Lords Sitting of 20 October 1992

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chelmsford.

Lord Stewartby
The Right Honourable Sir Bernard Harold Ian Halley Stewart, Knight, RD, having been created Baron Stewartby, of Portmoak in the District of Perth and Kinross, for life—Was, in his robes, introduced between the Lord Hothfield and the Lord Renfrew of Kaimsthorn.

Lord Archer of Weston-Super-Mare
Jeffrey Howard Archer, Esquire, having been created Baron Archer of Weston-Super-Mare, of Mark in the County of Somerset, for life—Was, in his robes, introduced between the Lord Denham and the Lord Renton.
Lord Moyne Lord Moyne— Sat first in Parliament after the death of his father.
Lord Tennyson Lord Tennyson— Sat first in Parliament after the death of his brother.
Lord Grenfell Lord Grenfell— Took the Oath.

Long-term Unemployment: Figures
3 p.m.
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
What were the total numbers of long-term unemployed in May 1979 and in the most recent month for which figures are available.
The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater): My Lords, in the United Kingdom in July 1992 there were 905,255 persons claiming unemployment-related benefits who had been unemployed for over a year, a fall of 145,232 since July 1983, the earliest date for which the nearest equivalent figures are available.
Lord Dormand of Easington: My Lords, is the Minister aware that of all the indicators demonstrating the bankruptcy of the Government's economic policies, none has greater significance than that of long-term unemployment? The figures given today are a disgrace in a modern society. Despite the information that he has just given, will the Minister confirm that 70,000 people have been added to the ranks of the long-term unemployed in the past four months? Is that not a record high for such a period? In the face of such a tragedy, is the Government's policy to remain zero inflation and zero jobs?
Viscount Ullswater: My Lords, the noble Lord is wrong, because the range of measures which the
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employment service and the TECs have provided for the six-month plus unemployed is having a good effect. If we look back to 1983—the last time that unemployment was at the current level—the long-term unemployed (one-year plus) made up over 42 per cent. of that total, and that proportion is now down to one-third.
Lord Rochester: My Lords, can we he assured that the training package for redundant miners announced yesterday amounting to £75 million—many of those miners being candidates to join the long-term unemployed—will he financed wholly by new money, and that no part of that training package will be financed by the Department of Employment's existing budget?
Viscount Ullswater: My Lords, my understanding is that the new package of help for the TECs and the employment service is worth some £75 million over this year and next. That will guarantee the full assessment of help needed for unemployed people in those closure areas. Priority access to employment training, support in setting up their own businesses, job clubs and job interview guarantees will be available to people in those areas. TECs will be drawing up their action plans over the next month.
Lord Mason of Barnsley: My Lords, is the Minister aware that in these slump conditions—the worst since the 1930s—what is most disturbing is the loss of jobs in manufacturing industry? We are losing 3,500 every week. We are now down to a figure of 4.4 million people employed in manufacturing industry. As a consequence, we are now importing more manufactured goods than we are exporting. Are not the Government worried about that? What are they going to do to reverse that trend?
Viscount Ullswater: My Lords, the figures are conflicting, because the figures that I have do not suggest what the noble Lord has said. As I have said a number of times from this Box, falling manufacturing employment as a share of total employment is a common trend in all industrial countries. The UK share of world trade in manufactures is estimated to have risen in the three years to 1991 after decades of decline. The share of manufacturing in GDP has remained at about 24 per cent. of GDP for the past 10 years.
Lord Orr-Ewing: My Lords, is my noble friend aware that from all parts of the House we shall chivy the Government into encouraging in every possible way the retraining, redeploying and giving of jobs to people? It is not right to compare conditions in 1933 with those today. For obvious reasons manufacturing output per head is very much higher than it was. Is my noble friend aware that in 1933 22 per cent. of this country's insured workforce was out of work, whereas now it is only 10 per cent., and that 6 per cent. of the total population was out of work in 1933, whereas it is now only 3 per cent.? That does not take account of the huge increase in female employment over that of 60 years ago.
Viscount Ullswater: My Lords, I would not question my noble friend's figures. He could have gone on to say that the total United Kingdom workforce in employment now stands at nearly 25.5 million; and that at 70 per cent. the United Kingdom continues to have a much higher proportion of people in work than any EC country apart from Denmark?
Lord Mackie of Benshie: My Lords, will the Minister please answer my noble friend's simple question? Is the £75 million that is to be spread over two years new money? Is it extra to budget?
Viscount Ullswater: My Lords, so far as I am aware, yes.
Baroness Lockwood: My Lords, what proposals do the Government have for dealing with the increase in youth unemployment, particularly in view of the failure to provide a youth training place for all young people in the appropriate age group?
Viscount Ullswater: My Lords, I question the assumption made by the noble Baroness. The YT guarantee still stands. That means that young people who leave school—of course, they are being encouraged to stay at school—have the guarantee of a YT place until they are 18.
Baroness Turner of Camden: My Lords, is the Minister aware that some forecasts indicate that long-term unemployment is likely to increase for at least two years, and that much of that unemployment will be among people who are already skilled? Although we welcome training programmes, I should like to ask what good will they do to people who are already skilled and who still cannot find employment?
Viscount Ullswater: My Lords, I agree with the noble Baroness. While training has a key role to play in providing the skills essential for business success and enhancing the prospects of people at work, I agree that it is not always the most appropriate way of meeting the needs of unemployed people. That is why we have such a range of other measures from the employment service and the TECs to help people find jobs.
Baroness Elles: My Lords, does my noble friend agree that many people in this country strongly support the Government's training programmes, and that it is the continual change in information technology and technology which needs constant training and "uptraining"? The fact that people have already been trained is irrelevant to the needs of industry tomorrow and the day after.
Viscount Ullswater: My Lords, I entirely endorse my noble friend's words.
Lord Dormand of Easington: My Lords, is the Minister aware that I am grateful—I mean this—that he has not used the words, "There are now signs that the economy is recovering"? Is there any truth in the statements reported recently in some newspapers that cuts are to be made in some of the measures which apply to the long-term unemployed?
Viscount Ullswater: No, my Lords. I do not believe that is right. It is important that the work of our department concentrates on those people who have not been able to find work after six months. It is true that two-thirds of those who become unemployed find employment within six months. Therefore our work concentrates on those who have not found employment within that time.

Former Yugoslavia: Status
3.10 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
What action they are taking, with other governments, to suspend the representation by Serbia and Montenegro of the former state of Yugoslavia in all international organisations until the future of the whole territory has been determined.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, we fully supported the UN General Assembly Resolution A/47/1 of 18th September which concluded that the Federal Republic of Yugoslavia (Serbia and Montenegro) cannot continue automatically the membership of the former Socialist Federal Republic of Yugoslavia in the UN and that the Federal Republic of Yugoslavia should therefore apply for membership in the UN and shall not participate in the work of the General Assembly. This is serving as a model for action in UN specialised agencies and other international organisations.
Lord Campbell of Croy: My Lords, I thank my noble friend for her reply. Does she agree that while an empty seat for Yugoslavia should be kept in these organisations the regime in Belgrade should nonetheless not be excluded from relevant discussions both as a party to a brutal civil war and also to help bring those responsible for atrocities on all sides to book?
Baroness Chalker of Wallasey: My Lords, I thank my noble friend for his supplementary question. Once the countries have applied for membership of the UN General Assembly that will be the time the assembly considers the matter again. It will not occur before the end of the main part of the current session in mid-December, and it will depend on the situation at the time. In the meantime I can assure my noble friend that Belgrade is already included in discussions in Geneva. As a follow-up to the London Conference those discussions arc relevant, particularly in respect of humanitarian assistance. Resolution 780 provides for dealing with war crimes through the creation of an impartial commission of experts who are to assist the UN Secretary General in the collation and analysis of evidence of war crimes in the former Yugoslavia. They will report to the UN Secretary General.
Lord Cledwyn of Penrhos: My Lords, will the noble Baroness kindly go a step further and tell the House what is the role of British troops in the former state of

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Yugoslavia? What are their rules of engagement, especially as aid convoys are being attacked on all sides? What is the command structure?
Baroness Chalker of Wallasey: My Lords, that matter is a little outside the scope of my noble friend's Question, but I can tell the noble Lord that the role of British troops, as with other troops of the United Nations, is to facilitate the delivery of humanitarian supplies. We do not announce the detailed rules of engagement in any circumstances for obvious and understandable reasons. I can assure the noble Lord that our troops will defend themselves and, in this difficult situation, will try to ensure that the many thousands of people at risk of starvation and death this winter will not die. That is the task of our troops.
Lord Bridges: My Lords, I return to the original Question. Will the noble Baroness kindly inform the House what is the status of our own mission in Belgrade at the present time? Is it accredited to the former republic of Yugoslavia or to the new republic?
Baroness Chalker of Wallasey: My Lords, as we have not recognised the new state it is accredited to Serbia. However, at the present time we await recognition in the United Nations after application to the General Assembly before our mission can be accredited to the new state.
Lord Renfrew of Kaimsthorn: My Lords, does my noble friend agree that the policy of ethnic cleansing is one of the most horrific and offensive policies seen anywhere since the atrocities of the Second World War? I do not imagine that my noble friend will necessarily share my view that the powers of the European Community have been rather slow to get a grip on the situation, although in some respects they may have now done so. Will my noble friend indicate the thinking of Her Majesty's Government in relation to the provinces of Kosovo and Skopje or Macedonia—call it what one will—and to what extent there is forward thinking in relation to the hostilities and perhaps the ethnic cleansing that may break out in those provinces?
Baroness Chalker of Wallasey: My Lords, I thank my noble friend for that question. Of course we condemn absolutely all ethnic cleansing. We continue to condemn Serbian abuse of human rights in Kosovo. A special group on Kosovo has been set up within the ethnic and national communities and a minority working group of the international conference in Geneva. The aim is to press the Serbian authorities to grant the Kosovars genuine autonomy with full human rights and to persuade the Kosovars to accept something short of full independence. I would add that the brokered talks in Pristina on 14th October attended by the Serbs and the Kosovars were a step forward. We are encouraging them to concentrate on practical issues such as resolving the education crisis. There will be further talks in Belgrade this Thursday.
Lord Mackie of Benshie: My Lords, the noble Baroness has been generous in the breadth of questions she has answered. Will she tell the House what she thinks of the effect of sanctions and whether
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the latest move in Yugoslavia is a backward step that will restrain the forces there that genuinely want peace?
Baroness Chalker of Wallasey: My Lords, I believe that sanctions are now having a marked effect, certainly on the Serbian economy. The noble Lord will know that we believe it right to maintain pressure and tighten the implementation of sanctions. It is for that reason that the EC CSCE sanctions assistance missions are in place with the aim of assisting the local authorities to enforce the UN sanctions more efficiently. They have now been extended to Romania, Hungary and to the Danube.

Winchester Bypass
3.17 p.m.
Lord Brabazon of Tara Lord Brabazon of Tara asked Her Majesty's Government:
Whether the main contract for the construction of the M.3 Winchester bypass has been awarded, and when work will begin.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, the main contract for the construction of the final section of the M.3 near Winchester was awarded to Tarmac Construction in September. The formal start of works under the contract was yesterday, 19th October. The work is expected to take about two years to complete.
Lord Brabazon of Tara: My Lords, I am most grateful to my noble friend for that excellent piece of news. Was my noble friend as pleased as I was to note that during the Recess the European Commission admitted it was wrong in this matter and that the British Government were right? Therefore, work on this important piece of new road can now go ahead. Does my noble friend agree that while the Commission may have a role to play in environmental matters that cross national frontiers, such as pollution of the sea or pollution of the air, it should have no role to play in what is purely a domestic matter such as the construction of this particular piece of road?
The Earl of Caithness: My Lords, I understand the mood of the House on this sensitive issue. I am sure the House agrees with my noble friend; that is, we were delighted to note the result of further work undertaken by the Commission when it realised that it was wrong and that the British Government were right in the case brought by the Commission against the British Government. It is right that the Commission should seek to enforce on a uniform basis the rights it has, which are to ensure that the requirements of the EC directive on environmental assessment have been properly applied. This section of the route has now been considered for over 20 years and there have been four public inquiries. There can be no question but that the environmental assessment had been carried out long before the Commission considered this matter.
Lord Mackay of Ardbrecknish: My Lords, does not my noble friend agree that at this time of difficulty in

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the construction industry the public sector can often receive good bargains as regards tenders for construction projects, such as this bypass? Is that the case as regards the Winchester bypass? What was the tender price and what was the initial estimate? If, as I suspect, the tender price is lower than the estimate, will my noble friend pass that information on to the Treasury?
The Earl of Caithness: My Lords, I can assure my noble friend that the information has already been passed to the Treasury. We estimated the cost to be some £36 million for the scheme. In fact the contract price is £25.8 million. The total cost of the scheme as a result of all the environmental and other works that need to be carried out will be about £40 million.
Lord Erroll of Hale: My Lords, can my noble friend tell the House whether protesters are still on the site of the works?
The Earl of Caithness: Yes, my Lords. I can confirm, alas, that there are still protesters on the site but appropriate measures have been taken to remove them. I am sure that the whole House will condemn the action of the protesters and the environmental damage which they are causing to an important part of the countryside. We wish to move a rare piece of turf out of the line of the road to an adjacent area and the activities of the protesters are severely detrimental to that piece of ground.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that the current weather conditions will ensure that the protesters are even wetter than they were before?
The Earl of Caithness: My Lords, some are forecasting a very hard winter.
Lord Orr-Ewing: My Lords, can my noble friend indicate the cost to the country of the delay and the legal costs resulting from the commissioners' incorrect judgment? Does the Commission have a fund out of which the taxpayers of this country could be repaid for that additional delay and would that be a worthy use of the commissioners' pension fund?
The Earl of Caithness: My Lords, I shall certainly bring the second part of my noble friend's question to the attention of the appropriate Minister and perhaps even the Commission itself. On this occasion, because of the thorough work which we had undertaken and the public inquiries and environmental impact assessments which we had undertaken, very little cost was involved because we had all the information which the Commission requested from us. Once the commissioners saw that information and had time to read it they realised that we were right and they were wrong.
The Viscount of Oxfuird: My Lords, does my noble friend agree that we have finally reached a stage in this matter whereby the principle of subsidiarity has been achieved?
The Earl of Caithness: My Lords, my noble friend is right. It is quite right that we should ourselves decide where our roads should go and have the right to take decisions on various other matters relating to the transport industry. Of course subsidiarity is one area in which we are making a great deal of effort in the European Community at the moment.

Speculation Against Sterling: Bank Profits
3.22 p.m.
Lord Morris Lord Morris asked Her Majesty's Government:
Whether they intend to use their powers under the Banking Acts to establish the level of profits made by the clearing banks between 11th and 25th September 1992.
The Earl of Caithness: My Lords, no.
Lord Morris: Why not, my Lords?
The Earl of Caithness: My Lords, it is not in the public interest.
Lord Hesketh: My Lords—
Lord Peston: My Lords, perhaps the noble Lord will allow me to intervene because we have at least 10 minutes to pursue the matter and I should like to ask at least one question. I am surprised that the noble Earl said that it is not in the public interest. I am advised that the Banking Acts do not give the Government any powers whatsoever to intervene in the matter or to ask for such information unless it is believed that speculators acted corruptly. Can the noble Earl confirm that that is the case?
The Earl of Caithness: My Lords, the Bank of England may obtain information from authorised institutions under the Banking Act 1987 where that is necessary for the performance of its functions under that Act. If there is a public interest in doing so the Government may obtain confidential supervisory information from the bank. That is why I said that it is not in the public interest.
Lord Peston: My Lords, is it not important to get this right? As I understand it, the Banking Act enables the Government to intervene if it is a matter of protecting depositors. Unless there is any implication that the speculation in this matter in some way damaged depositors—and I should have thought that the reverse was true—the Government have no locus standi in the matter anyway. In other words, whatever one may feel is wrong in this state of affairs—and a great deal is wrong—the Government can play no role in discovering the information. Is that not correct?
The Earl of Caithness: No, my Lords. I have already mentioned one way in which the Government can act. The noble Lord will also be aware that under Section 4(1) of the Act the Treasury also has a general power of direction.
Lord Williams of Elvel: My Lords, if there is a general power of direction would it not be the case

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that, if there is serious speculation against the currency by banks authorised under the Banking Act, the Government have a public interest in ascertaining what gross revenues—rather than profits, which are difficult to ascertain—those authorised banks cashed in in speculating against the pound sterling in the days mentioned?
The Earl of Caithness: My Lords, I should have thought in view of the noble Lord's background that he would have been one of those who wished to see the financial centre of the world—London—working as it should in a proper market. Of course the Inland Revenue will be very interested to see the final results of the banks.
Lord Morris: My Lords, can we not give some comfort to those who find it puzzling that, while Her Majesty's Government, presumably in the national interest, were busily emptying the coffers of the nation's reserves of foreign currency in support of sterling, the money changers at the same time were doing the reverse and taking no consideration of the national interest, being interested only in short-term profit?
The Earl of Caithness: My Lords, the Government were right to take the action which they did. However, in a free market, and a market the size of London—which is the largest foreign exchange market—in order to achieve what my noble friend wants one would have to go significantly further than the clearing banks as mentioned in the Question on the Order Paper. It might interest the House to know that there are more than 500 foreign banks from 72 countries based in London.
Lord Stoddart of Swindon: My Lords, does the noble Earl agree that those who urged caution about joining the ERM have been vindicated?
The Earl of Caithness: My Lords, that is a most interesting question but perhaps not one for today.
Lord Bruce of Donington: My Lords, does the noble Earl agree, in view of the exchanges that have taken place across the Chamber, that those provisions in the Treaty of Maastricht which provide for so-called independent bankers to have control over our national affairs are, to say the least of it, slightly dubious?
The Earl of Caithness: My Lords, the noble Lord will be comforted to know that soon, I believe, he will have the opportunity to discuss that point in detail.
Lord Williams of Elvel: My Lords, I yield to nobody in desiring London to be the financial centre at least of Europe if not the world. However, will the noble Earl explain how the Inland Revenue, which he mentioned will be interested in the profits that have been made, will identify the profits? If it can identify the profits, will the noble Earl say so?
The Earl of Caithness: My Lords, I was referring to the profits of the banks for the year.
The Countess of Mar: My Lords, will the noble Earl say how Her Majesty's Government define the public
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interest? It is apparent from conversations I have had over the past few weeks that the public are very interested in how much the banks have made.
The Earl of Caithness: My Lords, the question of how much the banks have made is a commercial matter for the banks. It is a matter which the Inland Revenue will want to look at at the end of the financial year.

Business
3.27 p.m.
Lord Hesketh: My Lords, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the European Council meeting in Birmingham.

Business of the House: Debates, 21st October
The Lord Privy Seal (Lord Wakeham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Clifford of Chudleigh set down for 21st October shall be limited to 2 hours and that in the name of the Lord Chalfont set down for the same day to 3 hours.—(Lord Wakeham.)
On Question, Motion agreed to.

Boundary Commissions Bill
3.28 p.m.
The Minister of State, Home Office (Earl Ferrers): 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.—(Earl Ferrers.)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES (LORD AMPTHILL) in the Chair.]
Clauses 1 and 2 agreed to.
Clause 3 [Local government boundaries to be taken into account in reports]:
Lord Underhill Lord Underhill moved Amendment No. 1:
Page 3, line 5, leave out ("and").
The noble Lord said: I appreciate that there is important business to follow the consideration of the Committee stage of the Bill, but Members of the Committee will appreciate that although we have no vote in parliamentary elections we are keenly interested in the franchise by which Members of the other House are elected because we are affected by the result. In moving Amendment No.1, which is a paving amendment, I shall speak also to Amendment No.2.
On Second Reading I expressed concern at the proposals in the Bill relating to Wales. I refer to Clause 3(3) (b) on page 3 of the Bill. Although three

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months have elapsed since Second Reading it may be advisable if I read out that particular provision. The amendment proposes leaving out lines 6 to 11:
"(b) a boundary which has not yet come into operation on a particular date and which, apart from this subsection, would not be regarded as prospective on that date shall be so regarded if it is specified in a Bill which, on or before that date, has been read a second time by the House of Commons".
The Bill proposes that a commission may make recommendations based upon local government boundaries which are prospective only at the time of publication of the commission's report. The new subsection (8) to be added to Section 3 of the 1986 Act states that a boundary change shall be regarded as prospective if the change is specified in an Act—not a Bill—although it has not yet come into operation. That is a reasonable proposal because in those circumstances Parliament would have approved the actual boundary change. But the proposal in the Bill regarding Wales is totally different. There is an assumption that a Bill on local government boundaries which has had a Second Reading only in the Commons is certain to become law. It assumes that the Bill may not be altered in subsequent changes in the Commons and completely ignores what may transpire when the Bill comes before your Lordships' House and proceeds through its various stages.
Very strong words were used about this proposal by Members in the other place. It was suggested that the proposal was presumptuous in terms of the procedure of the House, that it was insulting to both Houses to assume they would not make the slightest change to any boundaries during those stages, and that it was an arrogant procedure. In reply to criticisms which I made during the Second Reading debate the noble Earl, Lord Ferrers, pointed out that there was a difference between the provisional recommendations of a commission and its final report. I recognised that. The noble Earl said:
"There is no question of the final report being based upon boundaries not already framed in legislation. The Second Reading will not be conclusive".—[Official Report,16/7/92; col.339.]
That reaffirmed what the Minister, Mr. Peter Lloyd, had said during the Committee stage in the other place:
"Only the boundaries that are legislated for in the Bill when it has become an Act can be used as a basis for its final recommendations to the Secretary of State".—[Official Report, Commons,22/6/92; col.96.]
Mr. Peter Lloyd had also said:
"Of course, there is an element of risk. If the Bill does not go through the House or become an Act by 1st June 1994, the boundary commission for Wales would have to revise its proposals to accommodate them to the boundaries then in force rather than to those that are intended".—[col.82.]
There is no reason whatever why the Boundary Commission for Wales should not proceed on the basis of the electorate as it is at the moment. If there should be a local government Act which makes changes there could be an interim review. That seems to be a sensible procedure, whereas it is an arrogant assumption that there can be no possible change made in the other place or in your Lordships' House when it considers the local government reform Bill. I beg to move.
Lord Boyd-Carpenter: Is my noble friend on the Front Bench able to tell me whether there is any precedent for the provision whereby a Bill, having been given its Second Reading in another place, shall be treated as prospective? It seems to me unusual that the mere passing of a Bill at Second Reading should automatically give that status to a provision. It may well be that there are precedents for it, and I should be very grateful if my noble friend could tell me what they were.
Baroness Hamwee: This amendment provides an opportunity for that question to be answered and perhaps the Minister has a reply at the front of his mind, which indeed he may. I should not like to assume that he does not have such information at his fingertips. I support the amendment proposed by the noble Lord, Lord Underhill. As he rightly said, the procedures of this House and of another place are jealously guarded, not for the benefit of those who take part in them but as a matter of democracy. There should be no assumption as to the outcome of prospective legislation. I too find the clause a difficult one, assuming that the outcome will be as it was thought to be at the relatively early stage of Second Reading in the other place.
A balance has to be struck between the convenience of those who take part in elections both as members of political parties and of the electorate, and the right size of the right boundaries of a constituency. But one aspect which must prejudice democracy—perhaps in a little way but enough to be important—is uncertainty. It is helpful to the democratic process for boundaries to be known in time for the democratic process to work within the prospective boundaries. It seems to me that if this clause remains part of the Bill it may to some extent jeopardise that certainty, and the working of the community and the political process within a constituency as it is likely to be, given that the outcome may be quite short up against an election.
Earl Ferrers: This question has been discussed before, not only in this House but in another place. I realise that it has caused a certain amount of concern and possibly confusion. However, I shall endeavour to put the noble Lord, Lord Underhill, at ease with his worries.
First, this particular provision in the Bill is intended to be helpful. Except in the case of Wales, the Bill provides that the next final reports of the commissions shall be based on the boundaries which are specified in Schedule 2 to the Parliamentary Constituencies Act 1986 and which will be in operation on 1st June 1994. The provisional recommendations which precede the final reports can be based on those boundaries which, although they have been included in legislation passed by Parliament, will not be in operation when the provisional recommendations are published.
The situation is complicated by the fact that plans for the reorganisation of local government in Wales are well advanced, and there is an imminent possibility of a Welsh local government reform Bill. If that were to come about such a Bill might well include a redrawing of some county boundaries in Wales. Were the same time constraints to be used for Wales as are

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used for the rest of the United Kingdom there would be hardly any chance of the new county boundaries forming the base for the next general review in Wales. There would he a very real likelihood that the proposals for Wales would be out of date the moment they were published. That would be a pity. In order to minimise the possibility of having to repeat the review of Wales almost as soon as it is finished the Bill includes a special provision for Wales that will allow county boundaries which are not yet in operation to be included in the final report. So in order to form the basis of the final recommendations for Wales, any new county boundaries will have to have been passed by Parliament by 1st June 1994, although they need not be in operation by that date. The provisional recommendations, which can precede final recommendations by quite some time, must be based on existing county boundaries or any new county boundaries which may be contained in a Bill which has had its Second Reading in another place when the provisional recommendations are published.
The noble Lord, Lord Underhill, asks why we cannot act on the present county boundaries. Obviously it would be absurd to insist that the provisional recommendations for Wales should be based on legislation which is about to be changed. My noble friend Lord Boyd-Carpenter, who, as always, has the knack of asking awkward questions, asked whether there was such a precedent. If there is such a precedent I am not aware of it, but I have no doubt that were there such a precedent it would be a very good one.
The noble Lord, Lord Underhill, said at Second Reading and again today that it would be dangerous to assume that a Bill would remain unaltered between its Second Reading in another place and its final approval by Parliament. He is absolutely right. There is no suggestion that there would not be any alteration. The noble Lord said that it was arrogant to assume that there would be no such alteration. We do not make that assumption. He said, in what I thought fairly strong language, that it was insulting to Parliament to assume that there would be no change to the Bill before the legislation was put to it. Such an assumption would be dangerous and quite wrong. The Government make no such assumption.
If the provisional recommendations are published on the basis of a Bill which has had its Second Reading in another place and if the Bill is subsequently altered, then new provisional recommendations will have to be published in line with the way in which the Bill has been altered. I assure the noble Lord that there can be no question of final recommendations—final recommendations are the important ones—being submitted to my right honourable friend the Home Secretary based on anything other than county boundaries which have been approved by Parliament as a whole.
That is very important. There must be no affront to Parliament nor any question of unconstitutional procedure. I do not believe that there is. As I suggested in the first place, we are trying to be helpful and allow the boundary commissions to address their minds to what appears to be the likely outcome as opposed to a series of boundaries which almost certainly will be
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changed. In that spirit I ask the noble Lord, Lord Underhill, to understand that this legislation is designed to be helpful both to the electorate and the boundary commissions and to enable new results to emerge which will benefit the electorate.
Lord Underhill: I am grateful to the noble Earl for further elaborating on this matter beyond his remarks at Second Reading. He has been quite helpful. I would however like to make one point. The noble Earl said that this would be helpful. To whom will it be helpful? We must be careful that a pistol is not held at the head of Parliament to demand that if it does not agree with the local government commission the business may have to be delayed and come up again. That is the problem.
We want the boundary commissions to look at the situation properly and fairly. That can only be done by withdrawing this provision of the Bill and seeing what happens. If there has to be a change, it can be dealt with by an interim review. There is provision in the boundary commission arrangements for the commission to undertake an interim review. If that were the position, I am sure that Parliament would readily agree to speedy action being taken.
I am tempted to divide the Committee. This is a matter of constitutional importance. However, I shall read carefully what the noble Earl said to see whether or not we need return to it. It is a vital question of the procedure of the boundary commission and of the constitutional procedure of Parliament. It is not merely a question of an affront to this House. It is a matter I shall have to examine carefully. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No.2 not moved.]
3.45 p.m.
Lord Campbell of Croy Lord Campbell of Croy moved Amendment No.3:
Page 3, line 11, at end insert:
("() Where a Boundary Commission has to decide between ameliorating disparity in the sizes of electorates in constituencies and taking into account local government boundaries, due weight should be given to the former consideration.").
The noble Lord said: I note that Amendment No.4, in the name of my noble friend Lord Mackay of Ardbrecknish, which immediately follows, deals very largely with the same point. If he and the Committee agree, in view of the important debate which will follow, I suggest that it might be convenient for both amendments to be considered together. I understand that my noble friend agrees.
I do not regard my amendment as more than a probing amendment. I do not expect my wording to become enshrined in statute. But it will have served its purpose if it indicates the point which I shall now elaborate.
In the Second Reading debate on 16th July my noble friend Lord Ferrers stated that one of the main purposes of the Bill was to even out disparities in numbers between constituencies. He gave examples from within England of a constituency with 101,000

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electors (the Isle of Wight) and another constituency with only 42,000 electors. He spoke of differences in size of constituency electorates which,
"jolt the principle of parliamentary democracy".—(Official Report,16/7/92; col.321.]
He said that the purpose of the Bill was to produce boundaries which would not be very out of date when a general election is held. As he knows, I agree with all the main purposes of the Bill.
I pointed out at Second Reading that, resulting from the Act of Union in 1707, there have to be at least 71 constituencies in Scotland. That means that the average electorate in Scotland must be less than the average in England. In other words, the electoral quota is less in Scotland. We do not seek to change that. If ever that were to happen, it would have to be accompanied by general constitutional changes of another kind.
Within that limitation, much could be done to reduce disparities. The boundary commissions have several criteria to apply which are prescribed by legislation. They perform their tasks admirably to achieve proposals in accordance with Parliament's guidance. But have we in Parliament conveyed to the commissions the degree of weight to be attached to each of those criteria? In particular how important are local government boundaries? That is one of the criteria which ought to be taken into account. Parts of the United Kingdom are mountainous, sparsely populated and much indented by arms of the sea, channels and sea lochs. One would expect that they would have smaller electorates, and that boundaries would limit the geographical size of areas so as to make them more manageable. But that is not the case at present.
Let me give some examples from northern Scotland. One enormous area—the constituency of Inverness, Nairn and Lochaber—has an electorate of 70,000. Another large constituency in northern Scotland—Gordon—has an electorate of 80,000. Argyll in the west, which is a very large and difficult constituency to move about in because of the sea lochs, has an electorate of nearly 50,000. Banff and Buchan has an electorate of 64,000. In contrast eight constituencies in Glasgow, which are very small in area by comparison, have electorates of less than 50,000. One has 36,000 and another 41,000.
It seems that the main reason for such disparities is the apparent requirement to follow local government boundaries. I ask whether that is what Parliament intended. In Scotland the commission is required "to have regard to" local government boundaries. That criterion appears to have been given priority over, or a higher priority than, levelling out the sizes of electorates. An electorate of 80,000 in a large area of northern Scotland contrasts with an electorate of 36,000 in a small, compact area of Glasgow. One would have expected them to be the other way round if there were to be any differential at all because of the difficulties associated with areas of enormous size in northern Scotland. If that is not a jolt to the principle of parliamentary democracy, to use my noble friend's words, I shall be surprised.
Should so much importance be ascribed to the criterion of local government boundaries? A vote in Provan in Glasgow is worth more than two votes in Banff and Buchan in northern Scotland although its area is about 100 times less in size. Rule 4, Schedule 2, in the 1986 Act states that,
"regard shall be had to the boundaries of local authority areas".
In winding up our debate on 16th July, the Minister of State pointed out that rule 5 states that a commission,
"may depart from the strict application of rule 4 if it appears … desirable to avoid excessive disparity".
It is the conflict between those two criteria with which I deal in the amendment. At present the wording makes the task difficult for the commissions. To me "having regard" means taking into account but not being obliged to comply. However, rule 5 refers to the "strict application". It therefore appears that local government boundaries are to be given more importance than other criteria. Is that what Parliament intended?
The commissions have discretion in considering all criteria, as my noble friend Lord Ferrers reminded us. The question is how much weight they believe they have to give to any one of the criteria. In Scotland the boundaries of district councils have not been regarded as sacrosanct. However, the boundaries of regional councils appear to have prevailed. There are no counties in Scotland. The nearest equivalent is a regional council. That seems to be the main cause of the huge and unexpected disparities.
Last week the Secretary of State for Scotland published a consultation document, Reorganisation of Local Government in Scotland, proposing a single tier instead of district and regional councils. That makes it all the more important if possible to indicate to the commissions how much weight should be given to local government boundaries although new authorities in Scotland are not expected to be in place for at least four to five years. What is the significance of coinciding with local government boundaries? There is convenience: we can all see that it is convenient for the authorities and others. But I have yet to hear of any serious reason why electoral boundaries should coincide with local government boundaries. Where they do not do so in Scotland—I refer to some of the district council boundaries—I have not heard of any problems arising.
I felt constrained to raise the subject because as a Secretary of State for four years I had responsibilities in that field. I believe that the boundary commissions will welcome further guidance from Parliament. If they require more guidance because the present schedule to the Act is not helpful enough—perhaps I should accept some of the blame for its present state having had responsibilities for the previous legislation—should we not try to give guidance to them?
The immediate matter for our consideration is whether we in Parliament intended such wide disparities to arise not through immense geographical differences or sparse population in some areas but simply to coincide with local government boundaries. The opposite to that which one would have expected has been the result.
My noble friend Lord Mackay of Ardbrecknish proposes an amendment to the relevant schedule to the 1986 Act. He is making a valiant effort to give the commissions some guidance in the Bill. I believe that most people in Parliament will consider that necessary. I shall listen with care and great interest to what he says. I beg to move the amendment.
Lord Mackay of Ardbrecknish: It may be for the convenience of the Committee if I speak at this stage to Amendment No.4 which stands in my name. My noble friend Lord Campbell of Croy seeks to attack the same problem. Although my noble friend openly admitted that his was a probing amendment, I have attempted to phrase my amendment in such a way that it could be added comfortably to the Bill and to the 1986 Act.
At Second Reading I spoke about the need in a first-past-the-post system to have parliamentary constituences as nearly equal as possible. Unfortunately I am not able to propose the far-reaching amendments that I should like since the Long Title of the Bill restrains me from that ambition. The Long Title informs me that I can only deal with,
"membership of the Boundary Commissions, the timing of their reports and the local government boundaries of which account is to be taken in their reports".
Local government boundaries are the main factors which cause the considerable distortions in constituency size in Scotland. Even in 1983, the first election fought under the last boundary commission's rules, two out of the three largest electoral seats in Scotland were rural. That seems an odd way to seek to be fair to rural areas. The smallest seats in Scotland were largely in urban areas in the central belt. That initial imbalance, although not huge in 1983, grew until at the last election, of the 10 largest constituencies in Scotland six were rural. Of the 10 smallest, half were urban. If one excludes the three special cases of Orkney and Shetland, Caithness and Sutherland and the Western Isles which fall under rule 6 of the 1986 Act, of the smallest 10, eight were urban; and six were in Glasgow, which must be the most over-represented part not only of Scotland but of the whole United Kingdom.
Aside from some poor arithmetic and poorer population projections by the boundary commission in the early I980s, the principal reason for the imbalance was the commission's absolute determination not to cross the boundaries of regional councils. That led the commission to create, for example, the constituency of Inverness, Nairn and Lochaber. It not only has the largest geographical constituency in the country; it now has the second largest population. It also led to the constituencies in the adjacent region of Grampian being rather large by Scottish standards.
There was a simple solution to the problem, as there will be for the next boundary commission. It was to give both Highland and Grampian an extra half seat. That would have involved crossing a regional boundary. The commission was implacably opposed to crossing regional boundaries despite the fact that it was not opposed to giving extra seats to Scotland. For some reason which no one has been able to explain to me, it gave an extra seat to the city of Glasgow. The
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reason for that and similar mistakes by the commission in other parts of Scotland was that it read rule 4 as being more important than rule 5.
In his reply to me in the Second Reading debate the Minister stated:
"I hope that that gives both my noble friends the indication that rule 5"—
it is the electoral quotas rule—
"permits the boundary commission not to stick rigidly to local or regional boundaries where it thinks fit".—[Official Report,16/7/92; col.338.]
I welcome that assurance. However, I also know from my experience that people follow the words in Acts of Parliament and not the interpretation by Ministers at the Dispatch Box. My amendment is designed to make sure that the words are taken by the boundary commission to mean what I believe Parliament intended them to mean.
It is doubly important that the Government accept my amendment because, as my noble friend said, there is considerable uncertainty as to what the boundaries in Scotland will be by the next general election. We know that regions will not exist. Therefore, it seems important that we should signal in the words of the Act that local government boundaries should not be given precedence over the need to have reasonably equal electorates.
My amendment takes account of the rigid view which the boundary commission took on the last occasion and ensures that the present boundary commission will be forced to change that view. It weakens the words of the original Act which state:
"regard shall be had to the boundaries of local authority areas"
to "consideration shall be given". Also, it states quite clearly that when that consideration is given, it should have regard to rule 5, which is the rule about quotas. Thus, my amendment states clearly that the need for the electorate to be as near the quota as is practical is more important than local authority boundaries. I hope that the Minister and Members of the Committee will accept the validity of the arguments which have been put by my noble friend Lord Campbell and myself and find some way to signal to the boundary commission that the need to achieve reasonably equal electoral quotas is paramount in the making up of single Member constituencies in a first-past-the-post system.
4 p.m.
Lord Underhill: I find some difficulty in supporting either of the amendments put forward. The amendment in the name of the noble Lord, Lord Mackay, raises a question of semantics: the difference between "consideration shall be given" and "have regard to". Perhaps somebody will tell me exactly what is the difference.
However, it is more important to consider what the Minister of State, Mr. Peter Lloyd, said in the other place. He said:
"The commissions must have regard to the balance of population, social and geographical considerations and the significance of county and, particularly, London borough boundaries".—[Official Report, Commons,15/6/92; col.741.]
That is an extremely wide statement. The point I make in dealing with both the amendments, but particularly

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that in the name of the noble Lord, Lord Campbell of Croy, is that the commissions have a great deal of flexibility. Schedule 2 (7) of the 1986 Act states:
"they shall take account, so far as they reasonably can … of any local ties which would be broken by such alterations".
I believe that everyone will agree that it is desirable that electorates should be as equal as they possibly can. That is the whole purpose of the boundary commissions' proposals. Heaven knows, we struggled long enough to get constituencies of a fair size. Therefore, I support the proposal that, as far as possible, we should have constituencies with equal electorates.
However, one important point arises. Do we wish to break local community ties? It is clear from the schedule to the 1986 Act, which I read, that so far as they reasonably can the commissions should take into account any local ties which may be broken by such alterations. The community interest is extremely important. There is flexibility in the present procedure and it would be dangerous to move away from that flexibility so that the commissions must follow certain lines, because when certain proposals are considered local ties are as important as the areas of local authorities.
I do not complain about the fact that my amendment was taken out of order but there was a matter which I wished to raise when speaking to it and I shall do so now. There is a difference between electorates and the total eligible population. At present the commissions are not allowed to take that into consideration.
I should like to hear what the noble Earl says about the points I have raised. I believe that the question of local community ties is extremely important. That flexibility should not be taken away from the boundary commissions.
Lord Monson: Although I saw it for the first time only 20 minutes ago, I warmly support the amendment moved so ably by the noble Lord, Lord Campbell of Croy. I am sure that Amendment No.4 is equally meritorious although I have not had an opportunity to look at the 1986 Act.
The whole point of having a boundary commission is to ensure fairness and to ensure that the vote of every elector in this country counts for just as much as the vote of any other elector. Compared to that requirement the considerations of local government boundaries, whether based on sentimentality or convenience, must count for relatively little.
Baroness Hamwee: I too have some difficulty with both of these amendments. On Second Reading I mentioned the words "proportional representation". Today I shall do no more than that but we have had a splendid example of the problems of our electoral system. This Bill does not set out to cure that but I too have difficulties in balancing the question of local ties against numbers. I hope that when the Minister replies he can assist the Committee not just as regards the interpretation of the words "give consideration to" and "have regard to" but also where the words "due weight" come in that spectrum.
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I thank the noble Lord, Lord Campbell of Croy, for making a splendid case for three additional Members of my party and the examples that he chose as constituencies. Nevertheless, I find it difficult to accept the amendment.
Earl Ferrers: Perhaps I may say to the noble Baroness, Lady Hamwee, that her difficulty in understanding this modest little Bill will be nothing compared with the difficulty which all Members of the Committee would have in understanding any Bill which produced a form of proportional representation.
Baroness Hamwee: I did not say that I have difficulty in understanding the Bill. I indicated that the arguments are difficult to balance.
Earl Ferrers: In that case, the noble Baroness underlines the point even more when she says that she finds the arguments difficult. I find the arguments on proportional representation infinitely more difficult to understand than the arguments raised by this Bill. However, I shall leave that to one side as I know the noble Baroness raised the matter only as a red herring.
I am grateful to my noble friend Lord Mackay of Ardbrecknish for speaking to his amendment at the same time as discussing Amendment No.3. The amendments address similar matters. They both seek to alter the rules for the redistribution of seats as set out in Schedule 2 of the Parliamentary Constituencies Act 1986.
The amendments intend to emphasise that the goal of equalising electorates should take precedence over that of not crossing local government boundaries. The difference between the two amendments is that the amendment in the name of my noble friend Lord Campbell of Croy refers to the whole of the United Kingdom whereas that in the name of my noble friend Lord Mackay of Ardbrecknish refers only to Scotland.
I am glad that my noble friend Lord Campbell said that his is a probing amendment because, as presently drafted, his amendment would have no effect. That is because in order to have effect a paragraph would need to be added to the rules for the redistribution of seats in Schedule 2 of the 1986 Act. My noble friend Lord Mackay foresaw that and tabled his amendment to do exactly that. The difficulty with that amendment, were it to be accepted, is that the Scottish rules would then be different from the remainder of the rules for England, Wales and Northern Ireland.
I should like to make it clear and reassure my noble friends—and I understand their anxieties on this matter—that rule 5 of Schedule 2 of the 1986 Act clearly states that any local government boundaries can be crossed in order to avoid excessive disparities between electorates. That is particularly true in Scotland where, as my noble friend Lord Campell of Croy said, the commissions are required only to have regard to the boundaries of local authorities. Therefore, they are not bound to be bound by the boundaries. They can cross them.
The commissions therefore are already entitled to recommend the crossing of local government

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boundaries in the interests of electoral equality. My noble friends Lord Mackay and Lord Campbell both said that they had difficulty in deciding which provisions of the Act should be given the greater weight. That is precisely the reason they are so drafted—to enable the boundary commissions to have such flexibility as they require in order to make their own judgments. I agree with the noble Lord, Lord Underhill, that the boundary commissions have a considerable amount of flexibility. Parliament will need to think carefully before putting them into too much of a straitjacket.
There is another difficulty; that is, that the English and Scottish commissions are already part way through their reviews and the English commission has published proposals using the rules as they stand at present. A change in the rules at this stage would mean either that they would be unable to achieve consistency, which would be unfair, or they would have to begin their review again. That would make it virtually impossible to meet the 31st December 1994 deadline imposed by the Bill.
My noble friend Lord Campbell referred to the Glasgow constituencies. Their current size has nothing to do with local authority boundaries; it has everything to do with the electorate having shrunk since 1978 when the previous review began. I know that both my noble friends are anxious about the matter. I believe it was my noble friend Lord Mackay who asked how we could make a signal to the boundary commissions. I am sure that the boundary commissions will read and take note of what my noble friends said. But if there were to be a change, the right time for it would be before the beginning of the next general reviews, which will not be until the turn of the century.
The sole purpose of the Bill is to speed up the reviews and not to alter the rules by which they operate. Were they to be altered, it would be desirable for there to be wide consultation between all parties and the rules should be considered in their totality as opposed to just one facet of them. My noble friends have a point in the substance of their amendments. As my honourable friend the Minister of State said in another place, both he and the Home Secretary believe that several suggestions have been made, some during our debates, which must be considered jointly and collectively before the next round of changes.
I hope, therefore, that on reflection my noble friends will consider that the best course is as I suggested—for those ideas and others to be considered in the wider context before the next review rather than to incorporate them in the Bill at this juncture.
Lord Campbell of Croy: I am grateful to all those who have taken part in this short debate, particularly the noble Lord, Lord Underhill. I am completely in favour of flexibility between the criteria, and I understand the problems of London. It is not local government boundaries that are responsible for small constituencies; it is however local government boundaries that cause the enormous size of rural and
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Highland constituencies which one would normally have thought should be smaller because of the difficulty of their management.
The noble Lord, Lord Underhill, raised the question of local community ties. That is one of the criteria but is easily looked after in the huge constituencies about which I spoke. A vast number of local communities are included and any local community considerations would only involve around 200 people on the edges of the constituency. They arc much more important in the smaller constituencies. I accept that that is one of the criteria, though it is not one that causes much difficulty for the commissions in northern Scotland.
The situation still exists where a constituency in the north of Scotland contains 80,000 electors. It includes the foothills of the Cairngorms and all kinds of other geographical problems. Yet a constituency in a small urban area of Glasgow contains only 36,000 electors. That means more than two votes there are the equivalent of one vote in northern Scotland.
I realise the difficulties of making changes. All one can do is to try and indicate guidance to the commissions when they are operating in some of the large rural areas. I hope that the commissions will consider all the criteria and that they will be guided in the emphasis that they give to the question of local government boundaries and to what was said in the debate. I wish the commissions well in their difficult job, which they perform extremely well. As my noble friend suggested, I hope that they will read the debate. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
[Amendment No.4 not moved.]
Remaining clauses agreed to.
House resumed: Bill reported without amendment.

The European Council in Birmingham
4.16 p.m.
Lord Wakeham: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the Birmingham European Council held on 16th October. The Statement is as follows:
"With permission, Madam Speaker, I shall make a Statement about the European Council in Birmingham on Friday 16th October. My right honourable friend the Foreign Secretary and I represented the United Kingdom.
"I should like to thank the city of Birmingham, its leaders and its people for the effectiveness and speed of their organisation.
"Following the events in the financial markets a month ago, a number of EC member states asked for this meeting to help restore confidence throughout the Community and to address the issues raised by the market turbulence. Among those concerns—clearly evident in the referendums in Denmark and France—was the unease that too

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many decisions were being taken centrally in Brussels. The summit conclusions on these and other issues are in the Library of the House.
"Let me deal first with economic and monetary co-operation. At Friday's meeting we reaffirmed our commitment to pursue open market policies, to control budget deficits and to reduce inflation. It was unanimously agreed that these are the basis for recovery and for the creation of new and lasting jobs here and in the Community as a whole.
"The European Council also reaffirmed the necessity of the work set in hand by Finance Ministers after the recent turbulence in the currency markets. It was agreed that the work will involve Finance Ministers, the Monetary Committee, Central Bank governors and the Commission. It will cover recent economic and financial developments in Europe; the implications of changes in the economic environment in recent years. In particular, it will look at the impact of the increasing size and sophistication of financial markets and greater capital liberalisation.
"One critical discussion concerned the negotiations for a GATT Uruguay Round settlement. Over the past two weeks significant progress had been made between the Commission and the United States in all sectors of the negotiation. I asked Commissioner Andriessen to report to the European Council. At the end of our discussion the Commission was given the authority to continue to negotiate with the intention of reaching a satisfactory conclusion in the next 10 weeks. Subsequently, further useful progress was made in talks in Canada over the weekend. A GATT settlement would make a vital contribution to recovery and would be very much in Britain's interest. According to OECD it would lead to an extra 200 billion dollars in annual world output.
"In the Birmingham Declaration we also took significant steps towards bringing the Community closer to ordinary people. The declaration agreed at Birmingham has a number of distinct elements. It recognises the importance of national identity. It acknowledges that the Community can act only where member states have given it the power to do so in the treaties. It lays down that action at Community level should happen only when necessary. It calls for new guidelines so that when Community action is taken it takes the lightest possible form. It introduces better consultation by the Commission before proposals are brought forward; and it calls for a greater role for national parliaments in the work of the Community.
"This declaration provides for the first time a proper framework for the practical definition and implementation of subsidiarity. We agreed that at the Edinburgh European Council in two months' time we must make a reality of this principle. All members of the European Council agreed to take decisions at Edinburgh to make subsidiarity an integral part of EC decision-making. This change
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of attitude by the Council and the Commission is as important as the procedures and criteria to be introduced.
"Prime Minister Schluter of Denmark reported to the European Council on the present state of discussions on the Maastricht Treaty within Denmark. The Danish Government have published a White Paper and will produce specific ideas shortly. It remains their aim to ratify the Maastricht Treaty, and we plan to set in place at Edinburgh the framework which will allow them to do so.
"The Birmingham Council also gave us an opportunity to review our action to relieve suffering in Somalia and Yugoslavia. The Community has given a lead in both countries.
"In Somalia we called for an immediate ceasefire to allow for the rapid deployment of UN troops and for the distribution of aid and agreed to try to expedite these deployments.
"In Yugoslavia, at British initiative, a Community humanitarian task force will be set up. It will support the UN High Commissioner for Refugees in delivering humanitarian aid. The Community will speed up aid already pledged, which includes 120,000 tonnes of food. We have invited the UN High Commissioner for Refugees to hold a meeting of experts as soon as possible to make sure this aid gets through straightaway. There will be a follow-up meeting in a few weeks' time to ensure that effective action is being taken. Member states also pledged further staff and resources to strengthen the UNHCR effort. I can today announce a further £15 million of bilateral aid to provide 22 more trucks,10 Land Rovers, shelter, medical supplies and personnel. Deliveries will start shortly.
"A confident and successful Community is a vital interest of this country. Sixty per cent. of our visible trade is with the Community. Much of our external investment comes from the Community. Eight of our top 10 trading partners are in the Community. With less than three months to go to the completion of the single market, which could raise Community output by over 4 per cent., it was vital to re-establish confidence in the interests of stability, recovery, growth and jobs in our countries. The Birmingham European Council did that."
My Lords, that concludes my right honourable friend's Statement.
4.25 p.m.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Lord the Leader of the House for repeating the Statement. A number of constructive achievements have been mentioned in the report, but the people of this country and Parliament were looking to the Berlin Summit meeting as an opportunity and a first step towards resolving the economic difficulties in which the Community and this country find themselves.
The Prime Minister, who was President, had a special responsibility to try to make some progress,

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but the whole exercise was put at risk by the Government's coalmine closure policy and the totally inept way with which it was dealt. The sad fact is that the 11 leaders of the Community came to a country rent by one of the most serious divisions of the century and with its confidence undermined by incompetent leadership. Far from giving us hope for economic recovery, or indeed planting a signpost towards it, they have left us with less hope than before. If I am wrong, perhaps the noble Lord will tell the House of one clear economic initiative which started in Birmingham.
Are we certain that the Maastricht Treaty will be ratified in the near future? The answer is no. Are we certain what our policy will be if Denmark continues to stand by her referendum decision? Once again, the answer is no. The 12 must ratify. Did Birmingham give us a definition of subsidiarity? Once again the answer is no. It gave us a "framework"—as is mentioned in the Statement—whatever that may mean. Can the noble Lord clarify the Government's intentions on re-entry into the ERM? Was this discussed in any detail in Birmingham? Furthermore, can he say when the European Communities (Amendment) Bill will proceed to Committee in another place? Would he not agree that we are nearer a two-speed Europe than we were before the Birmingham Summit?
Finally, in his Statement the Prime Minister referred to the importance of the GATT round. Of course we agree with that. But are the Government confident that the French Government will agree on the agricultural proposals within the 10 weeks set out in the report?
Lord Jenkins of Hillhead: My Lords, we too are grateful to the noble Lord the Lord Privy Seal for repeating the Statement. We can endorse some of the points in it, notably the great importance of a GATT settlement, the prospects of which seem to have become slightly better in the last 24 hours, although I think not as a result of anything done at Birmingham.
It is clear that this European Council accomplished nothing of any significance. But could the noble Lord tell us what it was intended to accomplish? After all, this was not a routine meeting. Her Majesty's Government have been campaigning for some time to go down from three to two European Councils a year and they succeeded in achieving that. Then we had the special non-routine one which put it up to three. Presumably there was some very considerable purpose which was thought to be there. But it is difficult to see what it was.
I regret that the city which I had the honour of representing in Parliament for 27 years should not have its name associated with a more constructive and memorable European Council than this appears to have been. What was its purpose? It can hardly have been designed to improve on Maastricht. We well remember the Prime Minister's statement that Maastricht was game, set and match for this country. I doubt also whether he invited his fellow Prime Ministers to discuss his other most memorable obiter dictum of the last months—that he hoped to see
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sterling replacing the deutschmark as the central and most trusted currency within the European Community.
It would be helpful to know what was intended, even if it was not achieved. I hope that the Lord Privy Seal will tell us that. Otherwise we are left with the impression that the Birmingham European Council fits only too well the pattern of recent government initiatives: ill thought out, weakly executed and ending in a whimper.
Lord Wakeham: My Lords, the noble Lord, Lord Cledwyn, said something which slightly put me off my stroke. He referred to Berlin, but I think he might have meant Edinburgh.
Lord Cledwyn of Penrhos: My Lords, I meant Birmingham.
Lord Wakeham: My Lords, I was confused because I thought the noble Lord said Berlin, and I was in Berlin on Saturday with his right honourable friend the Leader of the Opposition in another place, at Willy Brandt's funeral.
I am grateful to both noble Lords for some part at least of what they had to say. If your Lordships will allow me to do so, perhaps I may leave questions on the coal industry until a bit later in the afternoon.
The purpose of the Birmingham Council was first to respond to the request of a number of heads of government who thought that it would provide a sensible opportunity to discuss matters in view of the particularly turbulent affairs that had taken place in the Community, and especially in the financial markets, in recent weeks. In my view, we need to look at the Birmingham Council meeting as a part of the British Presidency. It should be viewed in the light of our Presidency as a whole. It dealt with issues of deep concern to this House and made progress on bringing the Community closer to its citizens.
It was important that the heads of government should discuss the current position in GATT, which both noble Lords considered an extremely important matter, as I know do all Members of the House and the Government. It was important to take stock of the position. As the noble Lord, Lord Jenkins, said, it is looking a little bit better now than it was a couple of weeks ago. I do not believe, however, that I am in a position to go further than what my right honourable friend the Prime Minister said in his Statement.
The meeting also discussed and took stock of the position with regard to humanitarian assistance to both Yugoslavia and Somalia.
The noble Lord, Lord Cledwyn, asked me about the ERM. The Birmingham Council confirmed the view of the European Finance Ministers that they should carry forward their reflection and analysis along with governors, the Commission and the Monetary Committee so that they can take account of the wider economic and financial aspects that were referred to in the conclusions of the Birmingham meeting. I believe that that is the right and proper way forward.
With regard to the Maastricht Bill in another place, the position is that the Prime Minister has indicated

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that he would like to get on with that legislation as soon as possible. Discussions are going on through the usual channels to find a suitable date.
4.32 p.m.
Lord Boyd-Carpenter: My Lords, will my noble friend amplify a little what both the Prime Minister and he himself have said about the Birmingham discussions on GATT? There was a certain qualified optimism in the Prime Minister's Statement, but does that mean that the French are now at long last making it clear that they are prepared to accept the necessary cutbacks in European agricultural support in order that progress should be made? Was any indication at all given by the French of flexibility in that direction? In that context, my noble friend used some expression about "10 weeks". Perhaps he could amplify that. Is it expected that a decision on the GATT round will be achieved within the next 10 weeks? If so, that is of the greatest importance, but, if not, what is the relevance of 10 weeks?
Lord Wakeham: My Lords, I do not know that I can add a great deal to what was in the Statement in order to assist my noble friend and the House in this matter. However, the first thing that I can say is that the heads of government were unanimous in calling for an agreement this year, including the French President, who was present at the summit. Everybody wishes to achieve agreement. Since then, as I understand it, good progress has been made with the United States in the meetings that were held in Canada last weekend. This remains a high priority during the UK Presidency. My understanding of the significance of 10 weeks is that if we reach agreement by the end of the year, by that date the United States Congress's fast-track procedures will enable early ratification of the agreement. We are most anxious to achieve that.
Lord Barnett: My Lords, perhaps I may congratulate the Prime Minister on managing to pad out a Statement about what happened at Birmingham when the summit did so little. Does the noble Lord the Leader of the House agree that the Prime Minister would earn rather more respect if he irrevocably and unequivocally stated that he intended to introduce the Bill to ratify the Maastricht Treaty regardless of how he defines the S-word, given that he signed the treaty as it stood with the word "subsidiarity" in it? While I am about it, perhaps I may add that he seemed to be saying that a further meeting would take place on the exchange rate mechanism which might lead to our rejoining it sooner rather than later. Do I interpret that correctly?
Lord Wakeham: My Lords, I have known the noble Lord for many years and while I normally find his speeches entertaining, I believe that I have been present on occasions when they might have been subject to a little padding. Nevertheless, I do not believe that what he said is a fair reflection upon the Statement made by my right honourable friend the Prime Minister on the Birmingham meeting.
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The position with regard to the ERM is, I think, quite clear. At their meeting in Brussels some time ago the European Finance Ministers agreed that they should carry forward their analysis and reflection upon the situation that we all know about. That work is being set in hand and the heads of government at Birmingham endorsed their decision. That process is taking place. Until that has been done, there will not be any decision on whether the United Kingdom is able to rejoin the ERM. We have made our position quite clear. We wish to rejoin, but only when the right conditions appertain.
On the Maastricht Bill, again I think that the noble Lord is being less than fair to my right honourable friend the Prime Minister who has made no secret of the fact that he intends the Bill to come before Parliament, as he reaffirmed the other day. Discussions are taking place through the usual channels to find a suitable date for the first debate which has been promised.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that some of us find these statements a little confusing? In one statement the Government seem to be hot but in another to be cold, especially with regard to subsidiarity. At the minute that is just a word and none of the nations has agreed what it really means. On the other hand, the Prime Minister has stated that we shall support Denmark's position until it makes it clear that it wishes to sign the treaty. Legally, Denmark is right because the treaty cannot take effect until everybody has signed it. At the moment by a referendum Denmark has said that it is not in agreement with the treaty and our Government have said that until Denmark is satisfied we will not ratify the treaty. However, we are now told that the Bill will be pushed through this year without that definition having been arrived at.
Should not the Government make up their mind in which direction they want to move? Either the view taken on Maastricht should be unanimous and the real meaning of subsidiarity should be defined or we must accept that the agreement is not unanimous and the treaty should be dropped. To push the legislation through either House using the Whips and in the absence of a referendum of some sort does not accord with the nation having its say on this very important constitutional development.
Lord Wakeham: My Lords, when my noble friend says that he is confused about these issues I find that somewhat hard to believe. He knows the issues perfectly well, but I shall nevertheless seek to explain the position as best as I can. First, the concept of subsidiarity was included in the Maastricht Treaty and would therefore become part of Community law for the first time. A very important principle was thus established. What we are seeking to do during the British Presidency is to put some flesh onto that idea and demonstrate how subsidiarity will be put into practice in the hope—and I think in the confident expectation—that it should be possible to reach agreement at the Edinburgh Summit as to the way forward.

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There are three elements to putting subsidiarity into practice. First, there are the questions of procedure in the Council to see that all subsidiarity aspects of all proposals are properly taken into account. Secondly, we have to determine the criteria for applying subsidiarity so that the Community will apply it to existing and proposed legislation. Thirdly, we intend to identify before the Edinburgh Summit examples to demonstrate the first results of that examination. That is the position on subsidiarity. I think that that is fairly clear and straightforward.
With regard to the Danes, my noble friend is of course right. Unless the Danes ratify the Maastricht Treaty the treaty will not come into force. It is in the end their decision what they do. However, what the Prime Minister said was that he did not think earlier it was right to proceed with the Bill through Parliament until it was clearer to him and to the Government how the Danes were proposing to set about dealing with the problem which they fully recognised they faced as a result of their referendum. But the Danish Government have indicated, by the publication of their White Paper on 9th October following inter-party consultations, that they hope to put proposals to the Community soon which are designed to pave the way for ratification. That is the basis of the Danish position. That is why it has altered from the original statement by my right honourable friend the Prime Minister; and I believe that that too is pretty clear.
Lord Bruce of Donington: My Lords, is the noble Lord aware that the version which he has now given differs substantially from the completely specific undertaking that was given to Members of another place by the Prime Minister on 24th September? The Prime Minister said:
"So we need a definition—a settled order—of what is for national action and what is for Community action. We need clear criteria by which Community proposals will be judged. When we are satisfied that such a system has been put in place, and when we are clear that the Danes have a basis on which they can put the treaty back to their electorate, we shall bring the Maastricht Bill back to the House of Commons".—[Official Report, Commons,24/9/92; col.8.]
The noble Lord has said that the second criterion may have been satisfied, but certainly not the first. The Prime Minister repeated the undertaking at a later stage in his speech on 24th September last. It was quite clear that there was no intention to bring back the Treaty of Maastricht for ratification to another place and therefore to this place until both of those conditions had been satisfied.
Quite clearly, on the basis of what the noble Lord has said this afternoon, the first position has not been satisfied. Indeed the President of the Commission himself, speaking at the European Parliament on the day before the Birmingham conference took place, said:
"Look, I have got 200,000 ecus here for anyone who can send me a one-page solution. We will open our arms to it".
According to The Times of 15th October:
"M. Delors has told an emergency session of the European Parliament in Strasbourg that the British Presidency's idea of subsidiarity was not his and openly appealed to the people of Europe to overcome the dilemma".
It is quite clear that the President of the European
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Commission strongly disputes the definition of subsidiarity. Indeed, the Government so far have not been in a position to offer a satisfactory explanation to the British public.
In those circumstances, I put it to the noble Lord opposite that the intention to bring back for ratification the treaty to another place before the position about subsidiarity and its application has been completely satisfied in accordance with the solemn undertaking given to another place on 24th September is yet another example of where we can have no reliance on the good faith with which this entire operation has been conducted.
4.45 p.m.
Lord Wakeham: My Lords, an analysis of the noble Lord's remarks confirms the position as I put it. The noble Lord stated the position in September and quoted some part of the Prime Minister's speech. I make no complaint about that. The position has moved on since that time. The fact is that the Prime Minister is satisfied as a result of the Birmingham Summit that we are making progress towards an agreement about subsidiarity.
The noble Lord quoted from the President of the Commission, M. Delors, speaking a day before the summit. I do not know whether the noble Lord quoted everything he said but both of those events took place before the summit on 16th October. At that meeting we were satisfied that we were making progress about subsidiarity. The Danes are making progress with regard to ratification. Those were two of the conditions on which my right honourable friend indicated he wished to make progress before he brought the Bill back to Parliament. So I think that the noble Lord, although he would hate me to have to say this, has confirmed the position as I put it to the House.
Lord Cockfield: My Lords, I wonder whether my noble friend would also agree that bringing the Bill back for ratification is the only way that another place and this House can properly debate the matter and come to a conclusion. The course of action recommended by the noble Lord, Lord Bruce of Donington, would deprive this House and another place of the opportunity of debating these matters properly. Perhaps the noble Lord might explain why he wishes to deprive us of that opportunity.
Lord Wakeham: My Lords, I am sure that the noble Lord will find another opportunity to deploy those arguments. As is so often the case, my noble friend Lord Cockfield has hit the nail firmly on the head. He is absolutely right. The right and proper way to deal with the treaty which was agreed by the British Prime Minister at Maastricht is to pass it through both Houses of Parliament so that it can be properly debated.
Lord Stoddart of Swindon: My Lords, is the noble Lord aware that the Prime Minister would gain a good deal more support and respect if he put the Maastricht Treaty to the British people in a referendum, particularly bearing in mind that the treaty was not

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available during the general election and that therefore there can be no mandate? Secondly, does he agree that the most frightening thing that came out of the Maastricht Treaty was that the President of the Commission, M. Delors, was going to prepare a 20-page document on subsidiarity? Can we have an assurance that before that is discussed at the Edinburgh Summit this House and another place will have the opportunity to discuss it and to declare upon it?
Lord Wakeham: My Lords, the noble Lord raises the question of a referendum. I do not think that we need deploy the arguments again. My position and the position of the Government is still the same as it was before and the noble Lord's position, I am sure, is still the same as he has expressed it in the House before. We do not believe that in these circumstances the right way to proceed to the ratification of the treaty is by means of a referendum.
With regard to the question of subsidiarity, on which there has been some progress, I do not believe it would be sensible to discuss in this House documents produced by the Commission which will be the subject of discussion and decision by the Council of Ministers at the summit in Edinburgh until the members of the European Council have reached some conclusions. At that time there is a perfectly proper case for the House to discuss the matter to see whether it approves of what has been done. That seems to be the normal way to proceed.
Lord Beloff: My Lords, I should like to ask my noble friend the Leader of the House a rather different question. Does he not think that there is some simple significance in the fact that we are discussing this matter while awaiting the commencement of a debate on the position of the coal industry? Is it not a general feeling in the country that one reason why the Government have run into domestic, economic difficulties—I shall not put it any stronger than that—is that Ministers' attention for the past few months has been concentrated not on our domestic problems but on seeking some way to get this foolish and unwarranted Treaty of Maastricht through Parliament? Ministers spend their time hopping from one capital to another or entertaining one foreign minister or another when they should be in contact with their own electorate and probably would have come to different conclusions on some matters. Finally, when it was suggested to the Prime Minister that he should pay more attention to coal, is it not true that he sent another dinner invitation to the Chancellor of Germany?
Lord Wakeham: My Lords, on the narrow point as to why we are talking about this issue now, I have to tell my noble friend that there was a request for the Statement that was to be made in another place to be repeated in this Chamber. The reason we are not currently discussing coal is that we are dealing with the Statement the repetition of which was requested by this House. I do not feel that I should apologise for that fact.
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Moreover, I do not accept for one minute the proposition that in some way the very great difficulties that the country and the economy, along with many other countries in the world, are experiencing as a result of this very difficult world recession have been neglected in any way because of the discussions over Maastricht. Indeed, 60 per cent. of the exports of this country are with our Community partners. The completion of the Single European Act, and of the GATT talks in which the European Community is negotiating as a bloc, is fundamental in seeking to make progress with regard to the recession. Therefore, contrary to what my noble friend says, I believe that absolutely the opposite is the case: the talks and discussions on Maastricht are most vital for the future of the British economy and for the rest of the world.

The Coal Industry
4.53 p.m.
Lord Cledwyn of Penrhos Lord Cledwyn of Penrhos rose to move to resolve, That this House calls upon Her Majesty's Government to hold a thorough independent inquiry into the future of the coal industry before proceeding with either their original proposals or those announced on 19th October and to publish the outcome.
The noble Lord said: My Lords, my noble friends and I welcome this opportunity to debate the crisis in the coal industry. I know that that view is shared by noble Lords in all parts of the House. I have been asked to make it clear that the debate does not take place in government time, but on a day when legislation would have priority. That is the wording in our Standing Orders but not in those of another place. However, it is a point that should be recorded.
We are passing through one of the most difficult and anxious periods of this century. I believe that it is the duty of us all, regardless of political affiliation, to assist in resolving the problem and in getting the country back on an even keel. The people of this country have, for several months, felt a sense of insecurity about the future. I regret to say that the Government's record in tackling our economic problems, the difficulties arising from the Maastricht Treaty and our relations with our partners in Europe, has been totally inadequate. I do not recall a period, certainly not in my political life, when a government have lost the people's confidence so swiftly and to such an extent.
It is quite extraordinary that, on the eve of the Birmingham Summit under British presidency, the Government should announce a pit-closure programme involving the sacking of over 30,000 miners. It is not enough for Mr. Heseltine to express "anguish" and "dismay" as he has done—I believe that those were his words. He was seriously lacking in imagination if he could not envisage the anguish of the mining community and, indeed, of people in all walks of life from Chesterfield to Cheltenham.
Further, it is inconceivable that an announcement of such critical importance could he made without a full discussion in Cabinet and, in our view at least,

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extensive consultation with those concerned in the coal industry. As a former Secretary of State for Wales, I found difficulty in believing that Mr. David Hunt was not aware until the following morning of how many pits were being closed in Wales, although the industry which had been the backbone of the Principality's economy for so long was being virtually destroyed. Mr. Heseltine admitted that the Welsh Secretary was not aware that the Point of Ayr colliery (the only one left in North Wales with its important liquefaction plant) was to be shut down, although it now turns out 555,000 tonnes of coal per annum. But then, it does that with only 480 splendid miners who are told that they arc to lose their jobs. If I had been treated like that when I was Secretary of State for Wales, I would have resigned.
But let me repeat—and here the Prime Minister must take the responsibility—no one thought it necessary to ensure that the full Cabinet was assembled to be informed or to discuss such a devastating policy involving one of the country's most important industries. I had heard that it was a Cabinet of "chums". Where were the chums last week when close Cabinet understanding was absolutely essential in the interests of the nation? Therefore, it is against a background of indignation and disbelief and a sense of injustice that this debate is being held. I believe that that was reflected in the House yesterday when noble Lords on all sides expressed their deep feelings about the closures.
Before 1 turn to the Government's amended proposals, made yesterday in another place, I should like to make some general remarks about the coal industry which are very relevant to our discussion today. If the closures as originally announced proceed in the new year after the moratorium there will be very serious consequences for the British people. There will be a waste of more than £1 billion of public money in keeping people out of work. There will be higher prices as consumers and industry are forced to rely on electricity supplied from the "dash for gas", which is in any case uneconomic. Next, this country's rich coal resources will be lost and, finally, our balance of payments must inevitably suffer.
In the attempt that Mr. Heseltine and others are making to justify their closure policy they omit to tell us the good things about British coal. They must also be put on the record. British deep-mine coal is the cheapest in Western Europe. On average, our coal is half the cost of that from our main EC competitors; that is, Germany and Spain. We should note that no production subsidies are paid to British deep mines, whereas German mines receive an average subsidy of £38 per tonne. Again, our miners do not get the credit for increased productivity which has been 150 per cent. in the past 10 years.
Let me make it plain again that our deep mines are the most technologically advanced coal mines in the world. Britain is exporting new mining technologies worldwide. Those are among the mines that will be closed. The best mines in the world will he shut down, and the finest miners in the world will be thrown on the scrapheap without proper consultation, and without a Cabinet debate. It is one of the most callous
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and cruel acts proposed by any government in this country for many decades. It is for that reason that we are making our protest, and making it with all the conviction that we can command.
Government spokesmen have been looking back to the 1950s and 1960s and the closures which took place then. The noble Baroness, Lady Denton, mentioned that in her speech yesterday. I recall the time well, and, as Secretary of State for Wales, set up a committee of inquiry under the chairmanship of Sir Melvyn Rosser to study the arguments for and against every proposed closure in Wales at that time. It was a public exercise, as the noble Lord, Lord Ezra, said yesterday, and it was also a period of continuous full employment when alternative jobs were available.
Yesterday's Statement by Mr. Heseltine does not remove our fears. It could be no more than a postponement of the closures for two or three months. In our exchanges here we made it plain that an independent inquiry into the basic facts behind the Government's energy strategy is essential. The consultation now offered by the President of the Board of Trade is totally unsatisfactory.
We have already had consultations on this subject. We were told several months ago that the Government were holding full consultations during the summer. Were they inadequate, and, if so, why? If they were adequate what is the point of repeating them now? From experience, I would hazard a guess that the consultation that the Government are offering will in no way compensate for the full, independent inquiry into current and future energy strategy which their mishandling of the pit closure announcement would indicate has never been more urgently needed than it is today.
The case for such an inquiry is underlined by the general tone and content of yesterday's Statement. What was clear about that was not just the Government's cynical attempts to buy off their own Back Benchers in another place—Back Benchers who were justifiably concerned about what the closures would mean for the future of British industry, and, in some cases for their constituencies—but also the fact that the Government still find the arguments for pit closures compelling. Mr. Heseltine still thinks that he is right.
In view of that, how can the Government seriously expect that they should be allowed to go down the same route again? Their view of consultation is to dictate the terms of reference, determine who is consulted and decide what weight should be attached to the responses. In effect, they will be judge and jury in their own court. That is not acceptable. This Government do not have the credentials to act as an independent tribunal. After all, both the Prime Minister and Mr. Heseltine have made it very clear that their minds are made up.
In effect, the Government are shamelessly trying to use the consultation processes which they had previously discarded as a means of camouflaging the pit closures. This Government can say what they want about consultation, but the fact remains that the miners, their families and their communities have a very real fear that the Government are merely

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undertaking the most questionable of public relations tricks and will, in due course, shut the pits down regardless of any consultation that may take place over the next few weeks and months.
To satisfy a deeply worried nation, the Government must launch an independent inquiry which will consider all relevant issues in a constructive and open-minded way. That should examine the basic issues covering the costs of electricity generation and, in particular, the relative costs of coal, gas and nuclear energy; the cost of imported coal; the total cost of the proposed pit closures; and the total cost of keeping the pits open.
In a parliamentary democracy no Cabinet Minister, or group of chosen Ministers, has the right to implement a policy of that significance, which throws thousands out of work, destroys whole communities and decimates one of our greatest industries, without respect for public opinion. That action is contrary to all we believe in, and the least the Government can do is to set up an independent inquiry. They will be judged not only tomorrow but by history on their reaction to that demand. I beg to move.
Moved, That this House calls upon Her Majesty's Government to hold a thorough independent inquiry into the future of the coal industry before proceeding with either their original proposals or those announced on 19th October and to publish the outcome.—(Lord Cledwyn of Penrhos.)
5.6 p.m.
Lord Wakeham: My Lords, your Lordships have cause to he grateful to the noble Lord the Leader of the Opposition for tabling his Motion today so that we can have this opportunity to have a wide-ranging debate on the coal industry. I am very pleased to have this opportunity to put the Government's views on these important matters. I shall seek to explain to the House why I do not believe that an independent inquiry is the best way to proceed.
Some of your Lordships may be aware that I had, in a former ministerial role, some responsibilities for these matters. I oversaw the completion of the privatisation of the electricity industry. I also initiated preparatory work on the privatisation of British Coal. I should like therefore to record that I very much share the regret that my right honourable friend the President of the Board of Trade has expressed in another place that British Coal had to reach the decision to announce last week so many pit closures and job losses. I regret all pit closures and all job losses but it is particularly regrettable that many of those miners who stood by the nation in the 1984–85 strike should lose their jobs.
To debate the Motion, I believe that the House should have a clear understanding of the Government's energy objectives. It is the Government's energy policy to achieve, through promoting competition and developing competitive markets: secure energy supplies at the lowest possible prices; diversity of supply and in decision making; meeting the customer's needs with maximum efficiency; and maximising the economic exploitation
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of the UK's energy resources, while at the same time meeting the growing requirements of environmental policy.
It is the nature of a market that diversified decision-making replaces central economic planning. A competitive market ensures the greatest possible downward pressures on price. It is the Government's conviction that it is the competitive market which provides the best prospects for providing the cheapest possible sustainable electricity prices for customers.
We did not, of course, create a fully competitive market in an instant out of the former Central Electricity Generating Board. Rather, we planned for competition to be increased progressively in an orderly fashion. We are therefore currently in a transitional period. Before April 1990 there was no real competition at all; by 1998 most of the restrictions, limitations and transitional arrangements will be at an end.
It is unreasonable to say that because we do not yet have full competition the market is not working. Indeed, the main transitional feature—the creation of the franchise market where regional electricity companies have a monopoly in the supply to domestic and smaller industrial and commercial users until 1998—was created specifically with the needs of the coal industry in mind.
The franchise part of the market enabled the electricity industry to sign contracts for coal for the first three years after privatisation. Its continuation until 1998 provides a stable basis for the negotiation of further long-term coal contracts ensuring that the coal industry is given the benefit of an eight-year transitional period to full competition.
The coal industry is in decline throughout Western Europe. The former industries in the Netherlands and Belgium have closed completely. The French industry is a fraction of its former size. The German industry, so often quoted as a model, is proving so enormously expensive to its government that closures and job losses are planned. German production fell by 20 per cent. in the 1980s and the rate of decline is expected to accelerate over the next decade. Heavy subsidy never means job security. Subsidy cannot restrain the trend towards diversification into other fuels which can be cheaper, more efficient and less environmentally damaging than coal.
I should say that I fully recognise and appreciate the considerable achievements British Coal has made in increasing productivity and reducing costs since the 1984 strike. I have gone on record on many occasions to praise those achievements. But the improvements have to be set in perspective. When I was Secretary of State for Energy I commissioned Boyds, the international mining consultants, to undertake an independent review of British Coal's mining operations. Boyds found—and British Coal's management accepted the analysis—that British Coal had not yet become truly competitive and there remained substantial opportunities to reduce costs and improve efficiency.
Against that background it is our policy that coal should compete on a level playing field in the energy market. It is of course important to ensure that the

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playing field is indeed level and I shall come, in a moment, to the safeguards that have been put in place to ensure that is so, and the steps we are taking in the review to ensure that the safeguards are working.
It is not the case that the Government are unfairly favouring nuclear over coal. Let me make it clear what the fossil fuel levy is for. The levy contributes towards the liability to pay for past costs. Avoidable costs of nuclear generation are low. The unavoidable costs, including particularly decommissioning costs, would have to be met even if there were no further generation of nuclear electricity. It therefore makes sense to continue to run the stations provided they are safe and economic. The costs met by the levy have not been created by the privatisation of the electricity industry. Rather, they have always been there; privatisation has simply made it clear what the costs were.
I have no wish to defend the stance that governments of all shades have adopted over the years towards our nuclear policy. When I arrived in the department many decisions had been made by different governments that I found hard to understand. I would, however, like to claim credit for identifying for the first time the true costs of nuclear power. Having done that, I also identified a way, acceptable to the European Commission, of progressively phasing out the subsidies which had been paid for years and which had been hidden by the Central Electricity Generating Board through its bulk tariff arrangements. I realise a considerable number of your Lordships know a great deal about energy. They will appreciate that what I have said is absolutely right.
Let me turn to gas. All the companies who have looked at the options for new generating capacity since privatisation have turned to gas. It is the economic choice for new plant and, for the major generators, an important element of their commercial strategy for meeting the progressively reducing emission limits for sulphur dioxide set out in the Commission's directive.
I know noble Lords have expressed concern about the future availability of gas and about its price. But our North Sea reserves are substantial—equivalent to up to 50 years of current UK consumption. And in each of the past four years we have discovered more gas than we have extracted. We have a pipeline link to the vast Norwegian reserves and the Government are actively encouraging other pipeline links to the Continent to improve the security of our gas supply.
As for gas prices, our best estimates—published by the DTI earlier this month as Energy Paper 59—are that gas prices in the year 2000 will be between 5 per cent. lower and 20 per cent. higher in real terms compared with 1990. Our estimates for world coal prices over the same period are for a range of 7 per cent. lower and 15 per cent. higher. Now, obviously, there is a deal of uncertainty about such forecasts. But the basic message is that we do not see gas prices rising relative to coal to any significant extent until well into the next century; and of course, the higher the gas price the higher the level our economic gas reserves in the North Sea will be.
I have explained that the electricity market is in transition to greater competition. I always recognized
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that in the absence of full competition customers' interests needed to be safeguarded in two ways; first, by the imposition of real obligations on the electricity companies and, secondly, by the creation of an independent regulator responsible for enforcing the obligations and monitoring the operation of the market to ensure that it works and that, if need be, the regulatory obligations on companies are changed and strengthened. It was in recognition of the fact that the regional electricity companies have a monopoly over the franchise that we placed an obligation on them—set out at Condition 5 of their licences—to purchase electricity
"at the best effective price reasonably obtainable having regard to the sources available".
Decisions by regional electricity companies to purchase electricity from gas-fired power stations are therefore commercial decisions by them, taken in the full knowledge that they will have to justify them against the regulatory economic purchasing obligation in their licences. They will have to defend those decisions to the regulator and take the consequences if they are wrong. Professor Littlechild, as Director General, is already well advanced with this review of the RECs' contractual decisions. I appreciate that Professor Littlechild carries a heavy responsibility but I am confident that he has the full powers and will exercise them to ensure that there is no abuse by the regional electricity companies of their position to the disadvantage of coal.
Some have suggested that the future of the pits British Coal planned to close could be assured if imports of coal were stopped. That is far from being the case. About half of UK imports—of 19.5 million tonnes in 1991—are of anthracite and coking coal which are in short supply in this country. Steam coal for power generation accounts for little more than a third of imports—about 7 million tonnes—and is expected to fall over the next few years. Imported coal is available at prices much lower than it can be produced here. Imported coal, including coal from opencast sites in Australia and the USA, is available at 80 pence to £1 per Gigajoule, compared with British Coal's average production cost of £1.75 per Gigajoule. Restricting coal imports would be damaging to consumers. It would be contrary to our GATT and other international trade obligations. I am confident that British Coal can compete with imported coal at our power stations inland. I believe that when new contracts are signed with the generators they will imply a share reduction in imports to power stations.
Of the 88 million tonnes of coal that British Coal currently produces, 65 million tonnes go to the electricity generators in England and Wales. It is likely that British Coal's share of that market will decline to at most 40 million tonnes as from next April. It was against that background that my right honourable friend the President of the Board of Trade agreed last week that British Coal should announce that it would cease production at 31 pits, with the loss of up to 30,000 jobs.
The Government have recognised the concern at the speed of the run-down and about the very great difficulties it would cause to the communities

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concerned. The Government therefore announced yesterday that, for the time being, British Coal would be allowed to proceed with the closure of only 10 pits, which have no prospect of viability in the foreseeable future. The Government have asked British Coal to introduce a moratorium on all other closures and redundancies until early in the New Year.
The Government have announced that during the moratorium on further pit closures they and British Coal will set out the full case for the planned closures; the Government will provide an opportunity for Parliament to debate the issues; and the Government will carry out a full and open review.
There would be little point in having a pause and moratorium on the proposed pit closures if it was merely a device for getting the Government off the hook for today or tomorrow. The purpose of the pause is to look again at the issues and to report to Parliament as to whether the case for the closures has been made, or whether ways and means can be found to increase the use of coal and as far as possible to lessen the impact. It would be wrong to he too optimistic about the outcome of that review but also wrong to be too pessimistic.
The Government accept what British Coal has told them about the unanswerable case for closing 10 pits, but they will not be closed until my right honourable friend has been satisfied that the full consultation process has been completed. If there are bids from third parties for any of the pits the Government have asked British Coal to consider them carefully. British Coal has a duty to consider applications and responsible organisations seeking licences to mine coal and the Government have been assured that it will continue to discharge that duty responsibly.
In his review my right honourable friend will want to cover the full range of issues. Among other things he will want, first, to look at each pit and ask himself the question whether the case for closure has been made.
Secondly, the Government will be looking for further discussions with the generators and with the 12 regional electricity companies. We shall need to be satisfied that the market prospects for coal have been correctly assessed. We shall also be looking again to ensure that no company is abusing its market position.
Thirdly, the Government will want to look at the level of coal stocks, both at the pithead and at the power stations, and ask the questions: are they adequate for our needs and are any plans to run them down sensibly phased?
Fourthly, we shall be looking again at the switch to gas. There is no question but that gas is cheaper. But as I made clear to the Energy Select Committee in another place in January—and I put it absolutely crudely so that there was no doubt about it—if the regional electricity companies have an interest in a gas-fired power station which is more expensive than the electricity they can buy from another source, in my judgment they are in breach of their licence conditions. I said that on 15th January, and also a great deal more. People need to look at that.
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Fifthly, we shall wish to consider whether it is sensible to mothball some closing pits or to release them to private operators. I know that some private companies are looking at the potential.
Sixthly, my right honourable friend will want to look at the proposed level of imports and satisfy himself that it is appropriate.
I believe that as a result of this thorough and wide-ranging review we shall have a significantly smaller coal industry than we have at present, but it will still be a substantial industry. It will have the best prospects for stability of employment and production that have been seen for decades because it will have emerged from a very hard-headed analysis of the market.
The Government recognise the very serious social consequences of closures for the mining community. My right honourable friend the President of the Board of Trade made that clear in the Statement he made yesterday. He set out a substantial package of assistance measures to provide training and counselling and assistance for those made redundant to find new jobs, as well as longer term measures to ensure the provision of modern industrial and commercial premises. The measures also included new enterprise zones and assistance to attract new investment and employment to the areas affected. There were measures, too, to help small firms in those areas. Additional money from the European Commission will also be focused on those areas.
Altogether the new package amounts to substantial new money for those areas. Wherever possible we shall work through local regeneration bodies where those exist, but we shall want to see the measures of assistance closely focused to bring real help quickly to those areas. The Government have therefore announced that my noble friend Lord Walker of Worcester will have a role as national co-ordinator and adviser to the Department of Trade and Industry and the Welsh Office. He, of course, brings considerable experience to bear on these problems, having played a major part in the regeneration of the economy of South Wales after the coal closures there.
Lord Taylor of Gryfe: My Lords, I am sorry to interrupt the noble Lord, but he will be aware that in addition to the redundancies and the consequences of the closures certain other industries are affected. Sixty-five per cent. of British Rail freight transport is coal transport. Am Ito understand that the provisions which are now being made will also be spread to other industries? Will the effect on British Rail freight transport and the subsequent privatisation be taken into account?
Lord Wakeham: My Lords, the measures which are proposed in order to find new jobs, to establish new enterprise zones, to provide training and so on, are to assist people who lose their jobs. They are not intended only to assist miners but also to assist others in the areas who are affected. We shall obviously want to concentrate the maximum amount of help in those areas where there is the maximum difficulty. One anticipates that that will he in the area where there was

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the largest number of miners. However, we recognise that there are wider consequences and that there are some consequences for British Rail.
Perhaps I may take this opportunity to comment more fully on a couple of points which were raised by noble Lords yesterday, and in particular the point made by the noble Lord, Lord Callaghan, in relation to the use of the Government's 40 per cent. shareholding. It was suggested that we should use the Government's 40 per cent. shareholding to direct the generating companies to act in the national interest in buying coal rather than in the companies' interest. I have already indicated that my right honourable friend will want to talk to them to see whether they have properly taken all such factors into account. However, I ought to make it quite clear that the directors of a company are legally bound to act in the interests of the company and all its shareholders. The suggestion that the Government should require them to act otherwise is to require them to breach their common law fiduciary duties to shareholders.
Lord Callaghan of Cardiff: My Lords, before the noble Lord leaves that suggestion, I think that I am correct in saying that the word "direct" was used by him and not by me. From my small experience of what 1 read in the newspapers about what happens when someone acquires a reasonable shareholding, which may be only 15 per cent. or 20 per cent. of a company, it is very easy to persuade the directors, without directing anybody, as to what they should do. I suggest that the same technique might be applied. That would not put anybody outside their legal obligations.
Lord Wakeham: My Lords, I think the noble Lord is on slightly tricky ground. The fact that some unnamed people acquire a percentage of a company and use it in ways which they think are beneficial in some cases and in others not, is not the point at issue. The point is that one cannot use a shareholding in a company either by requiring directors or seeking representation on the board other than on behalf of the whole body of shareholders, not one particular group of shareholders—whether it be 40 per cent. or 15 per cent., or, I have to say, for the nation as a whole—if it is to the detriment of some of the shareholders in the company. The Government might by legislation be able to do that, but certainly not by using their shareholding.
Lord Mishcon: My Lords, if the noble Lord will permit me, is he putting a legal proposition to the House that it is illegal for a shareholder to represent to directors that the directors should behave in the national interest?
Lord Wakeham: My Lords, I certainly was not putting forward that proposition, and I would be extremely surprised if any analysis of my words indicated that I put any such misguided suggestion to the House. I was making a point, which I thought was helpful, in response to an issue raised by the noble Lord, Lord Callaghan, yesterday. It is a very serious point which concerns many people in the nation. They believe that because the Government have a 40 per
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cent. shareholding they can use it in whatever way possible to say that the company will act in a certain way that is to the benefit of the nation. But if it is to the detriment of the 60 per cent. of shareholders which the Government do not control then I have to say—and the noble and learned Lord on the Front Bench knows that in this respect I am essentially right—to operate in such a way is not a proposition.
Baroness White: My Lords, can the noble Lord explain to the House what is the point of the Government having a shareholding at all in such an enterprise if they are not allowed to use it in the public interest?
Lord Wakeham: My Lords, the position is that when the companies were privatised the Government owned 100 per cent. of the shares. The Government had to determine—and if they had not determined it in a satisfactory way the Public Accounts Committee might have had something to say about it—the best way to realise that holding as part of the privatisation process. The advice we were given was that the right way to proceed was to sell 60 per cent. into the market and retain 40 per cent. for another year or two; the reason being that our advisers felt that the market had not fully appreciated the value of the shares and that to sell 60 per cent. and keep 40 per cent. in the taxpayers' interests was the best way to proceed. We gave certain undertakings to the companies at that time as to the way in which we would use the shares, but we certainly did not have to say that we would use the shares to try to persuade the directors to breach their common law fiduciary duties to their shareholders.
Next came the suggestion that we should increase the market for coal by blocking the import of electricity from France. I suggest that that is neither realistic nor desirable. We are striving to complete a single market in Europe, not to create new barriers to trade. I think that was one of the decisions which the right honourable gentleman, Mr. Benn, had some doings with when he was Secretary of State for Energy. I am sure he was right to do it at the time and it would be contrary to all our international obligations to try to stop it.
The noble Lord, Lord Cledwyn, suggested that the review should be an independent inquiry. The final decision on whether to approve any closures is the responsibility of the Government. It is not a responsibility they can avoid. In those circumstances, it must be for the Government to conduct the review. My right honourable friend has made it clear that there will be wide-ranging consultation in the course of that review, and I have set out in more detail the issues that he will want to address. My right honourable friend has made it clear that Parliament will be given a full opportunity to debate the findings of his review. There will be the fullest opportunity for those concerned to make their views known. I can assure your Lordships that those views will be considered very carefully indeed before a final decision is reached. Therefore, I have to say to the House that I cannot support the noble Lord's Motion on the Order Paper today.
5.35 p.m.
Lord Ezra: My Lords, before participating in this important debate I feel I should declare that apart from the long period in which I served in the coal industry I am still actively involved in a fuel company which deals with various forms of energy.
The noble Lord, Lord Cledwyn, in introducing this debate so movingly used words such as "anguish", "indignation" and "disbelief". Indeed, those were the feelings of the whole country when the Government's original announcement about closing more than half the existing pits in the country was made. The Government have since modified that, and it is the modified proposition that we are here to debate. We have just had a detailed response by the noble Lord the Leader of the House, using his considerable experience from his previous activity as Secretary of State for Energy.
Before expressing my opinion—which will be in full support of the proposition of the noble Lord, Lord Cledwyn, that there should be an independent inquiry—I should like to draw attention to what strikes me as being an important issue of timing. The Government have said that there will be a moratorium and during that period only 10 of the pits mentioned will be closed, on the basis of the normal closure procedures. To use the words of the noble Lord the Leader of the House, the remainder would be deferred until "a full and open review" had been conducted. Parliament would then debate the issue and decisions would be taken. What worries me is that in the Statement yesterday the President of the Board of Trade said that during the moratorium there would be time for negotiations between British Coal and the two electricity generating companies to continue and, it was hoped, be concluded on the new coal contracts. If those contracts are concluded before the inquiry is completed and we have had our full discussions we will be wasting our time, because if the contracts are based on the 40 million tonnes of coal which is being so freely talked about now there will be very little left to discuss. The matter would have been decided. It is the fall from 65 million supplied this year to 40 million next year that has led to the whole controversy. Therefore, I should like to ask the noble Baroness when she responds whether the Government have taken that into account. If we are to have an open debate at the end of the day—whenever the investigation has been completed and however it is conducted—the issue must not have been determined beforehand. I feel that this contract must not be concluded until we have completed our deliberations on the Government's findings. That is the first point I make.
I turn to the issue of whether the inquiry should be conducted by the Government on the lines that the noble Lord the Leader of the House has pointed out or whether it should be an independent inquiry which is the subject of the Motion put forward by the noble Lord, Lord Cledwyn. There is no doubt that it would be not only in the interests of the country but of the Government if this were an independent inquiry. The Government are caught in a very difficult issue. What would be a better way of resolving the issue than to say
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that there should be an independent body to whom the Government, the coal industry, the electricity companies and any other responsible body could give evidence? All of that could be sifted out and conclusions and recommendations made. Those could be fully debated and action taken upon them. I feel that there is an overwhelming case for that.
I listened carefully to the view of the noble Lord the Leader of the House about what energy policy should be. I thought it an impeccable statement. The noble Lord covered all the issues. The problem lies in discovering who is meant to be responsible for carrying out such a policy. In my mind there is some doubt.
If one considers the role of government in recent years in the formulation of energy policy, we find that it has been more noticeable in some respects than in others. There is clearly a policy for nuclear. The raison d'être for that was explained to us. The policy for nuclear is to maintain it at its present level and there is a measure of subsidisation to cover certain unavoidable costs such as decommissioning. That is very clear. At present regrettably there appears to be a government policy for coal; namely to diminish coal. But there is no discernible policy in any other regard.
There is not a policy that is entirely coherent. Some body should look at the whole issue and ask whether there should not be a more coherent policy. The Government's policy seems to develop as issues arise. There does not seem to be any clear, coherent, long-term strategy for energy.
At the moment many people are playing a part in the evolution of energy policy. There are two regulators: for gas and electricity. They have enormous powers but they deploy them very differently. The gas regulator, Sir James McKinnon, is very proactive. He has taken a major role in trying to introduce competition into the privatised gas sector, despite the fact that the gas industry was privatised in a way which left the monopoly intact. On the other hand, the electricity regulator appears to be much more reactive. He has said that the inquiry which he is at present conducting into the impact of the contracts for the purchase of electricity by the regional electricity boards could take quite a long time, perhaps a year or so. That has appeared after the issue has culminated in a major row. So we are not absolutely clear about the role of the regulators.
But in the whole area of the formulation of energy policy the companies play a major part. There is the very large corporation represented by British Gas and there are the two major generators. What they do has an enormous impact upon the market and the formulation of policy. Is it the market place that is determining policy? No, not at all. As the noble Lord said, we are in an indeterminate position and in so far as concerns electricity we have nothing approaching a proper market situation. He said that that would not come about until the year 1998 and that during that period there would be a phasing-in of competition.
We who feel that the coal industry is not being properly treated say that the coal industry's position should be phased in during that period. I do not regard it as phasing-in to diminish the amount of coal

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supplied to the power stations from 65 million tonnes in one year to 40 million tonnes in the next year and then to reduce that amount to 25 million tonnes within two years thereafter. That is not "phasing in".
We are bound to accept that there should be some diminution in the supply of coal to power stations. But let us take advantage of the period up to 1998 to phase it in a way which would not result in the repercussions at present envisaged. That would be the purpose of such an inquiry. We need also to ascertain beyond any further doubt the relative costs of producing electricity from different basic sources of energy. There is much argument about the comparison between gas fired and existing coal fired stations, nuclear installations and so on. That should be clearly exposed in an inquiry.
The question of coal imports has been raised. I had much experience of coal imports in my time. They were at times very economic but sometimes they were very expensive. I recall a time in the history of the National Coal Board when it was forced by the Government to import coal and pay the difference between the home price and the higher imported price. So these things change. We can certainly envisage that, compared with the present situation in which we are all in the depths of a recession virtually throughout the world, there could be a period ahead—most of us are, I hope, optimistic enough to presume so—when the economic situation will change.
There have also been changes in the value of currency. That has immediately pushed up the price of imported coal by 10 per cent. to 15 per cent. On top of that comes the impact on the balance of payments. The whole issue of coal imports needs to be examined objectively and openly by the inquiry. In addition, there is the position of research into energy. Unfortunately, experience of the privatisation of the electricity industry has shown that the amount of research previously undertaken by the Electricity Council has been substantially reduced. The new generating companies reached a decision that there was a certain amount of research undertaken which they did not consider was in their commercial interest and so was eliminated.
What is to happen about coal research? What is to happen to the important aspect of clean coal technology on which much of the future of the coal industry could depend? The Grimethorpe project, in which much work was being carried out on that technology, has been closed down. So far as I can tell, very little work is now being conducted. Even less would be done after possible privatisation. That whole area needs to be looked at.
I believe that there are a variety of issues which could be put to such a body of inquiry, issues which need to be addressed. We need to examine them in order to have an informed debate at the end of the process of inquiry. It would be in the Government's interest to have that done by an independent body. For that reason I support the Motion on the Order Paper.
5.48 p.m.
The Lord Bishop of Sheffield: My Lords, the Anglican liturgy can surprise us with the aptness of the scriptures that it shows. This morning I found myself reading the passage: a time to plant and a time to pluck up that which is planted; a time to kill and a time to heal.
Let us consider the time to plant. I declare an interest in the debate. The diocese of Sheffield was founded for coal. Sheffield is a steel city. But the lands that we cover, stretching down to Goole, are coal lands. Technological improvements and market demand led 70 years or so ago to the rapid development of the Doncaster coalfield. It was that which made people feel a need for a diocese and therefore a bishop in Sheffield.
That coalfield was a remarkable development. After the age of Satanic mills, fine villages were built near to the old villages—the old, tiny country villages with their small limestoned churches which, up to then, had marked that land. Now we have new Maltby, New Edlington, new Bentley, New Rossington and Woodlands, villages built for coal. They are very fine places. But they are communities built for nothing other than coal. That is seen most dramatically in New Rossington. There is only one road into New Rossington. Drive straight along it and one is in the pit yard. To the left or right are streets of housing. There would be found St. Luke's Church, the Roman Catholic church, the cinema (now closed) and the shops. It was a community built for coal.
I referred to a time to plant and a time to pluck up that which is planted. It would be folly to maintain that what was there once must be there always. Almost daily I walk my dog by the water wheels in the Rivelin Valley which once polished the knives of Sheffield industry. Now they are the haunt literally of coot and hern, and my dog and me. We can understand that coal runs out. We can see that in the diocese of Sheffield. The situation is quite different around Barnsley and the Dearne Valley. But how confusing is the situation for those who live in New Rossington, new Bentley and new Maltby. In the past few years not only have they been urged time and again to improve productivity and to produce more coal, and they have done so, but also British Coal, no doubt through the Government, has spent unbelievable amounts of money upgrading and improving the collieries.
The figures do not mean much to me. I am a little nervous about speaking in this debate among so many experts. I have been given a figure of £114 million for Maltby. The new machinery at Bentley—another of the pits to be closed—is hardly out of its wrappers; it is yet hardly dirty. Millions have been spent to make those pits super pits, with all the infinite resources of coal. We are told that economic necessity and market forces leave no alternative to their closure.
I could accept what has been said about retraining and massive investment if I believed either that it was the right response to the needs of the people of those communities and that there really was no market or need for their coal, or that there was the remotest chance of economic regeneration for New Rossington

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and of new jobs being found for the people of Maltby, Bentley and the remainder. If economic investment could have solved unemployment in south Yorkshire I cannot believe that any Government would have been so hard hearted as to deny us it. Such economic investment cannot bring new life to those communities. The end of coal is the end of those communities.
Is it inevitable? I listen to the representatives of the Government telling me how necessary it is. I listen to many other voices saying that the Government have got their figures wrong, that we do not need the coal imports—I am sure that we do not—that gas is not the way forward, and that there is not much of it. But we have coal. The balance of payments has been mentioned only once today. We have coal which is comparatively easy to get at in up-to-date pits.
The issue arose when I was at Markham Main. Quite accidentally, I had a meeting at a school that evening. I drove home through Maltby. I saw a great notice outside the colliery saying "Coal—the fuel for the future." It had not long been painted.
Coal is the fuel of the future. If it is not, if what we are being told is the case—that these villages have to be destroyed; that these men have to go on the dole; and that there has to be a rather hopeless attempt at retraining and reinvesting—then we need more convincing arguments than we have been given to date.
My scriptures this morning referred to a time to kill and a time to heal. The statement of last Tuesday was indeed a time to kill. The effect on the people of south Yorkshire was quite unbelievable. Churches Together in South Yorkshire—an ecumenical body—arranged a petition in our churches on Sunday. I have received a phone call telling me that more than 65,000 people signed those petitions, almost one in 10 of the population in an area where few people attend church. We have the lowest church attendance in the British Isles. However, 65,000 people signed that petition urging the Government to reconsider, to inform us more clearly why the decision should be so. We do not wish to see that industry destroyed.
If the proposals of last Tuesday go through, two pits will remain in the diocese of Sheffield: Silverwood and Goldthorpe—Goldthorpe for not much longer. It is a pathetic, sorry future. I refer again to those words: a time to kill and a time to heal. I beg the Government to listen to what has been said and to allow an independent inquiry so that we can clarify the conflicting signals. We have had reference to more investment, more production, and then less; more expansion and then cuts; the price of gas; the need for imports; free trade; the Germans; and the nuclear issue. All those conflicting issues have left us puzzled as to why so much should be invested and then wasted, why so little regard should be given to the true costs of those closures in terms of human lives and in the lives of communities. Somehow or other an independent inquiry might obtain the facts, and might indicate how extraordinary it is that the electricity companies should take decisions which destroy Grimethorpe, Rossington and Bentley without
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benefit, so far as we can see, either to customers or shareholders, which would make the pill fractionally more palatable.
I grieve to say this. In the statements over the past day or two the Government have made it clear that their minds are made up and will not be changed. I cannot believe that a government inquiry will convince the 65,000 people who signed the petition, never mind the villagers of Rossington and Bentley, that a real, fair and inevitable decision has been taken.
The newspapermen were buzzing around us on Sunday. They went to the leafy suburbs of Sheffield convinced that they would find outraged Tories tearing up the petition and refusing to sign it. Try as they would they could not find one. Without any hesitation, I understand, everyone who was in church in Sunday, and many who were not, made it their business to sign the petition. Those people deserve an independent inquiry so that they can believe that a true, careful decision has been taken. If the price has to be paid by the people of Rossington, Bentley, and Maltby, then at least they have the comfort—poor comfort though it may be—that it is a fair decision and not a forced one.
5.58 p.m.
Lord Callaghan of Cardiff: My Lords, whatever view anyone may take of this issue, I am sure that everyone in this House will applaud and thank the right reverend Prelate the Bishop of Sheffield for the way in which he has approached his task today. It is indeed one of a series of remarkable speeches. I must refer to what I thought was a great speech by my leader, my noble friend Lord Cledwyn. Alas, we shall not hear many more speeches from him as our leader but he will be able to look back upon that speech and say that he truly represented the people of Wales.
Your Lordships may well ask—I ask myself—what title I have to speak in a debate of this kind in which so many experts such as the noble Lords, Lord Ezra and Lord Haslam, and others will speak with much greater authority than I can about this issue. I got into this situation of feeling that I had to speak this afternoon when I was asked simply because my reaction was that of millions of people: I could not believe my ears when the announcement was made. I felt such a deep sense of outrage about what was being done and proposed. Therefore, I shall have very little to add to your Lordships' deliberations this afternoon other than to express one or two thoughts about the way in which the matter was handled and what should be done.
I have had a connection with the miners for 40 or 50 years since my noble friend Lord Tonypandy took me to the Rhondda nearly 50 years ago to stay in his house with him, the son of a miner. That began my acquaintance with the mining community. Over later years that extended widely because of the constitution and make-up of the Labour Party and the Labour movement. Because of my positions within that, I was thrown into contact both with representatives of the miners—the NUM and other trade unions—and also with the men themselves. Like everybody without exception who comes into contact with those men, in

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some ways I envied that tremendous loyalty which they had to each other; that tremendous sense of cohesion and cohesiveness and their tremendous loyalty and patriotism. They do not mention Britain 52 times in a speech or anything of that kind; but when the call comes, they go and fight for Britain. They did that in such numbers that they had to be stopped and brought back because we were going to be short of coal.
Therefore, for those reasons I wish to put on record my horror and detestation at the way in which this matter was dealt with. It has shown an almost inconceivable lack of consideration. Public opinion has now won a stay of execution; but from what I heard from Mr. Heseltine on Radio 4 this morning and from what I have heard this afternoon, I am not convinced that in the last resort Mr. Heseltine will be anything other than judge, jury and executioner. For that reason, I support those who have spoken before me who have called for an independent inquiry. I say to the noble Lord, Lord Wakeham, that he should tell the Cabinet that nothing less than that will satisfy millions of decent people in this country.
As to the way in which the matter was carried out, it is one of the most incompetent operations that it has been my lot ever to see. Indeed, in a long parliamentary history over a long period I cannot remember anything that rivals it since what happened as long as four weeks ago when there were four changes of Bank rate in a day. Those examples of incompetence make us doubt whether the Government are not so rattled at present that they are incapable of judging anything other than on the basis of short-term considerations.
The approach that I hear from many Members in the other place and from some Ministers is the most cynical that I have heard. Frankly, their only consideration is whether they will win the vote on Wednesday. "Have we done enough?" That is the phrase. "Should we perhaps include one more pit? Should we say that we shall consult with the Select Committee of the House of Commons?" Those are the kind of considerations which have been openly advanced by Members of the other place. They are asking whether they have done enough to save their skins. That is not good enough.
I say to the noble Lord, Lord Wakeham, who I know to be a man of honour and who I know has sensibilities about these matters, that it is his duty to represent those of us—and whatever happens in the vote this evening I believe we are in the majority—who say that it is not good enough to allow Mr. Heseltine with his fixed convictions, with his certainty and dogmatism to conduct the inquiry and to tell us what are the conclusions.
Of course, in the end the Government must take responsibility for what is said. However, Parliament has a right to know what are the arguments that lead to that and not what is the presentation of the case which was made very ably this afternoon by the noble Lord, Lord Wakeham. For every statement that he made, for every figure which he gave, there is a challenging figure, there is a different figure. The millions of people whom the Government have deeply
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offended are entitled to know what is the considered opinion of those who have more objectivity than Ministers who have attached themselves to this course in such a way that they can only change their minds with great loss of face.
When we have seen those facts and the result of such an independent inquiry, then the Government are right to make up their mind. They should then come back to us and tell us what are their conclusions. Parliament can then decide whether or not to support the Government in the conclusions which they have reached. That is the right way to proceed.
I say to the noble Lord, Lord Wakeham, that it is important to proceed correctly, as has been said by the right reverend Prelate, for the sake of the Government's good name—because they have to govern for some time yet—and their authority. It is important also to satisfy the miners who are cynical after what they heard yesterday, the public who are dubious about what they heard yesterday and the markets which are uncertain, although perhaps it would be fairer to say disinterested because they do not believe that this measure begins to tackle the fundamental weaknesses which exist in the British economy today.
As the right reverend Prelate and the noble Lord, Lord Ezra, indicated, such an independent inquiry should go wider than what is, I understand, proposed at present. It should ask what in my view is the basic question: does the interest of the markets and the lowest price coincide with the national interest? That is the overriding question which I believe the right reverend Prelate was asking in his speech this afternoon. I cannot believe that government Ministers, with their present convictions, will address that question.
Is the lowest price for the electricity distributors the best price for the nation to pay? The two are different. I believe that that consideration has been totally neglected in the narrow approach taken by the Government.
Having heard what the Minister said this afternoon and having listened to Mr. Heseltine, I can understand how that incredible decision was made. I did not understand it before, but I think I do now. It is because those Ministers, who were assembled by the Prime Minister, had their own particular interests. All noble Lords who have served in Cabinets will know that what I am about to say is true. Ministers have their own particular interests. Of course every departmental Minister who goes to such a meeting who has a special interest in these matters has his own axe to grind and his own case to put. Each Minister must get the best that he can from the situation. However, I remind your Lordships—and I need not remind all my former colleagues who have served in Cabinets of whatever party or complexion—that the purpose of a Cabinet is not that each Minister should have his way but that each Minister's narrow judgment of an issue should be subjected to the more worldly approach, or more disinterested approach, of their colleagues who have no particular interest in the subject at all. That is the way in which I understand

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Cabinets should be conducted and that is the fault. It is because that did not happen that this absurd decision has been promulgated by the Cabinet.
The fact that that did not happen calls into question the judgment of the Prime Minister. I can only assume that the noble Lord, Lord Beloff, was right this afternoon when he said that perhaps the Prime Minister's attention had been distracted by other matters which led him astray. The Cabinet should not only have had before it a report but also considered arguments so that a decision could have been taken. I am bound to say that the ultimate irony of the situation was when I read in the newspapers that Mr. Heseltine reported his decision to the Defence and Overseas Policy Committee. Can anyone imagine anything more ludicrous than that as a substitute for Cabinet government?
I return to the major point. I believe that the Government are suffering—as indeed is much of this country; certainly the electricity industry is suffering from it and the coal industry is a victim of it—from what the noble Lord, Lord Laing of Dunphail, called "short-termism". I believe that is an appropriate phrase. As the noble Lord, Lord Ezra, said, "these things change". We have seen them change. We have seen the price of oil move up and down. We have seen the price of coal move up and down. We have seen how fashion plays a part—sometimes too much of a part—in governmental decisions.
It is only 10 years ago that the Government Front Bench in this House and in another place were coming to us and Ministers were saying—noble Lords will remember their names—"Of course manufacturing industry is being run down. But look how it is being taken up and replaced by the service industries, by the financial sector of our economy. Those are what matter. Of course manufacturing is going to run down, but it does not matter". I may express that in a colloquial way but that was the tenor of their remarks. What do they say now? What does industry say? What do employers say? They say that we must build up manufacturing as quickly as we can. That is imperative if we are to get the economy moving again.
That was a fashion. This is a fashion. The dash for gas is a fashion. I want to see that fashion exposed. Perhaps it has substance behind it. This afternoon the noble Lord, Lord Wakeham, put forward a case. Perhaps that can be demonstrated. However, I do not believe that what has so far been said, together with the contrary statements, is sufficient.
I should like to see the inquiry consider whether it is right to have this duplication of national resources where I am told that we are to be left with an excess capacity of around 50 per cent. I recall many years ago it was thought that a surplus capacity of 17 per cent. in the energy industry was sufficient. What are the capital resources that will be devoted to that surplus of 50 per cent? I want to see a big capital investment programme. There is no point in wasting resources; let us put them to something useful. Let us look at the question of security of supply. I can envisage scenarios (which I shall not put forward for time's sake this afternoon) in which what the Government are
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proposing could greatly endanger us. We must consider the conservation of national resources, and above all the social cost of devastating communities in the way we were reminded of this afternoon.
I trust that the Government can be required to think again. It was only public opinion that won the day and secured us this reprieve. Public opinion can do it again. I believe that the Government properly yielded to public opinion and can be required so to do again.
Finally, the short-term thinking, which in my view led the Government astray on this issue, is to be found also in the thinking concerning our national economy. We shall continue to fail as a nation until we have a defined policy—quite apart from overcoming inflation—which makes a successful economy through an enlarged manufacturing base; through a balance of payments that is sufficient; through a substantial reduction in interest rates; through setting a standard for sterling either in or out of the ERM. Tell us what is required in the way of taxation, whether higher or not. Remove the prevalent pessimism that has overtaken the nation not only because of the incompetence of the Government on these specific issues, but also because the nation does not see clearly where the Government are going, at least on this issue. Follow what I believe to be the majority opinion in this country and set up an inquiry which can look into what was done by the Government. Consider the national interests regarding the future. Make up your minds what you then want to bring to us and we shall look at it in the light of the best way to help our country.
6.15 p.m.
Lord Boardman: My Lords, I am sure that all noble Lords who heard the right reverend Prelate were moved by the speech that he made. However, I should like to put the issue of the closures into a rather different perspective. There is a danger of being carried away on the great emotional wave that broke over this country on the announcement of the closures and perhaps of disregard of the hard economic facts and the matters necessary for the Government to make the right decisions and to meet the social consequences that flow from the closures.
The closing of mines has been going on for generations at a vastly greater rate than anything that has happened in 1992. It is partly inherent in the mining industry to know that closures will occur when pits become exhausted or when the cost of extraction makes them uneconomic. It is something which miners have become accustomed to living with. They know more about it than anyone else. They work on the seams; they know what it is like and how quickly the coal is being exhausted.
The fault in this instance was the way in which the decision was handled. On reflection, my noble friend will probably agree that elements of that were regrettable. I can understand the desire to announce all the closures at one time; to try to indicate to everyone where they stand and not to achieve a result,

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as has been suggested by press reports, where a number live with massive uncertainty in an atmosphere of a somewhat lingering death.
It is known in all coalmining areas that further contraction will take place as it has taken place for countless years past. There is no secret in that regard. The reports regarding the requirements of coal have been widely publicised. The numbers of pits that will be left open by the end of the 1990s or indeed today have been widely publicised by the press. Neither the miners nor their unions—the NUM and the UDM—were unaware of that. They have excellent people who are able to guide them and explain what is happening and what the forecasts are.
It would therefore be wrong to say that the closures were sudden shocks. However, I particularly welcome yesterday's Statement that made it clear there would be some form of moratorium and, above all, full consultation before the pits are closed. One of the unfortunate aspects of recent days has been that that consultation process was omitted. As the noble Lord, Lord Ezra, knows, an extremely sophisticated consultation process works in the pits. It has always worked fairly and effectively. The pros and cons are discussed, including the amount of coal left, the cost of extraction and conflicting fuels. By the use of that consultation process—this is the inquiry to which we should direct our minds in the immediate future—it should be possible to justify or not the closure of the pits that were nominated.
There is a danger of becoming confused in regard to the longer term issue of energy policy. The Government have a duty to announce their energy policy—I am sure that they have one—and it should be widely debated in this House and in Parliament generally. That is a form of longer term inquiry which should replace any independent inquiry put forward in the Motion before us. There are many experts in this House who could give judgments on the energy policy produced by the Government. Let us have full and wide-ranging debate on that, on the merits of various fuels and on the economic aspects that will come from closure or reduction of one kind or another.
Perhaps I can suggest the headings that may be considered in a social policy document. They have a bearing on the events of the past few days and the closures that are so much in the news today.
The most important consideration has to be security of supply. We need to be sure that we retain the basic supply of United Kingdom coal, oil, gas and nuclear energy, all of which we are very fortunate to have in this country. We should ensure that those supplies are retained so that we have security of supply. At the same time we have to be mindful of our obligations under GATT. We cannot say that we will not have any supplies coming in from overseas, that we will use our own and no one else's. So a balance has to be struck.
Secondly, our energy policy must take into consideration the cost of energy. Energy supplies all our industry; it turns all the wheels in factories up and down the country. The domestic cost of electricity goes through into the RPI, into wage packets and again into industrial cost. The suggestion that we
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should pay whatever is necessary to keep our mines open must inevitably put upon electricity a cost which would inflict a grave penalty upon our industry and, as the noble Lord, Lord Callaghan, said, upon our manufacturing base. We must watch that too.
It is no good saying to the thousands of workers who would be displaced—and I am talking about some industries which I know quite well, such as the chemical refractories or cement industries—"I am sorry we are putting you all out of work. We cannot compete against imports, or overseas, because we have to pay so much more for our energy than they do in France or Germany." That is a factor we must bear in mind. We must not be carried away by emotion which in the short term may preserve a small number of jobs in the mining industry but lose many thousands of jobs beyond that.
There are also environmental considerations. Sulphur, acid rain and the hole in the ozone layer are all consequences of certain fuels, coal in particular. We have to develop long term energy which is not dependent upon finite resources. There has been criticism of our subsidising nuclear power but without that there will come a time when our descendants will say "We have run out of oil, gas and coal and have nothing left", while other countries have developed their non-finite sources of supply. Therefore, it is right that we should continue to develop long term sources of energy.
Our energy policy must also take into account the social consequences. By that I mean not just the comparison between the miners who work bent double in some of our pits extracting coal and those at the enormous coal faces which I and many other noble Lords will have seen in many parts of the United States, and also in Australia, where there are hundreds of feet of sheer coal face being open cast. The contrast between that extraction of coal and that being obtained from mines underground is vast.
I find it unhappy to have to press miners to retain positions where they are working underground in conditions—fine as some of the equipment may be, as the right reverend Prelate said—which are considerably worse than those in places from which we can get many of our supplies.
We have to look at the impact that closures may have on close-knit communities. The mining communities are close knit. We do not just have to consider the miners who, after all, have very generous redundancy terms, pensions and the rest—and rightly so. They are not in a favoured position; but they are in a better position than most people who are made redundant. The more serious consequences are upon those in industries that supply the mines, upon those who run the corner shop, the barber's shop and other amenities, in those communities. We must bear those people in mind.
Some 20 years ago I had some responsibility for closures, then mainly in the steel industry. We put teams into the steel towns drawn from government departments and private sources, and gave generous financial support. Over time this transformed those steel towns, which were then entirely dependent upon steel, into prosperous mixed enterprise areas. I am

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sure noble Lords will be aware of many of those examples, but it took time, effort and money. Our social policy and our energy policy must take that into account.
I believe that the miner, like the steel worker, is a marvellous worker who can adapt to change. So I very much support the Government's proposals, as they are now outlined, to attract new industries and training into these areas, opening up new opportunities for the people whose livelihood is being taken away from them in this way, by inevitable consequences which we have debated. Following the policy that has been announced I believe that we can in time provide for communities, once faced with declining and loss-making industry and the prospect of early closure, new and exciting opportunities. For the reasons I have given I oppose the Motion of the Opposition.
6.26 p.m.
Viscount Hanworth: My Lords, I propose to make one of the shortest speeches I have ever made in this House. I shall attack the Government from an angle that has not been sufficiently mentioned.
In these past days a tragedy has been made clear to most of us, namely that the Government have been obsessed by their policy of allowing short-term market forces to take control, forces which have overridden all other considerations, to the total disregard of our nation's long-term interests.
Privatisation of the quite efficient electricity industry has meant a rush for gas, many of whose installations are likely to take up to one quarter of our total gas demand. Moreover, no large coal-generating stations are likely to be constructed. Nor, apparently, are the potentially viable pulverised coal/gas turbine generators likely to be fully developed or constructed.
We should realise that natural gas is a limited resource the price of which will rise as it grows scarcer. Inevitably the cost of coal imported from elsewhere will also rise, even the subsidised German coal, whereas our own coal can give long-term energy security at a stable price.
A simple comparison should be made between the cost of closing pits, redundancy and unemployment on the one hand and of helping generating stations to buy British on the other. Are the Government still deluded by short-term commercial will-o'-the-wisps in this as in so many other areas? It is monstrous if such a philosophy still survives.
In a speech to your Lordships several years ago I pointed out that the electricity industry was functioning well and could easily, with a little encouragement, be made the most efficient in the world. Instead, we have been brought to the present pass. This privatised industry has inherently little true competition and so incentives are lacking. I support the TUC request for an independent overall review of energy policy, taking a much longer view than it appears the Government are able to do.
In the 1930s, at a time of comparable economic crisis, a coalition government was formed to steer the nation towards recovery. This Government have
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made so many mistakes that they would be well advised to consider a similar move as a possible way forward in the national interest.
6.30 p.m.
Lord Marsh: My Lords, I suppose that, like me, most of your Lordships find this place unique. I find that the debates here are more interesting than in the other place, which frequently would not be a problem. This House has a lack of predictability and a degree of spontaneity which I find particularly attractive. However, it is well known that nothing can be perfect and one of the problems with this House is that so many of the debates produce a deep feeling of déjà vu—and that is even more pronounced today than usual.
I listened to the right reverend Prelate the Bishop of Sheffield with particular interest. I understand and respect his horror at the suffering caused to ordinary decent people by pit closures. Pit closures are always especially ghastly, partly because of the nature of the communities within which the miners live and partly because of the extent to which the miners are part of their communities. It is a characteristic unique to the mining industry.
Unfortunately, no government in the past 30 years have found a way of avoiding this problem. All have been conscious of the horror and of the political unpopularity of the suffering that electors have seen around them but none of them could find an answer. Our list of speakers today contains former energy Ministers and two former Coal Board chairmen, spanning many years between them and representing the views of every group within this Chamber. They include Members of the Labour Party and the Conservative Party and encompass all the varieties of Liberal Democrats and democratic Liberals. They all have one thing in common—each and every one of them has had to face the problem of pit closures and the steady decline in the demand for coal.
The noble Lord, Lord Callaghan, spoke, as always, with force and conviction—I apologise for not having given him notice of my comments; I had not realised that he had left the Chamber—but he spoke as though we were faced with a new, if not unique, problem—one that has appeared before us only in the past few days. The only major difference in this case is the crass incompetence with which the issue has been handled. That is the only thing which distinguishes this from all the many other crises in this area in the past. This is not a new problem; it is a variation of a problem with which the noble Lord, Lord Callaghan, struggled nearly 30 years ago. It really is a case of plus ça change and all that.
Through no fault of its own the coal industry has been losing markets for many years. The 1950s saw the Clean Air Act and a major drop in the domestic consumption of coal. In the same period British Rail moved from coal-fired steam engines to diesel. Both of those policies were regarded as popular and as almost inevitable. The 1960s combined the development of nuclear power with the discovery of large reserves of natural gas and oil in the North Sea—resources which may still prove to have more to offer.

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Therefore, it was not surprising when I became Minister for fuel and power in 1966 that the future role of coal was at the top of the agenda. It always is for Ministers for fuel and power and Secretaries of State for Energy, or Presidents as they are now called. The question was already not whether the industry should contract; only how fast it should contract. The result was the 1967 White Paper and the beginning of a pit closure programme which was bigger, faster and harsher in its effect than anything seen before or since. I say this with no sense of pride or exultation. The social devastation was horrendous—and that was a Labour Government, and I was a Labour Minister.
I do not make this as a debating point, but only those who have been part of it will ever understand the very special relationship between the mineworkers and the Labour Party. It is partly emotional and partly historical, but it also reflects real political power. The mineworkers were the largest group in the Parliamentary Labour Party and the union's votes at party conferences were often crucial. I repeat that I am not saying that to make a debating point, but to underline the fact that if that Labour Cabinet and those Cabinet colleagues—some of whom are now distinguished Members of this House and contributors to this debate—could have found an alternative policy they would have done so, and they would have done so regardless of any views that I might have had. The only reason why they could not find an alternative was that there was none. They were then, as the Government are now, trapped in the inescapable logic of the numbers.
In 1965 the Labour Government reviewed the future of the industry and wrote off £415 million of debt. They decided to continue with the tax on fuel oil, placed a virtual ban on coal imports and introduced positive discrimination against the use of oil at power stations and in public buildings. On the basis of that assistance to the industry they produced a forecast of coal consumption up to 1970. They forecast a range of between 170 million and 180 million tonnes, including exports. When I arrived at the Ministry in 1966—the forecast had been made in 1965—consumption was already below the forecast for 1970. In 1966 alone coal sales fell by 10 million tonnes. That has been the fate of every forecast of coal consumption for the past 30 years. In 1966 the board employed 456,000 men and sold 175 million tonnes of coal. In the four years to 1970 the numbers fell to 356,000 men producing 150 million tonnes. By 1980 we were down to 294,000 men producing 117 million tonnes, while for 1991–92 the figures are 58,000 men producing 86 million tonnes.
So how did we get away with it? Throughout the 1960s we avoided a major confrontation with the unions only because we managed to convince their leaders that the massive closure programme was a one-off. I remember a negotiation with Will Painter in a miners' club when we stood in a corner while he explained to me that one of the things that we had to do was to make provision for the older miners in particular because they were the people suffering ill health. We reached a number of behind-the-scenes agreements because they believed and we believed that once we could get to that magic figure we could offer
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some degree of stability to that sad industry. We genuinely believed that with a benevolent mixture of good intentions and massive subsidies we could reverse the market trend.
My Lords, we completely misled ourselves and them. It did not work then and it will not work now. Indeed I believe now, with the benefit of hindsight, that by the 1960s public ownership, and the succession of reconstructions, each one leading to accelerated closure programmes, provided the miners with a false belief, completely without foundation, that they would have long-term job security if they went one more step. Every time they were betrayed, not by individuals, not by Ministers, but by the realities of the situation. Had the industry been in private hands I think it highly likely that the decline in the industry would have been achieved far more efficiently and, paradoxically, with far less misery. It would have been a steady and consistent decline instead of these appalling cuts every three or four years.
An inquiry is now probably inevitable. Indeed it may well be helpful to review some aspects of current fuel policy. I believe that the skill of the noble Lord:, Lord Walker, in attracting industry to the most extraordinary places is well proven. I believe that his appointment is one of the few bright spots in this miserable episode. But the fact has to be faced that coal will never again be the major, or a major, element in any sensible fuel policy. The time is long overdue for politicians and unions to stop pretending, to face up to the need to accept the inevitable and to concentrate all the available resources on minimising the pain of a process which on every shred of evidence is inevitable. Any other policy is of no benefit to the country at large and is disastrous for the miners and their families.
6.42 p.m.
Lord Dormand of Easington: My Lords, when the Lord Privy Seal at the opening of the debate told us about the additional measures which are now to be taken following the outcry in the country the thought kept occurring to me—why was not all of this done before? Perhaps I may take consultation as an example. That ought to have been the absolute basic necessity before this announcement was made. Indeed, I think I am right in saying that such consultation is required in law. It is a statutory obligation. So one would think that that would have been one of the first things the Cabinet or the Secretary of State would have thought about. That was not done.
Perhaps I may refer to the previous speaker, the noble Lord, Lord Marsh. I hesitate to take issue with someone who has such wide and deep experience in these matters. He speaks as a former Cabinet Minister dealing with energy. I agree with him that the scale of the pit closures announced—in other words, the 31—is probably the worst example of political ineptitude that we have seen in our political life; and like the noble Lord I have been in politics for some time now. But I disagree with him when he says that that is the only difference. With great respect that is not the only difference. The noble Lord talked eloquently about the 1960s and to some extent the 1970s. One other

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important fact is that other employment was then available. That is crucial in relation to the problem that we are discussing today. I hope that that will not be forgotten throughout this debate.
The justification for the closure of the 31 pits is, according to the President of the Board of Trade—he has repeated it many times—that "the economic case is unanswerable". There is, to say the least, considerable doubt about that view. It has already come out in the speeches that we have heard in the debate today. A wide range of economists from all parts of the political spectrum differ from the Government's opinion on this matter.
Non-economists, like me, cannot fail to notice that the Government in presenting their case never mention the £1.3 billion paid in assisting nuclear power. We see that the German coal industry receives the biggest subsidy ever received by coal in any country. No figures are produced to show the cost of throwing what most commentators say will be something like a total of 100,000 people out of work by the closure of these 31 pits. Almost nothing has been said about the dire effects on rail freight. One of my noble friends mentioned the point briefly in the debate. That in itself would warrant a wide ranging debate. There is more than doubt that gas-fired stations, despite what the Lord Privy Seal said, are cheaper than coal-fired stations, and the Government know it.
These and other arguments have been repeated many times since the Government's announcement about the closures was made and I shall not go further with them. What is basic to the whole problem is that it is not the cost of coal production which is destroying the market for coal but the way in which the electricity industry was privatised. It is months ago since the former commercial director of British Coal, Malcolm Edwards, warned the Government that if they disregarded the consequences of the form of electricity privatisation only a dozen pits would be left in the country. In case any noble Lord asks on what authority Malcolm Edwards speaks, all I can say is that some of us had a great deal to do with Mr. Edwards. We found that he talked sense on the coal industry.
The costings and benefits relating to pit closures is a complex matter and I readily concede that. It is therefore of the utmost importance that an independent and open inquiry be made into it. Nothing has been revealed of the calculations made by the Government in coming to such an important decision. I suspect they knew that glaring weaknesses would have been exposed. The unprecedented reaction of people in this country—people who, as has been said by a number of speakers, have no connection with the coal industry—to the pit closure proposals show that they are interested in, and are entitled to know, the basis on which such a conclusion was reached. As my honourable friends in another place said yesterday following Mr. Heseltine's Statement, people are interested in why pits need to be closed, and not when they are to be closed. If in the face of such reaction as the country has seen in recent
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days the Government refuse to set up an independent inquiry they will demonstrate an arrogance which some of us thought even this Government were incapable of showing.
I have spoken about some economic aspects of the issue but I believe that there are two other matters to which the Government have paid too little attention. First, the social consequences of the closures. Yes, Ministers say how sorry they are about the effect on mining communities and families. We have had it today and I do not for one moment doubt their sincerity, but they do not really know what it means. I remind the House that the average age of miners now, because of redundancies, closures and everything associated with the industry, is less than 40. That means that they are only halfway through their working life.
Perhaps I may inject a personal note. I come from a mining family. In another place I was a Member for a mining constituency and for two years I was a training and education officer with the National Coal Board, so I hope that that gives me at least some experience of the devastating impact that pit closures have on a community and on individuals. When my noble friend Lord Callaghan was speaking earlier about the spirit of miners, an incident came very quickly to my mind. On one occasion during one of the many visits that I made to the pits I went into an 18-inch seam. Let us just imagine an 18-inch seam. We usually see pictures of miners on their knees getting coal; but in this case the miner had to lie down. So I laid down with him. I said, "My goodness, how on earth do you manage to live this kind of life?" He said, "It is not so bad, it gets you away from the wife for an hour or two". I thought, "Well, that is one way of putting it".
One of the 10 pits to be closed is Vane Tempest, which is in Seaham in County Durham. There were three pits in that small town. One was closed just before I ceased to be a Member and another closed last year. Now the remaining mine is soon to be closed. It is simply not possible for Ministers to realise what effect three pit closures in such a small community will have when there is so little alternative employment. That is one of the main issues. In that connection, I should like to make a point that has not yet been made in all the discussions I have heard on the matter. The Government, rightly, propose extra provision for the areas concerned. But it cannot be stressed too strongly that jobs arising from that help do not materialise for a long time; indeed, in some cases, they do not materialise at all. If that fact is forgotten then, frankly, the Government will not arrive at a solution.
Today during Question Time I asked a Question about long-term unemployment. If Ministers examine the figures they will find that many of the long-term unemployed live in the former mining areas. That fact speaks for itself. There is the strongest case for the gradual phasing of closures—I believe the noble Lord, Lord Marshall, made the point—where it is felt and agreed that there is no alternative. I must also add that in most cases the closure will be determined by geological factors and not for economic reasons.

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The second matter to which the Government have paid too little attention is one that I have raised on many occasions in this House. I am glad to say that so far it has been mentioned by two speakers in the debate. I refer to the security of supply. I am glad that my noble friend Lord Callaghan and also the noble Lord, Lord Boardman, made the point. Geologists are agreed that, at the present rate of extraction, we have a 200-year supply of coal beneath our soil. Does that count for nothing to this Government? Some countries—and I have Japan especially in mind—would pay a very high price to have such an assured indigenous supply of coal. We import some 20 million tonnes of coal—a figure which continues to increase—much of it subsidised. When we reduce our own output, is it not virtually certain that we shall have to pay more for that imported coal, to say nothing of the additional cost brought about by our recent devaluation of the pound? If I may say so, the noble Lord, Lord Ezra, with his vast experience, brought reality to bear when he talked about the variations in cost which arise in respect of imported coal.
I believe that coal will remain an important fuel for many years to come, to say nothing of its potential chemical value including coal liquefaction. I think I am right in saying that the only coal liquefaction plant that we have (which is in Point of Ayr) is to be closed; as, indeed, are some of the research establishments. The abolition—that is what it is—of research into coal is simply destroying the seed corn for the future of the coal industry.
In conclusion, I repeat a phrase which is often used but which I believe is not fully appreciated. It cannot be emphasised too strongly. Once a pit is closed there is no reopening. A pit left untouched for even a few weeks can be irrecoverable. Even during the worst times of the 1984– 85 strike—and some of us remember those times very vividly indeed—there was an agreement all the time that miners should go down the pit to ensure that it was left in working order for the time when activity resumed. It is unthinkable to many of us that those millions of tonnes of such a valuable asset should be left untouched forever. What a price to pay for the short-termism now being thrust upon us.
6.55 p.m.
Lord Haslam: My Lords, I have been somewhat reassured by the Statements made by my noble friend Lord Wakeham today and by my noble friend Lady Denton yesterday. Further, I believe that if the initial pronouncement had followed that pattern, we would not have had the depth of outcry which has occurred. Nevertheless, beyond the announced closures of 10 nominated pits, there are still 21 pits living under a shadow and their ultimate fate needs clarifying as quickly as possible.
I shall find this speech even more difficult than usual to make from these Benches this evening because I am somewhat biased on the situation as noble Lords know, having recently been Chairman of British Coal for about five years. But, equally, I can appreciate better than most the tremendous efforts both managers and mineworkers have made since the strike to ensure the well-being and survival of British
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coal. They have carried out a restructuring in speed and depth which has not been matched recently in any UK industry.
The number of pits has already fallen in this recent period from 170 to 50. That is a significant figure: it is 120 pits. There were two years in which we actually closed down 30 pits. As noble Lords know, on the whole, that was done in a fairly quiet way. The total manpower during that period fell from 221,000 to 55,000. All that was carried out on a voluntary basis, and I stress that fact. No one was forced to leave the industry. Workers were given the option of either redundancy terms or a movement to a job in another colliery. Of course, that becomes increasingly difficult. Nevertheless, no one was forced out of the industry. But having said that, one cannot take any pride in the depressing statistics. However, it had to happen if any part of the industry was to survive at all.
The massive restructuring was made possible by the Government allowing British Coal to use generous redundancy terms, and also by providing substantial finance for British Coal Enterprise to assist in the creation of nearly 80,000 jobs in affected mining communities. I should like to stress the role of British Coal Enterprise as it has not been mentioned today. The Government deserve praise for that as it allowed 80 per cent. of the current restructuring of the industry to be carried out as smoothly and humanely as possible. Further, productivity has been increased by 125 per cent.—although some noble Lords on the other side have quoted a rather higher figure. But, even more impressively, the productivity improvement over the past five years is more than double the total achieved in the previous 37 years. That is the measure of the rate at which the process went.
The attitude of the mineworkers, too, has immeasurably improved. I should tell the noble Lord, Lord Dormand, that I believe the average mineworker has suddenly become younger. I think that the average age is now nearer 36 rather than 40. They are indeed a new generation. They fully appreciate the business realities of life and have increasingly identified with the success and survival of their particular colliery. It is not surprising therefore that, overall, they feel the current announcements are a poor reward for the impressive progress that the industry has made during the past few years. The UDM miners have the added anxiety that the Government have apparently ceased to recognise their special role in the miners' strike.
How has the adverse market for coal arisen? There are a number of strands, many of which have been mentioned today, which have collectively impacted adversely on British Coal's future. First, there is no doubt in my mind that Rothschilds' (the Government's advisers) often quoted view—and rather early in the day—that only 12 to 15 pits would survive, has, like Mr. Scargill's earlier predictions, become a self-fulfilling prophecy on which other people base their thoughts.
Secondly, the "dash for gas" has been a prime factor. Following privatisation, the generators understandably felt the usual sense of freedom and release, and having served in both kinds of industry I understand that better than most. But they seemed to

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go overboard and embraced natural gas with almost gay abandon. The situation has been compounded further by the potential independent generators which became increasingly concerned as British Gas raised its prices to contain the rapidly escalating forward demand. A number of those independents joined forces with the regional electricity distribution companies which themselves were anxious not to be dependent upon the main duopoly generators, and hence saw that as an excellent opportunity to participate in electricity generation.
The independents too welcomed those joint ventures as they assured them of a fairly cosy future market. Even the existing generators have condemned those collaborations between the electricity distributors and the new independent generators as "sweetheart" deals. Those have in turn brought about another surge in potential gas generating capacity, and we now have an embarrassing over-capacity. If that had produced a more competitive situation it might have been excusable, but as all the generators, present and future, and the distribution companies, have all been taking the same steps, and hence may have made the same mistakes, it is almost certain that the consumer will have to pay to reward that over-capacity.
What is even more extraordinary is that there is a clear consensus emerging that coal generation, even at present coal price levels, is cheaper than gas. That is contrary to the view expressed earlier by my noble friend Lord Wakeham. That margin will widen further when the new coal contracts are in operation next year. Over the long term it is my view that gas prices will continue to rise, whereas conversely coal prices will fall in real terms. It is even more surprising that the regulator is looking deeply at that issue only now after all that over-capacity has been created. The life of the gas and coal reserves of this country have been mentioned. The figures are not meaningful unless one puts a price to them. There is nothing like 200 years of coal resources at the present price at which coal is being moved, nor is there 50 years' supply of gas in the North Sea at the present price at which it is being moved.
The other factor which has reacted adversely on coal's future is nuclear energy. Despite the Government's often repeated commitment to market forces, we have 20 per cent. of the electricity market protected and ring-fenced for the nuclear industry. Consumers in the UK pay a levy of 11 per cent. on their electricity bills. That levy generated £1.3 billion for Nuclear Electric last year. That sum equates £17 for each tonne of coal mined, sufficient to make every pit in the land profitable. That levy is hardly a sound basis for ensuring that British consumers, and industry in particular, have competitive prices. Additionally, substantial energy flows to the UK, through the Channel link, from the highly subsidised French nuclear industry. That alone represents a coal equivalent of about 6 million tonnes per annum.
Let us contrast that with the situation in Germany, which has already been referred to today, where the Government are determined to conserve their coal
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reserves at all cost. They have a coal levy of about 8 per cent. on their electricity bills, which goes directly to their privatised coal industry. That, together with the direct government grants that the German coal industry receives to compensate for its massive losses in supplying their steel industry, brings the total annual subsidy to their coal industry to between £3 billion and £4 billion.
The consequence of that is that for the past few years we have been closing pits in this country which have far lower costs than even the best German units. I am not however advocating that German solution. Indeed, in recent years we have made a number of pleas to the Commission that those German subsidies, and the equally massive support that the French nuclear industry receives, should be phased out. Although I believe that the Commission had much sympathy with that view, it argued that it was impossible to pursue it while the UK Government were subsidising their nuclear industry. Thus, despite 1992, a level playing field on energy in Europe seems a long way off.
I turn last to imported coal. The price British Coal has charged the generators has fallen in real terms by over 30 per cent. during the past five years. and will continue to do so. Hence the gap with the price of imported coal is gradually being eroded. International coal prices such as oil and gas are quoted in dollar terms, and, as we have seen recently—the noble Lord, Lord Ezra, mentioned this point—the pound has fallen suddenly from a peak of 2 dollars to 1.62 dollars. As our interest rates and those of the United States continue to converge, one can readily visualise a rate of well below 1.50 dollars by next spring. That trend would of course have a profoundly beneficial impact on the relative pricing of domestically produced coal. Also, one cannot ignore the security of supply considerations surrounding imported coal, if one is to rely upon such unpredictable sources as Colombia and South Africa. South Africa, for example, contributes 55 million tonnes at present.
Those then are the factors which have led to the shrinking markets for our coal industry. The Government clearly believe that there is no way of arresting that market decline, but they will need to be more open-minded if any progress is to be made to salvage at least some of the 21 pits now in the review mode.
I no longer have access to resources to put forward detailed alternative options, but I suggest with some diffidence that the following should at least be looked at. First, restraint should be applied to any further expansion of gas generation until the relative costs of energy from all sources are firmly established. Secondly, the regulator should, as a priority, have a close look at those so-called "sweetheart" deals between the RECs and the independent generators. In the interest of equity with coal, the protection and ring-fencing of the nuclear industry should be terminated. One of the prime reasons for that privileged position was the need to have a strategic alternative to coal, but that role is now filled in full measure by gas. That termination will lead inevitably to an earlier phasing out of the Magnox and

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subsequent AGR reactors. However, they are technologically antiquated and will make little or no contribution to the development of any radical new cost-competitive nuclear industry which I agree in due course has to come. The French link should be at least temporarily suspended. That heavily subsidised supply is alone equivalent to the output of four large pits. That will undoubtedly involve a difficult contractual negotiation; but one is aware that during three critical periods the French have cut off our supply to preserve their own. Thought should be given to the continuation of the 11 per cent. nuclear levy. If it is felt that that is necessary, would it not be fairer to share it with the domestic coal producers for, say, a limit of three years? That would allow British Coal to compete fully with imported coal in the short term. If British Coal continues its cost reductions at the present rate, and the pound/dollar exchange rate trends continue, as seems likely, its coal should be competitive with the importers at the end of that three-year period.
What is not generally appreciated is that British Coal has consistently made an operating profit since the mid-I980s and has not received any direct operational support. Cash subsidies from the Government have been essentially to cover interest charges on historic loans which are then paid back to the Government—in 1990 that amounted to a staggering £574 million; a tremendous figure—and the rest of the subsidies relate to restructuring costs. Having been critical of my noble friend Lord Wakeham, I must now praise him. He was the architect of the financial restructuring in 1990. That was probably the best thing that has happened to British Coal recently. That interest charge has now been reduced to an acceptable commercial level.
I know that the Government will throw up their hands in horror at those suggestions. But if the proposed review is to be meaningful, one or more of those options will have to be grasped if it is to be seen as providing a fairer balance to those employed in the coal industry. Looking at the cost structure of the individual pits, I have always hoped that the fighting weight of British Coal could be about 30 pits, plus of course its profitable open-cast mining activities. That would be a sustainable core industry which could operate profitably even in this highly competitive international market. We now have 50 pits; 10 are being closed; and another 10 will become exhausted within the next 10 years, so we are debating whether we should have 20 or 30. I believe that 30 is the figure. To try to do better than that would be to try to climb a hill that we cannot climb. Finally, whatever transpires, I hold fervently to my consistent view that British Coal should be privatised as soon as is humanly possible. That would be a real shot in the arm for the industry in terms of opening up new opportunities and vistas.
7.10 p.m.
Lord Brookes: My Lords, I apologise to your Lordships' House if my early departure may mean I shall not be present at the end of this debate. However, that fact is irrelevant in terms of the extraordinary
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political and social folly that has been inflicted upon an afflicted nation by recent events. Many people have telephoned me to say that those recent events have rendered them speechless. Those people came from all sides of industry and from all sides of politics. I ponder what peculiarities and what extraordinary mental cocktail can concoct an event which reflates a deflated Mr. Scargill and destroys faith, and perhaps hope and a future, for the Union of Democratic Mineworkers and Mr. Roy Lynk who has done so much good for the nation at a time of great need.
Recent events demonstrate an irresponsibility of a kind which I believe is not only politically unforgivable but is also socially unforgivable and is economically damaging. In short, grave offence has been given to the whole of our nation. Grave offence has been given to our nation's heart and even its soul. Offence has been given to our nation's faith and to its belief in itself. Offence has also been given to our nation's belief in politics and to its faith in the future. Some price should be paid for that and the impromptu, almost indecent, patch that was put upon a big puncture yesterday will not and should not prove enough.
I dismiss with equal serenity the implication that the step which the Government are about to embark upon has a resemblance of being an authoritative independent inquiry. That measure should not satisfy your Lordships' House and it will not satisfy the British people. That is for sure. Truth loses none of its force, its rectitude or its quality by repetition. Our indigenous energy including coal—most certainly not excluding it—should not be diminished on some of the grounds that have been presented in your Lordships' House today. Our indigenous energy is and never has been more vital to our balance of payments, the crisis of which is increasing hour by hour in terms of our trade and in terms of what is happening in foreign currency markets. Therefore, in the best of the national interest we must ensure that we use our own resources rather than rely on unpredictable foreign resources which all too often will be priced in international dollars and not in pounds. Coal is not merely historically but is necessarily a part of our sorely afflicted industrial manufacturing base. Recent events are yet another assault upon the human interests, the financial necessities and the pride and the standing of a man, which hang on that industrial base.
Coal is vitally important to our defence. Reminiscence can be a pointless waste of time but I remind noble Lords that at the outbreak of the last war Britain's forging industries, which burn oil, electricity and gas in their furnaces, had rapidly to switch to pulverised coal. Thank God the technology was there to do that. I thank God even more that the coal was there and that the miners, even though they were often reviled and despised, were also there to provide that coal. I shall never forget that time. Pulverised coal is still a possible future use of coal as such coal can be turned almost into a liquid.
Coal is here under our own feet and under our own ground. It is there for the getting, the retaining and the securing. How vulnerable would we be and how vulnerable would our oceanic oil and gas platforms

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and pipelines be to air warfare, surface sea warfare and undersea warfare? What would we do if those platforms and pipelines were all shot to hell? I do not believe that the in-depth, independent inquiry, which I hope will take place in a manner which satisfies the natural sense of fair play of our people, will be enough. I feel no sense of responsibility, and neither should the British people, to the quasi-monopolies which have been established in doubtful circumstances for the supply of electrical power. They deserve no special consideration or protection at this time because they are nationalised industries that have been turned into monopolies of political and profitable convenience.
Therefore I would suggest that because energy is the tap root of our industrial and manufacturing base this country stands in immediate need of a national energy authority whose job would be to plan, coalesce and co-ordinate all sources and resources of energy and all applications of energy. Such a national energy authority would not own the energy sources but it would ensure that a framework was established in which the various parties involved in a situation which is inevitably interrelated had unified control of those energy sources. In business or in industry we would not contemplate this lack of unified control of a common and vital asset. We would not tolerate this disparate uncontrolled situation which reflects lack of thought. I plead for that unified control. However, I do not feel that that will be conceded by a government who would interpret such a move as nationalisation. The co-ordination and control of assets and the unification of asset control is good business. It is not a matter of nationalisation.
I feel I am speaking for the nearly 3 million unemployed people. That number will be added to by means of the admittedly relatively light step upon which we are now about to embark. I have not heard it contradicted that it costs £9,000 per annum to service an unemployed man. I do not validate that figure but I have not heard it contradicted. I cannot work out the cost per head of this measure but I know that no businessman would feel he had done anything other than take leave of his senses if he caused such expenditure to have a negative worth by throwing it at nothing to make nothing, except to break up lives, break people's hearts and break up the social structure of whole communities. Enough is enough. Our people cry out for faith and hope. They cry out not for charity but for work.
7.19 p.m.
Lord Varley: My Lords, it is always a privilege to listen to a speech by the noble Lord, Lord Brookes. As a distinguished former businessman and industrialist he speaks for many businessmen and industrialists and everything that they have been saying over the past few days.
As is the custom in this House, I have to declare an interest. I am involved as an adviser to a company involved in coal mining contracting. I want to make that plain although, fortunately, I do not have to rely exclusively on that company for remuneration.
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I do not want to spend too much time going over the ground of how the Government got themselves into the present position. However, they were warned over several months that they were set on a totally indefensible course. It is no good the Prime Minister saying, as he is alleged in today's issue of The Times to have said to the Cabinet,
"We are perhaps too close to the detail to realise the extent of the shock caused by announcing all these closures at one time".
My complaint about the Government is that they have not been close enough to the detail, because they have not considered it closely. If they had they would have come to an entirely different conclusion.
Last year the House of Commons Select Committee on Energy made it absolutely clear that the Government were pursuing a policy which would blow up in their faces. While the noble Lord, Lord Wakeham, today, in responding for the Government to the Opposition Motion, mentioned that report he did not mention the conclusions. The conclusions were against practically everything that the Government are proposing to do now.
I wrote to Michael Heseltine, President of the Board of Trade, on 28th August—nearly seven weeks before the pit closure programme was announced and before "Black Wednesday" when sterling was devalued. As other noble Lords have said this afternoon, the sterling devaluation makes the case for coal and for this review even stronger. The President of the Board of Trade is an old sparring partner of mine. I like him quite well. I was in full line when he once picked up the Mace in the other place and I was sitting on the Government Front Bench. I thought it my duty to write to warn him. I said in my letter:
"To allow the generating companies to bring about the irrevocable decline of the most successful coal mining industry in Europe would be an act of great folly … Surely there is something you can do to prevent the power generators from making the Government's problems worse?"
Of course I received a nice, courteous reply from him but he did not really take the point on board.
It is no good the Leader of the House telling us that "x" hundred pits closed in the 1960s, 1970s and 1980s. There is no comparison with what is taking place today. I listened carefully to the noble Lord, Lord Marsh, a former political friend of mine in another place. In 1967, as a Member of the miners' group, I was one of those Back-Benchers who at that time were harassing him. I believe that on reflection the noble Lord will bear in mind that we are now in a totally different situation from the 1960s and 1970s. Pit reserves were exhausted at the time when he had to deal with these matters. There was full employment. When my right honourable friend the then Member for Cardiff was Chancellor of the Exchequer there were 500,000 unemployed. Miners could get jobs. Inflation was in the region of 3 per cent. a year. We had an economic policy for the country which was working. Therefore, the plans of the noble Lord, Lord Marsh, at that time, draconian though he made them sound, could be dealt with in a much more humane way. I know that he had difficulties. I know that he had trouble with the miners' group in the other place,

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and I suppose that I gave him as much trouble as anyone else. But the economic situation now is in no way comparable to the situation which existed then.
Lord Marsh: My Lords, I thank the noble Lord for allowing me to intervene. My point was that whatever the state of the economy at that time or the level of employment, the Labour Government would desperately have liked the need for that particular cut to have been removed from us. The reason we went ahead with it was not that there were jobs available but that we could not do anything else.
Lord Varley: My Lords, of course I understand that completely. I shall return to that point in a moment or two because it is relevant to what I am about to say.
We have reached a situation where there are only a few pits left. The great inefficiencies in the UK coal industry have been rationalised out of existence to a large extent. That was achieved in the days of the noble Lord, Lord Ezra, and, more latterly, under the chairmanship of the noble Lord, Lord Haslam. Those rationalisations were handled differently. They were not announced in the way that these proposals have been announced.
There are those who say that security of supply no longer matters and that we can obtain cheap coal from overseas. But for how long? Wiping out one-third of Britain's coal production will force up the world price of coal. Everybody accepts that. We have heard some of the arguments before. One of the problems which the noble Lord, Lord Marsh, had to deal with in the 1960s, when he was Minister of Power, was the firm belief at that time that oil, at 2 dollars a barrel, would be cheap and plentiful for ever more and there would be no need to worry about it. Under a previous Conservative Government Mr. Selwyn Lloyd, as he then was, imposed an oil levy to protect the coal industry because of the cheap oil which was coming into the country. The Yom Kippur war put a stop to that in 1973. Almost overnight oil prices quintupled. Many people say that they quadrupled, but they quintupled over that period.
Those who do not accept the need for security of supply ought at least to take into account the impact on our balance of trade of replacing a large amount of British coal. I do not want to go over the ground that has been covered by my noble friends Lord Callaghan, Lord Brookes, and others, but great swathes of manufacturing industry have gone. There is no way of replacing them. That occurred in the 1980s, and the same is happening now. The hope that that would be replaced by invisibles and earnings from the City is no longer realistic. Therefore, we shall have gigantic problems of a trade imbalance for years to come.
For example, our energy exports in the mid-1980s contributed some £8 billion to our good. That has all gone. At present there is talk about 50 years' supply of gas from the North Sea. The noble Lord, Lord Haslam, said that there may be 50 years' supply, but what will the price be? It is totally unrealistic to look at the matter in that way; just as it is, I concede, to say the same about the 200 or 300 years' supply of coal. We are already importing 13 per cent. of the gas that we need and those imports are bound to increase.
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Some people estimate that the £8 billion surplus on energy in the 1980s will swing to a deficit of something like £14 billion.
The burden of the case was put by my noble friend the Leader of the Opposition this afternoon. I ought not to use such emotive words as "rigged" in this House as I did yesterday, but the market is certainly tilted against coal and in favour of the electricity supply industry. It is the way in which the electricity supply industry was privatised which has brought this situation about. Electricity is not a commodity in the sense that sugar is a commodity or tea is a commodity. One cannot put it on a shelf; one cannot stock it. One can store electricity for a short while but not in great quantities. One needs electricity instantly, on demand. What matters about electricity is the fuel it uses and the plant which generates it. That is the nub of the argument now.
I hope that the noble Baroness who is to reply to the debate will answer the following point. It has been widely reported that we shall finish up with something like 50 per cent. more electricity generating capacity than we need in the next few years. If that is the case—and if the Department of Trade and Industry do not begin to understand it and have done no research upon it then it is time they started—why do not the Government tell Professor Littlechild, the electricity regulator, to speed up his examination of the so-called sweetheart deals between the regional electricity companies and the planned gas-fired projects to generate electricity? Every independent body that has looked at those projects says that the electricity planned to be produced by those stations will cost more than electricity from coal.
The internal review and moratorium announced yesterday by the President of the Board of Trade will not do. As has been said by people who are not political animals in the sense that they belong to political parties—we have heard Lord Brookes and other Cross-Benchers—it has not fooled anybody either, least of all the miners. One mineworker in his thirties at one of the temporarily reprieved pits phoned me yesterday and said, "On Sunday I was being strangled; now I am being slowly suffocated". That is the feeling of mineworkers at this stage. They do not know what is happening to them. I have never seen such emotion. I started work in the coal industry in 1951 and worked there until 1964 when, by the grace of the people of Chesterfield, I was elected to the other place. I still live in what is essentially a mining community. Over the weekend there were tears. I have never experienced anything like it in my life. I hope the Government can take that point on board.
The issue of whether we can get more coal into our power stations was neatly summed up today by the present chairman of British Coal, Mr. Clarke. He said that a government review of the plans to close 31 mines would amount to little more than a stay of execution unless the Government overhauled the market for power station fuels. Unless that changed the market for British coal was finite. He also said that only if there was an enlarged market could any larger coal industry be sustained.

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Why are the Government so afraid of an independent inquiry? It would be in their own interests. As my noble friend Lord Callaghan of Cardiff said, let us have an independent inquiry. Nobody is going to be convinced by the Department of Trade and Industry, together with a few others, with British Coal management having their arms twisted and told exactly what they have to do to come up with something. That will not carry credibility in the mining communities of Britain. Only an independent review will do that. If it turns out as the Government say we shall have to look at the facts and face up to them and judge what is in the best interests of the nation.
I do not subscribe to the view that the Government are totally heartless or that they are going to fall. Unfortunately, they will survive for a normal parliamentary term. My complaint is that we have a half-hearted and half-baked government. I feel a bit embarrassed for them when they get into this sort of mess. The Government say that the ERM is at the heart of government policy. Then, instead of re-aligning within it, they withdraw and sterling goes into free fall. They get the Bank of England to brief on a Wednesday that there will be no interest cuts, and cuts take place on the Friday. The Government say on Sunday that no changes to pit closures will take place and a plethora of Ministers appear on television to tell us that. We are then told on Monday that the closures are postponed. What are they playing at? For goodness sake, let us have an independent inquiry so that we know exactly how things stand. The Government may even come out of it with a bit of credit.
7.35 p.m.
Lord Renfrew of Kaimsthorn: My Lords, this has been a most illuminating debate on a matter of widespread and deep concern throughout the nation. I rise to speak with some diffidence since we have had such enormously well-informed and experienced speakers this evening. I do so partly because I want to share these expressions of concern and partly because I am not altogether clear why we feel the concern so much more acutely on this occasion than on the previous occasions to which the noble Lord, Lord Marsh, referred.
I think there are one or two elements of genuine common ground on all sides of the House, though they may lead us subsequently in different directions. First, we all recognise the misery of the continuing run-down of the coal industry that is felt in the mining communities. It is not a new experience but it is a very painful one. Secondly, we all recognise that there comes a point when it is false economy to bolster up industries by large-scale subsidies. In that way one simply makes other forms of employment uneconomic when they should be economic. Thirdly, it is probably a point of common agreement that some further pit closures are inevitable—perhaps at least the 10 which we have heard are still likely to be closed after the brief moratorium.
It is clear that at this particular time the
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announcement has touched a nerve in the nation in a much more severe way than had been anticipated by some and in a much more severe way than earlier closures on a comparable scale had touched a nerve. No doubt that is partly because the announcement was abrupt to the point of seeming ill-considered. That must be admitted. But later historians will analyse why the closures are so disquieting in a manner which earlier announcements of closures were not, or at least not to the same extent. No doubt one factor is the unsettled state of the nation after leaving the exchange rate mechanism and the devaluation of the pound. I have no doubt that that is one factor which will one day be brought into the relationship.
Secondly, and perhaps more seriously, this is not only a reduction. The originally announced reduction comes close to being a terminal one, or at any rate we can see that we are on the way to the end of the British coal industry if we are not careful. Thirdly—and for me above all—I am not at all sure of the cost analysis. It has not been very satisfactorily presented.
There are different views on the economy, in particular on the economy of energy, but it has been asserted in many quarters—and has not been effectively contradicted—that effective coal production costs have been falling and are likely to continue to fall while gas costs in the middle and long term are likely to rise. Those points were very effectively and most informatively made by my noble friend Lord Haslam. I think the country will expect to be satisfied much more fully on those issues than perhaps we can expect to be by the government side on this occasion.
I see no particular merits in an independent inquiry. It would be an unusual way for a government to go about their business. Generally governments set up Royal Commissions when they want to temporise. It seems odd for the Opposition to suggest there should be an independent inquiry. Nor is it a proposal that I feel has been very carefully thought through. No speaker this evening has offered any suggestion as to how that inquiry might be constituted or conducted. I have heard no suggestion that anybody has thought about it. On the contrary, I think this debate is a deep expression of concern, and it is appropriate that it should be so.
While we on this side of the House support the Government this evening and welcome the change that was announced yesterday in another place, we expect a much broader and more thoroughgoing review than simply a re-analysis along the classic economist exercise of simply computing prices as they appear to be. We are told the current prices of coal and gas as if the whole matter were simply an exercise in market economics. But it is not an exercise in free market economics.
We are aware that there is a nuclear levy and the whole history of the nuclear industry is the history of a subsidised industry. We have a suspicion that the newly privatised industries—the electrical production industries—are in many ways anomalous. That is recognised by the Government; they have a regulator. They are anomalous partly because they are a duopoly

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and partly because they are in the early days of their life when all kinds of historic constraints emerge, such as the price of the shares and so on.
In addition, we have not heard brought into the equation today the capital costs of gas fired electricity. We have not heard how they are met and whether they are effectively reflected in the economic discussions that have taken place. Nor have we heard very much about the capital costs of clean coal technology. Moreover, there are all kinds of assumptions: the possible relationship between gas and oil prices has not been touched on this evening. In one sense the gas prices might be regarded as stable. We have that asset in the North Sea and gas is being produced, so why should the gas prices change? But if oil prices rose dramatically through circumstances outside our control, I assume that the market price of gas would similarly rise.
Various speakers have touched on the long-term issues. There may well he a real national interest in retaining a viable coal industry. We have not yet been given adequate assurances that the consequences of the Government's policy will be to retain a viable coal industry.
I do not feel that an independent inquiry is a very coherent way to proceed. but many on this side of the House will expect that the Government's consideration must be placed in the much wider context of a review of energy policies. It should not merely say that this is the price in the market now; let the market roll. As I and other speakers, in particular the noble Lord, Lord Haslam, have tried to emphasise, we are not talking about free market conditions. There is not a free running market. There are all kinds of forces into which policies of other kinds enter and should enter.
When the Government have given us the very coherent presentation that we shall expect in due course and when the matter has been debated in this House and in another place, we may well have confidence that the policy enunciated is one which the country will believe to be well judged and a sound base for the future.
7.43 p.m.
The Earl of Perth: My Lords, the Motion calls for a thorough, independent inquiry into the future of the coal industry. It echoes what many noble Lords, including myself, called for yesterday. The House has heard from the noble Lords, Lord Wakeham and Lord Marsh, what I call the technical reasons why an inquiry is unnecessary and why the Government are totally right in closing the mines. The way that that is done is, as I understand it, from the Government's point of view something that they are prepared to reconsider.
I shall not rehearse the technical arguments of the noble Lords, Lord Wakeham and Lord Marsh. We heard much from many other noble Lords which went in the other direction and in particular from the noble Lord, Lord Haslam, who has great experience in this field. I thought that he gave very compelling reasons why we should not go ahead too quickly. I shall make only two observations. First, it is for any inquiry, if
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there is to be an inquiry, to go into all those arguments. Secondly, let us not forget that when a mine is closed it is closed for ever.
My first thought is whether the Motion for the inquiry is wide enough. The noble Lords, Lord Cledwyn and Lord Callaghan, said that it should be wider in some part or other. I should like to see a review of our overall energy policy with special reference to the future of coal and its miners. I need not develop that argument very far. In the last analysis, if, as I hope, the Government accept the need for an independent inquiry, clearly it is for them to decide the terms of reference in the light of all that has been said, today and at other times.
There is one other point; namely, as it stands the Motion—or resolution—does not stress the urgency of the matter. The noble Lord, Lord Renfrew, spoke of a Royal Commission. Heaven defend us from having the inquiry in the form of a Royal Commission. If there is to be an inquiry it should he quick. I suggest something like a 90-day maximum for the report.
The noble Lord, Lord Renfrew, said that nobody had developed what I call the terms of reference and who ought to compose the membership of the inquiry. Curiously enough I had exactly that consideration in mind as the main theme of my speech. Let me dare to suggest the people who I think should be members of such an inquiry. The number must be small; otherwise the inquiry could go on for ever. Let me suggest the well tried formula of three wise men.
Who should they be? Perhaps one should be a judge—not because of the legal angle, although there is a legal angle in certain aspects, but because a judge is well able to weigh up the evidence that is presented to him. There must certainly be somebody from industry or from the City—someone who has great technical experience on economic matters. For the third member I turn to the European Community. I shall give just two of my many reasons. One is that the European Community is very much involved in what happens in Britain. We are fortunate that we have two great assets which are rare in Europe: coal and gas. Therefore what happens in Britain to those great assets is of concern to the Community.
A second reason for my feeling strongly that the European Community should come into the matter is that outside help may be very welcome. Clearly that would be part of our thinking in bringing in a member from the European Community, which is a perfectly natural course to follow. Although in theory the decision is made by the three members of the committee, I believe that the chairman should be a Briton.
In conclusion, the Government should not be afraid of such an inquiry. I do not understand the fear. Let us suppose that the independent inquiry confirms their fears and confirms that the general course—I do not refer to the timing—which they propose is right. In those circumstances not only will the Government be vindicated but, more importantly, the country will understand and accept. However, if it were decided that there should be variation in certain respects—that the Government are too one-sided and blinkered

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having only had advice from their officials over the past year or two that coal must be reduced—then such a decision would give government an opportunity to make the change in a way that they are surely bold enough to accept. It would save their face and show that they have the well-being of the country at heart.
For those reasons I plead that the Government will accept an inquiry which is independent but will not bind the Government. As the noble Lord the Leader of the House said, it is for the Government to govern. I accept that absolutely. However, we are calling for an independent inquiry which the Government can then consider and make up their minds as to what to do.
7.52 p.m.
Lord Merlyn-Rees: My Lords, the noble Earl turned his mind to the nature of the inquiry. I wish to return to that in a moment. If we vote tonight on the need for an independent inquiry, it is essential that we suggest the important aspects that should be considered.
As the saga of the coal industry has developed in recent weeks, I have had a change of mood. The noble Lord, Lord Callaghan, referred to the incompetence of Government: that the President of the Board of Trade reported to the Defence and Overseas Policy Committee. However, let us leave that issue alone. Everyone understands that the Sunday Times, the Observer and other newspapers will investigate the story for a long time because it is so unusual and reflects on the Prime Minister and the Cabinet. I did not wish to go into that issue. I have written the word "brewery" but I have forgotten why.
My second mood arises from the debate and from listening to the radio programmes in the mornings. Although Mr. Perot in the United States will not do very well, he reflects a mood: it is that narrow party politics on a major issue will lead to the ruination of democracy and to wrong decisions being taken. What prompted that thought in my mind? Of course pits have to shut. I was born in South Wales although I never represented the area as a Member of Parliament. It provided steam coal. In 1914, quite properly, Mr. Churchill decided that the Royal Navy was going to turn to oil. It was the death knell of the South Wales coalfields after the war was over. The oil did not come quickly, but after the war that was it.
I was in Cardiff, Penarth and Barry only last week. They used to export coal to Buenos Aires, Aden and Gibraltar for shipping. That export has gone, and properly so. Anyone who tried to preserve such export would be flying in the face of economic facts. In the 1950s less and less coal was burned on the home fires. Factories turned to electricity. Electricity became the norm. Of course there were closures after that. But to compare the closures now with what happened in the 1960s and 1970s when my noble friend Lord Mason was Minister of Power is wrong. It is fooling people. It is a good, political point but there is no comparison between the two events.
I say this to the right reverend Prelate. I know Yorkshire having lived there for 30 years. If the right
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reverend Prelate is worried about what happens when pits shut down let him go to the valleys of South Wales. There is nothing there after all these years, and all the money spent. I am sceptical. I repeat that cynical, sardonic phrase of the older Welsh miners who say, "All they provided were dolls' eyes factories". That was not the position in the Vale when Fords and Japanese factories came along. However, such factories are not on the sites of the villages.
Great social changes result in a mining community from shutdown. We in the leafy suburbs of the south of England have never experienced them. Such shutdowns have not been experienced to the same degree in Yorkshire where I now live. At one time I represented miners. The point has been made; I shall not develop it. Why was there not the same outcry then? It is because there was full employment. Another reason is that the miners were older men. I am now in my 70s. Men who went to school with me and who became unemployed 20 years ago were glad to be unemployed. They had had enough working in the pits. They were glad to take the redundancy money.
The situation is different now. We have heard about men of 40 years and 36 years with family responsibilities who live in owner occupied houses and have cars. Such men do not take kindly to the situation. Older miners were in different social circumstances. They accepted the situation more easily than those new miners from the current 50,000 miners. Their commitment was shown in their voting habits. There is not the same commitment to my party as there used to be in some places. It was the miners who formed the Labour Party. Until recently—it may now have gone—there was a miners' room along the corridor. They regarded themselves as the aristocrats and watched carefully those Johnny-come-latelys who came into the Labour Party at a later stage. The miners had a great influence on the political development of this country.
However, in Wales it was different. My father was severely damaged in the First World War. He was a miner. The last thing he would have allowed would have been for me to be a miner; and my mother even more so. My father was sceptical about coal owners and generals. He used to say to me, "When the people in Dorking, Surrey, are queuing to work in the coalmines, my lad, then you'll know it's a good job to have." That was in Wales. When I moved to Yorkshire, having lived in Nottinghamshire for a while, the situation was quite different. Noble Lords may have seen on television recently a young man who said, "I want my boy to work in the pits." When I went north years ago, I found it strange. The situation was foreign to me. Yorkshire and Nottinghamshire are quite different areas. That is one reason why the response is so different today.
Why do so many of us want an independent inquiry? I do not particularly want a Royal Commission. In fact, that never crossed my mind. I gave evidence to a Royal Commission last week on miscarriages of justice. It is just not possible to leave such an inquiry to a government department to unravel and a Royal Commission is absolutely right

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for such a purpose. Government departments are incapable of carrying out such inquiries, as are Ministers and Home Secretaries, and I have been one. People with a wide range of experience are needed. I am concerned that the commission, or whatever it is to be called, should deal with the facts. I believe that Claus Moser would be an ideal chairman. He ran the statistical service of the Government and he tried unsuccessfully to teach me statistics at the London School of Economics. He is a strong-minded man who could provide the facts.
It may be that one thing atavistically—I used that word in my maiden speech the other day and I am using it again today; I wonder why?—that people remember in their bones is that after the miners' strike and then the general strike in 1926 the Government set up the Sankey Commission. That commission did not please the government of the day but 10 or 15 years later it proved to be right.
A commission must look at the facts. What should it look at? I have learned something from speeches made today by former Ministers and those with experience of the coal industry. We could all learn from the collective wisdom of people who know what they are talking about and who are not in an emotional spasm about the situation.
I have made a list of the facts which need to be looked at. We should look at the comparative costs in two ways: the economic comparative costs, the alternative costs, and the financial comparative costs. In the Library there is every expert's article from all the journals at the weekend and they all tell a different story. It may be that that is inevitable. I believe that an independent commission would get nearer the truth as regards comparative costs. The effect of the exchange rate should be considered also. Recently the pound has floated. Are we to go back into the ERM? We can only make guesses but the exchange rate is extremely important as regards imports and exports.
We should also consider the subsidies in Europe that l have learned about today and the subsidies for the nuclear industry at home. It is most important that the Government take that into account; otherwise they are not making judgments on the facts as they are seen at the time. I have learned today—although I knew something of it before—about the generating boards in their new form. When the Government privatised electricity, their decision was disastrous as regards the structure which was set up afterwards. We hear of the sweetheart deals. They have to be taken into account. There are no sweetheart deals with the coal industry and I do not suggest that there should be. There should be no such deals.
I was astonished to hear that we import 50 million tonnes from South Africa. I thought that that surely could not be true. However, in Cardiff Bay the other day—in the docks which once exported coal—I was looking at what is to be done as regards the barrage and the changes that will take place. I saw a great pile of coal. I had been told that there were only three pits in South Wales, two of which were to be shut. I said, "Look, you are exporting coal." "Oh no," they said,"
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that is coming in from South Africa". Bringing in coal from South Africa to South Wales really is economic nonsense in my view.
Lord Haslam: My Lords, perhaps I may correct the noble Lord. I said that 55 million tonnes is the total exports from South Africa and not just the amount which is coming here.
Lord Merlyn-Rees: My Lords, I am grateful to the noble Lord. Some of it comes here. That is the point I am making.
I turn now to research and development. Let us take Grimethorpe, not just because of its brass band. I hope that an industrialist will take it over. It won the brass band championships last week. At Grimethorpe there is the fluidised bed research which is vitally important for the future but I hear that it has been shut down or mothballed. Who is responsible for research in the coal industry? Coal is not just for burning in a boiler. It is a precious chemical product. A commission should get the facts about that.
The last matter on my list is the structure of the coal board which has changed dramatically over the years. In my view the coal board gets more kicks than ha'pence. My family fought for the public ownership of coal. That was not because the industry was run well. Anyone remembering the coal industry in the 1920s will know that it was run badly. There was no centralisation. It was taken over for extremely good reasons. However, that does not mean to say that the structure is right today.
I wonder whether public expenditure would come within the remit of the inquiry. I have found one set of figures which demonstrate that 30,000 miners out of work would cost £2 billion in redundancy payments. Noble Lords can work out what would he the cost of 45,000 other people made redundant as a result. At present there is much talk about public expenditure and the Government are deciding to provide an enormous sum of public money to put people out of the jobs in which they are at present. Why should not the inquiry look at public expenditure and consider whether there are any better options? We should not seek to maintain the coal industry as a monolithic or prehistoric animal but so that it can change and so that other changes can take place.
Unlike the Norwegians, we have not used our oil revenues very well in recent years. We may well use our public expenditure rather more effectively. I am told that a subsidy of £75 million per year would maintain 10 million tonnes of coal and save 8,000 jobs. All that needs to be analysed. Let us use our public expenditure intelligently.
A committee would have to give its view but Parliament would have to decide. Parliament must decide on the unknown factors. Today in the Library I have been looking at the Royal Commission of 1871 which was made up of eminent people such as Jevons the economist. One decision that was made was that Britain would run out of coal by 1900. Therefore, even when we receive the independent report, Parliament must use its own judgment because there are

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imponderables in the situation. Any energy policy must take into account imponderables as well as the certainties of the day.
Today we are debating coal and we shall debate coal when some sort of report comes back to us. However, we are really debating the economy. I can never remember a situation such as this. I was alive in 1931 but in retrospect I was not very aware of what was going on. There is something basically wrong with the economy of this country. Politicians dance on the top like cream cake. The debate on coal is part of that. If we allow our manufacturing base to disappear, our future generations will never forgive us. We have not done very well in the past 10 years.
8.9 p.m.
Lord Elliott of Morpeth: My Lords, I too have greatly appreciated this debate in which extremely eminent people have taken part; for example, ex-chairmen of British Coal and ex-Ministers with vast experience of the energy industry.
I can claim a certain knowledge of the coal industry. For all of my life I have known quite a lot about the coalfields of East Northumberland and County Durham. When I was a child my home was near enough to the East Northumberland coalfield for me to hear the pit buzzer at night. That was bad news for the village concerned because it meant that there was no work the next day. Later on in my life I became a parliamentary candidate and the constituency concerned was Ashington. Ashington has always been described as the biggest pit village in the world. Having stood there twice to represent the Conservative interest, I agree entirely with that description of it. I learnt an enormous amount about the coal industry from being a candidate in that constituency and through living so close to the coalfields. I have known many miners in my lifetime and I have a great respect for them.
In 1947 there were 188 pits in Northumberland and Durham—a remarkable thought—which employed 149,000 people. By 1984 the number of pits was down to 18 and since then 13 have ceased to exist. In the short time that I propose to speak in this debate I shall address the social problems of the current closure proposals. As I indicated, they are not new problems for the North-East of England. Indeed, ever since the late 1950s the North-East has seen a great deal of industrial contraction, not only in coal, but also in shipbuilding and steel. Therefore the people in the North-East know about redundancy and the social problems that it raises.
The encouraging aspect of the enormous employment problem that we have known is that so much has been achieved in the North-East—I hasten to say in the periods of both Conservative and Labour Governments. New industry throughout the region has been encouraged and is now thriving. There have been enormous environmental improvements. I believe that in the North-East we possess the finest road system in the country. That is all due to the
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enormous efforts made by successive governments to deal with the redundancies caused by contracting industries.
I should like to give two examples of what has been achieved with regard to retraining and reemployment. I listened with interest to what the right reverend Prelate had to say regarding the villages in his diocese which would be flattened by the closure of pits, and I ask him to take some heart in what I say. It is not always so. Ashington, the biggest pit village in the world at one time, no longer has a pit. The two shafts which were sunk in the middle of the last century no longer exist; they are closed. But driving through Ashington, as I did last weekend thinking of the possibility of a debate on this subject, one sees a great deal of new light industry. That is extremely encouraging and pleasing.
The other example is that in September 1980 the Consett steelworks closed. At the same time a pit close by was closed. That had an immediate massive unemployment effect; 5,000 in Consett itself and 8,900 in the Derwentside area were made unemployed overnight. Today Consett is a remarkable place. It has a remarkable spread of new industry, and since 1980 6,000 new jobs have been created. It has a development park full of new shining factories. At the time of the closure of the steelworks there was one factory on what was called Consett No.1 Trading Estate, and it was empty. Today the factories are all full. Today in Consett we have factories on biotechnology and quality foods; Phineas Fogg tasty pieces are exported all over the world from Consett, once a stricken town. We have state of the art computers. Most encouraging of all is that in those factories, which I visited a short time ago, are ex-miners and ex-steelworkers who have been retrained and are now in good employment which will last because it is needed at this time. Best of all, because British Steel had the courage in 1980 to close the Consett steelworks and concentrate its efforts on the South Durham Steelworks at Redcar, Redcar is now second to none in Europe as a steelworks.
I should like to say this to mineworkers and their families, whose anxiety at this time is understood by all. As I see it, the Government wish to encourage by all means in their power the same kind of development in the areas of closure which we have known in Ashington, in Consett and in other places in the North-East of England. We need an extension of training, which we are to have according to the package being produced. We need extra encouragement of English estates. We are to have that, too. The proposed extension of regional enterprise grants is extremely acceptable and desirable. The extension of the highly successful enterprise zones will do a great deal to cope with the massive unemployment which faces us.
I was particularly pleased that my right honourable friend included in his Statement the fact that he was making available an extra £2 million for the Tyne and Wear Development Corporation. That is important to the Wearside section of the North-East of England and is greatly appreciated.

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I therefore look to the longer term. Sad as it is that coal mines should close—in my area they have been closing for a long time—I agree with the noble Lord, Lord Marsh, that it was inevitable that this industry should contract. When looking to the long term it is to he hoped that we shall have an efficient coal industry of the right size and with a market for its products; that we shall provide power at a price which will allow our entire industry to be fully competitive in the world; that our workforce will be trained for modern required skills and know a high standard of living. As I see it, those are the Government's essential aims.
8.16 p.m.
Lord Mason of Barnsley: My Lords, I thought I was digging a pit for myself in Statement time and Questions yesterday until I was hauled up the shaft by the advice from the noble Lord, Lord Tordoff. I was sorry about that. Of course, I am only sorry that the Government are not digging any pits for our own coalminers. It looks as though the last pit has been sunk.
What a devastating blow to our coalminers and horrific news to our coalfield communities that 31 pits are to close; 19 may survive but more likely only 12. Two-thirds of the coal industry will close down within months and that is still the case. Yesterday's Statement was not a cave-in; it was a con trick. It was a statement of salvation. It was a temporary pause for some pits and immediate death for the others. There is to be no independent review.
Thirty thousand miners' jobs are still to go and at least 60,000 jobs in supportive industries—many of them all over the country outside the mining communities. It affects steel, engineering, mining machinery, safety equipment, safety clothing, pit hoots, lamps, conveyer belting, canteen provisions, freight, road and rail, private contractors at the pits and the closure of coal-fired stations. There will be a massive knock-on effect. All that comes on top of 2,800,000 unemployed, manufacturing shedding jobs at the rate of 3,500 a week and unemployment racing to 3 million this year. What now of the Prime Minister's classless society? The Government are creating the largest mass of underclass citizens that we have ever known—a society of poverty-stricken no-hopers.
Last week's announcement sparked off a national outrage. Every spectrum of political life and indeed every walk of life—Church, business, commerce, workers and unemployed—rose in horror; nearly a people's revolt. That was because of the loss of 30,000 jobs; but nearly 100,000 jobs will be lost on top of 2,800,000 already unemployed in the country. That is what shocked the nation. But what a colossal blunder. The President of the Board of Trade obviously has no political nous. He is not aware; he has no sensitivity, no feeling. In his Statement he said that thousands of jobs were to go that very week, with all the consequent disturbing reverberations throughout the nation. That is political ineptitude of the highest order. How can anyone in trade and industry, even in politics now, have any faith or confidence in him any more? Never
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before have a Government sunk so low in the eyes of their people. He has been the main cause and I believe that he ought to go.
As yet we have had no reasoned presentation why the coal industry is virtually going to die. Perhaps a dozen pits may survive. Why are we annually expanding the imports of subsidised foreign coal—20 million tonnes this year—produced by cheap labour, at the expense of 20,000 miners' jobs'? The Leader of the House said that special coals are coming in. One can understand about special coals, but why are we importing 10 to 12 million tonnes of non-specialised coal? Why are we importing French nuclear power equivalent to the output of five coal mines, or 5,000 jobs? Again, the Leader of the House says it is free trade. Why then are the Germans not taking our cheaper coal? We are subsidising nuclear power to the tune of £1.3 billion, equal to £50 per tonne of coal. Is that fair competition? The Germans heavily subsidise their coal industry and they are free to export to Britain. We are producing the cheapest coal in Europe and yet we are closing our mines. Where is the level playing field and where is the economic sense in all that?
The market has been, and still is, rigged against coal. It is unfair competition. The Government know it because they know that Government policies are removing British coal markets.
What do they say about the dash for gas? PowerGen put out a statement. I was not going to mention it, but it has been mentioned many times by noble Lords, by the noble Lord, Lord Haslam, and by my noble friend Lord Varley:
"PowerGen has taken substantial volumes of coal from British Coal (26 million tonnes in 1991/2). These contracts expire at the end of March 1993 and new contracts arc under negotiation. Although we expect British Coal to remain by far our largest supplier, the volumes of coal for which we can contract are being squeezed through the privileged access that uneconomic nuclear power stations and independent gas-fired stations have to the market".
With "privileged access" and with the sweetheart deals mentioned previously by the noble Lords, Lord Haslam and Lord Marsh, it is obvious that the market is being rigged against coal.
I believe that British coal can compete with gas. PowerGen's most recent figures show a unit of electricity from gas ranged from 2.64 pence to 2.89 pence, and the cost of coal ranged from 2.20 pence to 2.73 pence. The Campaign for the Coalfield Communities carried out a survey. It established that one coal station could achieve 2.1 pence per kilowatt hour, gas between 2.7 and 3 pence per kilowatt hour. The TUC carried out its own survey and circulated all the information to my noble friends. It found that British coal would cost 2.2 pence per kilowatt hour and gas would be 2.7 to 2.9 pence. The chairman of British Coal said the same, but he would, wouldn't he?
The latest edition of International Coal Reports states that:
"No estimate of gas generation prices has been presented by the trade department to justify the closure of coal mines".
The further point was made that the surge of gas buying for new stations has already raised the price well above coal.

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All these are disturbing and ominous signs. I gather that many industrial observers are very unhappy and quite concerned that a vital decision on the future of the coal industry appears to have been taken in isolation. Not only was it taken without fully considering the economic and social implications, but there is mounting evidence and concerned anxiety that the dash for gas is likely to mean higher prices for industry and the domestic consumer.
Then there is the wider question of the balance of payments. There is already a deficit balance on our overseas trade running at £12 billion per year. Getting locked in to an increasing deficit on imported coal and nuclear power is inevitable if the coal closure programme goes ahead. As worldwide demand for coal increases so will the price and allied freight costs; likewise, as we import more gas from other than our own gas fields. Once our coal industry has been shattered and practically shut we shall be trapped in a spiralling increase of balance of payments deficits. What then will happen to our security of supply? We shall be held to ransom. Anglo United, British Coal's second largest customer after the electricity generators, is being forced to increase its annual coal imports from 100,000 tonnes to almost 1 million tonnes because of the pit closures. So it goes on.
The social consequences will be appalling following on the wave of closures in the 1980s from which we have still not recovered in South Yorkshire. There will be more misery, despair, unhappiness, frustration, and no hope. The average age of miners is now 36 years of age. What hope is there of a job when every vacancy will be chased by 50 applicants? Of the 10 pits that are to close immediately, two are in Barnsley and one nearby—Houghton Main, Grimethorpe and Markham Main. One small pit of 500 men remains at Goldthorpe. We shall see the end of an era.
How ironic it is that Grimethorpe colliery is closing and on its surface there is the development of fluidised bed, for which I was responsible in 1968. I raised the money to put the research on at Leatherhead, the Coal Board's research station. How ironic that it has come to Grimethorpe, to Barnsley, to be developed, and that when the Government had the chance of developing clean, cheap, efficient coal burning fire stations they withdrew their finance. They still have to answer for that.
My area is shattered. We have lost 20,000 miners' jobs in the past eight years, and as many in the supportive industries. Our unemployment rate is destined to rise well over 20 per cent. That epitomises the scale of coalfield community devastation and the depth of the slump that we are suffering. The right reverend Prelate spelt that out.
Let us have no misunderstanding of what happened in the 1960s when the noble Lord, Lord Ezra, was deputy chairman of the board and I was Minister of Power. In those days, with hundreds of coal mines and relatively low unemployment, the age of miners in the pits was 55 to 60 years of age, and there were still many mines available for transfer. There was no problem as there is today. On this occasion we have 2.8 million people on the dole, 31 pits to close out of
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50; that is, two-thirds of the industry going in the next few months. The average age of the miners is 36. Never before in the history of government or of the coal mining industry has there been a decision as harsh as this.
It is therefore obvious that there is a case to halt all these closures. It is vitally imperative that they be halted until a full examination has been undertaken of all aspects of their impact on the questions of total job losses: true energy costs; what energy deficits will accrue on the balance of payments; the concern over the security of supply; how to alleviate the social consequences; and a proper analysis of the costs in terms of unemployment payments and lost tax revenue. This examination should be conducted by independent, chosen energy analysts, not by party political committees and certainly not by the President of the Board of Trade. He is not going to bring out a determination that makes him look a fool or a liar.
The whole country feels that an injustice has been done. The national conscience has been stirred, and it can be calmed only by the report of a truthful, honest, independent examination of all these issues. I believe that that should be done.
8.30 p.m.
The Earl of Halsbury: My Lords, nothing is for ever. If one goes to Grimes Graves which I think is in Suffolk (but it may be on the border with Essex), one will see what is left of an old neolithic industry in chipped flints. It is called flint knapping. Who today could go down to Brighton beach, pick up three flints, use one as a hammer, one as an anvil and chip the third into an arrow-head? The craft is dead and gone. Need coal mining go the same way?
That brings me to an attempt to answer the rhetorical question that was put yesterday by the noble Baroness, Lady Denton, which was, "Who wants to buy our surplus coal?" She said that nobody had given her the answer to that question. If the noble Baroness will be patient, I shall give her the answer. The answer to the question "Who will buy our surplus coal?" is the electricity boards, provided that one puts an embargo on the use of North Sea gas for base load purposes. I do not mean that one may never use North Sea gas for power generation. The use of a gas turbine for peak load shaving (as it is called) would have to be exempt for that purpose. I simply cannot understand why we cannot do that.
My noble friend Lord Marsh has reminded us that this has all been done before—and so it has; but if doing it again could gain time, surely that is something that we should try to do. I would entirely agree with the noble Lord, Lord Merlyn-Rees, that our current poor performance in manufacturing industry has nothing whatsoever to do with fuel prices. It is an altogether independent phenomenon which, as I told your Lordships when we met for the special Session at the end of September, must be attended to. I have some ideas about that.
I approach this problem rather like King Magnus in Shaw's play "The Apple Cart". He was addressing a rather squabblesome Cabinet and trying to remind

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them what he was there for. He said that he represented the great abstractions: the posterity that has no vote, the past that has never had one and
"for the evolutionary appetite against the day's gluttony".
Talking of posterity,1 have quite recently become a great-grandfather.
Noble Lords: Hear, hear.
The Earl of Halsbury: My Lords, thank you. Becoming a great grandfather has enlarged my horizons because with this latest addition to my family what I call the future has been pushed forwards by my lifespan so far to the year 2077. I have reminded your Lordships on so many occasions in the past that I hope I shall not weary you by reminding you again that the next century is on us now. Anything that is decided today will not come into effect until about 1997. I said this when the turn of the century was 20 years ahead. I said it again when it was 15 years ahead of us and I say it again tonight when it is only eight years ahead of us. As I have said, I am thinking as far as the year 2077 as being comparable to my own life span starting from now.
Let us talk about today's gluttony. I must be frightfully frank here. Both parties, irrespective of their ideological persuasions have been guzzling natural gas from the very moment that it was discovered in the North Sea. This is exactly as described by the noble Lord, Lord Callaghan, who defended its use for the housewife. I entirely agree. North Sea gas is ideal and is a priority issue for the housewife. For cooking, central heating and so on there is nothing like it.
In supporting the Motion, the noble Lord the Leader of the Opposition should not suppose that I think his party guiltless in this matter. Without taking sides, which would be most unfitting for a Cross-Bencher, for historical reasons the noble Lord's party currently has rather less practical experience of misgoverning than the party in power, but its time will come.
Let me begin with the point at which I joined the North Thames Gas Board in about 1962. Incidentally, I am glad to see that the noble Lord, Lord Callaghan, has returned to his place because I have just paid him a compliment. No doubt he will read it tomorrow. I took part in two revolutions in the gas industry. The first was the transformation from carbonisation to hydro-carbon re-forming. That was a major revolution that affected the entire gas industry. The second was the transformation from towns gas to North Sea gas. That transformation has been described as the biggest single industrial enterprise ever undertaken by anyone. Whether or not that is the case, I did not think of the phrase, other people did.
Having done that, I was horrified at a board meeting of the North Thames Gas Board when up for discussion came a contract for an enormous amount of natural gas at a cut price to be supplied to the Slough Trading Estate. I protested against that on behalf of the future housewives. I said, "This thing must not be allowed. I shall not be a party to it unless I am pressurised into it by the Gas Council in which case it will not be a resigning issue because nobody will
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notice". The matter went from the Gas Council, which endorsed it, to the Ministry which also endorsed it. That was the thin end of the wedge that set us on this path and I experienced it with great misgivings. I am sorry to say that, so far as I remember, the Labour Government of the day were a party to it. If it had not been them, it would have been a Conservative Government because nobody was ever willing to make a stand about it.
I entirely agree with the analysis of my noble friend Lord Marsh; but is analysis the ultimate value in life? I seek a synthesis—the "evolutionary appetite" that King Magnus referred to in "The Apple Cart". Like the noble Lord, Lord Elliott of Morpeth, I too am aware of coal mining and coal miners. Some 10 years ago I constituted myself into a travelling reporter on coal mines for what was then Sub-committee F—now Sub-committee B—of the Select Committee on European Affairs. I made it my business to go down every coal mine in the country that represented the extreme of something. I have watched the thinnest seam being mined and I have watched the thickest. I have watched the wettest seam being mined—that is the Seaforth mine under the Firth of Forth, where five tonnes of water are mined for every tonne of coal. I have been to the most inclined seam, the most gassy seam, and so on. I made quite a hobby of it.
I became acutely aware that coal mining is a kind of sub-culture of our national life. Underground, everyone is friendly. Everyone smiles and says, "good morning" when one passes, escorted by the mine manager. I do not know whether they were saying "good morning" to him or to me. It all seemed very friendly-like. One thinks of how a mining village starts. In the first place, a pit shaft is sunk where it is most economical and then a village grows up around it. The inhabitants of the village all inter-marry. They become a family; and if there is a disaster in the mine, it affects very many people.
Arising out of these matters, I tabled a Motion calling for Papers in March 1979. I believe that the noble Lord, Lord Callaghan, was then in office as Prime Minister. We had a very interesting debate with the noble Lord, Lord Strabolgi, replying on behalf of the Government. I should like to read to your Lordships what I then said because I want to emphasise the fact that I have been saying this for so long. In 1979 I said:
"North Sea oil and North Sea gas will not be there for ever, and I am much concerned about what I call the squandermaniacal depletion of our reserves of North Sea gas due to extremely unwise drawing of the contracts with the oil companies in years gone by. That is another topic and I shall not explore it in depth this afternoon".—[Official Report,7/3/79; col.189.]
I ended the debate with these words:
"we ought never to use gas where we can use oil; we ought never to use oil where we can use coal; and we ought never to use coal where we can use nuclear power".—[Official Report,7/3/79; cols.265–66.]
That is what I felt in 1979. I received what I call a rather confirmatory reply from the noble Lord, Lord Strabolgi. He more or less said that he quite agreed and that it was quite a good idea, but it did not make the slightest difference. We went on with our squandermania just the same. I very much hope that

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this Motion will be passed as, for my part, I want to give evidence to that committee of inquiry and tell it what I think on behalf of the housewife.
8.40 p.m.
Lord Jay: My Lords, I thought today that the noble Lord the Leader of the House made a most convincing case against the privatisation of electricity generation. He told us that it was illegal for the directors of the two power companies to act in the public interest. That was exactly the case against privatisation. It was not illegal for the Government to advise them to act in the public interest but it was illegal for the directors to take the Government's advice. It is no good therefore the Government saying that there is no market for British coal. The Government have deliberately rigged—I used the word "rigged"—the market against coal by handing it over to a duopoly of two private power companies, which incidentally I believe have a vested interest in the gas powered generating stations. That privatisation of power is the main cause of the whole of the disaster which we are discussing today.
Although that is so in the short term, have the Government given no thought also to the longer term and to our national security both in economic and defence terms? Economically, if we massacre our coal industry we should put our whole economic life at the mercy of oil exporting countries which could hold us up to ransom and which may not be particularly friendly to this country. After all, as has been said by several noble Lords today, our oil and gas reserves in the North Sea, unlike our coal supplies, are dwindling and will not last for a great number of years.
The defence risk, which has not been mentioned by anyone other than the noble Lord, Lord Brookes, is surely even greater. In the two great wars we were more nearly defeated in 1916 and 1942 by loss of shipping space than in any other way. We survived only by help from the United States. Shortage of shipping space became a major bottle-neck in the whole of the last war effort. I speak here, though only a grandfather and not as yet a great-grandfather, as one who played a modest part in the economic war effort in the second war. Only the most essential materials could then be imported. But our fuel supplies were adequately maintained just because they were almost wholly dependent on home produced coal. Our coal industry saved the situation in both wars and saved the balance of payments situation in the 10 years after the second war. Have the Government really considered—I very much doubt whether they have because they did not even bother to consult their own Cabinet—our defence prospects if we deprived ourselves of our coal supplies and became almost wholly dependent on oil, gas and nuclear supplies?
I should have thought that oil installations, oil rigs and natural gas installations in the North Sea are about the most obvious sitting ducks for either air or naval attack, if that situation ever arose—more obvious than almost anything one can imagine. Perhaps the only other similar sitting duck would be a 200,000 tonne oil tanker fully loaded with oil sailing
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from the Middle East to Liverpool or Southampton. Yet on the Government's policy, as I understand it, almost the whole of our electricity supply would in the event of a war go to industry, to the railways, and to munitions production. The armed forces would be dependent on imported oil or gas, with a little help from nuclear energy.
I know someone will say at this point in the argument that what I have said is scaremongering and involves looking too far ahead, that this situation will never arise and that we shall never be engaged in hostilities again. If that is so, why do we have armed forces? Why do we spend more than £20 billion a year on our armed forces? I have always been in favour of a British nuclear deterrent and the Trident programme, but whatever else is true it really cannot be common sense to spend £10 billion on three Trident submarines and then not have any oil to enable them to go to sea. Therefore, I do not think it is a sound argument to say that all this can never happen and that we need not give any thought to it now. In that case there does not seem to be much point in our huge defence expenditure which otherwise I should defend.
The sober truth is that we maintain our defence capacity because none of us knows what will happen 40 or 50 years hence. Indeed, we all pay insurance premiums because none of us knows what is likely to happen to our house or car. Who can say now this reflection is worth while—what kind of government the Russians will have, the Germans will have, the United States will have or indeed France will have 50 years from now? It would be a reasonable spread of risks, economic and military, to make our electrical power 50 per cent. dependent on a home produced coal,25 per cent. dependent on oil and gas—it is reasonable to have some—and the remaining 25 per cent. dependent on nuclear stations.
That is only an amateur judgment made without knowledge of all the statistical facts, but have the Government made any expert and authenticated judgment of the practicabilities and the possibilities? If so, what are their conclusions; and, if not, the Government, quite apart from the rest of the problem, are under an imperative duty to the nation and to Parliament to make such an assessment of the defence risks before they destroy the British coal industry on the advice of two power companies and apparently Messrs. Rothschild, who had some major part in the whole of this story.
I would argue that the greater the difficulties and the greater the uncertainties in assessing this defence risk the greater is the national obligation to allow a fair margin of safety in our favour. Even if a subsidy were necessary for home produced coal—and that has not been proved—it could very properly and reasonably be counted as a defence insurance and be paid for under the defence budget. That is another reason why the Government must take these problems seriously and accept some kind of genuinely impartial and objective inquiry before they proceed further down this dangerous road.
8.49 p.m.
The Earl of Dudley: My Lords, I shall not waste your Lordships' time with an explanation as to why I have the temerity to speak in the debate in the face of so much expertise, fluency and lay and spiritual concern. I hope that that will become clear as my brief remarks unfold. Those remarks will, I fear, not compare with those of my distinguished predecessor the noble Lord, Lord Jay.
I welcome Ministers' change of heart even if that heart is not always worn on their sleeves. I agree with much of their logic as applied to the coal industry, even if the presentation fell far short of what was desirable or appropriate, especially when pointing directly to job losses in an industry where the limits of endurance and guts are needed to mine coal.
Secondly, I believe that if management in the coal industry judges that a pit is incapable of generating profit, having explored all avenues such as the level of future coal prices, investment and the other relevant issues, then it is wrong to spend public money on keeping it afloat longer than is necessary for an orderly closure. Thirdly, I agree that unsaleable stocks of coal should not be accumulated at vast cost to the taxpayer. Those three propositions seem to me to be self-evident and must override all other considerations however painful. They call for a review of other remedies but do not allow retreat.
Having said that, questions follow from those propositions which I hope my noble friend will be good enough to answer in her closing speech. First, as regards the proposed reduction of over one-third in the likely usage of coal by electricity generators, what savings in the cost of electricity to industry are envisaged? There must be estimates. The massive investment in gas-fired power stations could not have been justified without detailed estimates of savings. My noble friend the Lord Privy Seal in his former office must have discussed them with the electricity generators. However, he has told us nothing about them. Ministers must know them. Parliament and the public—and more especially the employees of British Coal—are entitled to know. I hope that my noble friend will be in a position to produce such figures at the end of the debate.
Secondly, at what averaged price is coal delivered at power stations competitive with gas—that is, averaged over the quantities per cent. of different grades of coal, and taking into account transport costs? Can my noble friend the Minister confirm that all pits earmarked for closure are unable to mine coal at such low cost that it cannot be delivered to where it is needed at the required tonnage and at that price? Thirdly, does the increase in gas-fired power station capacity equate to the likely reduction of intake of coal by the electricity generators? If so, there is very little to discuss apart from the timing and method of closures and the scale of compensation as I have not heard one of your Lordships recommend that those gas-fired power stations should stand idle and unused while coal continues to be mined in the same quantity as before.
Those are relatively simple questions. If the Government know the answers and will give them, I
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personally do not see why the expense, and scale of time and effort, of a public inquiry should be warranted. But if Ministers and British Coal continue to keep Parliament and the public in the dark, and if my noble friend in her closing speech is economical with facts and figures, then I shall have to rethink my views about the need for a full public inquiry into the proposals.
Whose are those proposals? The President of the Board Trade says that they originate with British Coal. If so, management made short-sighted decisions from which miners have only been granted a reprieve because public opinion made itself felt through Parliament and ministerial recantation. My noble friend Lady Denton said yesterday that privatisation would strengthen British Coal. But how? Will it improve the competitive position of British Coal? Will it increase the demand for British coal? There must be considerable doubt in respect of those questions. How can there be justification for my noble friend to use the word "market" to describe the source of demand for British coal? There is no market in the sense in which my noble friend was using the word. In fact, there are negotiations between one supplier and two customers leading to contracts. That is hardly the scenario in which market forces can exert their pressure on prices in the interests of the consumer. Further, how can British Coal expect to find buyers for its shares when the current prospectus is no market for coal?
Finally, I should like to remind your Lordships of how many Members of this House have at one time or another been associated with the famous names detailed for closure in the ministerial Statement. I ask those Members, as former coal owners, or their descendants to join me in expressing our sympathy to the sons and grandsons, facing redundancy, employed by our fathers and grandfathers. I ask the House to do all within its limited powers to safeguard their interests and ensure that they get a fair and even a generous deal from British Coal, co-ordinated and facilitated by the wisdom, the experience, and, above all, the humanity of my noble friend Lord Walker who, I hope, will be able to build a Chinese wall between his gas interests and his new coal responsibilities. That will also be at the behest of the Minister who, on this occasion, is not attired in a loincloth, but, more appropriately for the coal industry, in sackcloth and ashes.
8.58 p.m.
Lord Desai: My Lords, at this late hour I speak neither as an MP for a mining constituency nor as a former Minister or chairman of the National Coal Board or even the grandson of a mine owner. I speak merely as an economist. I must say that I have felt deeply insulted professionally—that is, riot just for myself but also for the profession of economists in this country. People have been bandying about words like "competition" and "market" as if there has been no reliable information on the subject.
If I may, I should like to sort out some of that confusion this evening. First, the Government have for a long time been confused about the words "private" and "competitive". They have always taken

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the view that whatever is public is wrong and monopolistic and that whatever is private is good and competitive. Well, as many noble Lords have said, that happens not to be the case as regards gas and electricity privatisation. Moreover, British Coal's privatisation is likely to be another mess.
We cannot talk about competitive markets when we have a system of private monopolies. We cannot talk about competitive markets when, due to regional differences and local conditions, there can be one electricity supplier only in a region. That is not competition. It is elementary. Just because a business is private, it does not become competitive. Every price set in a private market is not necessarily competitive; nor is the fact that a firm makes a profit an indicator of efficiency just because it is private. That is a little lecture, and I shall answer questions afterwards.
It could be argued that the coal mines lose a great deal but that for various social, economic and political considerations we should like to defend them. Before I deal with efficiency generally, I want to talk about the simple accounting facts of the coal mines that it is proposed should be shut. A subsidy of £100 million has been mentioned. I should like to know from where that figure comes. The total loss incurred in the latest year for which I have figures in the 31 pits scheduled for closure was £8.5 million—no more than £8.5 million. The profit made by the 10 pits about which it is said there is an unanswerable case for closure was £3.4 million. Those figures come from the accounts of British Coal. They are not loss-making pits. They are profit-making pits. I grant your Lordships that the figures are accounting figures and not economic figures, but if a strong case is to be made out that the nation is throwing money down the drain, let us pause and ask where are the figures to justify such concepts.
People as different as Mr. Andrew Glynn of Corpus Christi College, Oxford, and Professor Colin Robinson, who is the director of research in the Institute of Economic Affairs, agree that the manner in which gas and electricity were privatised and the way in which the entire energy economy is structured cannot carry the name of competitiveness, and the figures cannot bear the scrutiny that should be given to them.
I do not believe that all the pits are loss-making, although I do not deny that some of them are. Together they lose £8.5 million. If the pits are loss-making, we then ask whether to concentrate upon the short and narrow concept of efficiency is justifiable or whether we should look at the social costs of redundancy in the coal industry. Many noble Lords, including the noble Lord, Lord Ezra, who made many of these points succinctly, have said that we should examine all the options available, not just in relation to current prices of gas and electricity but also the possible trends in prices which could be envisaged if they did not have the monopoly powers which the Government have granted them. We must then ask ourselves whether, if the prices are not taken as God given, could we still justify the idea that somehow the coal industry is inefficient. It may be. It may not be, but the Government gave us no evidence in the first
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instance when they announced the closures, in the retraction, or anywhere else, to justify the idea that we somehow have a coal industry which is throwing money down the sink and obtaining no return.
Before I reach the argument about the social costs of unemployment, the narrow economic case for shutting pits has to be examined. It must be examined on the grounds that some of the prices, if not rigged, are distorted. Not only are they distorted, but, as many others have said, much of the planning for the efficient gas-fired plants has been based on the simple static idea that whatever was the price in 1990 would be the price for ever. We have made such mistakes before. As many noble Lords pointed out, we made the mistake with oil. We thought that oil was going to be cheap. In 1990, some teenage scribbler in Rothschild's, or whatever it is—vastly overpaid, I have no doubt—thought that the then current prices for gas and coal would last for ever and therefore calculated that coal would be inefficient. There is no justification for that.
Proper accounting should be done with alternative spot prices. Calculations should be made as to which pits are efficient and which are not. That is not new. Economists do it all the time. This country has some of the finest economists who have pioneered cost benefit analysis. We can do it much better. The calculations do not necessarily have to be done in the private sector just because they charge a great deal of money. The universities can do them. They can charge a great deal of money if that is what is wanted. They should be done in a way that does justice to the talents which exist in this country as well as to the strength of public opinion which says to us that we should not take decisions in such a peremptory manner.
There are large issues of efficiency to be considered on the grounds of a single industry, on different assumptions, and the energy economy, taken together. Lastly, as people have said, one cannot decide upon inefficiency independently of the state of the economy as a whole. That is where the balance of payments, the exchange rate and the PSBR come in. If we are going to spend £1.6 billion extra on redundancy payments for miners, what are we going to cut? If we are to be told that the PSBR will be added to, that is fine; but the matter must be clarified. Economics is about choices and options. If we are to spend £1.6 billion this year and £600 million a year for a long time thereafter on the closures, we must have clarification as to the choices the Government are making: what they are giving up, and what will be the unemployment consequences of those choices. That is what we should like to know.
What we do not want to hear, after 15 or 20 pits have been shut down, is the Government saying a year later that the entire policy is changed. We do not want the Minister to start singing in the bath one year further on. Let him sing in the bath now. We do not want policies that cause a lot of misery only to be told later that the Government did not believe in those policies anyway. That is a serious problem. We have been subjected to economic policies which we were told were a central part of the economic strategy of this Government. Then we are suddenly told without

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any apology that the policies are not a central part of the Government's economic strategy, and that the Government never believed in those policies. How can a government who not only change their mind but do not even explain why they have done so command any credibility?
The Government believed that after Black Wednesday they were acting in British interests. That means they were not acting in British interests before Black Wednesday. That is somewhat surprising. Will the Government now tell us whether they think they are acting in British interests or whether they will do so after some catastrophic event has occurred? We must know the answer to that question.
An independent inquiry is necessary for two reasons. First, the credibility of this Government and their decision-making structure is zero if not negative. Secondly, only an independent inquiry can consider private monopolies without prejudice as the members of the inquiry do not have a stake in those monopolies. The members of the inquiry have not made decisions in the past relating to those private monopolies. The people who have made those decisions in the past would tend to defend their decisions. I suspect that the consultation we have been promised will confine itself purely to the coal industry and will miss out gas, electricity, the balance of payments, the public sector borrowing requirement, unemployment and other such issues. I believe an independent inquiry would be broader, deeper, more impartial and more useful than the consultation we have been promised.
No one has mentioned so far in the debate the environmental consequences of shutting down coal mines. Some noble Lords may have seen a letter in the Times from Dr. Emma Rothschild who has great knowledge of environmental matters. She described in graphic detail the consequences of shutting down coal mines. She said that such a process can be quite disastrous in terms of water pollution and fish life. Even if it is decided to abandon certain coal pits, we must ask ourselves carefully whether it is in the environmental interest to shut them down for ever. The environmental costs of shutting down coal pits may be the largest unaccounted costs of the measure the Government are taking. The environmental and unemployment consequences of that measure make us all plead, for sanity's sake, for an independent inquiry. Then the correct decision can be arrived at.
9.11 p.m.
Lord Monkswell: My Lords, last week when the Government announced the closure of 31 pits and the redundancies of 30,000 miners an emotional spasm went right through this country. People said enough was enough and that the Government had gone too far. I believe that a phrase attributed to the Duke of Wellington on the eve of the Battle of Waterloo was that he did not know what the effect of the troops he was reviewing would be on the French but they certainly scared the hell out of him. I wonder whether the Government's action was taken as a result of their enmity towards the mining community for various actions taken by that community in the past.
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When we arrived here yesterday we all felt a sense of anticipation as we knew a significant government Statement was to be delivered. We listened to that Statement with bated breath. The Statement caused me terrific anger as it effectively asserted the Government would continue with the policy that emerged last week. The Government have conceded they will temper their policy a little for a couple of months but it will inevitably go ahead. That anger was still with me today just before this debate began. I intended to move a manuscript amendment to the Motion before us. My manuscript amendment would have asserted that this House was totally appalled by the Government's decision. I wanted to ask the Government to stop the closure programme and to demand that they take action to secure the future of the coal industry.
However, as the debate has progressed my anger has to a certain extent been dissipated. It has been interesting to listen to the wisdom and the information from all parts of the House. That wisdom has been spoken by our Leader on the Opposition side of the House, by the noble Lord, Lord Ezra, by the right reverend Prelate the Bishop of Sheffield and by a host of other speakers. They have all contributed pertinent information as to how we have reached this stage and where we go from here.
We are discussing the future of the coal industry. As many speakers have said, the issue relates not only to the coal industry but to energy policy generally. We are now at a critical juncture. The question arises as to how we have got where we are and why this is a critical juncture.
The noble Lord, Lord Marsh, pointed out that over the years there have been reductions in the size of the coal mining industry for various reasons. In the 1950s and 1960s the use of gas, and to some extent oil, for domestic consumption was prevalent. That resulted in tremendous benefits for this country, not only for households in the domestic sector, as the noble Earl, Lord Halsbury, pointed out, but also for the environment. We achieved clean air as a result of burning gas in our domestic residences rather than coal. That meant a reduction in the demand for coal.
We have also seen a reduction in the demand for coal as a result of the building of oil-fired power stations and the development of nuclear power stations. It is interesting to consider those factors, because cheap oil was considered to be the fuel of the future. Yet what happened in the early 1970s? The price of oil rocketed so that it was no longer significant as a major fuel for electricity generation. For 30 or 40 years we were told that nuclear power was a cheap form of energy. It is only in the past few years that the truth has emerged: nuclear electricity is in fact more expensive than any other form of electricity generation.
We are now debating the closure of 31 pits, with 30,000 miners being made redundant, for two significant reasons. The first is the rise in imported coal being burnt in our power stations. The second is the development of gas-fired electricity generation. We are told that both of those factors will effectively hit

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the UK economy from April next year and that the demand for British coal will decline from 65 million tonnes to 40 million tonnes.
It is very easy to blame the Government for that. A great deal of blame does attach to the Government. I believe, however, that it is more a question of the cock-up theory of politics rather than of conspiracy. I do not believe that there was a conspiracy on the part of the Government to destroy the British mining industry by organising electricity supply in this country so that gas was used more effectively along with imported coal. I do not believe that that was running through the Government's mind. Yes, they changed the circumstances. They privatised the gas and electricity industries, and that has led to the present situation.
How do we get out of that situation? The noble Lord the Leader of the House pointed out one mechanism in his opening remarks. He said that if the use of gas by the regional electricity companies to produce electricity resulted in more expensive electricity they would be in breach of their licensing conditions. What are the mechanisms for dealing with that? If that gas-fired electricity generating capacity is installed who will pay for it at the end of the day? I suggest that the only people who will pay for it are the electricity consumers.
For that reason we need to stop that programme now. We need to stop the programme of pit closures now to enable the inquiry which we have proposed to look at all the problems. One of the problems is that the coal-fired electricity producers have the opportunity to buy imported coal or to buy from British Coal. If the generators sign up long-term contracts with British Coal to supply the majority of their needs the security of British Coal is assured for the longer term.
I make the plea that the Government go a little further than they have already and say to the coal mining industry that there will be no more closures until we have had a thorough review. It is not good enough to say that individual miners can take redundancy if they want it. If the threat of closure is hanging over the industry anyway people will volunteer for redundancy. Effectively, the industry will haemorrhage to death. We need to stop that haemorrhage and identify the best way forward. That can be done only by the inquiry for which we are calling.
9.21 p.m.
Baroness Seear: My Lords, my father was a mining engineer. I recall that on one occasion he was called down the mine in the middle of the night because there had been a fire on the night shift. The noble Lord, Lord Merlyn-Rees, has told us that today there are mining families who are anxious to see their children go into the pits. His knowledge of this is infinitely greater than mine, and I bow to his superior wisdom. But I still have the feeling that if I were a mother in a mining village the last thing I would want would be to put my child down the pit.
Not so very long ago a prominent trade unionist in the mining industry said he would not be satisfied until
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all the men down there were up on the surface in white coats, with bunsen burners, doing civilised, comfortable jobs out in the open. I have always felt a sense of guilt that so much of the prosperity of this country, and the prosperity of so many in this House, has been built on the work of men who have had to work in such dangerous and unsatisfactory conditions. I know they are better today, but surely nobody is seriously going to deny that it is still a dangerous and in many ways an unpleasant industry in which to work.
It is not the shutting of the mines as such that one regrets or protests against. If the circumstances were right it would be a good thing to have the work done in other ways. But what are those circumstances? The circumstances are that we would have to be entirely satisfied about all the environmental conditions and the economics of the change. As the right reverend Prelate reminded us earlier today, it is perhaps even more important, or at least equally important, to be satisfied about the future of the men who will be coming out of the mines and about the communities in which their families have been living for generations. We are satisfied about none of those things.
As I have listened to the debate this afternoon it has become increasingly plain to me that there is no agreement about any of the essential facts which we need to know before we can make a reasoned judgment about what ought to be done and the extent of the changes that ought to be undertaken. That is why we on these Benches wholeheartedly back the demand for an independent investigation. I know that the noble Baroness is going to say, as the Leader of the House said at the beginning of the debate, that the Government will carry out further investigations and the facts will be put before us. I do not wish to be brutal. I understand that the Government have many problems. But the plain, brute point is that facts put before us by the Government are not going to be believed.
It is no use giving facts that will not he believed. The Government have contradicted themselves too often. They are too deeply compromised. They are too involved in the decisions that have already been made—their decisions, after all—for anyone, even with the maximum amount of good will in those circumstances, to credit figures given to us by the Government. The alternative is either that the Government continue arbitrarily in their own way, leaving us all without the information that we need to make a reasoned judgment of whether what they are doing is right or wrong, or they must hold an independent inquiry.
The independent inquiry must also take into account the position of the electricity industry. As my noble friend Lord Ezra said, the electricity industry has the mining industry by the jugular. That is the key to what will happen. Going back a little further, the troubles start with the way in which the electricity industry was privatised. These Benches protested again and again that a private monopoly was being created. We have to deal with a private monopoly and it is a private monopoly with which the coal industry has to deal today. A private monopoly has no place in a free market. It is useless to say that what we see is the

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operation of the market and that is why the coal industry has to be sacrificed. It is not a free market. It is nothing like a free market.
I ask the noble Baroness to comment in particular on the point made by my noble friend. If those contracts are signed between the Coal Board and the electricity industry limiting the purchases of the electricity industry to 40 million tonnes, the independent inquiry will be shutting the gate after the horse has bolted. The question of the electricity industry and its bargaining power with the coal industry must be looked into now.
The noble Lord the Leader of the House said that there were legal reasons why nothing could be done to change the decisions made by the electricity industry. I find that very difficult to believe. Surely in such a crisis, with so much at stake, there must be a way in which pressure can be brought to bear on the electricity industry so that it does not go ahead and sign the contracts until the independent inquiry has had a chance to report.
We have been told that it cannot be done because of the interests of the shareholders. We know that 60 per cent. of them are private shareholders. But the Government have a 40 per cent. shareholding, presumably in the interests of the nation. The nation is a 40 per cent. shareholder in the electricity industry. It has a right to be heard too. There is not such a very great difference between 40 per cent. and 60 per cent. Surely it has become apparent throughout the country that the nation as a whole has a deep and profound interest in this matter. It would be extremely reluctant to see those contracts signed and therefore any future changes made impossible.
It is not only what the Government have decided to do that is at issue. As noble Lords from all parts of the House have said this evening, it is the way in which it has been done. The Government could have acted in many different ways. I do not feel that quite enough has been said about the way in which Parliament has been bypassed. This is a matter of very great national importance. The reaction all over the country has made it clear that the nation as a whole is deeply concerned.
At the weekend I was in Nottingham, in the Midlands. A local lady there, one of the remaining landowners of the extreme Right (so everybody thought), was urging the parishioners after church to write to their MP to protest at what the Coal Board was doing. When one has such reactions from such sources something very special indeed is going on. That is only one example of a nationwide protest. There may be a degree of hysteria about it. But that national reaction surely gives credence to my argument that 40 per cent. of the country are represented in the electricity industry and have a right to be heard.
Parliament has been bypassed on this issue. A matter of such national importance should not have been decided by the Government and the information should not have been handled in such a way. The decision was made before Parliament came back and not discussed with Parliament in advance. There should surely have been at least a White Paper which
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could have been discussed before those changes took place. In their previous life this Government were accused again and again, in particular from these Benches, of treating Parliament like a rubber stamp—telling Parliament about decisions which had been made and were almost fixed in concrete before we had a chance to get a word in. They are now a different Government. I beg them not to follow that practice any more and to recognise that such a matter should have been fully discussed with Parliament before the decision was handed out as being final.
I comment also on another aspect of the way in which the issue was handled. Will the Government never learn? Have they never seen how a more enlightened industry carries out a difficult change of organisation? Have they not read the volumes of literature? I refer to academic and industrial literature on how to have change accepted. It is by involving people in the change and having discussions with them in advance. Consultation is not a matter of making up one's mind, telling people that that is what one has decided to do and asking whether they have any comments. Consultation is saying to people in advance, "This is the problem. We have ideas as to what we might do. We have sorted out various lines of action. Let us discuss them". Nothing like that has happened.
Ask any modern employer, my Lords. There is plenty of experience of bringing about difficult changes in such bodies as ICI and other large-scale organisations. They do not achieve it in this way. They have real consultation with the people who will be involved. Unless those people believe that they are party to the change, that they can see something in it for them and that they have some ownership—not in a financial sense but in a decision-making sense—in the changes being brought about, experience tells us that the change will be rejected. Do the Government never learn?
9.33 p.m.
Lord Donoughue: My Lords, it is clear that the whole House has welcomed the debate which is central to the anxieties of the nation today. We have heard some remarkable speeches. We have heard the impressive authority of the noble Lord, Lord Ezra, the moving speech of the right reverend Prelate the Bishop of Sheffield, the passion of my noble friend Lord Callaghan, the expertise of my noble friend Lord Dormand and of the noble Lord, Lord Haslam, effectively, and without conclusion, refuting the case of the Government. We have heard the noble Lord, Lord Brookes, with all his industrial experience, and the noble Earl, Lord Perth, from the Cross-Benches supporting an inquiry. Whatever the number of feet in the Division, it cannot be denied in this debate that the overwhelming consensus of voices expressed deep concern about the future of the coal industry and were in favour of a full, independent inquiry. Where genuine disagreement existed—such as over the nature of the energy market—to me it confirmed the case for a genuine inquiry to establish the true facts and figures on which those disagreements were based.

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Naturally we welcomed the speech of the noble Lord, the Leader of the House, who for the first time attempted to clarify and define the issues to be reviewed. The speech was not comprehensive but it was certainly helpful. In fact, to me, the noble Lord the Leader of the House moved some way down the path of logic which, to the rest of the House, leads inevitably to a full independent inquiry. He set out several aspects of the energy situation which require review—nuclear power, gas and exports—but stopped short of the obvious conclusion; namely, to have an independent review of them. He did three-quarters of a somersault compared with the Government's position last week. But why does he still stop short of the logical conclusion and still advocate that internal review?
The worst and least trusting interpretation is that the internal review has been chosen as a kind of cynical political trick to fudge and delay the closure issue without any real change of intention and so to quieten Conservative Back-Benchers for tomorrow's debate. I prefer not to take that view; but certainly one simple way to bury that suspicion would be to have an independent inquiry.
The problem with obstinately insisting on an internal consultative review is that we know—as has been said frequently—that the internal reviewers are in fact pre-programmed. The Ministers concerned have stated that they find the arguments for closure compelling. The Prime Minister said that on Friday in Birmingham; Mr. Heseltine said it on television on Sunday; yesterday's Statement repeated that. On the present proposals those Ministers will, as my noble friend Lord Cledwyn said, be judge and jury in that internal review. Why should they change their minds without convincing independent arguments?
Our view is that sadly this issue is at present pre-judged. That is why an internal review cannot carry conviction. Only an independent inquiry can carry credibility. As the noble Lord, Lord Brookes, said, an internal review should not satisfy this House and will not satisfy the nation. I cannot better that. We need an independent inquiry with published terms of reference and an agenda which covers the main issues that have been raised so well and argued so ably in this House today.
I should now like to summarise those issues which should constitute the terms of reference and agenda for that inquiry, all of which have been referred to by noble Lords in this debate but not all, I must say, were mentioned by the noble Lord the Leader of the House in his opening speech. Perhaps the noble Baroness will assist us in her winding-up speech.
I ask the House and the Government to include the following items and agenda in the review. It must begin with an independent analysis of the market for coal. That has cropped up again and again. We know the assertion that:
"there is no market for British Coal",
and therefore, there is no alternative to butchering the coal industry. That has been Mr. Heseltine's constant refrain, a kind of TINA in a flak jacket. So far there has been no objective analysis and no independent
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evidence. No supporting, objective, convincing numbers have been presented to prove and demonstrate that. We have just had assertions. They may be correct. However, I believe that the House wishes to see the evidence. We need an independent analysis of it. If we have that, we can consider it. Parliament and the nation can consider it and be convinced. But we cannot take it on trust without proper evidence when the only evidence we have is that ministerial minds seem to be made up.
That will involve also having on the agenda an analysis of the true relative costs of coal and gas in electricity generation. That matter has been raised again and again. I must say that I, the House, the nation and noble Lords from both parties are bewildered by the conflicting claims as regards that question. That needs to be analysed and established.
We also need to know objectively the extent to which the electricity market is rigged—or "tilted" as it was cleverly re-defined by my noble friend Lord Dormand—against coal. My noble friends Lord Mason and Lord Desai also made that suggestion. The Leader of the House acknowledged that problem and must surely accept that it needs independent analysis.
We need to know and understand the true level of subsidy for coal. The President of the Board of Trade suggested a figure of £18 billion as the alleged subsidy. I am informed that that includes loans to the coal industry which must be repaid with interest. On that basis, much of private industry is subsidised by its loan capital. We therefore need that aspect to be properly considered.
We need to know the true net cost of the closure programme—not mentioned by the Leader of the House—compared to the alternative of keeping the pits open. That needs professional independent cost-benefit analysis. We need to examine whether it is true, as I believe it is and as my noble friend Lord Desai convincingly argued, that the majority of threatened pits cover their operating costs. In addition, one must take into account the huge indirect cost of closures and the terrible social cost, as referred to at some length by my noble friends Lord Dormand and Lord Varley. Is it not cheaper to keep the pits open, and more expensive to close them? There must be independent analysis of that issue. Even with that cost-benefit analysis, we shall still need to set against the result the terrible social and human cost of closure. Would an internal review cover that?
The nuclear question was mentioned by the noble Lord, Lord Wakeham, and is important. On 13th October PowerGen stated that the markets are rigged against coal by the nuclear industry,
"by increasing levels of output from heavily subsidised nuclear power stations including plant whose design life has been extended".
That must be independently examined. The noble Lord, Lord Haslam, made a powerful and convincing argument on that point.
We must scrutinise the true level of imports to this country. The noble Lord, Lord Ezra, was convincing on that point. Is that a fair market? I believe that Colombian imports to this country are subsidised. They receive public loan capital on which they do not

735
pay interest for five years. Is that true? Why do we expect British coal to compete on that basis? It seems not to be a truly level playing field. An independent inquiry can examine that.
Moreover, I believe that the European Commission wrote a letter to the court examining European tendering stating that it has no objections to the UK blocking non-EC imports. Is that true? It has significant implications. As for exports, which were not mentioned in the opening speech, on the question of our markets, how do we know what is the true market for British coal when the European market has not seriously been tested? We have not seriously tried to sell coal in Europe although apparently there are no constraints. I believe that British Coal has not participated in the EC fuel-tendering process. Is that true? If so, how can we decide that there is not a market for British coal? After all, Britain has the largest reserves and the cheapest production in Europe. An independent inquiry should examine that question of the potential export market.
The role of the electricity regulator has not been mentioned often, although the noble Lord, Lord Haslam, commented on it. It needs critical analysis to discover whether he is adequately protecting electricity consumers by ensuring that the generators buy the cheapest fuel source and by refusing, as I believe he should, to allow them to pass on to their customers the cost of buying higher cost fuels. That is strictly linked to the question of regional electricity companies buying higher cost fuel from their own plant. The independent inquiry should examine that and call upon the regulator to explain or to act.
There is the question of rail freight. We are still due to consider rail privatisation, although it has been rather overwhelmed by the coal question. I believe that coal is crucial to rail freight revenues. I should like to ask the noble Baroness whether she will confirm for the information of the House that 65 to 70 per cent. of rail freight revenues derive from coal, and whether any examination will be made into the implications for rail of the closures that are proposed? Any such inquiry should look into the impact on related industries.
The final and overwhelming reason for an inquiry which should be on that agenda and derived from that agenda is to help to clarify and establish a national strategy for a secure energy supply based on a balanced mix of sources, including a future for coal. That would be backed by independent analysis, by objective figures, shorn of preconceptions about so-called free markets, shorn of any ideological clutter, and shorn of any residual vindictiveness towards the miners—and there may be none—bearing in mind that the United Kingdom loses its energy self-sufficiency within a few years.
Then, with the results of such an inquiry from such an agenda, with the facts, figures and objective analysis, Parliament, this House, the nation, can assess the conclusions that should be reached and, crucially, the true market prices and costs of such proposals. Having assessed that, it can approach the final important question which my noble friend Lord Callaghan posed: should that market price be the only
736
consideration in the decision; and how should one set against those objective numbers the terrible human costs of the proposed closures?
The views that I and others have put are not partisan views. This is not a partisan Motion, nor a partisan attack on the Government. I think we all understand the terrible dilemmas and complexities of the situation in which the Government find themselves. I believe that noble Lords on the Cross-Benches and opposite can support this Motion because a proper independent inquiry is not an Opposition view; it is in the national interest. Therefore, I believe it is in the Government's interest to accept and adopt it.
I should like to say to the noble Baroness—and she has our sympathy in her thankless task—that the Government will lose nothing by having an independent inquiry; the Government and the nation will lose by not having one. I trust that that will be the message from this House tonight.
9.50 p.m.
Baroness Denton of Wakefield: My Lords, I too am grateful to the noble Lord the Leader of the Opposition for providing an opportunity for your Lordships to debate today, at length and with due consideration, issues which are so important that they should be discussed in such conditions and not simply at short notice in the heat of the moment as happened yesterday.
We are talking about policy, but we are also talking about people, their lives, their future and the future of their children. We have welcomed the opportunity for a more considered debate.
I am personally grateful. There are few occasions in life when one gets a second chance to put more clearly that which might have been better put on the first occasion. Coming from a mining village and with some of my family married into mining families, I understand the real community spirit that hard and sometimes dangerous work welds. I therefore appreciate the intense nature of the shock to these areas. I appreciate also the sincerity of the views that we have heard today.
Let me assure your Lordships that my right honourable friend the President of the Board of Trade was concerned about the leaks and about the many newspaper and radio stories that were rife this summer, sowing fear. When he had organised the best possible redundancy package to support British Coal's proposals, he rightly felt that the people affected should know.
The Motion that we are debating shows the agreement among all that it is not simply enough for decisions to be taken on the basis of all the relevant information and with the exercise of sound judgment. Decisions must be taken and must be seen to be taken in a manner which enables all concerned in the industry, in Parliament and in the country as a whole to be confident that the right decisions have been taken.
It is precisely because it is clearly felt across a wide range of opinion that the case for the pit closures had not been made that the Government decided yesterday

737
to ask British Coal to allow time for further consideration of the corporation's proposals. Early pit closures are therefore to be limited to 10 collieries which are loss-making even at the high prices which the electricity industry is currently paying for its coal. I shall return later to the point raised by the noble Lord, Lord Desai. All other closures and redundancies, other than those accepted voluntarily, are to be subject to a moratorium. This moratorium should enable the final outcome of the negotiations between the electricity generators in England and Wales to be considered. Again, I shall return later to the points made by the noble Baroness, Lady Seear, and by the noble Lord, Lord Ezra.
The Government have also undertaken that Parliament will be given a full opportunity to debate the findings of a review. At that time this House will have the opportunity to decide for itself whether the proposals being made are sound and worthy of its approval. Before addressing the Motion in specific terms, I should like to address some of the specific points that have been raised. I am more than conscious of the lateness of the hour but I am equally conscious of the concern and deep feeling which have been expressed in the House today.
The noble Lord, Lord Cledwyn of Penrhos, asked whether we were aware of the vast improvement in the miners' productivity. We are very aware of that. We are also aware that that is part of the problem that we are facing. This is not unique to the coal industry. If any large industry is to be competitive globally it must aim at productivity. That means that it will not be a generator of jobs in the future. The noble Lord also drew our attention to an independent inquiry in a period in which, whatever the answers, the results—the figures—are still the same: 313 pits and 200,000 men lost their futures.
I suspect that the noble Lord, Lord Ezra, felt that we should slow down the process, but I am very conscious that we have been fighting not to talk about things but to reach decisions and to get movement in the economy when it comes to gas. I believe that the last thing that the miners would want us to do would be to slow down the process of gaining knowledge. We have to be aware of that. It is important that there is an energy policy—a point which I explained yesterday and to which my noble friend the Leader of the House drew attention again today—and that the nation has adequate, secure and diverse supplies of energy in the forms that people and business want and at competitive prices.
The noble Baroness, Lady Seear, and the noble Lord, Lord Ezra, said that the contracts with generators should not be concluded before the review is completed. The essential point is that the contracts should aim for the largest possible volumes at the best advisable prices. As soon as it is clear that that point has been reached heads of agreement shall be signed, but final contracts will not be signed before the review.
The noble Lord also said that coal research and development should be maintained. The Government recognise the importance of the development of clean coal technology. We shall be giving careful
738
consideration to the future of British Coal's research in this area. I understand that the experiments at the Grimethorpe facility were completed before its closure. The closure will not affect the development of British Coal's topping cycle on which work is continuing at the Coal Research Establishment.
The House listened with a great deal of attention to the right reverend Prelate the Bishop of Sheffield. I find common ground with him when he expresses nervousness at standing up in a House full of experts. I understand that feeling well. I hope he will understand some of the issues better than most because he has seen in south Yorkshire the market for coal go in the changes that have taken place in the steel industry. I know that he and other members of the Church will help those businessmen who, with the extra money going into the training and enterprise councils, will be endeavouring to make any change as painless as possible, will be aiming to reduce a sense of fear and despondency and be looking towards the future. The spirit of south Yorkshire aims well for that. The right reverend Prelate raised the issue of the balance of payments. I suggest that people look at South Wales.
I was delighted to listen to the speech of my noble friend Lord Elliott. It is appropriate that I mention it now because he brought to the discussion the ability of the North East to manage change. I am full of praise for the area and congratulate those involved on being able to look forward and on their achievements in giving jobs to the people we are talking about—the younger generation of miners who will now be affected. We were offered in my noble friend's speech a message of hope for the future. What always impresses me when I visit the North East is how it works—people work together across the whole spectrum on concerned parties.
I can assure the noble Lord, Lord Callaghan, that Parliament will have the fullest opportunity to look not at a narrow review but at one with the widest of interests in the context of our energy policy. The aim among other things is to create jobs for young people. We must look to the future. No one today has suggested that the mining industry has a future in creating jobs. We have been talking about the situation now but no one is suggesting that the industry will create jobs. We believe it is important to create wealth and to look after those in need. There is major structural change which needs proper handling.
My noble friend Lord Boardman emphasised the point that I believe the whole House knows: the miners do understand some of the issues which have to be faced. That applies, again, in any industry. The workers do know what you are going to say to them. In emphasis of that fact, I should like to point out that since 1989 44,000 miners have taken voluntary redundancy. But, as my noble friend said, there has to be the security of a diversity of power sources and we must always bear the environment in mind.
My noble friend also mentioned steel. Of course, it is from the steel industry that we see the effectiveness of the enterprise zones which were part of the programme put forward in yesterday's Statement. The noble Viscount, Lord Hanworth, raised the question

739
of how far we are looking ahead and what would the picture be in 50 years' time. It is impossible to say precisely what the picture will be 50 years on—for example, what will drive the cars and what will provide the power for homes and factories. But we are well aware of the need to look at the long term.
The noble Lord, Lord Marsh, eloquently pointed out the problems which have always faced the coal industry. I hope that we are now better aware of the needs of training and the support for change that we need to give and the creation of opportunities. We must have learned from all the work that has gone on in other industries undergoing structural change. I hope that noble Lords will appreciate that the £165 million programme which I brought to the House yesterday will be of benefit in that area. Everyone on all sides of the House agrees that there is no pleasure in looking forward to closing pits; it is a matter of how we handle some of the issues.
I was somewhat amazed to hear—though I am sure the noble Lord, Lord Desai, was delighted—the noble Lord, Lord Dormand, praise economists. That is not something I have come across in his previous speeches. In turn, perhaps I may praise British Coal Enterprise which is working in the area. The noble Lord said that it was not easy to create jobs. Of course it is not easy; we are not underestimating the situation. However, I am delighted to share with the House the fact that British Coal Enterprise has been able to find new jobs for around 85 per cent. of the miners leaving the industry who have registered at their job shops. More than 32,000 mineworkers have been found alternative employment since the job shops began operating. I think that the organisation has to be praised. The task will not get easier. It is a task that is dealt with by professionals.
From the debate, I gather that there is a common and unfortunate misconception on the question of import subsidies. The main areas of competition for the British coal industry are the coal industries of the United States and of Australia. Those industries are not subsidised. But the German coal industry, which is, exports very little coal. The noble Lord, Lord Dormand, asked about the Point of Ayr coal liquefaction project. I understand that there is secure funding to ensure its completion.
My noble friend Lord Haslam brought much experience to the debate. He contrasted the United Kingdom and the German coal subsidies. Again, I would say that the support that the Government have given to the coal industry since 1979 to the equivalent of over £400,000 per miner currently employed with £8 billion of investment being financed does not leave us with a feeling that we are not concerned about the industry. Instead of Germany being quoted at us in the future as the economic wonder, I hope that we shall begin to point at our own industry and some of the aims that we are tackling. We are trying to build an industry for the future. The review will not prejudge the answers, as was perhaps suggested.
The noble Lords, Lord Varley and Lord Callaghan, mentioned a possible excess electricity capacity of 50 per cent. That reflects an alarmist view of the amount
740
of gas-fired plant that will he built. The gas-fired capacity effectively committed will produce nothing like that figure.
I am pleased to quote Professor Littlechild in answer to noble Lords' questions. If necessary, he will advance that part of the review which would help shed light on the prices of electricity from all fuel sources offered by various suppliers. I have been nervous throughout the debate as to why noble Lords felt so strongly that an independent inquiry was necessary. I listened to their colleague from another place this morning who said that Labour would have reviewed the energy strategy to make sure that we maintain the present coal burn going into our generating power stations. That would give a secure future to British Coal and the pits. I understand your Lordships' anxiety if that is the definition of an independent inquiry by government.
I am pleased to tell your Lordships that most of the recommendations of the Energy Select Committee were directed towards the Director General of Energy Supply who responded positively. My noble friend Lord Renfrew asked that the government inquiry should fully and closely analyse the factors underlying the economic position of the coal industry. That is a request which, I can assure my noble friend, will be met. I assure him also that whatever the fears we are not looking at a terminal situation for the coal industry. We are looking at strengthening it in order to enable it to compete.
The noble Earl spoke about urgency. The matter is urgent. As I said, we are talking about people's jobs, lives and futures. It is important that the facts and the context in which they exist are clarified. I share the anxiety of the noble Baroness about the statement made by the noble Lord, Lord Merlyn-Rees, that mothers in Yorkshire are happy for people to go down the pits. I doubt that very much. I certainly doubt whether we want to encourage people to work in the 18-inch seams that the noble Lord, Lord Dormand, mentioned. I believe that the noble Lord will be satisfied by the facts placed before the House. He said that he learnt today from statements made in the House. I suspect that he also learnt, as I did, that there are two interpretations to most facts.
When we talk about sweetheart deals I suggest that £18 billion is a fairly friendly gesture. We say that we will review the industry. The noble Lord, Lord Mason, in his usual forceful manner, told us what the figures will be. We are not in that position. We shall bring the facts before the House, and the discussion will be on the facts. I was amazed today to hear requests for an independent inquiry coming from the side of the House which wants independence for coal. I had quoted at me the views of, and figures from, the Campaign for the Coalfield Communities and the coal journals. I must have been a little naive if I expected the figures to be quoted from the gas journals next. The fact that the private sector is having to import coal now while there are stocks available at the pitheads emphasises the different nature of the coal that is required.
The noble Earl, Lord Halsbury, shares with me a concern about a youngster. He has a new

741
great-grandchild. I have a great-niece whose future is important to me. It is important that we protect the future. I share the view that nuclear power gives us some of that protection. I hope the noble Lord, Lord Jay, will agree with that view. However, I do not share the view that an independent process involves protecting miners before offshore workers and protecting coal before gas. However, I am sure the noble Earl will be pleased to know that Slough Estates is commissioning a new coal-fired generating capacity. I hope that balances his concerns.
My noble friend Lord Dudley asked me to address specific questions. The savings in the cost of electricity from the proposed new coal contracts from next year should result in savings of around £300 million. We expect these savings to be passed through in full to the electricity bills of smaller customers, including domestic users. My noble friend also asked about the average delivered costs of coal delivered to power stations compared with the costs of gas. I shall have to write to my noble friend on that matter.
The noble Lord, Lord Desai, made many points. One has to envy the dexterity of thinking of his pupils. He asked whether gas and electricity were not competitive. The transmission and the distribution of those commodities constitute monopolies and therefore they are regulated. However, the generation and supply of those commodities can be and are being opened to competition. The noble Lord asked whether or not the pits that British Coal had proposed to close made heavy losses. However, at the same time he conceded that he had merely seen the accounts and therefore it was not easy to define the figures. I believe the noble Lord is overlooking two points. One is that the coal prices paid by the electricity generators at the moment are artificially high. In April they will fall substantially when new contracts are agreed. Secondly, the requirement for coal on the part of the electricity generators is likely to fall by 25 million tonnes. New factors will come into the equation.
The noble Baroness, Lady Seear, spoke with her normal care and fluency. She stressed that good management is needed in the industry. We have seen enormous changes in the management of British Coal. British Coal is to be congratulated on its ability to introduce quality programmes for its workforce. Relations between the employers and the employees have changed enormously in a way which I am sure pleases the noble Baroness.
Yesterday my right honourable friend asked for a moratorium from British Coal. The noble Lord, Lord Donoughue, asked us to look into the rail freight issue. I can definitely say that we shall do so. I am delighted to say that. I take on board the list of requirements the noble Lord feels should be considered in relation to that issue.
I shall not pretend that I enjoyed being in the firing line yesterday. I am beginning to think that the word "Statement" will be engraved on my headstone. However, it was appropriate that I should be on my feet, not only because of my roots but because for 30
742
years I have worked in industry, at a time when the manufacturing edge was lost to competing nations. We let them overtake us. We always seemed to be at the back of the business cycle. In order to ensure that we can regain our rightful place in the manufacturing scene—a matter on which there seems to be no disagreement in your Lordships' House—it is important, and the Government are aiming to ensure, that we have competitive energy supplies and that British coal is strong and competitive within those to supply a further source of fuel.
I am concerned about the allegations of short-termism that I heard today. I assure your Lordships that we in the DTI are determined to help build and support our manufacturing base. We believe that we can match the best in the world. Inward investment successes have proved that the workforce certainly can and has.
We worry about the miners, but we also worry about their children. There is no growth of jobs in the mining industry. One inherits the future. There are two statements which I heard in the summer which gave me optimism about the future. Chancellor Kohl was heard to tell the Germans that they must work harder. That is not a message which has so far come out with great frequency. Secondly, a French Minister suggested that his country should stop closing for August. There are changes on the Continent and all the problems are most certainly not ours.
My noble friend Lord Dudley raised the question that it is wrong to use public money to subsidise a declining industry. We must build for the future.
I should return to the Motion before the House. I have already referred to the moratorium which the Government have placed on further pit closures and the review that is to be conducted. A final decision on the closures that should be approved will be an extremely difficult one and, as my noble friend pointed out, is unavoidably a decision for Government. It is a responsibility that only the Government can accept. It must be for Government to conduct the review, with wide-ranging consultation, not only of the providers of energy but also the customers, the trade unions and other interested parties. Then Parliament must be given a full and proper opportunity to debate the findings of the review in the context of the Government's energy policy.
As my noble friend the Lord Privy Seal has assured the House, there will be the fullest possible opportunity for all concerned to make known their views. He has also assured the House that those views will be considered very carefully before final decisions are taken. We shall bring the facts to the House. We shall talk about the facts, and from there the decisions can be analysed. It is therefore with great pleasure that I add my recommendation to that of my noble friend that the Motion before the House should be rejected.
10.18 p.m.
On Question, Whether the Motion shall be agreed to?
Their Lordships divided: Contents, 125; Not-Contents,100.

Division No.1

CONTENTS

Airedale, L.

Jay, L.

Alport, L.

Jenkins of Hillhead, L.

Archer of Sandwell, L.

Jenkins of Putney, L.

Beaumont of Whitley, L.

Judd, L.

Belhaven and Stenton, L.

Kagan, L.

Birk, B.

Kennet, L.

Blackstone, B.

Kirkhill, L.

Blease, L.

Lawrence, L.

Blyth, L.

Llewelyn-Davies of Hastoe, B.

Bolton, L.

Lockwood, B.

Boston of Faversham, L.

Longford, E.

Brightman, L.

Lovell-Davis, L.

Brookes, L.

Lucas of Chilworth, L.

Bruce of Donington, L.

Macaulay of Bragar, L.

Callaghan of Cardiff, L.

McIntosh of Haringey, L.

Carmichael of Kelvingrove, L.

Mackie of Benshie, L.

Carter, L.

Mallalieu, B.

Chichester, Bp.

Masham of Ilton, B.

Cledwyn of Penrhos, L.

Mason of Barnsley, L.

Clinton-Davis, L.

Mayhew, L.

Cobbold, L.

Merlyn-Rees, L.

Cocks of Hartcliffe, L.

Mishcon, L.

Colville of Culross, V.

Monkswell, L.

Craig of Radley, L.

Morris of Castle Morris, L.

Dacre of Glanton, L.

Mulley, L.

Darcy (de Knayth), B.

Nicol, B.

David, B.

Ogmore, L.

Dean of Beswick, L.

Palmer, L.

Desai, L.

Parry, L.

Donaldson of Kingsbridge, L.

Perth, E.

Donoughue, L.

Pitt of Hampstead, L.

Dormand of Easington, L.

Ponsonby of Shulbrede, L.

Dunrossil, V.

Prys-Davies, L.

Ezra, L.

Rea, L.

Falkland, V.

Redesdale, L.

Fitt, L.

Richard, L.

Foot, L.

Robson of Kiddington, B.

Gallacher, L.

Rochester, L.

Galpern, L.

Rodgers of Quarry Bank, L.

Gibson, L.

Russell, E.

Gladwyn, L.

Seear, B.

Graham of Edmonton, L. [Teller.]

Sefton of Garston, L.

Selkirk, E.

Gray, L.

Serota, B.

Greene of Harrow Weald, L.

Shaughnessy, L.

Gregson, L.

Sheffield, Bp.

Grey, E.

Stedman, B.

Halsbury, E.

Stoddart of Swindon, L.

Hampton, L.

Strabolgi, L.

Hamwee, B.

Taylor of Gryfe, L.

Hanworth, V.

Thomson of Monifieth, L.

Harlech, L.

Thurlow, L.

Harris of Greenwich, L.

Tonypandy, V.

Henderson of Brompton, L.

Tordoff, L. [Teller.]

Hollis of Heigham, B.

Turner of Camden, B.

Houghton of Sowerby, L.

Underhill, L.

Howell, L.

Varley, L.

Howie of Troon, L.

Whaddon, L.

Hughes, L.

White, B.

Hutchinson of Lullington, L.

Wilberforce, L.

Hylton, L.

Williams of Elvel, L.

Hylton-Foster, B.

Winstanley, L.

Irvine of Lairg, L.

Young of Dartington, L.

NOT-CONTENTS

Aberdare, L.

Brabazon of Tara, L.

Aldington, L.

Butterfield, L.

Arran, E.

Cadman, L.

Astor, V.

Caithness, E.

Balfour, E.

Campbell of Croy, L

Barber, L.

Carnegy of Lour, B.

Belstead, L.

Carnock, L.

Bessborough, E.

Chalker, B.

Blatch, B.

Chilver, L.

Boardman, L.

Colnbrook, L.

Borthwick, L.

Colwyn, L.

Boyd-Carpenter, L.

Cork and Orrery, E.

744

Cranborne, V.

Mackay of Ardbrecknish, L.

Crathorne, L.

Mackay of Clashfern, L.

Crickhowell, L.

Mancroft, L.

Cross, V.

Margadale, L.

Cumberlege, B.

Monk Bretton, L.

Denham, L.

Morris, L.

Denton of Wakefield, B.

Nelson of Stafford, L.

Donegall, M.

Newall, L.

Dudley, E.

Oxfuird, V.

Eccles of Moulton, B.

Pender, L.

Elles, B.

Plummer of St. Marylebone, L.

Elliott of Morpeth, L.

Prentice, L.

Elton, L.

Pym, L.

Ferrers, E.

Rawlinson of Ewell, L.

Foley, L.

Reay, L.

Fraser of Carmyllie, L.

Renfrew of Kaimsthorn, L.

Gardner of Parkes, B.

Renton, L.

Gibson-Watt, L.

Rodger of Earlferry, L.

Glenarthur, L.

St. Davids, V.

Goschen, V.

Seccombe, B.

Gridley, L.

Selsdon, L.

Grimston of Westbury, L.

Sharples, B.

Hacking, L.

Skelmersdale, L.

Hailsham of Saint Marylebone, L.

Stewartby, L.

Strathclyde, L.

Harmar-Nicholls, L.

Strathmore and Kinghorne, E. [Teller.]

Harvington, L.

Haslam, L.

Thomas of Gwydir, L.

Henley, L.

Thorneycroft, L.

Hesketh, L. [Teller.]

Trefgarne, L.

HolmPatrick, L.

Trumpington, B.

Howe, E.

Ullswater, V.

Joseph, L.

Vivian, L.

Killearn, L.

Wade of Chorlton, L.

Lane of Horsell, L.

Wakeham, L.

Lauderdale, E.

Whitelaw, V.

Long, V.

Windlesham, L.

Lyell, L.

Wyatt of Weeford, L.

McColl of Dulwich, L.

Young, B.

Resolved in the affirmative, and Motion agreed to accordingly.
10.27 p.m.
Lord Cledwyn of Penrhos: My Lords, after a most impressive debate—I am sure that noble Lords in all parts of the House will agree with that conclusion—we have had an equally remarkable result. I hope that the noble Lord the Leader of the House will convey this to his colleagues in another place as soon as possible so that they may come to a similar result tomorrow evening.
Lord Wakeham: My Lords, perhaps I may say to the noble Lord the Leader of the Opposition that I accept the first part of his advice. I am not so sure about the second part.

London Docklands Railway (Lewisham, etc.) (No.2) Bill
Brought from the Commons; read a first time, and referred to the Examiners.
London Regional Transport (Penalty Fares) Bill
Returned from the Commons with the amendments agreed to.
Price's Patent Candle Company Limited Bill [H.L.]
Returned from the Commons agreed to with an amendment; the amendment was considered and agreed to.

Greater Manchester Light Rapid Transit System (No.4) Bill [H.L.]
Returned from the Commons agreed to with amendments; the amendments were considered and agreed to.
House adjourned at twenty-eight minutes past ten o'clock.