Coal Industry: Privatisation Plans (Hansard, 5 June 1991)

§ Lord Cavendish of Furness
My Lords, the Government remain committed to returning the coal industry to the private sector after the next election. To that end we recently announced the appointment of Rothschild as financial advisers to assist with preparatory work. We hope to announce the appointment of legal and accounting advisers shortly. That preliminary work will allow more rapid progress to be made when we come to privatise the industry. However, no decisions about the form or timing of privatisation will be taken until after the election, and after those interested have had an opportunity to express their views.

§ Lord Dormand of Easington
My Lords, is the Minister aware that if National Power and PowerGen do not place with British Coal adequate contracts —contracts which must be in place in 18 months' time —most of the country's coal industry will have to close down? Is he aware that the Secretary of State for Energy recently stated that it would be a mistake if contracts were to be settled solely on price and that security of supply was an important consideration? May I remind the Minister that we on these Benches have been saying that for years? In view of the urgency, especially over the contracts, what are the Government doing?

§ Lord Cavendish of Furness
My Lords, it is a matter for the generators. The Government do not propose to intervene. The coal industry is making good progress with productivity. It is up by over 90 per cent. on pre-strike levels. Further productivity gains are essential. The industry has the investment, the technology and the skills to achieve them. There are many other factors which will encourage the generating companies to continue to place contracts with British Coal.

§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that the facts quoted by the noble Lord, Lord Dormand, constitute a damning indictment of nationalisation? Will my noble friend tell your Lordships how much the industry has cost the taxpayer by way of subsidy since it was nationalised?

§ Lord Cavendish of Furness
My Lords, I cannot tell my noble friend what the industry has cost the taxpayer since it was nationalised. I can tell him that since the Government came into power the taxpayer has contributed to the industry to the tune of £7 billion —not nothing.

§ Lord Mason of Barnsley
My Lords, is the Minister aware that the Department of Energy has called upon the bank adviser of the noble Lord, Lord Hanson, N.M. Rothschild, to draw up the proposals for the privatisation of the coal mining industry? Has the Minister seen the comments made in The Times last Saturday that Rothschild's experience in the energy field includes its role as adviser to the 12 regional electricity companies privatised last December as well as acting, for Hanson plc during its abortive bid to buy PowerGen? Hanson plc also owns Peabody, the American mining group and one of the world's largest coal producers. Is there not a conflict of interest here? Will the Minister take the opportunity to clear the air and explain fully to the House whether or not there is a conflict of interest?

§ Lord Cavendish of Furness
My Lords, I should have thought that there was categorically no conflict of interest. We shall seek the best advice we can obtain in the circumstances, having examined what advice is available.

§ Lord Rochester
My Lords, did I understand from the Minister's initial reply that there would be full consultation with representatives of employees before firm plans are made for the privatisation of the industry?

§ Lord Cavendish of Furness
My Lords, I emphatically confirm that.

§ Lord Taylor of Gryfe
My Lords, has the Minister looked at the profits now earned by British Gas, British Telecom and the water companies and the share movements in each of those companies? Does it not suggest that the financial advice given by the Government has been faulty and that national assets have bee a sold off too cheaply?

§ Lord Cavendish of Furness
My Lords, that is wide of the Question. Suffice it to say that I do not agree.

Lord Bruce of Donington
My Lords, does the noble Lord think that bankers are appropriate advisers to the Government on a matter of this kind?

§ Lord Cavendish of Furness
My Lords, we need banking advice. I said in my original reply that we would have other forms of advice as well.

§ Lord Williams of Elvel
My Lords, the noble Lord was kind enough to tell us and to confirm to my noble friend Lord Mason that Rothschild were acting for the Government and that there were legal advisers. Will he be good enough also to tell us on what fee basis Rothschild are acting? Is the taxpayer to pay merchant banking fees and legal fees for something that may never happen? Or are they acting on a contingent fee basis, in case noble Lords opposite lose the next election?

§ Lord Cavendish of Furness
My Lords, we do not plan to lose the next election. We are not appointing Rothschild as legal advisers. I do not know at the moment what the fee basis is; I shall need to write to the noble Lord on that.

§ Lord Williams of Elvel
My Lords, if the noble Lord does not know on what fee basis the Government are hiring Rothschild and other legal advisers, will he be good enough to find out and let me know in writing?

§ Lord Cavendish of Furness
My Lords, I have just told the noble Lord that I will find out the fee basis and write to him.

§ Lord Strabolgi
My Lords, will the Minister say what is the position on the future of coal liquefaction after privatisation? We should remember that nothing was done in that field by the private colliery owners.

§ Lord Cavendish of Furness
My Lords, that is wide of the Question.

§ Lord Strabolgi
My Lords, does the Minister realise how important coal liquefaction is in order to replace petrol? What is to be the future of the station at Stoke Orchard? It is relevant to privatisation.

§ Lord Cavendish of Furness
My Lords, if the noble Lord will put a question, I shall be pleased to try to answer it.

§ Lord Dean of Beswick
My Lords, can the Minister give an undertaking that any consultations with people representing workers in the industry will take place before the major decision of whether or not to privatise is taken? We should bear in mind the Government's track record in previous privatisations in which "consultations" meant consultations after decisions had been taken.

§ Lord Cavendish of Furness
My Lords, the policy is in place and has been for some time, as is well known to the House. Employee representatives will be consulted, but this will not be until after the next election.

§ Lord Dormand of Easington
My Lords, does the Minister agree that the information he gave me concerning the amount of support provided by the Government to the coal industry contradicts what his noble friend Lord Boyd-Carpenter said? It was that there is a recognition of the need for some kind of support for the British coal industry, as the Secretary of State for Energy said, to ensure supply. If the two generating companies continue or increase the importing of coal from South Africa and from Colombia, where there is child labour—places with no trade unions and all that kind of thing—instead of from the more heavily subsidised industry here, would that necessarily be good?

§ Lord Cavendish of Furness
My Lords, we shall continue to support the industry, coal mining families and communities through British Coal Enterprise, which has been a great success. We do not believe that it is in the long-term interests of the coal industry to control imports. As regards imports involving child labour, which has been raised in your Lordships' 647 House before, there are undesirable working practices in countries like Colombia, but the products are mainly for domestic use. Imports from Colombia come mainly from a well-run, nationalised industry.

§ Lord Elton
My Lords, will my noble friend and the Government accept that the protection and safety of the health of pit workers are of equal importance to the financial security of the industry? The Government should not be distracted from that by some of the flak from the other side.

§ Lord Cavendish of Furness
My Lords, I am pleased to agree entirely with my noble friend.