Coal Review (Hansard, 25 March 1993)

HL Deb 25 March 1993 vol 544 cc452-68 452

§ 4.7 p.m.

§ The Parliamentary Under-Secretary of State, Department of Trade and Industry, (Baroness Denton of Wakefield)
My Lords, with the leave of the House, I should like to repeat a Statement being made by my right honourable friend the President of the Board of Trade in another place. The Statement is as follows:
"With permission, Madam Speaker, I should like to make a Statement on the conclusions of the Government's Coal Review. I must ask the indulgence of the House for what will be a lengthy Statement. I understand that my right honourable friend the Leader of the House will be making arrangements for a debate early next week.
"The House will recall that this wide-ranging review was to look at the prospects for the 21 pits proposed for closure by British Coal last October in the context of the Government's energy policy.
"First, I should like to pay tribute to the Trade and Industry Select Committee for the detailed work in its report.
"I have a number of important new announce-ments to make about future opportunities for the British coal industry.
"I am pleased to be able to tell the House that the generators and the Regional Electricity Companies have now formally confirmed their intention to enter into base contracts and the necessary back-to-back contracts which will enable British Coal to supply 160 million tonnes of coal over five years, with 40 million tonnes in the first year and 30 million tonnes in each of the next four years.
"Madam Speaker, the Select Committee iden-tified the central issue: that it is only sensible to produce coal for which there is a market. The key question then becomes how big that market is.
453 "There is inevitably great difficulty in predicting the size of a long-term market as complex as the one for coal. The dominant market is in the England and Wales electricity supply industry. Estimates of the size of this market vary widely and a number of different fuels compete for it.
"It is central to the Government's energy policy to help create competitive energy markets within which consumers can obtain electricity produced from a diversity of sources at competitive prices. This is the best way to keep consumers' costs down and thereby strengthen our industrial competitive-ness.
"Let me comment therefore on the fuel sources that compete with British Coal: gas; oil; nuclear; Orimulsion; coal from various sources; and electricity supplied through the interconnector with France.
"I agree with the Select Committee that it would be wrong not to take advantage of the massive public investment in nuclear power. Electricity produced from existing nuclear stations has the lowest marginal cost. The benefits should not be denied to British industry and other consumers. We will, however, wish to look closely at any requests from Nuclear Electric for approval for capital investment in relation to proposals for extending the life of any Magnox stations. We will also be bringing forward our review of the future prospects for nuclear power.
"Let me deal next with gas. It has been suggested that I should withhold further planning consents for gas fired power stations. In considering this, I must have regard to my statutory powers and responsibilities. I do not intend to interfere with existing power station consents or alter my policy in taking future consent decisions under Section 36 of the Electricity Act 1989. Consequently, matters such as the need for a generating station, its capacity, choice of fuel and type of plant remain commercial matters for applicants.
"The House will appreciate that, whatever decisions I might take on new Section 36 consents, they could not be relevant to the market for coal for at least another three years, since it would take at least this long before any new station could be brought into operation. In this context, I have decided that the Connah's Quay development in North Wales should be allowed to proceed. This is a "sour gas" project of a kind which the Select Committee favoured. I am also today granting consent to two smaller projects, one using sour gas at Rydale in North Yorkshire and a combined heat and power scheme at Aylesford in Kent. Together these three projects will involve investment of over £2 billion and will lead to the creation of over 5,000 construction jobs as well as several thousand in related industries.
"I have considered carefully the position of Orimulsion. As my right honourable friend the Chancellor of the Exchequer announced on 16th March, Orimulsion, like other oil substitutes, will be subject to hydrocarbon oil duty. As such it will 454 bear duty at the same rate as heavy fuel oil. It will also be subject to the normal environmental controls for which Her Majesty's Inspectorate of Pollution are responsible. There are existing binding contracts for the import of Orimulsion into the United Kingdom with which the Government have no powers to interfere. The Government have, however, been informed that Orimulsion imports to the United Kingdom are likely to reduce by at least 500,000 tonnes equivalent of coal a year from current levels and to remain at the minimum contractual level for the foreseeable future.
"In one area I have been driven to a different conclusion from that reached by the Select Committee.
"They recommended that I should remove EdF's non-leviable status and ensure that British-produced electricity should gain access to the French electricity market and to third markets through France. I have considered this carefully and I published on 18th March a summary of the legal advice I had received.
"The position is clear. Any governmental measure to prevent or restrict imports of electricity across the interconnector with France would run counter to Article 30 of the Treaty of Rome. Further, the Government would be at financial risk under the indemnity given to the National Grid Company at the time of electricity privatisation and reported to this House.
"EdF's non-leviable status could not be removed without giving EdF the benefit of levy payments. In other words EdF would have to be given the same premium for its electricity as is now given to Nuclear Electric and financed by the levy. Far from reducing imports from France this would reinforce their position and our consumers would end up paying more for their electricity.
"Madam Speaker, I have to tell the House that I see no prospect of reducing the net amount of electricity coming across the interconnector to zero as indicated by the Select Committee.
"However, my honourable friend the Minister for Energy and I have explored the scope for sales of electricity to France across the interconnector. The Minister has had talks with his French counterpart and the indications for sales in later years are good. Confirmation of this came in the announcement earlier this week of an eight-year export contract representing potential sales in excess of £100 million from the United Kingdom to France. The House will also wish to note that the latest forecast shows that sales by EdF in the UK are likely to decline progressively and significantly.
"I must now address that section of the market which is supplied by deep mined, opencast and imported coal. The base contracts I have just announced secure 160 million tonnes over five years at a value of £5.5 billion. This leaves British Coal as one of the world's largest coal producers.
"Opencast coal is a significant generator of employment, providing jobs, whether directly or indirectly, for some 17,000 people throughout the UK. It is an economic source of energy which needs 455 no subsidy from consumers or taxpayers. It can also play an important role in reclamation and redevelopment of derelict land. Whilst the Government do not think it would be right to impose arbitrary limits, British Coal have indicated in their evidence to the Coal Review that they expect their opencast output to fall over the next five years from the current level of 16 million tonnes to 12 million tonnes. British Coal's latest expectation is that opencast output will be lower still. I welcome the increased scope for deep mined coal which this represents. It will not affect British Coal's current contracts with companies who operate their opencast sites; nor will it affect the private sector opencast producers licensed by British Coal. My right honourable friend the Secretary of State for the Environment is currently reviewing the guidance to planning authorities on opencast coal. He will be announcing today how we will be carrying this forward in the light of the White Paper.
"British Coal's prospects of winning and holding a share of the wider market for coal depend on increased competitiveness. There is a critical role here for the private sector. We believe that privatisation is the only way of enabling this industry to take full advantage of the opportunities the market offers. British Coal will therefore begin immediately to prepare for full privatisation. They have confirmed that in advance of full privatisation any pits which the corporation does not itself wish to keep in operation will be offered to the private sector. The Government will be making available up to £1 million to assist in funding consultancy studies for management and employee buy-outs.
"To provide a further impetus for this, I intend to appoint a board member who will have special executive responsibility for privatisation. This will be supported by a new unit within my department. The Government will consider legislation to remove the manpower limit for private mines if this proves necessary.
"The Government have looked carefully at the position of large electricity users. I am working with the Director General of Electricity Supply to examine the circumstances under which they might bypass the pool. I will also embark shortly on further consultations with the director general, the electricity industry and large users on whether demand side bidding would improve the workings of the electricity market. In addition, the Government are reviewing the current regulation of on-site generation, which could offer large users an alternative source of electricity.
"Madam Speaker, I now turn to the most important of the Select Committee's recommenda-tions.
"I have authorised British Coal to negotiate for future contracts on the basis that it would supply at a world market-related price. The Government are prepared to subsidise the difference between that price and British Coal's cost of production. That subsidy will apply for any additional tonnages that British Coal is able to sell to the generators, 456 whether or not those are on long-tern contracts. The subsidy will reduce progressively over the period to full privatisation. The amount of subsidy will depend on the outcome of commercial negotiation, but we are prepared to embrace the range of figures put forward by the Select Committee. Those arrangements will be notified to the European Commission under the relevant state aids provisions.
"Private sector mines will also be able to seek government financial backing for supplementary sales at world-related prices on the same basis as British Coal and consistent with the relevant EC provisions provided they can demonstrate that that was for genuinely additional tonnages.
"I cannot guarantee that supplementary sales will be achieved by British Coal. But both generators have said that they will continue negotiations for such sales. To the extent that those sales fall short of the level envisaged by the Select Committee, expenditure will of course be less than that which they estimated.
"I am also aware that coal stocks are at very high levels. There are 33 million tonnes with the generators and a further 12 million tonnes at the pithead. Some reduction in coal output is therefore essential.
"As the House would expect, we have kept British Coal closely in touch with our thinking and we have provided it with an advance copy of the White Paper. Having considered that, British Coal has announced today that it is to consult on closure proposals for two of the 21 pits under review-Bolsover and Sharlston—whose reserves will shortly exhaust. Any redundancies will be subject to statutory consultation and notification requirements. British Coal has also announced that, again subject to consultations, it proposes to place the following six pits on a care and maintenance basis —Bevercotes, Clipstone, Easington, Rossington, Shirebrook and Westoe. Those six pits and the two proposed for closure in the coming months will be made available to the private sector.
"Twelve of the 13 remaining pits will continue to produce while British Coal, with government financial backing, looks for additional sales at world-related prices. British Coal is proposing that, again subject to consultations, one further pit— Maltby—will be placed on development. That will help to ensure that its reserves are available into the next century. The future of coaling in individual pits will depend on the extent to which intensive efforts over the coming months identify a market for their product or realistic prospect of sale to the private sector.
"Safety must continue to be paramount. The Government are determined to ensure, in consulta-tion with the Health and Safety Commission, that the existing high safety standards in such mines are maintained after they pass into the private sector.
"Madam Speaker, I have a general responsibility for competition, which of course includes the electricity market. Both I and the Director General of Electricity Supply have a statutory duty to 457 exercise our functions under the Electricity Act 1989 to promote competition. The Director General has the full support of my department in rigorously policing the competitive electricity market.
"I have taken the opportunity of the review to consider a number of long-term issues about the future of the industry. Clean coal technology will be vital to ensuring that coal continues to play a long-term role in the energy industries.
"The Government intend to make available an additional £12 million over the next three years to secure the future of the Coal Research Establishment before its transition to the private sector. The Government also intend to encourage links with international research programmes.
"The Government intend to publish an annual energy report to provide information relevant to business and investment decisions. In keeping with a recommendation of the Select Committee, the Government, in preparing the report, will be advised by a new Energy Advisory Panel of independent experts.
"The Government are acutely aware of the impact that any mining closures have on miners, their families and their communities. We announced a substantial package of measures in October to help areas that might be affected by closures. The Government have decided to increase the amount available to £200 million. The additional funds will allow major new projects to go ahead. Those could include a flagship business park in the Nottingham area and advance factory provision in several areas. The regeneration measures are to be co-ordinated by my noble friend Lord Walker.
"I can also announce our intention that the headquarters of the new Coal Authority proposed under our privatisation measures will be located in Nottinghamshire. In addition, my department will support the establishment of a new regional development organisation based in Nottingham to attract inward investment to the East Midlands.
"Finally, Madam Speaker, let me remind the House of what I said earlier. There can be no guarantees. The market for coal is complex and unpredictable. Even among the experts, opinions differ. I have done all that I reasonably could, consistent with economic realities and legal constraints, to increase the opportunities for British Coal.
"It is now for British Coal to make the most of those opportunities. The outcome will be settled, as it should be, in the market place. Our policies will give the industry every chance of strengthening its position and achieving future success. It is now up to the people who work in the industry to build on that".
My Lords, that concludes the Statement.

458

§ 3.27 p.m.

§ Lord Donoughue
My Lords, we thank the Minister for the Statement and for the final delivery of the White Paper. In October last year it was promised for the New Year. Since then, it has often been heralded and leaked, or mis-leaked, and the three-month moratorium became six. It covers 150 pages and we on these Benches have had less then 30 minutes to read and absorb it. However, we will do our best.
It has obviously been a painful birth and we understand the difficulties and delays which the Secretary of State has suffered. We do not underestimate the prodigious energy and creative political mind that he has put into it. But nothing could get him out of the energy trap in which his political predecessors left him, especially with the botched privatisation of electricity which structured the energy market against coal. The ideological commitment to a rapid privatisation of coal rushed him into early mass closures, and the economic failures of the Government left little to invest in his coal rescue plan.
Having made the best possible defence for the Secretary of State—I believe that that comment is permissible from an old admirer and Oxford contemporary of his—we must scrutinise the White Paper's proposals for remedying the gross errors committed in the past by the Government in terms of energy policy.
First, if you are a mining family listening to this Statement, what it proposes, in a nutshell, is that 12 pits are to be closed immediately; six pits are to cease production and be mothballed, perhaps for ever and one pit will go into non-productive development; 19 cease production and 12 have their death sentences reprieved for what appears (though I have not had a great deal of time to study all the details) to be an unspecified period ahead of privatisation, which may be quite soon. We welcome the fact that the mining industry is not to be totally butchered immediately. To that extent I believe we should be willing to be generous. We share the relief of the mining community that 12 pits will receive transitional subsidy and will not be immediately closed. But I suggest that that is not much.
This is a menu for phased closure of much of the coal mining industry, and several questions must be raised in relation to that. The basic question is whether the White Paper offers what we have lacked for many years—a long-term strategy for Britain's energy future based on a diversity of sources, including secure supply from indigenous fuel, especially coal. At first sight, I cannot see that here.
However, the paper provides a great surprise on page 12 which contains the heading "The Government's Energy Policy". We view that as progress and it constitutes a U-turn. The Government now recognise the need for an energy policy—a matter that they have frequently avoided in the past. We will closely scrutinise the paper before any future debate to see what that adds up to. But a recognition of the need for an energy policy which assumes a strategy is progress. We note immediately that there are no serious proposals to deal with the dash for gas through 459 the withholding of consents or the reduction of net imports of expensive French electricity to a net balance, as the Select Committee recommended. I believe that that should still be possible by negotiation within the EC regulations. The White Paper's proposals for French electricity imports seem to me to be vague and distant. In general, there is still reliance upon the rhetoric of market forces when, as has been said frequently in evidence to the Select Committee, there is no free market operating for energy in this country.
My second question relates to the doomed 18 or 19 pits. Will the Minister tell the House how many miners and related workers will be made unemployed by these steps? After all this time and all the study, the Government must have those basic figures. What is the estimated cost of closing those 19 mines? I am referring to the true cost which includes the social costs of direct and related unemployment, the balance sheet write-offs, the liability for closed pits, the environmental costs, the medical insurance costs of unemployed miners, the provision of free coal and so on. What would be the cost of keeping open those pits for three, five or seven years? Is there much saving for all the human suffering involved? It would help to have some numbers, which I have not found in this enormous document.
On the question of subsidy, which lies at the heart of the Government's proposals—where I sense that they look for most political approval—I can find no statement of the maximum amount available. What is the timescale? At first sight I am confused by the timescale. It says in various places that the subsidy is available until privatisation. That can be a short timescale. It says that the subsidy will diminish ahead of privatisation. If that is the short timescale, it is diminishing very soon. It is also said that it can be based on long-term contract. How long is that? The Statement says that it embraces the Select Committee's timetable, which when I look it up I find is live years. It will help me if the Minister can clarify what is the maximum available and what is the timescale of the subsidy. How is that reconciled with the timetable for privatisation when it implies that the subsidy ceases?
I now come to the proposal to license private owners. The basic question I ask is: how does this solve the alleged problem that there is no demand for coal? If there are structural deficiencies in the demand for coal, surely that applies to private as well as public coal. I do not believe that the demand market can see a difference. If the Government are saying that private coal will be dramatically cheaper than public coal, how will that be achieved? British Coal's productivity is commendable; it is rising faster than almost anywhere else in the British economy. It is the best productivity in Europe, and getting better. How will private coal do what it is impossible for public coal to do? Is it conceivable that it means skimping on safety and health, or dangerously long hours? If so, perhaps the Minister can provide guidance in that area.
Finally, the question most frequently asked in the media, in another place and especially on the government side is whether the White Paper will 460 succeed politically or is a political fix, to use an oft-used phrase. Presumably we shall soon learn. It may well succeed in that sense and get the Government out of this particular parliamentary hole. But I should like to suggest that that is not the right question, nor the relevant answer. The question should not be about political fixes. The central questions concern energy policy. Does this offer a strategy for Britain's energy future? Does it offer a decent and secure future for tens of thousands of miners and their families in the mining communities? I am afraid that the message going out to those mining communities of Britain is, regrettably, probably no.

§ Lord Ezra
My Lords, before I comment on the Statement we have just heard I should like to remind the House that I am connected with a group of companies covering a wide range of forms of energy.
The Statement deals with the central issue of the 21 pits under review. The document is a massive one, as the noble Lord, Lord Donoughue, pointed out. I trust that we shall have an early opportunity to debate it in detail. I was slightly disappointed to find that it did not point out the short-term problem—and there certainly is one—significantly in the context of longer-term policies. While there is reference to the wider issues and to energy policy, nonetheless some of the things that I looked for I did not find.
I start with the question of energy security. To cast our memories back over the past 50 years (as some of your Lordships may be able to), coal has stood the nation very well in terms of crises in that period. For example, in the immediate post-war period the reconstruction of Europe was based on coal. During the oil price crisis of the 1970s the fact that we had substantial reserves and production of coal was an immense asset to the country. No one can say that there will not be crises of that kind in the future. Therefore, I should have liked to read something about the Government's concern regarding energy security and the role that coal might play in that respect in the years ahead.
Secondly, on new technologies for using coal, there is indeed a reference to clean coal technology. I am very glad that the Coal Research Establishment at Stoke Orchard near Cheltenham, with which I had much to do during my time in the coal industry, will be assisted before it falls into private hands. However, many of these technologies are now past the stage of research. They have entered the development stage. I happen to be concerned with a company which is quite ready to go ahead using the coal gasification technology developed by British Coal at Westfield in Scotland over a number of years to apply to coal fired power stations. As it will be a development project it will require some assistance, if not necessarily directly from the British Government than at least from the Community, with support from the Government to obtain it. Are the Government moving positively in the direction of trying to see whether these new technologies work and can be marketed?
Thirdly, there is the question of the other markets for coal. We know that the electricity market dominates the sector. Nonetheless there are other important markets. There is the general industrial and 461 commercial market, in which I also happen to be involved. The coal supplied into those markets is of suitable quality and is competitive, but its production depends on a sufficient production of electricity. The two go together. I should have thought that some further reference to the way in which other markets could be developed might be mentioned. The White Paper has a chapter on the subject but it seems to be, regrettably, fairly dismissive of the other markets. I believe that they are quite important. They amount to 14 million tonnes of coal when all is said and done, which is worth retaining and building up.
On the question of privatisation, I was a little surprised to read that it is proposed that some mines should be offered up to the private sector before privatisation. I do not know how that can be reconciled with the provisions of the 1946 nationalisa-tion Act, which put all the coal reserves in the country and its production, subject to very small licensing possibilities, into the hands of what was then known as the National Coal Board. In order to be able to license mines to the private sector in advance of the privatisation legislation, will the Government have to introduce special legislation, or is there some other way in which this can be done?
On a positive note, I was very pleased to see that the Government took account of what was said about large electricity users in the debate introduced by my noble friend Lord Rochester and are trying to see whether they can obtain their supplies of electricity on a more competitive basis than going through a pool. That is a step in the right direction.
I conclude by expressing the hope that we shall very soon have the opportunity of debating this Statement and the White Paper in greater detail.

§ Baroness Denton of Wakefield
My Lords, I thank the noble Lords, Lord Donoughue and Lord Ezra, for their comments on the Statement and I shall try to answer the points that they raised.
The noble Lord, Lord Donoughue, commented that the White Paper is late. "Late" is not an appropriate word in this case. It was necessary that the White Paper was comprehensive and well done. That is what we have tried to make it and that is what I believe it is. It is a document which gives answers. He also suggested that there are no answers to the fact that coal is always at the wrong end of the market view. If the market has been tilted, it has been well tilted towards coal, with £1 billion of support a year and with this further adjustment which the Government are prepared to support to allow British Coal breathing space in which to operate and improve its productivity.
I agree with the noble Lord that much has been done on productivity in the coal industry. It is significant that British Coal produced 5.05 million tonnes of deep mined coal in February, only 10,000 tonnes less than in the equivalent period before the closure announcement. This has been achieved with 8,000 fewer employees and 10 fewer pits in production. If output continues at this rate annual production will be almost 66 million tonnes. Productivity has certainly improved, but it is still 462 significantly below the productivity of deep mined pits in America and Australia using the same technology and equipment.
The noble Lord referred to immediate closures. I think that there was a misunderstanding. The consultation process will continue and care and maintenance will allow the private sector to look at the possibilities of those pits which British Coal does not intend to continue with. On the development prospects for Maltby, this has to be tremendous news because it will allow the research and the necessary work to create a superpit in that area. This cannot be regarded by anyone as negative news.
I would point out that the subsidy is actually to the market place to provide an opportunity for British Coal. The noble Lord would not expect us to announce the subsidy in a pre-negotiation situation. I would simply repeat the remark in the Statement that it takes into account and is alongside the range of figures put forward by the Trade and Industry Select Committee. While I appreciate that noble Lords opposite have not had the White Paper for very long —I sympathise with their dilemma in that area—they have certainly had the report of the Select Committee since January.
The Government have always had an energy policy. I am sorry that it has taken a headline in a White Paper for it to be recognised that we have an energy policy. The Government's consistent policy has been to ensure the largest economically viable coal industry which the market can support in the long term. That is within our policy to ensure secure, diverse and sustainable supplies of energy in the forms that people and businesses want at competitive prices. The market provides the best means of achieving that and commitment to privatisation is the best guarantee of the industry's long term future.
The noble Lord, Lord Donoughue, suggested that it would be appropriate to break contracts on the interconnector with France. I am sure he is not seriously suggesting that the Government should break contracts.

§ Lord Donoughue
My Lords, I said that this should be done by renegotiation with the French. I am sure that it would be possible.

§ Baroness Denton of Wakefield
My Lords, the noble Lord goes to the negotiating table with rather more optimism than realism. The discussions that my honourable friend had with his counterpart Minister for Energy in France have produced quite significant moves. Obviously we regard the opportunity of a market over eight years of £100 million as significant.
I stress very firmly that the market for coal from mines taken over by the privatised sector will not be achieved by skimping on safety. I can give noble Lords an absolute assurance on that. The private sector may operate in a different, smaller-scale way which could produce coal that can be sold into domestic and industrial markets, as the noble Lord, Lord Ezra, mentioned, and which British Coal has said it cannot, because of its mining methods, produce in sufficient quantities. There is that possibility and the Statement 463 makes clear that the Government will be looking to take every possible opportunity to support and examine it.
The noble Lord, Lord Ezra, expressed his hope that there will be a debate in due course. That is a matter for the usual channels. I am sure that it will be examined. I am grateful to him for welcoming the £12 million for clean coal technology. It is an important move and it relates very much to the Government's technology policy over all. If some of the pits which British Coal no longer wishes to operate were to go into the private sector, he pointed out that it would be necessary to have legislation. As the Statement said, the Government will consider such legislation if the occasion arises.
There is absolutely no lack of concern or understanding on this side of the House for the future of the miners, their families and the communities in which they work. But I believe that the noble Lord was less than optimistic about the future for those people. Last month British Coal Enterprise conducted a special exercise on its services to miners who had volunteered for redundancy since the October announcement. About 60 per cent. of those made redundant had sought BCE help. Nearly 700 had already been found jobs. Training for an identified job had been provided or arranged for another 500. Approaching 40 per cent. of those made redundant before the end of 1992 had probably already been helped in one of those ways.
Other recent British Coal Enterprise research shows that within six months 75 per cent. of its clients who were actively seeking work have been helped in one of those ways. We should remember that the miners who will be available for other opportunities and jobs are highly skilled young men for whom there will be opportunities and who will be attractive to future employers. I believe that the Government's commitment to a £200 million package on helping to find job opportunities shows extremely well our concern for those people.

§ 4.51 p.m.

§ Lord Peyton of Yeovil
My Lords, perhaps I should first declare an interest. I am president of British Alcan Aluminium plc, which I believe is the largest private generator of electricity and therefore a very large user of coal. Is my noble friend aware that, in so far as this White Paper heralds a degree of greater flexibility— and it would appear to do so particularly in paragraphs 14.31 and 14.32—it is greatly to be welcomed? Will my noble friend call to mind the joint and unanimous submission made by Northumberland County Council, the Wansbeck District Council, British Alcan and Ryan Mining calling for greater control over the fuel economy of Northumberland? Is she aware that there is a strongly held belief in Northumberland that such control could perhaps save not only British Alcan's smelter, but the Ellington Colliery, the Blyth power station and the port of Blyth as well, and a very substantial number of jobs? I hope my noble friend realises how welcome a review of the general pattern of the electricity supply industry will be. Is she aware that many of us felt that the previous 464 Administration made a great error, in the name of competition, in setting up only two generators which perhaps have had an undue influence over the whole situation which has since developed?

§ Baroness Denton of Wakefield
My Lords, I am always impressed by the partnership which operates in the North East. The ability of people to put aside their own particular agenda and to work together for the benefit of the area is impressive. In the Wansbeck area in particular that has proven to be so. In preparing for privatisation, British Coal will be very happy to consider with interested parties proposals for the sale of regional coalmining packages. I am grateful to my noble friend for his recognition that, in opening up opportunities for people to talk with British Coal and other companies, that will be to the benefit of the market, the consumer and particular areas.

§ Lord Jay
My Lords, in deciding that it would be contrary to the Treaty of Rome to limit, imports of French electricity, did the Government investigate the extent to which nuclear-produced French electricity is heavily subsidised? Is there any evidence that the eventual decommissioning costs of nuclear power stations have been taken into account? If not, and these imports are heavily subsidised, are they not also contrary to the Treaty of Rome?

§ Baroness Denton of Wakefield
My Lords, I remind the noble Lord, Lord Jay, that the benefit of fuel flowing through the interconnector means that British industry has the benefit of competitive electricity.

§ Lord Jay
My Lords, that is not the question I asked. I asked: have the Government satisfied themselves that these imports are not heavily subsidised and therefore highly questionable under the Treaty of Rome?

§ Baroness Denton of Wakefield
My Lords, the Government are always prepared to take to Brussels evidence that there is misdemeanour under the Treaty of Rome. Were such evidence produced, we would be happy to take up the matter.

§ The Lord Bishop of Sheffield
My Lords, will the Minister note that Maltby is already a super pit? In places like Maltby and Rossington and where pits are being closed, mothballed or developed, and even in places where pits are being kept open for the present, if there can be no guarantees and everything is left to market forces, with no real restraint being imposed on gas or foreign electricity—I have no doubt that the laws would work quite differently if matters were the other way round; for example, the French would have found a way of switching off supplies—how can any plans be made for the future for the people who live in those communities by the local authorities, the school authorities, the shop owners and home owners and by all those making infrastructure plans for the future? How can those people make plans if we have no guarantees beyond tomorrow? How cart such people do anything to improve, survive, and maintain the quality of life in these sometimes very isolated mining communities?

465

§ Baroness Denton of Wakefield
My Lords, I fully recognise the right reverend Prelate's anxieties for the areas he mentioned. I hope I can reassure him that it is recognised that assistance should be available. As I said in the Statement, we have increased the package of support in England to £200 million. That will enable the people he has spoken about—the miners and the remainder of the community who have built themselves up around the mining villages—to look towards the future; to work, build and to attract investment which will have a long-term future. When we talk about the decline of the coal industry, that is not something that happened between 1992–93; it has been going on for a long time. We now have a support programme and the resources in place to help ensure that there is training. I spend a great deal of time in Yorkshire. I am delighted to say that the local authorities, the enterprise agencies and the training and enterprise councils are all working to ensure that these people have maximum help and assistance.

§ Lord Stoddart of Swindon
My Lords, is the noble Baroness aware that she has still not dealt fully and properly with the question of the French interconnect-tor? Is it not the fact that the French Government refuse to publish the full costs of their electricity even in their own country? Is it not a well known fact that to a very large extent the French in fact subsidise their nuclear electricity. While that might be all right if British jobs were not under threat, does the noble Baroness agree that, when British jobs in the mining industry are under threat, it is completely unacceptable that we should be importing into this country French electricity which is very heavily subsidised? In other words, it has been subsidised to undermine British jobs. Would it not be as well for the Government to take a much stronger line over this matter in relation to the Treaty of Rome?
The other point which I want to raise goes back to the strategic argument. It is all very well to say that at this point in time gas is a very competitive fuel, but what of the future? When gas supplies diminish, will not the price of gas increase? If it becomes more difficult to extract or import gas, will not the price go up and may not British coal at current prices then be more competitive? What if there are problems in Europe or in the Middle East and we are unable to bring gas and oil supplies ashore or to import them from the Middle East? What happens then? What happens if there is a war? And there could still be a war in Europe —indeed, there is one going on at present. What happens then if we have closed down all or most of our coal mines and we are unable to produce power for our people and for the war effort? That seems to me to be the part of energy policy which the Government have ignored, but which they ought to consider very seriously indeed.

§ Baroness Denton of Wakefield
My Lords, the noble Lord, Lord Stoddart, covered two points and I shall deal with the French interconnector first. Perhaps I may take the noble Lord back a little because it was his right honourable friend the Member for Chesterfield who introduced that, saying that the link would add to the security and diversity of the Central 466 Electricity Generating Board's source of electricity. It is not often that someone stands at this Dispatch Box and agrees with the right honourable Member for Chesterfield—

§ Lord Stoddart of Swindon
My Lords, he must have been wrong then.

§ Baroness Denton of Wakefield
My Lords, but what he identified was the fact that it is diversity of supply that protects British industry's energy supply. It is important that we ensure that there is diversity of supply and that we do not aim at one source at the expense of others. It is crucial to concentrate on those gas reserves which are economically recoverable—those where sales will cover the costs of extraction. On that basis, the United Kingdom's gas reserves will last roughly as long as coal reserves.
On the point about the French interconnector, the Government have received clear legal advice that action to cut off imports through the interconnector would breach Community law. All European Community governments must observe the law. The Government would certainly take action to ensure that the French Government met its Community obligations if we had to, and we would expect the French Government to do the same.

§ Lord Boyd-Carpenter
My Lords, is my noble friend aware that certainly until recently coal imported all the way from Australia was cheaper than coal from the British coal industry? Can she confirm whether that is still the case and, if so, give us the figures?

§ Baroness Denton of Wakefield
My Lords, I am sorry that I shall not be able to give my noble friend Lord Boyd-Carpenter those figures, but I can confirm that there is still a great difference in productivity between deep-mined coal in Australia and deep-mined coal in this country. We hope that the White Paper gives the British coal industry the opportunity to catch up by providing a subsidy on world prices.

§ Lord Sefton of Garston
My Lords, perhaps I may follow the right reverend Prelate in expressing some concern about the question of planning for the community in the future without proper information. Paragraph 2.3 on page 3 of the White Paper states: The Government intends to publish an annual Energy Report to provide information relevant to business and investment decisions". My first question is: if any private sector organisation involved in energy wants, for commercial reasons, to keep its investment decisions to itself, rather than giving them to the Government, do the Government intend to enact legislation to compel such organisations to disclose their future investment decisions?
My second simple question is: when the Government talk about the pits that are going to be mothballed and about those that will be offered to the private sector, will they consider sympathetically (as opposed to the way in which they considered the buy-out proposals in relation to Manchester's buses) any buy-out application from the workforce?

§ Baroness Denton of Wakefield
My Lords, the matter of the purchase of pits which British Coal is not 467 going to operate must be a matter for British Coal. However, I can reassure the noble Lord, Lord Sefton, that applications from the workforce, the community and from currently non-commercial partnerships will be seriously considered and will form part of the examination. I think that the noble Lord knows the answer to his first question. Obviously, we shall not force commercial companies to share their commercially confidential information, but the energy statement each year will allow people to see the overall view on which decisions are being based.

§ Lord Sefton of Garston
My Lords, in that case paragraph 2.3 is wrong when it talks about "an annual Energy Report". The Minister is now admitting that the figures that will be required to produce a realistic annual energy report will not be available.

§ Baroness Denton of Wakefield
My Lords, I am sorry if there is some confusion. That is not true. We shall, indeed, produce an annual report using independent experts (and I stress the words "independent experts") which will enable people to examine the energy situation in this country.

§ Lord Sefton of Garston
My Lords, how can that be fair?

Noble Lords
Order, order!

§ Lord Boardman
My Lords, although the closure of pits and the inevitable loss of jobs that follows from that is regrettable, I congratulate the Government on producing a White Paper which appears to recognise and to try to meet the problems that we are facing. Prior to taking any further action, would my noble friend agree that any action that increases the price of coal for which there is no market (we have about 55 million tonnes of that already) must inevitably put at risk jobs in industries that are dependent upon that energy? A balance must be struck. I hope that my noble friend will continue to bear that point in mind.

§ Baroness Denton of Wakefield
My Lords, I welcome the comments of my noble friend Lord Boardman. As I have tried to point out, it is absolutely essential that we provide British industry with the opportunity to have competitively-priced diverse sources of energy. That must be our key role.

§ Lord Rochester
My Lords, when, in the Unstarred Question to which my noble friend Lord Ezra has referred, I asked Her Majesty's Government whether they would ensure that electricity prices for major energy users were internationally competitive I said that in my view it was imperative that a solution to that problem should be put forward in the White Paper that has now been published. No such solution has yet been found. Nevertheless, perhaps I may endorse what my noble friend has said and welcome both the discussions that the Secretary of State is currently having (and those that are in prospect) with the Director General of Electricity Supply and others, and the further steps which I understand are to be taken, aimed at dealing satisfactorily with this matter. 468 I very much hope that a speedy solution will be found because—does the noble Baroness not agree?—it is urgently needed.

§ Baroness Denton of Wakefield
My Lords, my right honourable friend the President of the Board of Trade well recognises the role that the major users play in the British economy. As I said in the Statement, urgent consultations will continue. Various alternative solutions will be looked at to try to find the correct one for this problem.

§ Viscount Caldecote
My Lords, much of the Statement is extremely encouraging and constructive, but has full account been taken of the effect the proposed solution will have on the balance of payments? As I understand it, considerable quantities of coal will continue to be imported. In particular, has full account been taken of the costs—both revenue and capital—of putting the six mines on a care-and-maintenance basis? Would not it be better to spend some of that money on developing those mines so as to bring their production costs down to world competitive prices? Finally, will my noble friend give an assurance that every possible assistance will he given when selling those mines to private enterprise so that the proposition will be viable and that the purchasers will be able to sell coal at competitive prices and so keep them open?

§ Baroness Denton of Wakefield
My Lords, such matters have been taken into account. The subsidy offered to British Coal to give it breathing space to enable it to increase its competitiveness will allow it to compete with the price of imported coal. Development must be directed towards those mines which have a future and which can be world competitive so that this position does not arise again. It may not have been recognised by noble Lords opposite, but the whole aim of the White Paper is to ensure that this country has a competitive coal industry.

§ Lord Richard
My Lords, perhaps I may ask the Minister a simple, factual question about the French interconnector. She will have realised that there is concern on this side of the House as to whether something could, or should be, done about that electricity coming in from France. Have the Government requested the Commission to examine under its competition rules the possibility that state aids to the French electricity industry are excessive?

§ Baroness Denton of Wakefield
My Lords, no, but I shall repeat what I said previously. The Government would take action to ensure that the French Government met their Community obligations if we had to, and we should expect the French Government to do the same.