The Coal Industry (Hansard, 25 July 1990)

§ The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)
My Lords, the future of the coal industry is very much in the hands of the management and mineworkers 1443 themselves, and in particular on their ability to reduce costs to competitive levels through improving productivity which is up by 75 per cent. from pre-strike levels. Further cost reductions and productivity gains are essential. I believe that the industry has the technology, the investment and the skills to secure its own future. The Government remain committed to transferring British Coal's mining activities to the private sector, but no decisions will be taken on the future structure of the industry until after the next general election.

§ Lord Dormand of Easington
My Lords, how much importance do the Government place on the security of supply of coal, given that our present reserves are sufficient for some 200 years at the present rate of extraction? As all forecasts predict that the price of imported coal will increase in the medium and long term, and as the British coal industry continues to improve its efficiency, ought not the Government to look again at the policy of pit closures? I stress that I am referring to the medium and long-term position, especially as the Secretary of State in another place this week said that there was a great need for long-term contracts. One cannot mothball a pit.

§ Viscount Ullswater
My Lords, the contracts with the generators provide British Coal with a large market opportunity to aim for. They are three-year agreements, as the noble Lord indicates with his hand, and will provide a guaranteed stream of income over the next three years and time in which to adjust to new market conditions. That guarantee of production will give British Coal the incentive it needs to reduce its prices with an eye on the world price of coal. I am certain that coal will be burned by the electricity generators for many years to come.

§ Lord Mason of Barnsley
My Lords, with the introduction of gas-fired power stations and the closure of some coal-fired stations, with up to 15 million tonnes of cheap imported coal coming into this country—remembering that 1 million tonnes equals 1,000 miners' jobs—and with the Government's coal Bill necessitating the vast expansion of open-cast coal mining, what size of deep coal mining industry will we have left by the year 2,000?

§ Viscount Ullswater
My Lords, it would be wrong to ignore the fact that the Government have approved over £7 billion worth of new investment in the coal mining industry and provided more than £10 billion of restructuring grant since 1979. That is no mean figure. The noble Lord asked me about the 15 million tonnes of imports. My figures do not show that we import 15 million tonnes but nearer 11 or 12 million tonnes. Part of that is special coal required by the steel industry which cannot be found and mined economically in this country.

§ Lord Ezra
My Lords, as he intimated in his Answer that the coal industry has achieved a remarkable amount in improving its productivity in recent years, does the noble Viscount agree that it is to be commended on the efforts that it is now making to develop clean burning processes for coal which are of great importance in view of environmental considerations?

§ Viscount Ullswater
Yes, my Lords. I agree with everything that the noble Lord has said. However, the improved productivity still leaves the coal mining industry at odds with deep mining productivity in Australia and the United States. Research projects are under way so that the clean coal-burning technique can be improved and used in the future, especially to protect the environment.

§ Lord Williams of Elvel
My Lords, will the noble Viscount accept that my noble friends are right in saying that the future of the coal industry is a long-term problem? Does he not agree that the privatisation process means that generators will look to gas rather than to coal in the short term, partly for cost reasons and partly because that will meet the Government's environmental targets which they refuse to meet by other means? What will then happen when the gas runs out and all the pits are shut down?

§ Viscount Ullswater
My Lords, I am not sure that that is a correct scenario. The problems with the coal mining industry have been long-term problems for a great many years, as I am sure the noble Lord will know. Over the past 30 or 40 years pits have been closed at the same rate. Environmental considerations will mean that we have to clean up coal burning. However, I am quite certain that the fitting of FGD to power stations will assist with the environmental problems. I cannot agree that privatisation will hinder the process of looking to the future of the industry.

§ Lord Marsh
My Lords, does the noble Viscount consider that the Government could take a more objective view of the problem and recognise the fact that Mr. Arthur Scargill has done far more to rationalise the industry than any government department or Minister?

§ Viscount Ullswater
My Lords, all I can say is that Mr. Arthur Scargill has made an interesting contribution.

§ Lord Stoddart of Swindon
My Lords, is the noble Viscount aware that the coal industry is under a twin threat from the EC: first, from restrictions on government assistance to the coal industry; and, secondly, from its insistence that there should be no import controls on coal? Are not those two matters likely to do great damage to the coal industry in the future?

§ Viscount Ullswater
My Lords, the noble Lord suggested that government assistance has been restricted. All I can say is that in the past government assistance has not been restricted. I quoted some interesting figures to the House. The noble Lord shakes his head and says that that is not the question. The figures indicate that the Government have not shrunk from assisting the coal industry. As I indicated earlier, to date most of the imports of coal have been of special coals. I agree that the Government have no policy to restrict imports of coal. It must be up to the generators to decide where to purchase their coal. I do not believe that the taxpayer can go on subsidising British Coal at everybody's expense indefinitely.

§ Lord Dormand of Easington
My Lords, if the Government are not concerned about the security of 1445 supply, which was the purport of my Question, what lessons have they learnt from the fact that there is now not a single pit in the country producing coking coal, that all of the low-sulphur pits have been closed, and that there is one pit left producing anthracite?

§ Viscount Ullswater
My Lords, I have dealt with the fact that some of the coking coal cannot be produced economically in this country. We cannot just go on producing coal at the pithead for the industry at any price. It leaves us uncompetitive. I have dealt with the security of supply: that is one of the reasons that we are concentrating on building a nuclear power station.