Coal Industry Bill

HL Deb 31 January 1992 vol 534 cc1554-77

11.38 a.m.

Lord Cavendish of Furness

My Lords, I beg to move that this Bill be now read a second time.

The Bill is of great importance to British Coal, enabling the corporation to continue the restructuring of the industry which is essential for its future. The Bill is essentially a technical measure, as will become clear from its detailed provisions.

The Government's primary objective for the coal industry is to see that the largest possible economic industry is developed that the market for coal can support. It has to be recognised, however, that changes in the nation's fuel requirements are reducing overall levels of demand for coal. Industry, commerce and domestic consumers have been moving away from coal to other fuels and forms of energy over many decades. The electricity generators are now following that trend. Increasing output of low cost coal by foreign competitors is adding to the pressures on the coal industry.

Clause 1 of the Bill represents recognition that the changing market for coal presents the industry with serious challenges. Heavy restructuring has been required and colliery closures and substantial job losses are involved. That is why Clause 1 of the Bill increases the overall limit on the payment of restructuring grant by £1.5 billion and extends the availability of the grant by three years until March 1996.

Between April 1987 and the end of this financial year, some £1,400 million in restructuring grant will have been paid, including over £300 million this year. The existing ceiling of £1,500 million would restrict the payment of restructuring grant to the balance remaining of around £100 million. This is unlikely to be sufficient to meet the needs of the industry for restructuring finance. Without additional restructuring grant, British Coal would face heavy losses and a financial crisis.

Restructuring grant represents a specific commitment by this Government to the workforce in the industry. The grant was introduced by Section 3 of the Coal Industry Act 1987 and provides support for British Coal's expenditure on redundancy and early retirement, transfers and retraining, and covers the losses of British Coal Enterprise.

I appreciate the concern felt in this House about what these increases may imply in terms of a further manpower rundown in the industry. The increase in the limit is not, I can assure your Lordships, based on any specific government view of future reductions in manpower. Total expenditure on grant could be below the limit. British Coal's actual requirement for restructuring grant payments will be determined primarily by the degree to which British Coal succeeds in cutting costs further and winning sales in the mid 1990s.

The extension of the period of grant should also not be taken as a signal either on the timing of privatisation or the duration of any future rundown of manpower. Some elements of restructuring grant in respect of early pensions are staged over a number of years and those payments may continue beyond privatisation.

Clause 2 of the Bill provides power to repeal the Coal Mines Regulation Act 1908. That Act, which specifies limits on hours of work, has long been recognised tacitly as out of date by most of those working in the industry—mineworkers and management alike. The Act restricts hours of work to a prescribed period of no more than 7.25 hours plus one winding time, which everyone working in the industry know to be too rigid a constraint.

Noble Lords on both sides of the House who take an interest in the industry will know that the 1908 Act is widely ignored in practice and now serves only to define the start of voluntary overtime working on weekdays. The limit does not reflect the latest mining methods, good modern mining management, nor the technology that has been the backbone of the industry's continuing modernisation and increasing competitiveness. Mechanisation has been under way in the coal industry since the 1950s and as a result, the 1908 Act has become increasingly impractical and constraining.

It is by adopting greater flexibility in working practices and by developing improved modern management as well as by investment in modern mining technology that the industry has achieved the improvements in productivity and reductions in costs that are so vital to its future. British Coal's efforts need to be sustained on a continuing basis as we move towards an energy market that will be one of the most competitive in the world. Outdated constraints on good management and the productive partnership between mineworkers and management clearly need to be removed if the coal industry is to compete. The industry has long left behind the days of hewing coal by pick and shovel.

No one who has a genuine interest in the future of the industry wants to see its efforts hampered by antiquated legislation of a bygone era. Conditions in the coal industry have been transformed by mechanisation and other applications of modern technology. Indeed, it would be true to say that the improving record of mine safety is due primarily to technology.

Safety was an issue raised a number of times in another place during consideration of the clause. Let me confirm that for this Government the safety of mineworkers is of paramount importance. The much improved standards achieved in mine safety must be maintained. This Government would not bring forward any legislation which prejudiced safety. The repeal of the 1908 Act will not prejudice safety.

The UK system of legislative protection for the health and safety of mineworkers will be maintained. The main statutory protection is provided by the Mines and Quarries Act 1954 and the Health and Safety at Work etc. Act 1974. Both remain very much in force, and both are being enforced by the Health and Safety Executive. Indeed, the chairman of the Health and Safety Commission has recently written to my right honourable friend the Secretary of State for Energy advising that the 1908 Act is not a relevant statutory provision under the Health and Safety at Work etc. Act 1974 and that hours of work are in general an industrial relations matter. His letter says that the proposals in the Coal Industry Bill are unlikely to lead to a reduction in standards of health and safety.

Repeal of the 1908 Act will not take effect on the enactment of this legislation. Clause 3 of the Bill provides for the Secretary of State for Energy to implement the repeal by order at a later date. Noble Lords will be aware that a draft European Commission directive on the organisation of working time is currently being negotiated by member states. If the directive is implemented, it would apply immediately to British Coal as a public sector body. My right honourable friend the Secretary of State said in another place that he will not implement the repeal of the 1908 Act until either the EC directive on working time comes into force or, if agreement is not reached on the directive, an alternative UK measure is introduced.

Power to repeal the 1908 Act is required now because British Coal and the mining unions will not be able to negotiate sensibly on new formal working arrangements within the limits set by the directive until it is clear that the Act is to be repealed. British Coal has to give six months' notice before renegotiating working hours agreements and the negotiations could easily take a number of months beyond that. Powers to repeal the Act are, therefore, needed well in advance of the date when the directive may be adopted, which may be as early as the end of this year.

The coal industry's performance over the past five years has been remarkable by any standards. British Coal has raised productivity by over 100 per cent since the 1984–85 strike and has cut colliery unit costs in real terms by over 40 per cent. over the same period.

Last year British Coal achieved a bottom-line profit for the first time in 13 years. Those achievements, which I am sure are welcomed in all parts of the House, would not have been possible without massive support from the taxpayer, including £6 billion provided under the Coal Industry Act 1990. That £6 billion provision enabled the corporation to carry out a major financial reconstruction, reducing the debt burden of the corporation by over £4 billion and relieving it of annual interest payments of some £400 million. As a result, British Coal's financial results now more accurately reflect the performance of the current ongoing business. The chairman of British Coal has informed my right honourable friend the Secretary of State that the corporation is on course this year to make a bottom-line profit once again.

That excellent improvement in British Coal's performance has not been achieved without difficulty or without sacrifice. The market for British coal has been in decline for decades and in recent years it has also had to face coal prices falling in real terms. In the past five years, over 70 collieries have closed and the number of employees has been reduced by over 100,000.

This exercise is, unfortunately, not new for the coal industry, which has faced difficult periods of adjustment and restructuring in the past, including times when the party opposite was in office between 1964 and 1970. In April 1964, there were 576 pits. By the time Labour left office in 1970 the number had fallen to around 300. Nearly 280 collieries had been closed and around 170,000 jobs had gone. It is a tribute to the workforce and management that the continuing contraction in employment has been achieved without disruption. British Coal has been able to offer alternative jobs to any and every man who chose to remain in the industry. Those who decided to leave received substantial sums in redundancy payments and, if they wished, retraining and counselling through schemes run by British Coal Enterprise.

The Government's commitment to the industry goes far beyond providing the finance needed to ease the difficult problems of redundancy, retraining and re-employment, important as that may be. I want to reaffirm the Government's commitment to an ongoing economic coal industry and to its long-term future. Since 1979 the Government have approved investment expenditure of over £7.5 billion in the coal industry, which is more than all other governments together since the war.

We have also provided grants totalling over £11 billion in addition to the £6 billion provided last year. We expect to provide around £700 million in grant this year. And our commitment to the coal industry is not only demonstrated through financial assistance. Last Session, for instance, we tackled the long-standing problem of subsidence in a Bill which was extremely well received in your Lordships' House. The provisions of the Coal Mining Subsidence Act should greatly improve the coal industry's relationship with the neighbours under whom it mines.

What of the future for British Coal? After the general election we intend to build on the achievements of the industry by returning it to the private sector. Our aim is to ensure that we achieve the largest coal industry that is economically sustainable. We intend to give those who work in the industry the opportunity to demonstrate their full potential away from the constraints of the public sector. But the need for the Bill before us today does not arise from our intention to privatise the industry. The measures that I have described are essentially technical. Further restructuring and the repeal of the 1908 Act are needed, whether or not the industry's future lies in the public or the private sector.

Of course, coal, not just in this country but worldwise, will face some pretty demanding challenges over the next decade. Here in Britain, the power generators, the major users in recent years of the bulk of the corporation's coal output, are increasing their use of gas, a fuel that is, apart from any other consideration, rather more environmentally friendly. Our policy and the policy of previous governments of both parties over the past two decades has been to support diversity of fuel supply. Nuclear, renewable forms of energy and gas all have key roles to play as well as coal. Increased use of gas in generation brings enormous benefits to the electricity consumer and to the environment. The consumer will benefit from the lower electricity prices that will result. The environment benefits from lower levels of carbon dioxide and sulphur dioxide emissions.

This Government will not hinder the development of the competitive market that we have created in privatising power generation and distribution. We will not deter the use of cost-effective gas nor force the nation to use costly coal. The benefits of our policies are starting to work through towards lower electricity price increases.

This Government believe that British Coal must face the challenges in its market head on. Much has been accomplished in the years since the miners' strike. Much still needs to be done. British Coal must fight for every tonne of commercially viable business. It must build on the increases in productivity already achieved. Further productivity gains are essential to meet growing competition from other fuels and imported coal. This Government have provided the means to enable the industry to restructure and invest in the latest technology in order to increase productivity further. It is now for the industry to go on developing the skills and drive to surmount the challenges that lie ahead. This Bill is a further measure of the Government's support for the industry. I commend it to the House.

Moved, That the Bill be now read a second time.— (Lord Cavendish of Furness.)

11.56 a.m.

Lord Donoughue

My Lords, it is a brief Bill. I thank the Minister for the brevity of his speech and the helpful explanations. However, the full implications of the Bill may not be quite so brief and simple as they appear. Therefore, I should like to make some observations on the specific clauses and some comments on the wider implications for the coal industry especially since my noble friends Lord Dormand and Lord Mason are unable to be present today, it being a Friday. They would have wished to raise general issues from their great experience.

Clause 1 amends Section 3 of the Coal Industry Act 1987. It raises the upper limit of grants and extends the period. We accept the practical necessity since the payments under the current arrangements are close to their ceiling. We also support maximum financial provision for unemployed miners and their communities. However, we must question the attempt to present the Bill as a mere technicality. The harsh truth behind the clause is that it prepares the way for massive unemployment in the coal industry and, as the Minister stated, for privatisation of the remaining rump once the taxpayer has paid for the mass redundancies.

What are the assumptions of the scale of the redundancies behind the grants? I know that the Secretary of State denies having forecasts of the rundown of manpower but they must have had assumptions of a range to put to the Treasury in order to persuade the Treasury to pay up an extra £1.5 billion. What broadly were those assumptions? We can of course do our own sums. Even accepting that the £1.5 billion is a maximum and may be excess to need, £1.5 billion pays for 40,000 to 50,000 redundancies at an average of about £30,000 a head. In other words, that is 30 to 40 pit closures. Interestingly, that scale of redundancies fits closely with the scenario in the Rothschild Report of some 28 to 40 pits closed and up to 40,000 redundancies. The report gives several scenarios but that was the broad range.

It is difficult to avoid the conclusion that the Government are preparing for the Rothschild scenario. I do not say that they plan it or forecast it —I do not suggest that they even want it—but obviously they are preparing for it. They are also preparing for the much more brutal conclusion to the negotiations with the electricity generators for the post-1993 contracts. We notice that the grants are extended to 1996, which is beyond the time scheduled for privatisation and those negotiations.

Clause 2 repeals the Coal Mines Regulation Act 1908 which limited time worked below ground to seven-and-a-half hours. This proposal has caused widespread concern because historically, sentimentally, that Act was the foundation stone of health and safety and the reforms in that area in this century. In fact we know, as the Minister rightly said, that health and safety are not dependent on that 1908 Act. However, I believe that the Minister accepts that the move must be handled with great delicacy. Ahead of privatisation there are bound to be suspicions that it is a move to loosen and to worsen miners' working conditions and to increase profits for the new private owners. I accept that the Minister does not wish that to happen. However, I am sure that he will understand that, on the face of it, the proposal means simply that miners will work longer hours below ground per day and will not be paid overtime for above seven-and-a-half hours. It is hard to see that that is not an apparent worsening of conditions.

The Government's arguments are seriously based. They say that the 1908 Act is outdated because of mechanisation and because the Act is frequently breached. Mechanisation has certainly transformed the mines since 1908 but it does not mean that it is Utopia below ground now. Machines create their own problems of noise, dust and water. On the breaches of the statutory limit, there is no question. Over half the men in the mines now work above the limit. However, they do so voluntarily, have the right to the provisions of the Act and are paid overtime.

The heart of the Government's argument is the need for productivity and flexibility to compete and survive. We cannot disagree with that. Greater productivity is the only way to preserve miners' jobs. However, we note that it is not doing so at present. There have been massive productivity rises accompanied by massive redundancies. More specifically, the Government must be absolutely clear in their guarantee that the repeal will not in any way diminish health and safety or the miners' right not to work excessive time underground. I welcome the Minister's assurance on that matter.

I wish to make two more comments on Clause 2 dealing with the repeal. First, I cannot understand why the Government did not consult the relevant people; for instance, the miners, the managers, the deputies and the shotfirers who have a statutory responsibility in this area. We recall that in 1986 the then Secretary of State for Energy, Mr. Walker, gave specific assurance that there would be consultation on any moves to allow longer shifts. Why was that pledge broken?

Secondly, I am puzzled by the link between the 1908 repeal and the proposed EC directive on the working week. That relates to Clause 3, which gives the Secretary of State the power to implement the repeal at a later date by statutory instrument. The EC draft directive sets out the minimum standards. Article 16 specifically provides that member states can retain local laws giving better protection, as does the 1908 Act. The two provisions appear to be compatible. Therefore I am unclear about why the repeal is linked to the directive especially when, as we are told, the Government are fighting to prevent the EC directive coming into force. Indeed, the clause is most unclear on the timing of any replacement of the 1908 Act. There is a curious vacuum in the wording and we may need to look at that matter in Committee.

I shall turn to the more general issues and comment on the wider policy of the coal and energy industry. I confess that coming fresh and innocent to the policy area I am struck by the genuine dilemmas which face anyone trying to establish a proper energy policy for the future and a place for coal within that. It is not clear that anyone has a complete and coherent answer. I shall outline those dilemmas and the contradictions within some of the proposals which currently prevail.

I begin by stating the fact that I do not like the idea of people working underground. Therefore, I am uneasy in appearing to campaign to prolong that. However, I certainly do not want rapid mass unemployment in existing mining communities. So a timing dilemma exists. We want a balanced and diversified source of electricity generation, giving a place for gas, oil and renewables including nuclear generation. Coal has no predestined right to be produced and bought at any price, but we want a healthy coal industry as part of that diversified energy sector. I see no sense in massive imports of foreign coal and no sense in the rapid depletion of our gas reserves.

We accept that the coal industry must be competitive and that it must not live on subsidies. However, we believe that the industry must be given time to improve productivity further. It has already demonstrated what it can do. I do not accept that, for instance, the slave-labour markets of South Africa and South America should set the market levels with which British coal must compete. I wonder, in passing, why subsidies are okay for the nuclear industry, and in particular for the agricultural industry, while apparently they are unacceptable for the coal industry. I am suspicious that the size of this great industry and the long lead times involved in its investment are being determined by short-term market forces, typified by the renegotiations with the electricity generators.

Environmentally we accept that coal is still a source of dirty, noxious emissions, but we believe that it can and should be cleaned by new coal technology. That should be the centre of our coal policy and it must have the same positive priority for expenditure as have redundancies in a negative way. One ends with a fundamental gut feeling that there must be something crazy in wasting our greatest native energy resource.

Faced with those dilemmas the Government must make choices and reach decisions. This Government have done so and the Bill is part of that process. Those decisions constitute a policy that is not an energy policy but a broad economic and philosophical approach to the dominance of market forces. In the short-term, market forces indicate savage reductions in coal production. Therefore, there will be redundancies which must be paid for by the taxpayer, as provided for in the Bill. Then will come privatisation which will benefit from the looser working conditions and longer hours—again provided for in the Bill—in order to help to improve productivity and competitiveness.

I repeat and stress that I support the Government's efforts to make coal efficient and competitive. There is no way of ensuring miners' jobs without that. We cannot preserve coal as a museum industry frozen in time. However, is not the Government's approach too narrow and too doctrinal? Does it not have too little concern for the long-term energy interests of the nation? It contains no means of ensuring that Britain retains a coal industry at all. If short-term market forces, the flood of coal imports and the dash for gas by the generators dictate that there is no market for British coal, then the optimum size is zero and there is no policy to prevent that. The industry is left to the market.

Against that background I wish to ask the Minister some basic questions. The first relates to additionality. I shall be brief because I expect other noble Lords will raise the matter. Will the Minister explain why the threatened regions are deprived of a crucial injection of cash? If the reason is arcane Treasury accounting, cannot the Prime Minister knock some heads together? Secondly, have the Government no view on the flood of imports? The generators have already announced facilities for coal imports totalling 40 million tonnes by 1995. That will represent £2 billion on the balance of payments and the loss of 30,000 miners' jobs at a cost of £400 million in social security subsidy. It will also threaten the security of native supply. Have the Government no view on that matter?

In that context we should note the changes in the nature and reasons for pit closures. Until recently pits were closed for what one might call good reasons; they were geologically poor and had poor productivity. However, now pits are increasingly being closed as a result of imports. Those pits are currently highly profitable with rapidly improving productivity. Imports on such a scale are a flaw in the argument that pits must be profitable to survive. They are profitable yet they are being closed. Are the Government prepared to allow the closedown of the whole industry and to have no native supply whatever? The Minister may say that that is a decision for the generators. Well, is it? The Government still have a major stake in that interest and certainly the nation has an interest of its own.

What is the Government's view on the generators' switch to gas, which the Minister mentioned in such glowing terms? I accept that gas is cleaner and more flexible than coal, yet it is not cheaper. On 5th April last year the marketing director of National Power stated that gas is not cheaper and that it will become more expensive and be in short supply. The marketing director of British Gas this week forecast that there would be, severe gas shortages by the mid-1990s and higher prices". He said that that is because of the rapid switch from coal to gas by the electricity generators. What is hitting the coal industry is not its lack of productivity but the switch to gas and to imports. Do the Government have a view on the prospect of gas shortages, higher gas prices and massive coal imports? Those are the market forces which are now eliminating the coal industry, however efficient it becomes. That is the background to the 1993 renegotiations with the generators. Will the Government play a role in those negotiations and, if so, what role will they play? I return to the question of whether the Government have a view of the minimum or optimum size of the future coal industry. Are they prepared to accept zero?

This is a brief and, as the Minister said, technical Bill. However, it is technical only on the surface. It has much greater significance, Providing for massive redundancies and preparing the way for the privatisation of what remains of the coal industry. Today the Minister made a reasonable and fair defence of the specific technicalities. We shall look at what he said to consider ways of improving the Bill in Committee. Clearly this is the hors-d'oeuvre and the main meal lies ahead. Whoever is in government then must take a fresh look at the broad field of energy policy, bearing in mind the long-term interests of the nation.

I conclude with a final question that goes to the heart of the discussion of whether market forces alone, with all their virtues, should determine everything. It is in the form of a quotation: Why should cheapness of production always be achieved at the expense of the human factor? That was asked by Winston Churchill on 6th July 1908 in winding up on the 1908 Bill to limit miners' hours. I believe that Ministers of any government dealing with the future of the coal industry, as we now see it, must answer that question.

12.12 p.m.

Lord Ezra

My Lords, this is a short Bill with two main clauses but, as both the noble Lords, Lord Cavendish and Lord Donoughue, have indicated, those clauses raise major issues affecting this great industry—the coal industry.

The industry is presently going through a crisis. Unfortunately, it is by no means the first. If one goes back no further than the end of the First World War, one sees that the industry has been going through recurrent crises interspersed with relatively short periods of stability. Between us, the noble Lord, Lord Haslam, who is to speak next, and I have covered quite a large part of the period since the last war in the industry and I can tell your Lordships that facing crises is almost a permanent feature in the coal industry.

What is special about the present crisis is that in the period since 1985, as the noble Lord, Lord Cavendish, reminded us, the coal industry's productivity has doubled. I doubt that any other major industrial sector in Britain comes up to that level of improvement in productivity. As the noble Lord said, unit costs have been cut by no less than 40 per cent.

In the normal run of events, that should have strengthened the position of coal to face up to the market, to establish its position and to look towards expansion. However, for the reasons so clearly indicated by the noble Lord, Lord Donoughue, that has not happened. Therefore, we face this serious position where we have an industry, with substantial reserves, achieving such remarkable improvements in its performance and nevertheless continuing to lose its market share. It is in that context that we must look at the two main provisions of the Bill.

The first provision is to provide further grants to meet restructuring and redundancy costs because, as the noble Lord, Lord Cavendish, made clear, under the present arrangements provided for by the 1990 Act, the financial reserves are likely to run out. Therefore, it seems only reasonable that those should be replenished.

Having said that—and both noble Lords referred to this—there is bound to be cause for anxiety that the substantial increase in financial provision may be made for some ulterior motive. The noble Lord, Lord Cavendish, assured us that is not the case. The Government are making the additional financial provision because, if not, there would not be a sufficient reserve in existing funds to meet an even fairly low level of future redundancies.

However, on the other hand, we have the calculation made by the noble Lord, Lord Donoughue, which implies that if the full amount of the fund were to be used up in the period in question, it would amount to a very serious reduction in the industry. I hope that we are right in accepting the assurances given to us by the noble Lord, Lord Cavendish, that that is not the underlying intention of the Government but that the provision is purely to provide for the normal course of redundancies.

The provision of those redundancy funds must be taken in conjunction with the question of regional aid from the EC to which the noble Lord, Lord Donoughue, briefly referred. There has been much comment in the press recently about the so-called RECHAR funds which are reserves of money especially built up in the European Community to help in coalfield areas where there have been redundancies and there has to be redeployment.

The RECHAR funds set aside for the United Kingdom amount to £115 million. Those have been available for over a year. Unfortunately, because of the treatment of additionality by the UK Treasury, which appears to infringe the agreement reached by Community countries in 1988 as to how those regional funds should be used, and because of the intransigent position taken by the Treasury, those funds have not been released for use in this country.

Many noble Lords have been concerned with the question of additionality for a number of years. The funds available from the Community under the regional budget are intended to supplement and augment the measures already being taken in the country concerned. That was the underlying requirement of the 1988 agreement. A number of European countries, which had similar arrangements to our own —Denmark, Italy and Greece, to name but three—have subsequently changed their arrangements by law to conform with that agreement. So far, the United Kingdom has not done so. The impression created—and perhaps the noble Lord, Lord Cavendish, will elucidate the situation—is that those regional grants from the Community are regarded as part and parcel of general funding of local authority activities in the United Kingdom and to the extent that the money comes from the Community, so the amount made available from United Kingdom resources is diminished. If that is so, the way in which the matter is being handled is contrary to what was intended under the 1988 agreement. We need to know where the Government stand on that matter.

It does not affect only coal-mining areas. We are told that there is a further £885 million waiting to be paid into other regions of the United Kingdom if that question can be resolved. How much longer are we to stand out as the only country not applying the 1988 agreement and, therefore, depriving ourselves of approximately £1 billion of much needed help in our sorely pressed regions? I hope that the noble Lord will answer that question.

The second provision of the Bill deals with the repeal of the 1908 Act, which limits the hours of work underground and which has remained on the statute book every since. Indeed, it is one of the basic laws in the history of the coal industry. It is interesting to recall that Mr. Winston Churchill, then President of the Board of Trade, to whom the noble Lord, Lord Donoughue, referred, in proposing the Bill in debate on 6th July 1908 stated that there had been much change in the mining industry in the past 50 years—echoing the remarks of the present Secretary of State for Energy in another place. Indeed, he went even further than that to echo those remarks because he said, There is more extensive application of coal-cutting machinery"— we talk about mechanisation of the mines having transformed everything yet they were doing it in 1908— and the sinking of new pits with modern appliances". In 1908 they were facing the same situation as we are facing today. It is absolutely right that in a period as long as between then and now changes have occurred and it is certainly right that we should have another look at the basic legislation. In my opinion that is not the issue; the issue is what is to replace the 1908 Act. That is where we come into a situation of uncertainty.

The Bill simply provides for the repeal of the 1908 Act. The Secretary of State and the noble Lord, Lord Cavendish, have assured us that that would not be done until the long awaited directive from the Community arrived or some other measures were introduced by the UK. But that leaves a vacuum. I do not believe that a measure as historically important as the 1908 Act—regulating hours of work underground was a big decision in those days, as now—should be dealt with in this rather uncertain manner. At least we should know, when we agree to the repeal of the Act, what is to take its place.

We are told that is uncertain because of the Commission's directive which has not yet been finally formulated. But here, like the noble Lord, Lord Donoughue, I must ask a couple of questions. First, as far as I can make out the directive forms part of the famous Social Chapter. I thought that as a result of the recent Maastricht negotiations the United Kingdom was not bound by the Social Chapter. In that case, why should it be assumed that the directive will apply in the United Kingdom and have to apply on the very day that it is promulgated? I should like some clarification on that point.

The second issue affecting the directive is that as far as one can make out it deals with hours of work generally in industry as a whole. In fact during the day time the directive is concerned with leisure periods, and limitation of work on shifts is limited to the night time. That is according to the draft of the directive that I have seen. It may have changed since. It did not seem to me on a first reading of the draft directive that its application to the mining industry was particularly close. I should have thought, whether or not we accept the Commission's's directive which deals generally with hours of work in industry, we would need some supplementary arrangements affecting underground working in the mines in this country.

My point is that I do not believe it is right that Parliament should be asked to agree to the repeal of the 1908 Act without knowing what is going to replace it and with the added confusion of the nature of the directive from Brussels. I hope that the Minister will be able to reassure us that whatever is intended to replace the 1908 Act will be debated in this House and have to be approved by this House, just as there was a major debate on 6th July 1908 when the 1908 Bill was introduced. Indeed, there was a major vote on the subject in another place which was carried by the then Liberal Government with a substantial majority.

Regrettably, I must say that the way in which the repeal of the 1908 Act has been handled—whether or not it may be justified on technical grounds is not the argument —without any indication of what is to replace it, introduces a further element of uncertainty surrounding the future of the coal industry at a time when clear guidance in regard to its future is badly needed. In spite of centuries of extraction, coal still represents the largest natural energy resource at the disposal of this country; it is the most profitably produced coal in the European Community; it is served by highly skilled miners and mining engineers, and the development of clean coal technology can make its use consistent with current environmental standards. All that may be put at risk unless there is a clearly defined strategy for the industry. That strategy must essentially include the legal conditions under which coal is mined underground.

12.26 p.m

Lord Haslam

My Lords, as a recent chairman of British Coal, like my noble friend Lord Ezra, I naturally retain a deep interest in the well being of the industry and welcome the Bill. My comments today will be focused essentially on the Bill itself.

As my noble friend Lord Cavendish said, the first clause will obviously support British Coal's continuing efforts to restructure the industry in order to meet the increasingly fierce market conditions in which it has to operate. In competing with gas, oil, nuclear energy and imported coal, British Coal has had to reduce its prices dramatically and progressively during the past five years. It is that demanding market situation which has created the imperative need to restructure the industry.

Since the miners' strike the number of pits has been reduced from 169 to 53 and the total manpower from 221,000 to 64,000. I believe that that represents the most dramatic restructuring of a major UK industry in recent history. It was achieved with only a marginal loss of output and the reduction has occurred only within the past two years.

One does not take pride in those somewhat negative statistics and I, better than most, appreciate the human problems that lie behind them. But it had to happen if the industry was to survive at all. During the eight years in which I was chairman of British Steel, and thereafter British Coal, Opposition spokesmen in another place or trade union leaders opposed nearly every closure and job loss. If we had responded to those overtures British Coal would now need an annual—I stress the word, annual—operating subsidy of over £3 billion per year. That is obviously an extreme scenario but conversely one was never able to ascertain what the critics visualised as the optimum future shape of the industry, how it would be financed and where any additional coal output would be sold.

As a result of that restructuring programme, which has been an enormously demanding and daunting task for management and mine workers alike, British Coal's massive losses have been staunched. As my noble friend Lord Cavendish said, last year British Coal made a profit for the first time for 13 years. I believe that this year it will probably make a larger profit than last year. It was primarily due to the rapid improvement in productivity, which has more than doubled since the miners' strike.

On the positive side—this has not been mentioned too much today—British Coal Enterprise, which is charged with creating jobs in mining communities where pits have been closed, continues to make a commendable impact. When it was established seven years ago we adopted a target that it should help to create 100,000 such jobs in the next decade. The intention was to try to balance the loss of mining jobs. The current figure of 75,000 is on course to meet that objective.

To sum up, I am a strong supporter of Clause 1 which will allow the restructuring of the coal industry to continue and will also support the endeavours of British Coal Enterprise and the retraining of miners for alternative jobs. Just one footnote: this massive reduction in manpower has been achieved entirely on a voluntary basis. That is a very important point. I pay tribute to the Government that they made it possible for British Coal to use generous redundancy terms to enable this dramatic restructuring to be achieved with a minimum of pain and without any major strikes or disruptions.

Turning to Clause 2, the modern framework of safety law is set out in the Health and Safety at Work etc. Act 1974 which enshrines the overriding commitment that the employer's duty is to ensure a safe system of working for all employees. In my view the 1908 Act is not part of that framework of UK safety regulations as it does not come under the umbrella of the health and safety Act. For example, that contains specific powers under which previous existing enactments, which are called "relevant statutory provisions", can be repealed. The 1908 Act is not listed as one of those provisions.

Not only British Coal but also the miner himself who works overtime in excess of the seven-and-a-half hours provided for under the Act, can be technically in breach of that Act. That overtime dilemma, which, as has been said, has not been honoured in recent times, has existed for many years. A recent committee in another place accepted that that was so and rightly concluded therefore that the Act is now obsolete.

Is that surprising? Can one really expect a detailed Act now over 80 years old to have relevance in an industry which meanwhile has experienced vast technological change? As yet I cannot go back 80 years, but it is just 50 years since I first worked underground. Most miners then worked a six-day week. Each working day was extremely demanding. This was the "pick and shovel" era and required great physical effort and stamina. Furthermore, travelling to and from the coal face could be equally arduous as most miners had to walk long distances, often bent double, along mine roadways which had been partially closed by rock pressures. Frequently temperatures were over 80 degrees and there was high humidity. Understandably, the assumption therefore was that work began at the pit bottom when the miner started to walk to his workplace.

Contrast that with the position now. Obviously, any underground environment will always be a harsh one and there is nothing that one can do about that. However, coal extraction is now fully mechanised and one has to look far and wide to find a pick or shovel on a modern coal face. Also, most miners are transported by comfortable man-riding systems close to their workplaces. Altogether life is much less physically demanding, and indeed is light years removed from what existed in 1908.

Many critics suggest that the repeal of the Act, allied to an emphasis on productivity, will lead to a serious deterioration in safety. There really is no evidence to support that view. Conversely, British Coal's safety record has been a commendable one. For example, in 1950 there were 476 fatalities; last year there were 11. After taking into account the major reduction in manpower involved, the occurrence of a fatality was still nearly six times more likely in 1950 than it is now.

More detailed statistical results have shown, too, that higher productivity is normally accompanied by improved safety standards; also that accidents are more likely to occur in the third or fourth hour of a shift rather than at the end of a long day.

Contrary to some views expressed in another place, British Coal has never sought productivity at the expense of safety. I have worked in many industries in my career, but British Coal's commitment to safety is outstanding. Further, its safety record compares favourably with that of the best deep-mines around the world. Altogether, that reflects great credit on both management and mineworkers. I have no qualms, therefore, about supporting the repeal of Clause 2.

Finally, I believe that the whole Bill will be a positive factor in ensuring that the UK coal industry will be best placed to meet the daunting challenges it obviously faces in the future.

12.35 p.m.

Lord Jay

My Lords, despite everything that the Minister has said today, I fear that this Bill will strengthen the anxieties of those who fear that the Government's policy of almost malign neglect for the coal industry is threatening to imperil one of our most precious natural assets. The increase in funds for redundancy purposes, which is the main object of the Bill and which is welcome in itself, nevertheless must suggest that the Government expect large-scale further redundancies and pit closures. We all agree that modernisation and the reduction of unit costs are desirable in this industry as in others. They have been dramatically realised as has already been pointed out today. Productivity has been increased by 100 per cent. and real unit costs have been reduced by 40 per cent. in the past seven years.

Modernisation of the industry is one thing, and the decimation of it is another. It is not only the labour force of the industry which has declined, but in recent years production also has fallen drastically. Before 1939 several hundred million tonnes of coal were produced by a labour force of nearly 1 million. Even in 1948, just under 200 million tonnes were produced by a labour force of 700,000. Now the labour force has fallen to 64,000, as the noble Lord said; but production in 1990–91 has also fallen to only 72 million tonnes.

Therefore, I ask the Minister and the Government to consider seriously whether it is wise to allow one of this country's greatest assets to be almost thrown away in this fashion. After all, our oil supplies are now steadily dwindling and gas supplies are far from inexhaustible. Whatever the short-term outlook, we have a 200 years' supply of high quality coal and a great deal of modern equipment in the industry installed with the taxpayers' money and under public ownership.

What would any other country and our competitors do with an asset of this kind? What would France or Germany have done with our coal industry? France had little coal and oil. It has built up from nothing through government action, and no doubt through an artificially low rate of interest, a nuclear industry which supplies all of that country's energy needs. Germany has subsidised substantially a coal industry which is less efficient than our own. If in these circumstances the Government simply repeat their rather simple-minded view that the British industry must be left to fight it out in what it calls a competitive market, under the guidance of, apparently, Messrs. Rothschild, then it is not merely the British coal industry but the British economy which will suffer damage as a result.

It is no use arguing that it is all being left to a free, fair and competitive market. German coal is subsidised; French nuclear energy is subsidised, though—characteristically of the French—in rather more mysterious ways. Our Government are actually paying a current subsidy to our own nuclear industry. Indeed, all British Coal's chief competitors are heavily subsidised in one way or another. On top of all that, we should not forget that the present probable 20 per cent. over-valuation of the sterling exchange rate is enough in itself to subsidise coal imports and make it harder for the British industry to compete abroad. It is worth remembering that it was a 10 per cent. over-valuation of sterling in 1925 which led to the coal strike and the General Strike of 1926. I do not have much doubt that with an economic exschange rate now British Coal would certainly be able to compete.

To lay all these artificial burdens on our own industry is very far from establishing the level playing-field which we are always told about. It is more like turning the goal-posts the wrong way round for our own industry. Personally, I am in favour of our keeping a nuclear power industry as a hedge against all sorts of future uncertainties. But what possible justification can there be for paying a current subsidy to the nuclear industry and not to the coal industry? I have not heard that question answered at any time.

In answer to a Question the Minister told me on 14th January that the Government had spent —that was his word—£22.7 billion on the coal industry and he gave some further detailed figures today. He did not actually say then whether that £22 billion was over five years, 10 years or the lifetime of this Government. Perhaps he will make that clear and also how that £22 billion is divided up between one or another source of funds.

Ministers seem almost blind to the effect of all this on the nation's balance of payments over the years ahead. If we start importing fuel on a huge scale, when the British economy used to be based on exporting it, that is not a simple matter. We are also told, and constantly reminded, that coal-burning power stations produce carbon dioxide and sulphur dioxide. That is not in itself an argument for importing coal rather than producing it at home. It is also said that nuclear power is environmentally friendly. Surely it is not quite as simple as that. I need not remind the House that nuclear accidents can occur and have occurred and that there are major de-commissioning problems with the nuclear power stations which have not yet been solved. Nevertheless, as the noble Lord, Lord Ezra, has constantly reminded us, with adequate investment in clean coal technology the feared pollution can at least be substantially minimised.

How much better it would be to spend the millions of pounds made available by the Bill in making our own home supplies of energy safe and free, rather than paying it to thousands more employees to, in effect, stop work and probably do nothing.

12.43 p.m.

The Earl of Shrewsbury

My Lords, I must apologise to the House as I shall have to leave the Chamber before the winding up speeches to keep an urgent appointment. I shall read the Minister's speech and that of the noble Lord, Lord Donoughue, with great interest.

I declare an interest in the opencast mining industry and it is with regard to this section of the coal industry that I welcome the opportunity of being able to address your Lordships this morning. I am delighted that the provisions in the Bill will continue the extraordinarily generous levels of support to enable the industry to restructure itself on a competitive basis.

The opencast coal mining industry in the United Kingdom, as noble Lords will be aware, is a thriving sector of coal mining and a source of cheap coal. The output of opencast operations has remained fairly level over the past 10 years, around 16 million tonnes of coal being produced a year on average, rising to around 17 million tonnes in the year 1990–91.

The 1946 Act placed certain restrictions on both tonnages for licensing purposes and also restrictions on manpower in private underground mines. The private sector greatly welcomes recent changes in both these areas; first, on the tonnage limitations rising to 250,000 tonnes and, secondly, with a new figure of manpower raised to 150 men.

Perhaps I may first briefly address the matter of tonnage restrictions. Because of these restrictions the private sector is having to compete with British Coal on a very unlevel playing-field. For instance, prospecting licences are now being used as a means to restrict the private sector's activities. Prospecting licences are refused on the basis that the site and surrounding land may contain more than 250,000 tonnes and as such a production licence would not be issued. That even applies in areas where British Coal have no firm information upon which to assess tonnage.

The private sector firmly believes that the Act was intended to ensure that no safety or pollution problems were caused by uncontrolled drilling—not as a means of stopping the nation's resource being won by the private sector. The private sector believes that drilling should be allowed to provide all the information upon which a subsequent production licence application can be made. Only upon full consideration of that application and the details contained therein can a proper judgment be made as to whether the site can be licensed. If it is not, then the decision is now subject to an appeal process and it is surely improper to decide whether a production licence can be issued in advance of a detailed application being made.

No matter what the tonnage limitation is, the argument continues to be put forward that a licence cannot be issued as the coal is part of a larger reserve. The 1946 Act does not appear to require this to be considered where the amount of coal obtained by such operations from the area specified in the licence is, in the opinion of the Board, not likely to exceed, or greatly exceed 250,000 tonnes. There is no mention in the Act of any relevance of coal outside the area specified in the licence or, therefore, the licence application.

I am advised by a company in the private sector that it has recently encountered several sites containing less than 250,000 tonnes where it has painstakingly proved the mineral, secured the land and obtained the necessary planning permission. Yet it is being prevented by British Coal from proceeding to win the coal on the basis that the reserves, when added to some other nearby reserves, exceed the 250,000 tonne limit. Yet in the same areas British Coal has never declared any interest whatever in working the coal. That is not fair competition and I am sorry that my right honourable friend the Secretary of State was unable to raise that restriction in the Bill. I urge my noble friend on the Front Bench to consider the further liberalisation of these onerous restrictions.

In turning briefly to the question of manpower restrictions perhaps I may also ask my noble friend to consider further relaxation of the manpower limit of 150 men. That recently relaxed figure, welcomed by the industry, still is not high enough to make the private mines economically viable. For example, the Monckton Hall colliery, which was mothballed for some years by British Coal, has recently been privatised. But the Monckton Hall Miners' Co-operative has found that with present manpower restrictions the business cannot pay its way.

The number of men in private underground mines was interpreted by British Coal as 30 underground at any one time; for instance, up to 90 could he employed on three shifts. The 150-man limit is now being interpreted as a total of 150 employed at the mine. While the private sector appreciates the safety legislation it could be argued that the real reason is to maintain a brake on the private sector's involvement in underground mining.

The capital invested by the private sector in the coal industry is vast and it is only right that this sector of the industry should be allowed to compete with British Coal on a level position. I am disappointed that the Labour Party displays unremitting hostility to this highly efficient and profitable sector of the industry. I can only surmise that perhaps it is because the National Union of Mineworkers holds no sway in the private sector.

Finally, the British coal industry is a highly successful industry. I believe that it can be competitive to the long-term benefit of all the consumers by producing cheap coal, lessening the amount of imported material and with obvious benefits therefore to the balance of payments situation. I urge the Government to consider carefully the two points that I have raised and further liberalise the restrictions placed on the private sector producers.

12.49 p.m.

Lord Cavendish of Furness

My Lords, the wide ranging debate today has been informed by much experience and wisdom. I sincerely thank the noble Lords who have taken part. I shall try to deal with as many points as I can; but, if I cannot do so, I shall of course write to noble Lords.

The Coal Industry Bill is of great importance to the future of British Coal. It enables the corporation to continue the restructuring of the industry, which is essential if its future is to be secured. That fact was, I believe, recognised by noble Lords, and especially by my noble friend Lord Haslam.

The Bill also provides the power to repeal the 1908 Act, with which I shall shortly deal. It removes an out-of-date restriction that prevents the management and the workforce negotiating working hours agreements which are appropriate to the modern mechanised coal industry of today.

Briefly, Clause 1 extends the ceiling on the payment of restructuring grant by £1.5 billion. Noble Lords opposite have made much of the point that that increase signals further redundancies in the industry. As I said when I opened the debate, the Government recognise that the market for coal within the UK will decline over the next few years. There will, nevertheless, still be a large coal market to compete for. British Coal has the advantage of proximity to its customers and sterling denominated prices. Let there be no mistake: the Government want to see British Coal securing as much of the market as possible.

So, while we are increasing the ceiling on grant in the Bill, the size of the industry and therefore the actual requirement for restructuring grant payments will be determined primarily by the degree to which the management and the workforce together succeed in cutting their costs and winning business.

A number of points were raised in relation to Clause 1 which I shall try to address. The noble Lord, Lord Ezra, suggested that the EC directive on working time was part of the social charter which the Government did not sign at Maastricht recently. My advice is that that is not the case. The draft directive is founded on the social chapter of the Treaty of Rome to which we still subscribe. It is unaffected by the agreement reached at Maastrict. The directive on working time, copies of which are in the Library, was considered by the EC scrutiny committee in both Houses of Parliament. The directive was subsequently debated by an EC standing committee in the other place early last year. I understand the problem and the anxieties as regards the repeal. I repeat the undertaking made by my right honourable friend the Secretary of State.

The noble Lord, Lord Ezra, asked why the Coal Industry Bill does not make repeal of the 1908 Act conditional on the EC directive on working hours being agreed, or whether it could be dovetailed in some way. The legal advice is that it would be very unnatural and a likely cause of considerable confusion to express that a repeal should be contingent upon the happening of an uncertain event—in this case, either the coming into force of the EC directive or, failing that, alternative yet unspecified domestic legislation. However, I have no doubt that we shall return to the matter in Committee.

The noble Lord, Lord Donoughue, asked what assumptions were put to the Treasury to justify the increase in grant provision. From the remarks of the noble Lords, Lord Donoughue and Lord Ezra, there appears to be some suspicion that assumptions have been made. No particular level was put to the Treasury. The limit on the restructuring grant is just that; it is an upper band. Actual expenditure could well fall within that limit.

I understand the anxiety expressed in various parts of the House so far as concerns the EC RECHAR funds. The point was raised by the noble Lords, Lord Donoughue and Lord Ezra. We fully support the ECs RECHAR programme. That will bring real benefits to the coalfield areas. We very much regret that Commissioner Millan still refuses to approve our RECHAR programmes. We hope for a resolution of the issue in the near future. RECHAR money derives from money that we contributed to the European Commission in the first place. We are entitled to get that money back.

The noble Lord, Lord Ezra, mentioned the Government's position on additionality. Additionality is provided at national level. Expected EC receipts are taken into account in setting national public expenditure programmes which are therefore larger than would otherwise be the case. Consequently, ERDF grants must be covered from within public expenditure provision.

Clause 2 provides the power to repeal the Coal Mines Regulation Act 1908. That Act, regulating hours worked underground to no more than seven-and-a-half hours, has long since become outdated and is widely ignored. The limit recognises neither the latest mining methods nor good mining management. Moreover, the limit plays no part in the safety regime operating in our mines today. If the Act were to be enforced—I have not heard it suggested during the debate that it should be—miners' pay could be cut and productivity reduced. Collieries with long journey times to face would be especially hard hit and even more jobs would be threatened.

Much has been made of what will replace the 1908 Act. Let me be absolutely clear on this point. The provisions of the Act will continue until such time as my right honourable friend the Secretary of State for Energy implements its repeal. The Government have no plans to implement the repeal until either the proposed EC directive on working time or an alternative UK measure is adopted. Therefore, there will be no gap between the repeal of the 1908 Act and any replacement measure. Again, I have no doubt that we shall return to that matter in Committee. However, I hope that I have been able to give some reassurance.

Lord Ezra

My Lords, in the process of giving that reassurance, can the noble Lord indicate that the alternative arrangements—whatever they may be—will come to this House for debate before they are approved?

Lord Cavendish of Furness

My Lords, I have not been able to ascertain that information. The noble Lord makes a good point. If necessary, I shall write to noble Lords who expressed an interest in the matter. There are great technical difficulties in enshrining such a provision in the Bill. However, I understand why noble Lords seek reassurance on the matter.

The debate spread, as I expected—and I make no complaint about that fact—and many points were raised. The noble Lord, Lord Donoughue, especially, wanted to look at the wider issue. Again, I think that that is perfectly reasonable. I should like to make clear the Government's view on the future of the coal industry in Britain. We very much believe that the coal industry has a future into the next century. But it is up to those in the industry to make it happen. They must continue to drive up productivity and drive down costs in order to compete successfully with overseas coal producers.

It may interest noble Lords to know that the Government have received an encouraging report from Boyds, the US mining and engineering company, which reviewed British Coal's colliery operations and found much scope for further productivity improvements. It concludes that British Coal should be able to compete with the prices of imported coal while continuing to improve safety standards.

The noble Lord, Lord Donoughue, was anxious about the attitude of standing back and of non-intervention. He feels that the future of the industry relies—and I believe that the noble Lord, Lord Jay, expressed the same view—on intervention in the market and that that would force the generators to contract for tonnage at the prices dictated, perhaps, by the Government. I believe that that approach would be counter productive. I should also point out that many of the present day problems of British Coal result from such policies in the past. Our mines would have lower costs now if they had been more exposed to competition. Indeed, that is a very hard argument to deny. Moreover, the burden on the taxpayer would also be less and the cost of electricity generation would be lower, thus benefiting the consumer.

The noble Lord, Lord Donoughue, referred to the question of pits moving to profit and then closing, with the obvious anxiety and job loss implications which arise, and the feeling of the workforce that they had been let down. I do not deny that that does happen. However, it is not always as straightforward as it seems. In the last years of mining operation, development work ceases, which then produces an artificial, temporary profit before closure.

The noble Lord, Lord Donoughue, asked why there had been no consultation with the mineworkers prior to the introduction of the Bill. The reason for providing for the repeal of the 1908 Act well in advance of the implementation of the proposed EC directive is precisely to commit adequate time for consultation and negotiation between British Coal and the mining unions on the new working arrangements.

The noble Lord, Lord Donoughue, expressed concern about the sufficiency of gas supplies. Due to continuing exploration successes gas reserves have remained substantially unchanged for many years. The department's latest assessment is that the UK continental shelf gas reserves are capable of supplying the expanding British market and will be able to meet power station demands well into the next century.

Lord Donoughue

My Lords, is the noble Minister saying that the marketing director of British Gas was misinformed when at the beginning of this week he specifically forecast a shortage of gas?

Lord Cavendish of Furness

My Lords, I have seen the remarks attributed to British Gas. It is for them to organise their affairs to meet the needs of their customers. Looking at the UK picture as a whole, if all gas-fired power station projects currently contemplated come to fruition, gas demand will continue to rise very rapidly. It is not clear to me that they will all come to fruition. As time is needed to bring new gasfields into production, there may be some tightness in the market over the next few years. However, the department's assessment is that our reserves are capable of supplying all our needs up to and beyond the end of the century.

The noble Lord, Lord Donoughue, and others spoke of the energy deficit and the balance of payments. A central feature of the Government's energy policy is to seek to ensure that UK energy users are able to choose the fuels they need at competitive prices. We are working towards the creation of a free market environment in which they are able to make those choices from a diversity of available energy sources. The United Kingdom has large indigenous energy resources and in my view has nothing to fear from free trade. I understand perfectly well that collieries with known coal reserves that close down can in many cases be sterilised. That is not always the case. Seams can be approached from different areas. The important principle is that ultimately no one gains from extracting a resource uneconomically.

Lord Jay

My Lords, can the Minister say why the Government think it right to subsidise the nuclear power industry through the levy system and not to give similar support to the British coal industry?

Lord Cavendish of Furness

My Lords, I did not intend to ignore that question and was going to turn to it. However, since the noble Lord raises it now perhaps I may say that, when comparing the nuclear and coal industries, it is as well to bear in mind that British Coal benefited from a £6 billion financial reconstruction in 1990. It receives effective assistance of about £700 million a year from advantageous prices under current contracts with the generators. It also receives on average assistance of about £5 million a year by way of social cost and restructuring grant. How that scale of aid compares with the £1 billion a year that Nuclear Electric receives through the non-fossil fuel levy is open to debate. It is fair to bear in mind that in 1994 there will be a nuclear review which I do not wish to pre-empt at this stage. All of this follows the overall policy of diversity of supply.

The noble Lord, Lord Jay, also spoke of the French and German coal industries. The French coal industry has been reduced to a small rump and the German coal industry has also been run down. My advice is that subsidies are not protecting French and German industries against market realities. The noble Lord, Lord Jay, was equivocal about nuclear power, on the one hand admiring it and on the other hand casting doubt on its safety. As a measure of how things stand in so far as environmental issues are concerned, if electricity currently provided by nuclear power stations were generated by coal, UK emissions of carbon would increase by over 15 million tonnes a year, increasing total emissions by nearly 10 per cent.

I have tried to reply to most of the points raised by noble Lords. I will read carefully what has been said and write to noble Lords if I have not covered all the points raised. As I said at the outset, the Bill provides the clearest possible evidence of the Government's commitment to the coal industry and I commend it to the House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.