. That means more men are needed and more mining jobs would be provided. Those jobs would be provided in the areas of the country where they are needed.

I shall now turn to the other amendment in this group, Amendment No. 10. I am not sure whether the noble Lord wishes to address it. The noble Lord nods his head so I shall continue. The amendment seeks to require British Coal only to license mines where the manager had appointed one or more persons to direct at the pit head the lowering and raising of workers and had caused a register to be kept of those going down and coming up. That is the effect of the Coal Mines Regulation Act 1908, Section (2)(1). I must tell the Committee that the amendment is unnecessary. All coal mines, whatever the size of their workforce, have to comply with the requirements of the 1908 Act. The mine manager is required to ensure that the lowering and raising of workers in and out of mines is properly supervised and that a register of such movements is maintained. Compliance with Section 2 of the 1908 Act is monitored by the Health and Safety Executive Mines Inspectorate. In the event of a contravention, the mine owner, the mine manager and any undermanager would each be guilty of an offence. Having dealt with those amendments, I ask the noble Lord to withdraw them.

5 p.m.

Lord Dormand of Easington

The Minister has properly drawn attention to the significant reduction in the number of fatalities in mines and we all say hurrah to that. That has been a most significant development over the years. However, I suggest to the Minister that that reduction has been brought about through a number of causes which we need not go into. However, I should say that one of the most important committees at a pit is the safety committee. Miners have become conscious over the years of how necessary it is to take the kind of precautions which are laid down in the measures which the Minister has just enunciated. Therefore I find it difficult to understand some of the Minister's remarks. He made certain remarks on two occasions on Second Reading and he has repeated them again today. On Second Reading he said that: the increase in the number of those involved in deep mining will allow the introduction of new and modernised equipment which will go a long way to helping in that regard".—[Official Report, 9/2/90; col. 1061.] I find that difficult to understand. The Minister's remarks from the Dispatch Box just now have not convinced me on that issue. The Minister should have mentioned injuries as they are, if not as serious as fatalities, still very serious. Serious injuries are caused in a pit by machinery. We hear in the mining areas of some horrific accidents such as miners having their limbs torn off or being crushed. That kind of thing can be brought about as a direct result of machinery being introduced. I am obviously not against the introduction of machinery, but I am saying that the reason which the Minister has given on at least three occasions is that the introduction of machinery ipso facto will lead to a reduction in fatalities and injuries. I find that impossible to accept. I hope the Minister can satisfy me further on that point.

Lord Tryon

I have not intervened before on this Bill and I was not able to be present for the whole of the Second Reading, but I intervene now because I was at one time what one could call a private miner. I was a director of a company that had four small private licensed mines of the type we are now discussing. That was about 10 years ago. I am no longer a director of that company so I produce that information as a qualification rather than as a declaration of interest.

During the two or three years that I was involved in the private mining business I learnt several things about it. First, I discovered the absolutely splendid Qualities of the men who worked in the private mining field. They worked in conditions of incredible squalor and difficulty. They had to work difficult little seams. Nevertheless, their hearts were really in their jobs. They seemed to enjoy tremendously working for private mining companies. They were nearly all ex-Coal Board employees but they had made their lives in private mining.

However, as the owner of the mines, as it were, I soon learnt that private mining was an extremely difficult way of making money. It was a real struggle to break even, even on quite a good seam, because it was extremely hard to justify spending money on capital equipment. The mines therefore ran on with their strict limitations on numbers of people. One simply could not expand them as one could not justify spending the money. The mines went on and on in their primitive way with the hand-loading of tubs. One of the mines even had pit ponies. That was 10 years ago, but I suspect that pit ponies are still used in that mine. Therefore, I support what the Minister has said. If the opportunity is given to expand some of those mines to a bigger size and to have 150 men underground rather than 30 the justification to spend more capital would exist. That certainly to me would mean safer working.

Viscount Ullswater

It is always useful to have in the Chamber someone who has direct experience of the matters that we are discussing. I am grateful to my noble friend Lord Tryon for his experiences which he has recounted today. To some extent he used the words which I should have used or which I sought to use. He illustrated that with the constraint on the number of men being allowed to work underground the revenue is not available to invest in the capital machinery that I am talking about.

The noble Lord, Lord Dormand, suggested that injuries can be caused by machinery. If one investigates the injuries in private mines that are caused by machinery—most of those are caused by machinery and not necessarily from roof collapses—one finds that it is the outdated machinery that is causing the problem. The Government are convinced that by allowing the number of men to increase from 30 to 150 capital investment will be put into these small mines. I accept that that will not be the case as regards all small mines. There are still some small mines which only employ half a dozen people. I am sure that those mines will continue in that way as those companies will probably wish to continue mining, whatever the circumstances. I pay great tribute to those miners as theirs is an unenviable job. However, that is the job they seek and they seem to enjoy it. However, I suggest that the amendment that we put forward to the original Act is sensible and therefore I hope that the noble Lord will withdraw his amendment.

Lord Graham of Edmonton

I am grateful to the Minister. I acknowledge the experience that the noble Lord, Lord Tryon, brings to this debate. That is of course valuable, as is the experience of my noble friend Lord Dormand. However, our great concern quite frankly is the safety of the men. We are not trying to make an ideological point. We simply believe that the record and the remarks of the noble Lord, Lord Tryon, show that very often it is not a case of the mine owner not wanting to provide better safety but of owners having to make judgments in the context of their balance sheets as regards replacing bits of machinery. If those matters affect the balance sheet, I fear that in those instances the lot of the miner is put at risk.

We are also concerned about the changes which affect safety. I am told that in future a colliery deputy will no longer be required to hold a first aid certificate. My noble friend Lord Dormand, who speaks with authority on such matters, said quite rightly that safety is crucial to the peace of mind not only of the miners but also of their wives and families.

There are a number of other issues. For example, I am told that British Coal has reduced the number of training centres and is cutting back on off-the-job training. That is sad. British industry in general stands condemned for failing to do its job in training future generations of managers and workers. We should be pressing for greater safety measures rather than their being, as I fear, diminished.

The Minister has done what he can. I shall consider what he said and I may return to the matter at a later stage.

Lord Dormand of Easington

My noble friend raised a matter which I had intended to mention myself, namely the fact that deputies will not now be required to hold a first aid certificate. That is an amazing suggestion. Deputies are very proud of their certificates, which they acquire as part of their overall training. Perhaps the Minister can tell us why that is being withdrawn.

Viscount Ullswater

The situation is not quite as the noble Lord suggested. The Health and Safety Executive recently put forward proposals to the Health and Safety Commission which, if implemented in their present form, would include a requirement for a higher ratio of first aiders to persons employed below ground than is currently required. However, the proposals would not require a deputy to hold a first aid certificate. The commission is currently considering those proposals. It is not a fait accompli.

Lord Graham of Edmonton

The Minister has tried to be helpful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 7 not moved.]

5.15 p.m.

Lord Graham of Edmonton moved Amendment No. 8: Page 2, line 32, leave out ("250,000") and insert ("30,000").

The noble Lord said: In moving Amendment No. 8 I should also like to speak to Amendment No. 9. The Government propose to increase the maximum permitted production for private licensed opencast mines. We had a canter over the course at Second Reading.

In many areas opencast mining is visually offensive. Despite the best endeavours of the Government, the Coal Board, the law, and local authorities, opencast coal mining is turning out to be an environmental disaster. We see no case for production being increased as proposed.

We are very concerned at the attitude of British Coal. In granting licences for workings exceeding the permitted totals British Coal has acted against the law. Not long ago British Coal announced that in considering applications for private licences it would no longer obey the law and would countenance workings of up to 30,000 tonnes, despite the fact that the law specifies 25,000 tonnes. That smacks very much of the attitude towards Sunday trading. You bring the law into disrepute and then argue that because the law has been brought into disrepute it ought to be changed. The law is the law until it is changed. To their credit, the Government are at least seeking to change the law by the proper means. We disagree with their proposal. It is extraordinary that a government agency should announce that it intends to flout the law. I should like to hear the Minister say a few words on that subject when he replies.

I rest my case on the outcome of the Flowers Commission on Energy and the Environment which came down against the deleterious impact of opencast coal mining. The commission stated: We strongly recommend that as older, more unprofitable and less environmentally acceptable deep mines are closed and more efficient and profitable operations take their place, the volume of opencast mining should be allowed to decline. In the meantime, there should be no increase in the present target of 15 million tonnes per year.

I understand that the figure is now 18 million tonnes. The uniquely sensitive character of the British countryside and the high population density in much of the country would not be able to accommodate, without unwarrantable damage, a target in excess of that level".

A great deal can be said about the impact of opencast mining. I am indebted to Mr. David Gosling of R & A Young Mining Limited, Prospect House, Leadgate, County Durham—a place that I know very well indeed—for a letter, which I received only today. Mr. Gosling comments on the evidence of the County Planning Officers' Society that I read into the Second Reading debate concerning some of the ways in which the law has been flouted. He tells me that he was a county planning officer and that a great deal of what was said in the name of county planning officers was not strictly correct. In some cases the damage that was held to be clue to opencast mining was due to other causes. The letter is far too detailed to go into in this debate.

I ask the Minister to justify the proposed increases because the communities affected—not only those who live near the sites but also those who suffer from the dirt, dust and disease caused by opencast coal mining—would not wish to see such an extension. I beg to move.

Viscount Ullswater

The amendment would have the effect of restricting the increase in tonnage limit to 5,000 tonnes, making a new limit of 30,000 tonnes.

The figure of 250,000 tonnes proposed in the Bill was chosen very carefully to meet certain objectives. First, there is general agreement in the mining industry that there have been huge developments in mining equipment and techniques since the existing limits were originally set. However, it is simply not economic to deploy efficient, modern equipment on the smaller sites specified by the existing limits. A significant increase was therefore needed to enable licensed sites to be worked more cost effectively. Furthermore, the existing limit often meant that deposits were worked in a piecemeal fashion over an extended period of time, thereby prolonging the disruption to the local community.

The increase proposed by the Bill will reduce the number of deposits worked in that way and for that reason has been welcomed by the representative bodies of the local authorities. Larger sites will also provide greater operating flexibility which will help the licensees to achieve higher restoration standards.

The second reason for choosing 250,000 tonnes was that it fills a gap in the size of deposits being worked. British Coal rarely works sites smaller than 500,000 tonnes which effectively sterilised a significant number of deposits which could be efficiently worked by the licensed sector. The new limit will mean that a significant number of those deposits will be worked as a single, planned development without affecting British Coal's operations.

The noble Lord, Lord Graham of Edmonton, asked me why British Coal treated the figure of 25,000 tonnes as a figure closer to 30,000 tonnes. There is a difficulty in the wording of the Bill. It refers to a licence which, in the board's opinion, is not likely to exceed, or greatly to exceed, 25,000 tonnes. It is extremely difficult to envisage, before the coal is mined, whether the figure should be 25,000 tonnes or more. The noble Baroness, Lady Stedman, expressed concern on Second Reading about what was meant by the phrase not likely to exceed, or greatly exceed, 250,000 tonnes". [Official Report, 9/2/90; col. 1048–1049.] That flexibility is needed because one can never be precise about how much coal is available within a site. However, with the larger figures that we allow, I do not expect areas to be licensed which prove to contain very much more than 250,000 tonnes. The same goes for the new 150-man limit on deep mines. Likewise, there is no statutory bar on British Coal awarding an opencast licence in respect of tonnage up to 250,000 tonnes within a larger deposit of coal. However, I would not expect British Coal to issue consecutive licences within the same deposit. I have already referred to piecemealing. I shall repeat that point: I would not expect British Coal to issue consecutive licences within the same deposit. Where a licence for up to 250,000 tonnes in a larger deposit of coal is being considered, I would expect the corporation to have regard to, among other factors, the likelihood and desirability under current mineral planning policy of the deposit being extracted as a whole under a single operation.

There are therefore sound and cogent reasons for the modest but significant increase in the tonnage limit proposed in the Bill. As I have shown, the figure of 250,000 has been carefully chosen to meet several objectives. The amendment will meet none of those objectives and has no rational basis. I have not strayed into the environmental area because we shall debate that later. I have restricted my remarks to the reasons why the Government see an increase in the figure from 25,000 to 250,000 as advisable. I therefore hope that the noble Lord will feel able to withdraw his amendment.

Lord Graham of Edmonton

The Minister makes a case regarding a gap that can be filled by the addition. Will he tell us what effect that will have on the current total of opencast mining? What will be the potential effect of the tenfold increase? What has the Government's research indicated is likely to happen? The Minister quite properly reminded the House that the 25,000 tonne limit is not fixed in stone. I realise that one cannot be absolutely precise. However, if one follows the logic of the increase of the Coal Board's tolerance from 25 to 30, one must do likewise with the increase from 250 to 300. The Minister cannot say that the limit is 250,000 because the same arguments might well emerge and be applied in that case.

We shall leave the environmental argument until later. However, the Minister will be aware that to put forward the case in the present context flies in the face of the Flowers Committee which was well aware of the potential although not necessarily the current position of energy mix. If the Government are as green or as environmentally pure as they claim, and even if they can produce economic arguments, surely they do not want to rest their case there. However, we shall return to that point later. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 9 and 10 not moved.]

Lord Graham of Edmonton moved Amendment No. 11: Page 2, line 32, at end insert— ("(c) in paragraph (c) after "tonnes" there shall be inserted "and when undertakings have been made by the operators for the restoration of the land affected by the working of coal or by operations incidental to such working".")

The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 12.

The amendment seeks to lay upon the future licence-holder who will mine opencast coal a duty to place a deposit with the local authority. I do not say that heinous crimes have been committed, but I have read what I have read. From what one might call not a prejudiced but a biased point of view, there are clearly many opencast operators who fail to leave their land in accordance with the conditions that have been laid. We are all familiar with the arrangement whereby one leaves a deposit or a sum of money which is returned when one vacates the chalet or house or when one returns the motor car. One therefore complies with the conditions. If the conditions are not met—it is clear that that happens—it is the taxpayer and others who pay.

The Minister says that the Government believe that the polluter should pay. We say that there might be circumstances in which it is better that the operator pays in advance and gets his money back when he has proved that he has been a good operator, rather than the other way round. Even when land is ostensibly restored, the quality of the environment is inevitably and irreparably damaged. We hope that we shall not make the duty too onerous, but we are talking about people's lives and communities. We say that a bond—I am not talking about a precise sum—which is sufficient to make it worth while for the operator to carry out both his civic and mining duties is reasonable and fair. I beg to move.

Viscount Ullswater

The two amendments tabled by the noble Lord, Lord Graham, require British Coal to satisfy itself that undertakings have been given by licensed opencast operators to restore the land and to place bonds with the local authority to that effect. Under the new and fuller Mineral Planning Guidelines (MPG 3) published in 1988, the principles of restoration and intended after-use are now required to be settled at the time planning permission is granted. As British Coal will not issue a licence until planning permission is granted, the aim of the first amendment is already fully achieved.

As regards bonds, I am not convinced that it should be only licensees—that is, only the licensed sector—and not British Coal who should place bonds with local authorities, as this amendment would seek to put on the face of the Bill. That seems to be an unreasonable distinction. Moreover, local authorities should have discretion to call for bonds. It should not need to be mandatory. However, I accept that there may be occasions on which bonds are appropriate. I do not suggest that they are not. In those cases, local authorities can already effectively require them as part of the planning process leading up to the granting of planning permission.

I hope that I have been able to indicate to the noble Lord that the amendments that he seeks to move are already taken care of and that perhaps the point that only licensees rather than British Coal should be bound by this provision should be taken into consideration. I hope that on that basis the noble Lord will agree to withdraw his amendment.

5.30 p.m.

Lord Graham of Edmonton

The Minister makes a fair point that one wants to be even-handed. To that extent the amendment may very well be defective. However, we are moving into a situation in which neither the coal board nor the private operator will be under the sovereignty of the Government in respect of these matters. It is left very much to the power and determination of the local authorities.

I turn to the next point made by the noble Viscount. The conditions which a local authority lays down are probably pretty standard. I have seen lists of that kind of thing. Having been a member of a planning committee I know that council officers are assiduous in urging that they must have planning permission, but also in making sure that there is restoration of the visual amenity, turning points for cars, and so on. They are very good at doing that. However, we come down to the ability of the local authority to enforce its conditions. I can well imagine some local authorities which are very careful about carrying out their obligations and asking for a bond; I can equally imagine others which are not. I am afraid that the wider community will suffer according to the zealousness and perspicacity of the local authority in these matters.

However, the Minister has done what he can and I am grateful to him. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 12 not moved.]

Lord Graham of Edmonton moved Amendment No. 13: Page 2, line 45, at end insert— ("(2A) After subsection (2) of that section there shall be inserted— (2B) A licence under subsection (2)(a) above shall not be granted to (a) any person who, or company which, has been convicted of an offence relating to its colliery activities in the relevant period, or (b) any company in which the controlling interest is held by a person who, or company which, has been convicted of an offence relating to its colliery activities in the relevant period. (2C) For the purposes of subsection (2B) above the relevant period shall be defined as five years prior to the date of the application for a licence under subsection (2)(a) above or the date upon which this Act received its Royal Assent, whichever shall be later".").

The noble Lord said: This amendment seeks to insert in the Bill a provision in respect of the proven record, in every sense of that term, of those who will operate opencast coal mining. We are concerned in particular about someone who may have been convicted under the Mines and Quarries Act 1954 because he or she has been derelict in carrying out his or her obligations. We are concerned that the health and safety of those who work in the mines are not put into the hands of someone whom a court has held to have failed to carry out his obligations.

This amendment concerns any person who has been convicted of an offence relating to colliery activities in the relevant period and then goes on to be more specific. I beg to move.

Viscount Ullswater

I fully recognise the importance of the issue that lies behind this amendment. Mine safety is and always must be of paramount importance. I agree entirely that mines must be run only by those who are fitted to run them. However, it would be inappropriate to use the Bill to impose mandatory sanctions for offences which are not directly related to its subject. The safety regulations governing the mining industry are part of the health and safety at work legislation. Also, this amendment does not distinguish sufficiently between serious offences and those of a trivial nature. It would be quite iniquitous if a company were effectively to be put out of business simply because it had committed a relatively minor misdemeanour.

I believe that the most effective and indeed proper way of dealing with the issue is through the licensing process itself rather than through legislation, which is precisely how we deal with the problem in licensing North Sea oil operations where safety is equally vital. The statutes governing those licences do not contain requirements similar to those contained in this amendment but the applicant's safety record is taken into account in the licensing process.

The Secretary of State has given an assurance that he will ask British Coal to take into account any criminal record not just of the mine owner, as the amendment suggests, but also the mine manager in any application for licences or renewals of existing licences. That seems to us to be the right way to proceed and I hope that the noble Lord will feel able to withdraw the amendment.

Lord Graham of Edmonton

I intend to withdraw the amendment but I believe that the Minister is far more sanguine than he is entitled to be according to the record. I understand that in October 1988 Mr. Alfred Davies, who is a deputy chief inspector of mines and whose views should be respected, was reported to have said a number of sharp things when the inspectorate met the Federation of Small Mines. Among other things he said: Professional standards of management in licensed mines must improve. All too often the reports record very poor mechanical, electrical and mining standards. There is no excuse for these or the fact that managers often do not understand what proper standards should be". No amount of conditions or licensing permissions will stop someone who either fecklessly or recklessly is intent on abdicating his responsibilities. I believe that the Minister is more sanguine than the situation allows. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Lord Williams of Elvel moved Amendment No. 14: After Clause 4, insert the following new clause: ("Definition of accumulated group deficit. For the purpose of this Act the "accumulated group deficit" shall include—

1. (i) sums owned by the Corporation to the Treasury or the Bank of England;
2. (ii) sums owned by the Corporation to banks and other financial institutions;
3. (iii) sufficient sums to cover all outstanding claims on the Corporation for compensation for coal mining subsidence damage; and
4. (iv) such additional sums as the Corporation would have been liable for if the recommendations contained in the Report of the Subsidence Compensation Review Committee on the Report and Compensation System for Coal Mining Subsidence Damage had been enacted before 30th March 1990.").

The noble Lord said: With this amendment, which stands on the Marshalled List in the names of my noble friend Lord Graham of Edmonton and myself, we return to the question of the definition of the accumulated group deficit. As the noble Viscount will be aware, this is a point that has worried us throughout the passage of this Bill and indeed now at Committee stage.

The new clause that we propose specifies the nature of the accumulated group deficit. If I may take the small Roman figures seriatim, as it were, the paragraphs start off: (i) sums owed by the Corporation to the Treasury or the Bank of England".

The Secretary of State, being not a person but an institution, has financed the corporation extensively and we should like to make sure that the accumulated group deficit includes outstanding amounts to the Secretary of State, which in practice is the Consolidated Fund; and indeed if there are any facilities granted by the Bank of England to the corporation of which we have no record in the report and accounts of the corporation we should like to see those accumulated into the deficit. The accounting principles are quite simple. They are in profit and loss terms as written off and put in as a deficit in profit and loss terms.

Secondly, we are worried that there is an obligation in the annual report of the British Coal Corporation for the year ended in 1989 (I do not recollect the month; I could look it up but I am sure that the noble Viscount has it to hand) with regard to bank loans and overdrafts of some £44 million (and £47 million on a consolidated basis) and other creditors not falling due within one year of £808 million. We do not quite know what all that amounts to. However, it seems to us that if the corporation is to be put on a proper financial footing, if it is to be a free-standing, financially solid corporation, those obligations which are no doubt entered into on the basis of some assurance from the Treasury that they will be met should be catered for in the accumulated group deficit.

Paragraph (iii) of the amendment includes, sufficient sums to cover all outstanding claims on the Corporation for compensation for coal mining subsidence damage".

The Committee will be aware that it is a matter that was raised on Second Reading. We believe that there are potential outstanding claims that the corporation will have to face. It would be absurd if the Government tried to put the corporation on a sensible financial basis without making allowance for these.

In paragraph (iv) we include some arrangement that there should be a provision which would pass through the profit and loss account and therefore become part of the accumulated group deficit which would have been liable were the recommendations of the subsidence compensation review committee to be enacted before the end of March. In other words, if that happens, then clearly there will be an obligation on the corporation which we feel should be met under the terms of the Bill.

I recognise that it is a rather large point. I recognise that the Government may not wish to go as far as we should like to go. However, I emphasise the principle: if the Bill is designed to put the corporation on a proper financial footing, those are the issues which the Government must address. I beg to move.

Viscount Ullswater

As regards sums owed to Government and to banks, the purpose of Clause 1 of the Bill is to recognise that the corporation's asset base has been severely eroded by the events of recent years and to restore the corporation to a position where the Secretary of State can properly continue to advance loans to meet its day-to-day cash requirements. It is not the intention to eliminate all the corporation's debt; only that part which cannot be adequately remunerated by its activities.

If the Bill had been intended to eliminate all of the corporation's outstanding loans, the Government would have taken steps to provide the corporation with dividend capital. However, the Government believe that it would be quite wrong to do this in advance of fundamental decisions about how the corporation will be privatised.

Clause 1 of the Bill will limit the deficiency grant available to the amount of the corporation's accumulated group deficit at 31st March 1990. This deficit is currently expected to be around £6.5 billion, but there is a substantial margin of error, depending in particular on the extent of the asset write-down—a subject which we addressed earlier at Committee stage. I am confident that the limit on deficiency grant as set out in the Bill will be sufficient for the financial reconstruction to achieve its objective of enabling the Secretary of State to continue to lend to the corporation, without increasing this limit by the amount of the corporation's currently outstanding debt.

I am advised that the noble Lord will be aware that for the Secretary of State to forgive the corporation all or part of its loans would result in a credit to its profit and loss account and so in fact reduce the accumulated group deficit.

As regards the subsidence provisions, the corporation has provided in its accounts for some time (as coal is mined) for its estimated liability to meet the cost of surface damage. The provision included in its accounts to 31st March 1990 will therefore automatically be covered by deficiency grant as currently defined in the Bill.

It is not possible to assess fully the extent of any increase in British Coal's subsidence costs until details of the legislation are finalised. The noble Lord will be aware that further legislation to take account of the Waddilove Report is intended. It will then be for the corporation, in line with the "polluter pays" principle, to make the necessary provisions at that time. The adequacy of the corporation's provisions, including that in respect of its liability to pay compensation for subsidence damage, will be reviewed by the corporation's auditors when reporting on the corporation's annual accounts.

The noble Lord asked me a specific question about the other creditors of the £808 million. I am afraid that I do not have the detailed analysis of this figure but I believe that it relates largely to sums owing to pension schemes under annuity arrangements and to retention moneys in respect of uncompleted contracts, not sums owing to banks.

With that explanation, perhaps the noble Lord may feel inclined to withdraw the amendment.

Lord Williams of Elvel

I am most grateful to the noble Viscount. I understand that it is not the Government's intention to eliminate the whole financing deficit of the corporation, but the accumulated group deficit; in other words, past losses. I can find all kinds of accounting procedures for ensuring that forgiveness of debt does not appear as a credit on the accumulated group deficit. If the noble Viscount wants my advice, I am happy to give it to him—obviously for a commercial fee! I can certainly find ways and means of doing that.

On the question of subsidence, I accept that it is an issue which is to a certain extent open-ended until the Government introduce legislation to cope with it.

I am not entirely happy with the reply of the noble Viscount. However, in the interests of proceeding with the Committee stage on the Bill, I shall not press the matter further. I shall read what the noble Viscount has said, and may return to the issue at a later stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.45 p.m.

Lord Norrie moved Amendment No. 15: After Clause 4, insert the following new clause: ("Licensing: conservation requirements. .—(1) No licence shall be awarded under section 4 of this Act for the working of coal at a mine or by opencast operations unless the Board is satisfied that the proposal for which a licence is sought has been formulated having regard to the desirability of preserving natural beauty, of conserving flora, fauna, and geological or physiographical features of special interest, and of protecting sites, buildings and objects of architectural, historic or archaeological interest, and takes steps to mitigate any effect which the proposal would have on the natural beauty of the countryside or on any such flora, fauna, buildings or objects. (2) The provisions of the preceding subsection shall also apply, with the necessary modifications, where any proposal is being formulated for the restoration of land affected by the working of coal by opencast operations or by operations incidental to such working.").

The noble Lord said: The amendment would extend to the private sector the environmental duty that currently applies to British Coal's opencast operations. First, I should like to comment on the very positive debate that we had at Second Reading when almost every speaker referred to the need for stricter environmental conditions to be imposed on the coal industry. I therefore approach this debate with considerable optimism that the Government will respond positively to the need for a new duty, and will either accept my amendment or bring forward their own at Report stage.

The case for an expanded environmental duty is obvious. British Coal has had an amenity duty on its opencast operations since 1958. This was confirmed in 1986 under the Housing and Planning Act. Now that the Government intend greatly to expand the private sector activity in coal extraction, it is only logical and sensible to ensure that the private sector operates under the same framework as the British Coal Corporation. It means extending BCC's environmental duty to the private sector.

It is quite clear that the Government already hope that this will happen. In 1988 the Department of the Environment issued guidance to mineral planning authorities in its Mineral Planning Guidance Note 3. On page 5, at paragraph 16, it states that it expects that private operators will wish to have regard to similar considerations as those applying to British Coal.

The guidance is welcome, but it is by no means sufficient. Regrettably, the performance of many private operators in this field leaves much to be desired, as I mentioned in referring to the Durham County Council report on Second Reading. A simple hope that of their own free will private operators will embrace a statutory duty that technically applies only to British Coal is not good enough. The purpose of my amendment is to put into legislative effect that which the Government already hope will happen.

My amendment can be broken down into three areas. First, it would apply the environmental duty to the deep-mine and opencast sectors. I expect that my noble friend will tell me that I am breaking with precedent because BCC does not yet have an amenity duty with respect to its deep-mine operations. I am aware of that, but I believe that it is now time for BCC and the private-sector deep mines to have such a duty.

Secondly, my amendment would require private-sector companies to take the environment into account while formulating their proposals. That is vital because the procedures of planning and environmental impact assessment (EIA) do not in practice have much influence until a much later stage in the development of a project.

By that time all the major decisions, especially the favoured site, have been taken. Nothing could be more important than building consideration for the environment into the decision-making process at the earliest stage.

I was heartened when, in response to my amendment tabled last year during the passage of the Electricity Bill, the Minister agreed to accept the fact that similar duties should apply to the Secretary of State, to the Director of Electricity Supply and to the private-sector power generators and distributors. Those duties now appear in Section 3 of and Schedule 9 to the Electricity Act. Therefore, I am optimistic that my noble friend will build on that precedent by accepting my amendment today.

Thirdly, my amendment ensures that steps would be taken to mitigate the adverse impact of the development as an intrinsic part of is formulation. Such impact might be landscape damage; noise; and dust and traffic movements created in any coal extraction site whether deep-mine or opencast. That process would also interact with the planning stages where local authorities can impose conditions on developers to reduce environmental damage and the process of EIA which can identify mitigating measures.

I should like to comment briefly on the planning process and EIA and explain how my proposed new duty will relate to them. My noble friend referred to that point in his response to the Second Reading debate. All coal extraction proposals, whether deep mine or opencast, require planning consent. The normal planning procedure is the same as for any other development. The local planning authority receives the application, considers it and is entitled to give consent, refuse it, or impose conditions on a consent.

Since 1988 the EC environmental impact assessment directive has operated in the United Kingdom. It requires developers of certain projects to submit with their planning application an environmental statement describing the impact of their proposed development on the environment, together with the steps that they have taken to mitigate any environmental damage caused.

Obviously, these processes are of vital importance but we should be aware of their limitations. First, planning authorities are able to consider only the applications that they receive. For example, they cannot state that they believe that a much better site for opencast coal exists 10 miles from the site in question. Neither does EIA, which is a welcome addition to the planning process, apply in every case.

The detailed regulations covering EIA extend only to new large deep mines and opencast sites over 50 hectares. The exception is sensitive areas where smaller sites may require EIA. Fifty hectares is an enormous area of land. For those Members of the Committee who have difficulty thinking in metric measurements, it is an area slightly larger than Green Park and St. James's Park joined together. It is obvious that some applications would not be covered by the need to undertake an EIA.

However, for the purpose of my amendment it is important to note that EIA is implemented only after a site has been chosen and if it falls above the required threshold. My amendment would influence the process at a much earlier stage. For example, my environmental duty should help by identifying the least damaging sites; searching out derelict or unsightly land where coal extraction operations could improve the site; matching coal quality requirements with environmental considerations and the national need for coal with the objective ot minimising overall environmental damage. The experience of EIA in this country is that it is not able to fulfil that function. Therefore, I believe that my amendment is a necessary and important complement to existing planning and EIA procedures.

There appear to be innumerable arguments for accepting the new clause. There are legislative precedents in the Housing and Planning Act and the Electricity Act. The Government are on record as stating that they hope that the private sector will adopt similar duties in Mineral Planning Guidance Note 3, and there is ample evidence showing widespread concern about the damage which coal extraction—especially opencast operations—has on the environment.

It is clear that if private sector activity is to expand as the Government hope, it must do so in ways which cause the least damage to the environment. To date the private sector's performance is not reassuring. It is vital that we take steps now to ensure that the private sector plays its part in making sure that necessary industrial activity in our countryside results in the least possible harm. I beg to move.

Baroness Stedman

I support the amendment. I wish to deal with the problems already caused to local authorities which I raised on Second Reading. There are problems for local authorities where sites are not properly regulated and restored and where the environment is damaged.

The amendment tabled by the noble Lord, Lord Norrie, provides a strict environmental framework for the licensing of coal extraction. As he has said, in laying down the environmental duty to take account of the environmental impact of any scheme during the formulation of proposals as well as during the planning and assessment stages it follows implicitly the precedent of the Housing and Planning Act 1986 and the Electricity Act 1990. Unless the operations are guided from the outset by improved environmental responsibilities, the environmental damage could be greater than need be the case.

On Second Reading I referred to the concern felt by local authorities as a result of the proposal that the corporation can grant licences for opencast operations where the total production figure is not likely to exceed, or greatly to exceed, 250,000 tonnes. That is a 10-fold increase on the present limit of 25,000 tonnes. Yet, despite that huge increase, there is no requirement in the Bill for the licensed sector of the industry to have specific regard for environmental considerations, unlike British Coal.

Opencast coal mining can have significant environmental implications even where the operator takes all possible care to minimise the effects in the locality during the operation and to restore the land afterwards. It is imperative that private operators should be under no less an obligation than British Coal to minimise the environmental effect of their operations.

Since I spoke on Second Reading, I have received a great deal of correspondence concerning different local authorities and the problems that they have faced. I shall not bore the Committee with all the details but I wish to refer to some of the smaller licensed-operator sites. I refer in particular to Cinderhill, a site of 20 or 30 acres near Kilburn in central Derbyshire. After a period of several years during which it had not been worked, the operators put oil waste on the site in lagoons. That turned out to be most unsatisfactory. The site had been laid waste for about 15 years and although subject to enforcement action, that has still not been satisfactorily restored at all. In the end, the local authority will have to pick up the tab for making that land suitable for recreational and other needs.

There is another site at Hilton Moor, a licensed opencast site in Durham, which is about 19 hectares. Permission was given by the Secretary of State for the Environment in February 1986 following a public inquiry. That permission was subject to conditions requiring a cessation of extraction no later than 21 months after the work had begun and the restoration of the site in accordance with the scheme which was agreed by the county council. In January 1988 work ceased. The county council was advised that the site operator was no longer in possession of that site, it having been taken into receivership. As a result, the site has remained unrestored in breach of the planning condition with all the implications for the environment in that particular area. The county council took enforcement action towards the end of 1988 but the area has still not been satisfactorily restored.

A further example is the Hill Top opencast site in East Stanley in Durham. There permission was also given following a successful appeal by the developer and subject to conditions which included restoration of the site. The development of the site started in 1981 and was expected to be completed in some three or four years. However, by July 1986 the development had still not been completed and the site remains only partially restored. Enforcement action was taken in the summer of 1986 and although the site has now been restored there was a period of 18 months when the site, which is very close to houses with a lot of young children, remained an environmental eyesore and a real hazard to the children in the area. It was only after very lengthy and complex enforcement proceedings that the site was eventually restored.

Those are some unsatisfactory examples which we find in the privately licensed opencast sites. I also have compehensive details of a site near Consett in County Durham. It would take me too long to give the Committee the history of that matter. The county council made efforts to get proper reinstatement and faced many problems regarding enforcement notices. Work on the site ended in 1986 and the restoration is still not complete.

I accept that with the greater tonnage proposed, some of the larger operators who at present work on a contract site for British Coal will probably be interested in applying for the larger sites. Because they have been used to meeting British Coal's standards, they will probably achieve a higher environmental standard. However, I still believe that that duty should be written into the Bill to cover all licensed operators.

6 p.m.

Viscount Hanworth

From these Benches, we strongly support this amendment. I shall not waste the time of the Committee by repeating examples given by the noble Baroness, Lady Stedman, because quite clearly she has far greater knowledge of the matter than I.

Lord Renton

There is one technical point which I should mention. At the end of the second line of the amendment the word "Board" should be replaced by the word "Corporation". That is a very small point which can easily be dealt with by a manuscript amendment if the new clause is acceptable to the Committee. I hope that it will be acceptable to the Committee and especially to my noble friend on the Front Bench.

Let us concede at once—and it is evidence that what is best is possible—that in some cases there have been wonderful restorations of land following opencast coal mining. However, there have been too many exceptions, as has been stated. Here we are faced with the fact that on the wording of this Bill, as my noble friend Lord Norrie pointed out, no area which is smaller than St. James' Park will be affected by the supposedly stringent provisions which would guarantee restoration after opencast mining.

My noble friend Lord Ullswater said on Second Reading: We want to see opencasting, which is 30 per cent, cheaper than deep-mined coal, contributing more to our national economy, always consistent with each individual site being acceptable environmentally". He went on to say: That must be demonstrated rigorously through the planning system". [Official Report, 9/2/90; col. 1059.] I suggest that it is not enough to leave it to the planning system. That is leaving too much to chance—is it not?—because the attitudes of planning authorities vary from place to place and indeed, in my experience, within the same planning authority from time to time.

We are then presented with the possibility that things will get even better with environmental impact assessments being undertaken in future before new licences are granted. Of course, an environmental impact assessment is splendid. However, we must assure ourselves that the new licences, whatever conditions they contain, would be effectively enforced. Enforcement is the crux of this matter. Sometimes it is effective; but—alas!—in some notorious cases it is not effective.

The real issue for the Committee, and especially for my noble friend, is whether, in order to gain better enforcement, Parliament should make its will clear. Parliament should show its concern for the safeguarding of the environment in the way described in the new clause or in an equally effective way, however, drafted. This new clause is a valiant attempt by noble friend Lord Norrie to express what I am sure all Members of the Committee have in mind. It would place upon not only the licensee but also on the corporation the responsibility of seeing that the proposal has been formulated with regard to the desirability of preserving natural beauty and so on. Those words in the new clause are to be found in the Electricity Act 1957 and are repeated in only slightly different form in the Electricity Act 1989. I suggest that what is good for electricity should also be good for coal.

One could go on and emphasise this still further. I hope however that I have said enough to show that what my noble friend proposed with the support of the noble Baroness, Lady Stedman—and we hope for support elsewhere in the Chamber—will alert the Government to the need for strengthening the law and making clear the will of Parliament.

Baroness David

My name is to this amendment and I should like to add my support to the case which has been so ably made by the other four speakers. There is support all around the Chamber and I will not understand if the Government do not support the amendment also. I hoped that the noble Viscount would already have jumped to his feet and said "We agree with this" because there are precedents. There is the amenity duty which was put into Schedule 8 to the Housing and Planning Act 1986. Precedents have also been set in the Electricity Act 1989.

I certainly agree with the noble Lord, Lord Renton, that it is not enough to leave it to planning. We must have this covered by legislation to ensure that the environment is properly looked after, bearing in mind what could happen under this Bill. I therefore strongly support Lord Nome's amendment.

Lord Forester

I have listened with great interest to this debate and read the amendment very carefully. I am the first to agree that stringent environmental safeguards are a must and to that extent I agree with my noble friend Lord Norrie. However, surely the responsibility for safeguarding the environment rests with the Secretary of State for the Environment through the town and country planning legislation. As we have heard, planning permission is required for all mining. Those regulations have recently been tightened up and the environmental impact assessments, of which we have heard a certain amount, have been brought in. However, they are extremely new.

I have had two experiences with environmental impact assessments and they are extremely detailed. I venture to suggest that everybody is not fully aware of them. They involve groups of almost all environments and very wide consultations. They cover the majority of points in the amendment. I simply feel that this is a planning matter and should be dealt with as a planning matter.

Foolishly, when the planning guidelines were drawn up, areas less than 50 hectares were not automatically included; without doubt they should be included, virtually down to zero. That was an error, but surely it is a planning matter. If we are to listen to my noble friend Lord Renton and if we are to handle the whole thing through the Coal Board, will we not need planning for those applications in the future? I feel that we want one process and one process only. If all these things are dealt with under planning law, surely once they have been dealt with it will be sufficient; we shall not need to go through all the grounds again. I suggest that this is a planning matter and as such I must vote against it.

Lord Renton

Perhaps my noble friend will allow me to say—I am grateful to him for giving way—that under present law it is already a planning matter. It is also the responsibility of the British Coal Corporation. Both those considerations will remain, but the purpose of the new clause is to to show both the planning authorities and the corporation that Parliament really does expect enforcement.

Lord Forester

I feel that we should strengthen the planning laws. That is what I am saying. I am the first to agree that we want controls, but it is surely a matter for the Department of the Environment and planners to handle. Yes, I agree that there are items which must be put right.

The Earl of Erroll

If I may say so very quickly, I have very little faith in the planning laws. I live on the edge of an AONB and we have been trying to resist a scrap heap, a large commercial scrap yard, opening up there. We have been told that we are not allowed to resist it on the grounds that it is an eyesore for the community or the countryside; we can only resist it on the grounds of traffic and that it might be dangerous to traffic. I do not see the point of AONBs and SSSIs as ordinary local people do not appear to be able to bring them to the attention of the planning authorities and thereby resist developments. They are taken to appeal again and again.

The latest thing is that we are supposed to find £3,500 among a few households to employ a lawyer or we will not be thought to be serious when the case is heard. At a previous meeting we were suddenly told that we were not allowed to say this, that or the other or that people were not allowed to speak. The whole planning process, from the point of view of someone who has seen it from the other side, leaves a hell of a lot to be desired, to put it mildly. It seems to be impossible to resist these large organisations. All that happens is that they go to appeal; they ride roughshod over everyone and find regulations whereby all the points that we are told will be taken into consideration are not taken into consideration. I very much doubt that planning law is strong enough.

6.15 p.m.

Lord Nathan

Perhaps I may support the point made by the noble Lord, Lord Renton, relating to the incorporaton of such a provision consistently with the provisions of the Electricity Bill as long ago as 1957, as he mentioned. The current approach to these problems surely is that environmental consideration should be integrated into all activities, particularly into those having significant effect on the environment, of which coal mining is one.

It seems to me that it is the obligation of those concerned in such activities to carry out their environmental obligations, albeit that does not deny that the planning authorities should maintain the powers that they have. I suggest it is the obligation of the electricity authorities under the 1957 Act and the recent Act, and the obligation of the corporation under the present Bill, to take the appropriate steps and not leave the matter entirely within the planning field.

Viscount Ullswater

This amendment on environmental responsibilities tabled by my noble friends Lord Norrie and Lord Renton, the noble Baronesses, Lady David and Lady Stedman, and, indeed, the other amendment tabled by the noble Lords, Lord Graham of Edmonton and Lord Williams of Elvel, which we will be discussing later this evening, are important ones and we have considered them carefully.

I have a great deal of sympathy for the general sentiment that lies behind the amendments. Environmental expectations are rising and mining operations must have regard to this. Some of the arrangements for opencast workings and restoration which took place in the 1970s and 1980s would not be acceptable today. There is no dispute that the environmental standards of mine operators need to be higher today than ever before. The issue is how we achieve the right balance between the need for the coal and the environmental considerations, and how we ensure that the environmental standards are applied in a fair and effective way.

I must emphasise that there is very little difference between the basic objectives of the Government and the views expressed on all sides of the Chamber this evening. The difference is how best these aims of higher environmental standards can be carried forward.

I recognise that Paragraph 1 of Schedule 8 to the Housing and Planning Act 1986 imposed an amenity duty upon British Coal's opencast operations. It was felt by the Government at the time that this duty was superseded by implementation of the recommendations of the commission on energy and the environment that opencast proposals should be brought within the planning system. However, the Government accepted the strong views expressed in this House—I think most notably by Baroness Nicol—that a statutory amenity duty should continue to rest on British Coal as an opencast operator. Indeed, the Government went further. The mineral planning guidelines, published in 1988 and already referred to, (MPG3) drew attention to the amenity duty on British Coal's opencast operations and went on to say: it expected that private operators would wish to have regard to similar considerations". I am aware of the report prepared by the County Planning Officers Society in 1984 which reviewed instances where planning conditions imposed on licensed operations were not being observed. Two of the instances cited by the noble Baroness, Lady Stedman, would have dated from that time; that is, they were in excess of six years old. This report was based on data from 1981 to 1984 which predated the planning guidance issued to mineral planning authorities in 1984 under Circular 3/84.

Where environmental failures take place it is usually because either the planning consideration is not detailed enough or because the conditions laid down in the planning permission are not adequately enforced. On the planning side, since 1984 the Government have greatly expanded and tightened up the earlier planning guidance offered to mineral planning authorities. The opencast operators tell me—and I believe them—that MPG3 imposes on them a tougher planning regime than anywhere else in the world. Since 1988, as I indicated on Second Reading, the Government have gone further and require applicants for planning permission on opencast sites above 50 hectares to prepare a full environmental impact assessment in support of a planning application which examines all aspects of how the proposed workings will affect the environment. This will be mandatory for virtually all the larger licensed sites allowed under this Bill. The mineral planning authority has discretion to require an EIA in respect of any smaller site where there are likely to be particular environmental sensitivities.

If there are failings I do not believe that they lie in the planning permission or in the planning guidance but in the enforcement of those conditions. That is a matter that is not touched by this amendment; nor indeed is it touched by the amenity duty imposed on the British Coal Opencast Executive under Schedule 8 to the Housing and Planning Act 1986.

The amendment also extends to licensed deep mines. Having taken a helicopter trip over the East Midlands coalfields last week, I accept that deep mining can be just as much an eyesore as opencast operations, not least because of the much greater life of deep-mined operations. However, on fairness grounds I do not believe it to be reasonable to extend to licensed deep mines, which account for only 1 per cent, of total deep-mined output, a statutory requirement which does not apply to the 99 per cent, of deep-mined output produced by British Coal itself.

Moreover, it seems particularly unreasonable because all licensed deep-mined operations have had to obtain planning permission whereas British Coal deep mines which predate July 1948 are covered by a general development order. In any event, I believe that a great deal more consultation would be necessary before any amenity duty were to be imposed on deep mining. That cannot be accomplished within the very tight time-scale available for the passage of this Bill.

I accept, and I believe that British Coal accepts, that the time has come when British Coal's environmental responsibilities right across its activities—not just opencast mining—need to be reviewed and its policy codified. A voluntary but published code of practice rather than legislation seems to be the right way to proceed, given the rapid pace of change in mining technology and techniques. This approach will allow a more detailed code to be formulated and kept up to date. I understand that British Coal will be consulting bodies with an environmental interest and I very much hope that that will lead to a constructive way forward. In the meantime, we will continue to press British Coal to accept environmental liabilities that properly belong to it.

I am pleased to be able to tell the Committee that British Coal has recently agreed to accept liability for restoring the sites of deep mines closing over the next four years up to privatisation. This is an appropriate extension of the polluter pays principle and it will cost British Coal around £25 million, with a corresponding reduction in derelict land grant.

The Government believe that a voluntary approach is the most effective way forward. I have indicated one difficulty we have with this amendment—that it imposes on licensed deep mines a duty that does not extend to British Coal's deep mines. However, our basic objection to this amendment is that it puts the obligation on British Coal as licensor to satisfy itself as to whether the licensee has had adequate regard to the environmental implications of his operation. We do not think that is an effective way to secure environmental standards. In fact, it could be counter-productive. We believe a clear distinction has to be drawn between the licensing regime and the planning regime.

British Coal has clear statutory functions as licensor to develop the coal industry in the national interest. The planning system bears the responsibility of environmental protection. This amendment blurs this clear division of responsibilities and in my view weakens the functioning of both the licensing and the planning systems as a result. For example, we have an arrangement at the moment where British Coal has publicly committed itself not to issue a licence unless the licensee has planning permission. If British Coal were required to satisfy itself independently of the planning permission that the licensee's operations were environmentally sound, what would happen if it concluded that planning permission had been unsoundly given or required environmental conditions which were in conflict with the conditions laid down by the mineral planning authority or by the Secretary of State for the Environment? I believe the amendment will tend to produce muddle and delay. The reassurance that the supporters of the amendment are looking for rests, I believe, in British Coal's commitment that it will accept an application for a licence only when an appropriate planning permission has been obtained.

Perhaps I may deal with two questions that were put to me. My noble friend Lord Norrie stressed the need for early consultation on environmental aspects; that is, before an environmental impact assessment. The planning system was tightened in MPG3, as I said, to stress the importance of prior consultations between developer and planning authority. Paragraph 10 also requires consideration of whether it would be better to work an alternative site on environmental grounds. Therefore, I do not fully accept that there is no requirement for the early consultation that my noble friend seeks.

My noble friend Lord Renton suggested that local planning authorities were perhaps in some way not the right people to look after environmental aspects on a nation-wide basis. I have to disagree with my noble friend. It is local conditions that local government should consider before making decisions. Local authorities are probably best placed to take the detailed decisions that are required before giving planning permission.

I have spoken for a number of minutes on this amendment. That is perhaps an indication of how seriously the Government take it. However, I hope that in view of what I have said and the very tight timetable which this Bill requires my noble friend will seek leave to withdraw his amendment.

Lord Renton

Before my noble friend Lord Norrie decides, perhaps my noble friend Lord Ullswater will be kind enough to consider two matters. First, there is nothing in the amendment which excludes the planning procedure. I agree that there must be a planning procedure as there has been for quite a long time. The Minister has not dealt with the point raised by my noble friend, which is a very important one; namely, that it is only if an area is as large as St. James's Park or larger that the proposals in Clause 4 of the Bill would bite at all. That cannot be a satisfactory situation.

Viscount Ullswater

I shall deal with the last point first. All mining, whether opencast or deep-mining, requires planning permission and, however large or small the site, that planning permission is under the guidance of the Mineral Planning Authority Guidance, the MPG3, which I have mentioned. As regards the other point which my noble friend Lord Renton raised, I tried to stress in my remarks the fact that the Government consider British Coal, as the licensor, has a different function to play in this whole matter from that of the planning authority. I sought to stress that, in agreement with my noble friend Lord Forester, the planning authority is the right body to give planning permission and that British Coal is the right organisation to give the licence.

Lord Norrie

We have had a very interesting debate. I am still disappointed by the noble Viscount's response, particularly as my amendment has been very widely supported on all sides of the Committee. I am particularly disappointed by the Government's continual reliance on the planning system and the process of parliamentary assessment alone to address the very real environmental concern raised by coal extraction. As I emphasised in my speech, under the present arrangements these come into the process far too late to play the vital role which I envisage for the environmental duty.

The noble Baroness, Lady Stedman, also raised some very important points on behalf of the local authorities involved which, after all, deal with these applications day after day. The Government believe that we can rely on the existing planning and EIA procedures and by hoping that the private sector will voluntarily adopt strict environmental responsibilities. Almost every other speaker in this debate shared my concern that these issues are too important to be left to chance, and that we need environmental duties to apply from the very earliest stages of thinking about future coal extraction operations to complement planning and EIA procedures.

The precedents set by the Electricity Act 1989 and the Housing and Planning Act 1986 are ones which we should follow and not ignore. I should say a word about deep mines. I acknowledged in my speech that I was breaking precedent for what I believe were very good reasons. If my amendment were to be accepted by the Committee, I should be happy to discuss with the Government any difficulties that they have with that part of my amendment which could be resolved, if necessary, at Report stage.

I believe that extending the environmental responsibilities of BCC to the private sector is essential if, as this Bill intends, we give a greater role to the private sector in coal extraction. I also believe that this duty would be non-controversial so far as the remaining passage of this Bill: indeed, it might help its progress. The Department of Energy has to convince the public and the rest of the Government that it is taking its environmental responsibilities seriously. It took a great step forward in accepting new environmental duties in connection with last year's Electricity Act. The department should not let its image be tarnished by resisting the same improvements to this Bill.

We are facing an issue of principle here. We have reached an impasse which can only be resolved by asking the Committee to decide on the future of this amendment.

The Deputy Chairman of Committees (Lord Murton of Lindisfarne)

Before I put the Question I inform the Committee that the noble Lord, Lord Renton, has notified his wish to move a manuscript amendment.

Lord Renton moved, as an amendment to Amendment No. 15, a manuscript amendment: Line 2, change the word "Board" for "Corporation".

The noble Lord said: As regards Amendment No. 15 and the new clause as printed, the word "Board" in the second line should be changed to "Corporation". I beg to move.

On Question, amendment agreed to.

6.35 p.m.

On Question, Whether the said amendment (No. 15) shall be agreed to?

Their Lordships divided: Contents, 80; Not-Contents, 64.

DIVISION NO. 1
CONTENTS
Addington, L.	Jeger, B.
Airedale, L.	Jenkins of Hillhead, L.
Ardwick, L.	Jenkins of Putney, L.
Aylestone, L.	John-Mackie, L.
Barnett, L.	Kilbracken, L.
Blackstone, B.	Kinloss, Ly.
Blease, L.	Listowel, E.
Blyth, L.	Lockkwood, B.
Bonham-Carter, L.	Longford, E.
Bottomley, L.	Lovell-Davis, L.
Bruce of Donington, L.	McCarthy, L.
Carmichael of Kelvingrove, L.	McGregor of Durris, L.
	Mcintosh of Haringey, L.
Carter, L.	Mackie of Benshie, L.
Cledwyn of Penrhos, L.	Mais, L.
Cocks of Hartcliffe, L.	Mayhew, L.
Craigavon, V.	Meston, L.
David, B.	Monkswell, L.
Dean of Beswick, L.	Murray of Epping Forest, L.
Donaldson of Kingsbridge, L.	Nathan, L.
Dormand of Easington, L.	Newall, L.
Elliot of Harwood, B.	Nicol, B.
Erroll, E.	Norrie, L. [Teller.]
Ewart-Biggs, B.	Ogmore, L.
Falkender, B.	Peston, L.
Falkland, V.	Pitt of Hampstead, L.
Gallacher, L.	Ponsonby of Shulbrede, L.
Galpern, L.	Renton, L.
Gladwyn, L.	Seear, B.
Glenamara, L.	Seebohm, L.
Graham of Edmonton, L. [Teller.]	Stedman, B.
	Stewart of Fulham, L.
Greenway, L.	Stoddart of Swindon, L.
Hacking, L.	Taylor of Gryfe, L.
Halsbury, E.	Tonypandy, V.
Hanworth, V.	Tordoff, L.
Harris of Greenwich, L.	Turner of Camden, B.
Houghton of Sowerby, L.	Underhill, L.
Hutchinson of Lullington, L.	Wedderburn of Charlton, L.
Hylton-Foster, B.	Williams of Elvel, L.
Jay, L.	Winterbottom, L.

NOT-CONTENTS
Ampthill, L.	Caithness, E.
Arran, E.	Campbell of Alloway, L.
Auckland, L.	Carnock, L.
Belstead, L.	Colwyn, L.
Bessborough, E.	Constantine of Stanmore, L.
Blake, L.	Craigmyle, L.
Blatch, B.	Crickhowell, L.
Boardman, L.	Cullen of Ashbourne, L.
Borthwick, L.	Davidson, V. [Teller.]
Boyd-Carpenter, L.	Denham, L.
Brabazon of Tara, L.	Elles, B.
Brougham and Vaux, L.	Elliott of Morpeth, L.
Butterworth, L.	Ferrers, E.

Forester, L.	Murton of Lindisfarne, L.
Fraser of Carmyllie, L.	Napier and Ettrick, L.
Geddes, L.	Nelson, E.
Gisborough, L.	Orkney, E.
Glenarthur, L.	Pender, L.
Hanson, L.	Peyton of Yeovil, L.
Harmar-Nicholls, L.	Platt of Writtle, B.
Hayter, L.	Reay, L.
Henley, L.	Rockley, L.
Hesketh, L.	Stodart of Leaston, L.
Hooper, B.	Strathclyde, L.
Howie of Troon, L.	Strathmore and Kinghorne, E.
Jenkin of Roding, L.
Johnston of Rockport, L.	Sudeley, L.
Killearn, L.	Thomas of Gwydir, L.
Long, V. [Teller.]	Tranmire, L.
Lucas of Chilworth, L.	Trumpington, B.
Margadale, L.	Ullswater, V.
Marshall of Leeds, L.	Wise, L.
Merrivale, L.

Resolved in the affirmative, and amendment agreed to accordingly.

6.43 p.m.

[Amendments Nos. 16 and 17 not moved.]

Remaining clause agreed to.

House resumed: Bill reported with an amendment.