§ 3.34 p.m.
§ The Minister of State, Department of Trade and Industry (Lord Strathclyde)
My Lords, I beg to move that this Bill be now read a second time.
It is a measure of the seriousness with which this subject is taken that, on the first day back after the Easter Recess and on such a fine spring day, so many noble Lords have decided to speak. This Bill deals with a commitment made by the Government at the last general election to return British Coal to the private sector. That commitment was renewed last year in the White Paper following the Government's coal review.
The Bill before your Lordships is an important piece of legislation. It is a major step towards the implementation of the Government's manifesto commitment. It takes forward our continuing programme of privatisation and will enable the coal industry to find its rightful place as a competitive supplier in the energy market.
The Bill contains the Government's proposals for restructuring and privatising British Coal. It sets out the necessary provisions for safeguarding pension rights and concessionary fuel entitlements, and for safeguarding the rights of those affected by subsidence. It also reflects—and I cannot stress this too highly—the Government's determination to ensure that the present high safety standards in the industry are maintained or improved following privatisation.
Privatisation has already achieved an outstanding record of industrial success in this country. Industries such as the steel industry, British Airways, ports, and Rover cars, have been transformed. Industries which once lagged behind Europe are catching up and are now even leading within Europe and indeed the rest of the world. It is all about freedom for management to operate in a business environment, combined with high employee share ownership, which has all gone to help create a situation where privatised companies are now outperforming many other private sector companies.
Customers have benefited from the downward pressure on prices and rising standards of service. The domestic prices of British Gas have fallen by over 20 per cent. in real terms. British Telecom's customer services figures, such as those for pay phones, line installations and directory inquiries, have improved dramatically since it was privatised. There is every reason to believe that privatisation will offer exactly the same opportunities for the coal industry. I believe that it will make every use of those opportunities and create for itself a successful future.
1293 It might be helpful if I describe briefly the main provisions of the Bill. The Bill provides for the establishment of a new public sector body, the Coal Authority, to perform a number of functions for the coal industry. These are to license coal-mining; to own, and grant access to, coal reserves; as a consequence of taking ownership of coal and some of British Coal's land, to assume certain liabilities arising out of past mining, where these are not transferred to the private sector; to assume responsibility for certain subsidence damage claims; and to provide public access to information, notably geological information. The authority will be impartial and will not itself be allowed to engage in commercial mining. My department has made available to your Lordships via the Printed Paper Office copies of an explanatory note on the way it is envisaged that the Coal Authority will carry out its duties together with drafts of licensing and related documentation. Taken together with the Bill, these documents give a very full picture of the regime envisaged for the industry following privatisation.
The Bill contains the provisions necessary to enable British Coal to be reorganised into a structure suitable for privatisation and to allow sales to take place. As in previous privatisations, scheme-making powers provided in the Bill will be used to transfer the property, rights and liabilities of British Coal to other parties so as to achieve the privatisation of the business.
My honourable friend the Minister for Energy announced in another place last September that he intends to offer for sale five regional businesses, based on Scotland, Wales, North-East England, and the central coalfield which will be offered in two separate parts. Purchasers will be given the opportunity to bid for one or more of the regional businesses, up to and including all five packages. Bids will be assessed on their merits. In addition, as my honourable friend made clear in February, those pits which British Coal has since put on care and maintenance or proposed for closure will be offered to the private sector in parallel with the main sales.
Your Lordships may also wish to know that the Government hope in the very near future to take the first steps in inviting expressions of interest in the sale of British Coal. This of course does not in any way attempt to pre-empt the further consideration of the Bill in Parliament and will of course be subject to the further scrutiny which the Bill will receive between now and Royal Assent.
Our proposals for the sale of British Coal will attract new management from the private sector with flair and fresh ideas and they will give the industry's existing managers and employees, with their experience and expertise, the opportunity to make proposals to take over the running of their own industry. The Government have made it clear that we are prepared to offer financial support to help potential manager and employee buy-out teams to prepare their bids.
One of the issues of foremost concern to employees and former employees of British Coal is pensions. The Government have from the very beginning made plain 1294 our determination to safeguard the pension entitlements of those who have given their working lives to the industry, and their dependants.
After careful consideration of responses to a consultation exercise carried out last year my honourable friend in another place, the Minister for Energy, announced the Government's decisions on pensions. All pensioners and deferred pensioners of the mineworkers' pension scheme and the staff superannuation scheme and all currently contributing members will be able to leave their past service entitlements in the schemes, which, on privatisation, will be closed to new members. New industry-wide schemes will be created for employees of British Coal and its subsidiaries who are transferred to employment in successor companies.
The Bill provides for the closed schemes to be given a government solvency guarantee that will ensure that pensions and deferred pensions are increased annually in line with the retail prices index by reference to their level at privatisation. In addition, beneficiaries will be able to benefit from any fund surpluses through pension payment increases over and above RPI levels. The new industry-wide schemes will provide the same package of benefits as the corresponding existing scheme. Employees transferred to the new schemes will be given protected person status under the Bill.
The Government believe that these proposals meet in full our commitment to protect pensions under the two existing schemes. The proposals will provide security for pension entitlements earned from service with British Coal and will provide protection for pension entitlements from future service with successor companies.
Discussions are continuing between the Government and the trustees of the two pension schemes on final details of the solvency guarantee and the future governance of the pension schemes. I can tell noble Lords that progress continues to be made, although the discussions have taken longer than we had hoped. We believe that an agreement can be reached which will satisfy both sides. If the outcome means that amendments have to be made to the Bill, the Government will bring these forward at the earliest opportunity for your Lordships' consideration.
The Government have also given from a very early stage commitments that concessionary fuel entitlements will be safeguarded. Again, following consultation, my honourable friend the Minister for Energy announced that responsibility for meeting the entitlements of former employees and their dependants will be transferred to the Government. Successor companies will be responsible for the entitlements of British Coal employees who transfer to them. Taken together, these policies on pensions and concessionary fuel will, I believe, provide welcome and essential reassurance to many mining families that their hard-earned entitlements will not be jeopardised.
The Bill also makes provision to give proper protection to householders, landowners and others who may be affected by subsidence damage due to coal mining. One of the guiding principles underlying this part of the Bill is to make the regime as simple and as straightforward as possible from the point of view of the 1295 claimant while placing very clear responsibility on the licensee whose mining creates the subsidence. Under the Bill, the Coal Authority will take over all British Coal's existing responsibilities, except in clearly defined areas where licensees will be responsible. Householders and landowners will be notified to ensure that they are in no doubt against whom to claim. The Coal Authority is given a strong duty to ensure that licensees make proper financial provision for meeting claims, and the power to require that security, possibly in the form of a trust, is provided.
I turn next to the even more important issue of safety. The Government have made it clear that they regard safety as the paramount consideration in the privatisation of the industry. From the very start of the preparations for this Bill, my right honourable friend the President of the Board of Trade pledged that he would not countenance any proposals which would prejudice the safety record of Britain's coal mines. In 1992 we sought the advice of the Health and Safety Commission on the safety implications of privatisation. The Government published and accepted in full the considered advice of the HSC last year. Further copies of that advice have been made available to your Lordships through the Printed Paper Office.
The commission's advice was that it should continue to be the health and safety regulatory body for the coal industry, that the Health and Safety Executive should be the enforcement authority, and that the framework of legislation must be sufficiently robust to command the continued confidence of the industry and to ensure that health and safety standards are maintained or improved.
The commission also advised that there is already a comprehensive framework of law governing the mining industry, with a rigorous inspection and enforcement regime. The commission believes that the work it has been doing since 1983 to modernise that framework will make an important contribution to ensuring that it is adequate to the demands of a privatised industry.
The commission has largely completed steps needed to ensure that the best practice in British Coal's existing owners' instructions continues to be applied throughout the industry. Regulations were laid by my right honourable friend the Secretary of State for Employment in October last year to give legal status to a number of the most important requirements of British Coal's safety instructions.
The Bill contains provision for regulations under the Health and Safety at Work etc. Act 1974 requiring licensees to participate in an approved mines rescue scheme, reflecting advice provided by the HSC.
I know that one of the issues which we shall wish to discuss in detail when we come to Committee is that of the Opencast Coal Act 1958 and compulsory rights orders. It might be helpful if I say a few words now. It is a familiar truism that minerals can only be worked where they are found, and I think it will be recognised that the principle of compulsory access is well established. The Mines (Working Facilities and Support) Act already allows all mineral developers, including, for example, oil and gas companies, and sand and gravel extractors, to seek compulsory rights of access to minerals where it is not reasonably practicable 1296 for them to secure access by agreement. What is at issue therefore, is not the basic principle, but the procedures under which compulsory access rights should be granted, and particularly, the safeguards which these procedures should provide for landowners and others with an interest in the land which might be the subject of any such application.
The Government are providing new safeguards as regards any future use of the special procedures available to the coal industry under the Opencast Coal Act 1958. First, the responsibility of making any orders will lie with the Coal Authority and not with the companies; and the authority will not make an order unless it is satisfied that the licensee has made all reasonable efforts to secure the rights by agreement, but that it has not been practicable to do so. The criteria which we intend that the authority should use in coming to that judgment have been set out in the explanatory note on the Coal Authority's policy. Further, any orders, will only have effect if confirmed by the Secretary of State, which will only be given where he is satisfied that it is in the public interest to do so.
However, even with these new safeguards, the Government do not wish to see the present situation, in which the coal industry has access to procedures not available to other minerals industries, continued in the longer term. We have therefore set in hand a comprehensive review of the procedures for compulsory access to minerals, with the aim of producing a unified regime which would be common to all minerals industries. This review was announced on 2nd December last year. I can assure noble Lords that the Government have an entirely open mind as to its outcome. While the review is in progress, we do not believe that it would be sensible to repeal the existing coal industry procedures; in particular, because these have been amended by the present Government so that they mesh effectively with the planning system. The more general procedures, however, do not. But we are committed to the principle of a unified regime, and we have therefore proposed that the coal procedures should be repealed, as regards the making of new orders, at the end of 1999. As I have said, we have set out new safeguards to apply to any use of these procedures in the interim period.
Your Lordships may think, and I would agree, that there are difficult and sensitive issues here. But I think there is a balance to be struck between necessary change and reasonable continuity; and I believe that the Government have got it just about right.
The Government's privatisation policy is based on the belief, now widely accepted throughout the world, and indeed in many sections of the Labour Party, that enterprise flourishes best and provides a better service to customers in a commercial environment where management is free to manage without interference from government. The Bill will release the coal industry from the shackles of state control which inhibit commercial initiative, but at the same time it will ensure that the safeguards which are necessary for a privatised industry, whether they be for employees' pensions or concessionary fuel entitlements or for those affected by subsidence damage, are properly provided.
1297 Our objective for the industry is for it to become the largest economically viable industry which the market can support in the longer term. British Coal has already demonstrated that it can make dramatic improvements in efficiency and productivity. The Bill will give the industry the opportunity to take those improvements still further and become still more competitive. I have no doubt that it will make good use of the opportunities created by this Bill and I commend the Bill to the House. I beg to move.
Moved, That the Bill be now read a second time.—(Lord Strathclyde.)
§ 3.51 p.m.
§ Lord Morris of Castle Morris
My Lords, the House will be grateful to the Minister for the clear and careful way in which he has presented the Bill. Some years ago I went to the opening of the Big Dip Mining Museum in Blaenafon. Mining museums are important, and we shall be returning to them in Committee. We were shown the shining, white tiled pithead baths with rows of showers, where miners coming off shift could scrub everything except their lungs. At the end of that huge room was a small room, with only a bath in it. I asked what the room was for. I was told: "It's where they brought the dead, killed underground, to clean them up before anyone saw them: they needed a bath, you see, not a shower". There was a stretcher in the corner of that room, with the old bloodstains still on it. That is the cost of coal.
I mention it only to indicate that we on these Benches see the Bill, first and last, in human terms, and only subordinately as a commercial, financial, economic scheme. It is about strong men, doing dirty, dangerous work, and about their families and their communities, communities left derelict as one pit after another closed and there was no work for them.
It is a tragedy that has unfolded across the coalfields of the UK. In the Lancashire coalfield and in the North East no deep mines remain. Only one each remains in Scotland and Wales, while the vast, productive central coalfield of Yorkshire and the Midlands has been reduced to a tiny fraction of what it once was. What we are really confronting today is the final chapter in the rundown of an industry whose wholesale destruction we have all witnessed: 170 pits in 1985—now down to 15; an industry run down by the gross mismanagement and incompetence of its custodians of the past 15 years—Her Majesty's Government.
The seeds of that destruction were sown with the privatisation of the electricity supply industry in 1989. In the Electricity Act, coal is discriminated against at every turn. Nuclear power, which is, by the evidence of the nuclear industry itself, three times more expensive than coal-generated electricity, is ring-fenced. Regional electricity companies are obliged to buy at least 20 per cent. of their electricity from non-fossil fuel sources. That effectively means that every megawatt that Nuclear Electric generates, it is able to sell, no matter what the cost. On top of this, Nuclear Electric receives a subsidy of £1.3 billion per annum, paid for by a levy of 11 per cent. on everybody's electricity bill. It has 1298 often been said that if the coal industry had benefited from such patronage then it could give all its coal away and still make a handsome profit.
The privatisation of the electricity supply industry also encouraged gas-fired power generation on a huge scale. The regional electricity companies, in their eagerness to break the duopoly of the electricity generators, initiated the so called "dash for gas", investing millions in new gas-fired power stations and then selling the electricity to themselves. That is the rigged market and it is the rigged market and the Government's complacent delight in it that has killed the coal industry.
Nevertheless, the Government's announcement of 31 pit closures and 30,000 job losses in October 1992, was a shock. The callous brutality of that announcement was breathtaking and the nation's anger had to be bought off by "Heseltine's hoax". His White Paper was a classic piece of rhetorical drafting. Now we know the emptiness of his words. Eighteen months later not 31 pits have closed, but 35, and more are threatened.
So much for the bitter past: now for the present. The Coal Industry Bill is a substantial document extending to over 150 pages and 65 clauses. It is not reader-friendly. Its vision is distorted because it focuses on the selling of the industry and ignores the wider economic and environmental impact of the sell-off. Most of the Bill's shortcomings stem from the proposed new Coal Authority, set up to oversee the remnants of the industry. In the Bill, it is given a comfortable back-seat role. It is designed principally to be a licensing agency for potential operators; it has minimum responsibility for any wider aspect of coalmining and the vast legacy of assets and liabilities it has accrued. It is more like a village post office selling TV licences than the proper regulatory body which it surely should and must be.
As proposed, the Coal Authority is not only weak, it is blind. There are huge areas of the industry of which it would take neither control nor cognisance. Consider the workforce—both people within the industry and those who have now left. Many retired miners in this country recall vividly the harsh reality of life under the private owners. They will not forget the appalling levels of safety, injury and industrial disease. They will not forget the insecurity and the low wages paid in the past by exploitative employers. It is not without reason that one of the founding principles contained in the nationalisation Act reads:the Board shall be directed to securing the safety, health and welfare of persons in their employment.It is tragic that there is no such duty in this Bill, which is more about the maximisation of profits than the welfare of those employed in the industry.
Under nationalisation, the coal industry was transformed into the safest in the world. Under private ownership more than 1,000 miners a year were killed; today the fatal accident rate is less than one-tenth of its level in the 1930s. For a glimpse of the future under privatisation we need only look at the private licensed sector already operating in this country. Its safety record is appalling, with a fatal accident rate five times that of British Coal. Time and again in the progress of this Bill 1299 so far the Government have cried, "We have accepted the recommendations of the Health and Safety Commission". But there is still not a single safeguard introduced into the Bill.
Consider also the living standards of those workers employed by the successor companies. If the Government are serious about safeguarding miners' terms and conditions, they could easily make provision in the licensing arrangements obliging employers to honour existing contracts unless otherwise agreed by the workforce or their representatives.
The Bill will also affect the lives of thousands of former mineworkers and their families who depend on British Coal for their pensions, welfare provision and concessionary fuel. On pensions, many of the Bill's provisions can best be described as unusually unsatisfactory. For example, the Secretary of State wishes to have the power to veto any decision of the trustees "in the national interest". Such a swingeing power is not only unnecessary but represents a blatant attack on the independence and the integrity of the schemes. Trustees must be completely independent of Government control if pensioners are to have confidence that their hard-earned contributions will be protected and invested properly.
To many pensioners, their concessionary fuel represents an acknowledgement of their service to the industry. It is pleasing, therefore, that in the Bill the Government have pledged to guarantee all concessionary fuel entitlements for former workers and their widows. Yet there is still the danger that plans to privatise the administration of concessionary fuel could easily lead to cost cutting and attempts in the future to buy out entitlements. I hope we can ensure that that will not be the case.
Yet it is when we look at the environmental implications of privatisation that we see, starkly, how tiny, weak and helpless the Coal Authority is to be. Astonishingly, the Bill makes no provision for tackling the environmental hazards of minewater pollution and the leakage of dangerous mine gases that occur when mining operations cease and the pumps are switched off. These are serious problems throughout the coalfields but are more serious in some areas. In Durham, major pollution of watercourses, including the River Wear, is being held at bay only by British Coal continuing pumping operations at a cost of £1 billion per year. In Derbyshire, the entire village of Arkwright had to be relocated by British Coal because methane from abandoned coal mines was leaking into homes.
British Coal has dealt with these problems hitherto only because it operates a "good neighbour" policy. Under present law, it is not liable nor does it accept liability. So the question must be asked: what will happen when British Coal is disbanded? Will the new mine operators be such good neighbours, regardless of the cost? I beg leave to doubt it. It is absolutely essential that the Bill addresses this issue and ensures that statutory legal responsibility is assigned by the Government to the new Coal Authority.
Minewater and gas are not the only environmental hazards; subsidence is another. The Bill does give this matter some attention but, regrettably, its provisions 1300 would cause more problems than they would solve. As it stands, the Bill divides responsibility for subsidence between the new mine operators and the Coal Authority. We believe in the "polluter pays" principle; we also believe in prompt and full payments of compensation to claimants suffering subsidence damage. So, in order to avoid confusion, conflict and delay, we believe that the Coal Authority must take on full regulatory control of subsidence matters and ensure that it is fully indemnified by the mine operators against potential claims. In this way, the Coal Authority can act as the single point of contact for claimants and as arbiter in the conflicts over responsibility that will inevitably arise. Lastly, it can be the safeguard if mine operators fail to fulfil their obligations.
As regards welfare provision, it is pleasing to note that in the Bill the Government have now made a financial provision for the future of CISWO. But, alas, the amount is inadequate for CISWO to carry on its valuable work and we urge the Minister to consider further philanthropy.
However, there is one environmental issue which unites people from all parties, all walks of life, both inside and outside this House: that is, opencast coalmining. Opencast coalmining is one of the most environmentally damaging of all land uses and, of course, opencasting will be sold off along with the deep mines. There is mention of opencasting in the Bill but the most important decisions about it will be taken by the Department of the Environment in its current review of opencast planning guidelines. This is dangerous. Equally perilously, the Bill includes a provision for the continuation of compulsory rights orders for private operators for the next five years. This is an unnecessary extension and, combined with the lifting of the 250,000 tonne annual limit for private operators, it will no doubt lead to a flood of opencasting applications from private operators eager to exploit their new powers. Opposition to this is extensive; not just the Labour Party but the Coalfield Communities Campaign, the local authority associations, the Country Landowners' Association, the National Farmers Union, the Council for the Protection of Rural England, the Royal Town Planning Institute, the Campaign for the Protection of Rural Wales and members of the Conservative Party itself are all against it. We hope the Minister will take note and take heed of our amendments.
This wretched Bill will not go away. It has survived 65 hours of hostile debate in another place. We must try to mitigate its worst excesses but, in our view, the whole philosophy behind it is wrong and the Bill is misconceived and misbegotten. At its very heart stands the concept of a Coal Authority with as much power and influence as my village post office. It is an authority which, the Bill states, could have a membership of two, one of whom could be in the Bahamas for three months before he was sacked, and a quorum of one. That is utterly absurd and we can surely improve it.
But, even after the Government have fattened up the 15 remaining pits for privatisation, the enterprise is a dodgy commercial gamble. As that most sober organ the Financial Times reported on 13th January: 1301Prospective purchasers of coal mines are warning the Government that privatisation of the industry is being severely hampered by requirements that the new owners of mines must take on historic liabilities for subsidence. The liabilities could amount to hundreds of million of pounds".Potential bidders should be aware. It is a big risk; potential profits are fiendishly difficult to calculate, the contracts with the generators have only a few years to run and there will soon be a general election. Potential bidders would do well to think on these things.
Our principal concern is with the people of the mining communities. From Durham to Dyfed, there are communities and families which have lived with coal for generations and are now dying with it. I think of Merthyr Tydfil, a constituency of 76,911 which is at the heart of what was the Welsh coalfield. There, 40 per cent. of men of working age —that is those between 16 and 64—are economically inactive. In the 1960s, 21,000 men were employed in the coalfield; today, the number is 8,000. What has this Bill to offer those men? The answer is, nothing.
§ 4.13 p.m.
§ Lord Ezra
My Lords, the Bill that we are debating today represents a crucial development in the long history of the coal mining industry in Britain. It marks the close of a chapter which opened on 1st January 1947 when the British coal mining industry was taken into public ownership. During the period of some 47 years, the industry has had its successes and its difficulties, some of which have been critical. It has been a turbulent period for coal and there have been ups and downs. However, the industry has been served with dedication and loyalty by all those within it. In terms of output and employment it is a shadow of its former self and that is one of the most distressing aspects of the present industrial scene.
I joined the coal industry in 1947 and left in 1982. Before turning to the Bill, therefore, I wish to say something about the period of public ownership.
There were many outstanding personalities involved in the industry over that long period. I shall mention only three, all Members of this House. I refer first to the noble Lord, Lord Robens, who was chairman during the 1960s. He dealt with great skill and understanding with the problems of overproduction. I notice the presence here of the noble Lord, Lord Marsh, who was Secretary of State for Energy during that period.
I am glad to see that the noble Lord, Lord Haslam, is to be speaking in the debate. He was chairman after the strike in the mid-1980s and had the daunting task of guiding the industry to recovery after that traumatic dispute. Finally, I refer to the late Lord Gormley. He was an outstanding trade union leader with whom I had much to do. Many more could be mentioned who made an impact on the industry during the post-war period and some noble Lords who are to speak occupied ministerial positions connected with coal during that time.
The nationalisation of coal took place within the framework of what became known as the Morrisonian concept, which was that the basic sectors of the economy should be managed by independent boards in the public interest, and in so doing, cover their 1302 outgoings on an average of good and bad years. That seems to me to be a very reasonable concept, as one who joined the industry at that time. The powers of ministerial intervention were intended to be limited.
I believe that that concept could have worked but for one factor; right from the start, there was government intervention on a large and continuing scale. In 1947 coal was in short supply and its price on world markets had risen. But the Coal Board was prevailed upon by the Government to continue the so-called "gentleman's agreement" that had been struck with the private mine owners to peg coal prices during the war. Therefore, for a period of some four or five years thereafter, coal prices were held to the pre-war level which was at least a pound a ton below export prices—and I know that because I was at that time involved in exporting coal. I estimate that during that period, the industry could have accumulated a reserve fund of between £1 billion and £2 billion, had it been able to raise prices to a commercial level.
When the market changed in the mid-1950s and coal came under competitive pressure, the industry had no financial reserves with which to fight back. That pattern of government intervention continued throughout the whole period of nationalisation. The difficulties into which the coal industry ran were due in large measure to the way in which the system was operated by government and not, in my opinion, to the lack of effort and skill on the part of those employed in the industry.
During that long period there were many notable achievements; for example, as the noble Lords, Lord Morris and Lord Strathclyde, have already said, safety standards were consistently higher than in any other mining industry in the world. A skilled and indeed courageous mines rescue service was established. A high level of welfare was introduced for mine workers both past and present. One of the most successful industrial pension schemes was set up. High environmental standards were observed. Subsidence claims were dealt with on a proper basis. There were remarkable research achievements both in deep-mining technology and in coal usage. And not least, there have been enormous improvements in productivity in recent years, to which the noble Lord, Lord Strathclyde, referred. Those are but some of the real achievements during the period of public ownership. The overriding issue, now that privatisation is contemplated, is to make sure that those real benefits are continued into the future and not diminished under the new regime.
I now turn to the privatisation proposals as contained in the Bill. The fundamental proposition, as the noble Lord, Lord Strathclyde, made clear to us, is for a Coal Authority to be set up which will take over a number of the functions of British Coal, and will license the operations of the industry in five parts, in addition to the mines already licensed by British Coal.
There must be some doubt about that fragmentation of the industry. One of the worst periods for coal was between the two wars, as the noble Lord, Lord Morris of Castle Morris, has indicated. There was then—and my memories of it are very clear because I joined the industry just after—an internecine battle between the various colliery companies. It reached such a pitch that 1303 the Conservative Government had to intervene and impose a system of district selling organisations. We surely do not want to see a repetition of those unfortunate circumstances.
The real competition for coal now is not between pits, but between coal and other forms of energy. It would have been better, in my opinion, if the industry were kept under privatisation as a single entity. Gas was privatised as a whole; electricity had its generating capacity split into only two parts in England and Wales. It seems ironic that the energy sector in greatest difficulty should be split into the largest number of parts. Furthermore there is a general view that it would have been far better, both in the interests of the coal industry and of the nation, had new arrangements for coal been introduced at the same time as those for electricity because of the close links between the two sectors, which was referred to by the noble Lord, Lord Morris.
Apart from that major issue of the timing and nature of coal privatisation, there are a number of specific issues of importance, to which reference has been made already in many cases, which arise as a result of the Bill, and I should like to refer to some of them.
I turn first to safety. The Minister emphasised that the Government attach prime importance to that aspect. They recognise also that there have been enormous improvements in safety standards and performance during the period of coal nationalisation. That is supported by the report from the Health and Safety Commission dated October 1993 which shows that there has been:a massive reduction in the number of fatal accidents in the industry—in 1950 there were 476 fatalities in British coal mines, while in 1992–93 there were six. In that time the fatal accident rate for British coal mines has fallen from 0.28 per 100,000 man shifts in 1950 to 0.03 in 1992–93".The report by the Health and Safety Commission emphasises that the HSC should remain under privatisation the health and safety regulatory body for the industry, and the Health and Safety Executive should be the enforcement body. It is recognised that there should be a continuing liaison between the Coal Authority as licensor and the HSC in safety enforcement. The HSC emphasises the need for a clear demarcation of responsibilities.
Unfortunately, Clause 4 of the Bill does not make that clear, as the noble Lord, Lord Morris, pointed out. It merely imposes an obligation on the Coal Authority to prepare and:from time to time revise a document setting out such means as may, with the approval of the Health and Safety Commission, be agreed between the Authority and that Executive for securing co-operation and the exchange of information between them".That seems a particularly weak way of dealing with such an important issue as safety in the mines. Surely some reference should be made to the prime importance of safety, as there was in the Coal Industry Nationalisation Act 1946, to maintaining the high standards already established, and clearly indicating the respective roles of the Coal Authority and the HSC.
Associated with safety is the future of the Mines Rescue Service. The HSC, in its report to the Minister, accepts the importance of a national rescue capability which has been built up over the years within the 1304 nationalised coal industry. It has not yet concluded how this should be operated or funded. It inclines to the view that it should be jointly operated by mine owners. However, the process of licensing the mines could take some time and the future of the national rescue service could remain in doubt. It could lose its skill and dedication. Surely the best arrangement would be for the Coal Authority to be made responsible for operating and funding the national rescue service and to recover the costs from the mine owners as mines are licensed.
Next, there is the miner's welfare, to which the Minister referred. The Government have recognised the important role played by the Coal Industry Social Welfare Organisation (CISWO). There is a recognition that its activities must continue. However, the problem of funding under privatisation has arisen. CISWO currently has a funding of £2.3 million per annum (provided by British Coal in large measure) which is fully required to meet its welfare responsibilities. The Government have proposed a basic income of £650,000 per annum, together with £1 million per annum revenue grant from the licensed operators for a limited period of five years. It is essential that some more adequate and longer-lasting source of revenue be devised. Welfare has played an important part in the life of the coal industry since nationalisation. In my opinion, it would be unfortunate if that essential social activity were to diminish substantially under privatisation.
The issue of pensions is also vital and was referred to by both noble Lords who have spoken. I should like to remind noble Lords that the two pension funds in the industry dispose of investments totalling £17 billion. There are over 600,000 pensioners or deferred pensioners, and I happen to be one of them.
The coal pension fund is one of the most successful in the country, and has enabled benefits to be progressively improved. As we heard, the Government have accepted that there must be safeguards for those pensioners. They have guaranteed that they will continue to receive their entitlement together with indexation. Surpluses would be shared between the Government and beneficiaries. There is, however, concern about the authority given to the Secretary of State in the Bill to intervene on grounds of national interest and to make amendments to the schemes. There is also concern that some of the increments arising from surpluses could be taken away at a later date if the benefits from the schemes did not materialise, thus reducing the value of entitlements. The noble Lord, Lord Strathclyde, mentioned that further amendments might come forward from the Government. I very much hope that they will cover that issue.
I turn now to the question of subsidence, which has also been mentioned. At present, British Coal is responsible for compensation for subsidence damage owing to present or past mining operations. Indeed, there are a number of people present today who took part in the debate on the Coal Mining Subsidence Act 1991. That clearly sets out the position on what seemed to me to be a very fair basis. However, as we have heard, it is now proposed to divide subsidence liability between the Coal Authority and the new licensees. The 1305 latter would be responsible for subsidence arising out of their operations, while other subsidence responsibilities would rest with the Coal Authority.
That division of responsibility could cause confusion and delay. Moreover, as the noble Lord, Lord Morris, said, it would be far better for the Coal Authority to be responsible for meeting all justified subsidence claims and then to recover costs as appropriate from the licensees. I hope that the Government will seriously consider that issue. I am sure that amendments will be put forward to that effect.
Associated with subsidence is the risk of minewater pollution which, again, was referred to by the noble Lord, Lord Morris. It is a particularly pressing problem in County Durham. Some noble Lords may have received a very detailed publication setting out the danger which it is thought that that presents. The proposed cessation of pumping could cause severe contamination of water supplies and could lead to slippage and subsidence. I believe that the Bill needs to include a clear responsibility on the Coal Authority in that vital matter. Reference was also made by both noble Lords to the problems of opencast. That, too, needs very careful attention.
I turn now to the question of research into mining systems and equipment, and into coal usage which has been conducted very successfully by the nationalised coal industry. I should like to know what will happen to that research effort. Is it to be fragmented along with the ownership of the mines? Other countries with mining industries, even if privately owned—for example, as in Germany—have jointly-funded arrangements for research and development. I believe that we should all like to know what are the Government's proposals in that respect.
Since 1947, the interests of those who burn solid fuel in their homes have been protected by the Domestic Coal Consumers' Council. I have a special interest in the work of the council. I served as a member of it for 11 years from 1960 to 1971, and, therefore, know something about its operations. Contrary to the belief of some, there are still a lot of domestic users of solid fuel (indeed, I am glad to say that I am one)—around 3.5 million in the UK, including many who are elderly and among the poorer in the community.
Under Clause 24 of the Coal Industry Bill, the DCCC will be abolished. The Government are looking primarily to the coal trade to provide and fund new arrangements for protecting coal consumers, and are optimistic that a solution will be found in good time. Others, including the council itself, are not so sure and have made known their anxieties about the lack of progress. It is essential that coal consumers should continue to receive the protection that they need following the privatisation of British Coal. Users could be put in a most vulnerable position if the DCCC is abolished without alternative arrangements being in place to ensure their future safety and protection.
At present, there are three principal mining museums in Wales, Scotland and Yorkshire. They are all well established and serve to preserve the history and traditions of mining. I played a part in that respect when 1306 I was in British Coal—or, as I should say, the National Coal Board as it was in those days; indeed, I wish that that name had been continued—in maintaining a good link with those museums, and instituted the writing of a history of the British mining industry which has now been completed. Those museums benefit from the support of British Coal.
In view of the massive role that coal has played in the economic life of the country, it is important that those museums do not disappear with privatisation. I believe that the Coal Authority should have the responsibility of ensuring that they are adequately funded. If the Coal Authority is really to take over the responsibilities of British Coal in the wider sense, the latter is surely one of them.
Let me now conclude. It is with much regret because of my past association, that I view what is now happening to the coal industry in its greatly attenuated form. At the very least, we must ensure that the many achievements under public ownership are not lost or diminished under private ownership. I believe that it will be the purpose of our further debates during the subsequent stages of the Bill to ensure that that is brought about.
§ 4.27 p.m.
§ Lord Gray of Contin
My Lords, I am glad to have the opportunity of participating in the Second Reading of the Coal Industry Bill, which I warmly welcome. I should like to take issue—but will do so a little later—with one of the points made by the noble Lord, Lord Morris of Castle Morris, and one made by the noble Lord, Lord Ezra. Noble Lords can look forward to hearing that in due course.
I believe that the legislation before us could be the means of providing new life, new purpose and much needed success for an industry that still has a significant part to play in the provision of fuel for power generation and, to a lesser extent perhaps, for the domestic market. However, it cannot hope to flourish unless it is given the incentive of membership of the private sector and freedom from a constant indebtedness to the Treasury.
During this century, coal has provided a livelihood for hundreds of thousands of miners. It has survived bad times and played its part in the extra demands made upon it during two world wars. Its miners enjoyed a place of affection in the hearts of the people because of the dirty and dangerous nature of their work, particularly the minority who actually worked at the coal face. But over the past 20 to 30 years, that position has changed dramatically. The reasons for such a change are many and varied. Probably the most significant is that the take-up for coal has dropped from about 200 million tonnes in 1960 to about 101 million tonnes in 1992. In 1960 electricity generation took 26 per cent. of the 200 million tonnes. In 1992 it took almost 80 per cent. of the 101 million tonnes. Apart from electricity generation, the truth of the matter is that there is practically no market for coal.
The image perceived by the public is one of an industry into which vast sums of money have been pumped by successive governments, where the most generous concessionary fuel schemes are being 1307 maintained, where falling production rates prevailed and where the militant attitude of many members of the National Union of Mineworkers, culminating in the wholly disastrous Scargill strike, all played a significant part in a cooling of that warm affection. The closure of pits had been commonplace as old seams were worked out or dangerous conditions made work unsafe. I was astounded at the attitude adopted by the noble Lord, Lord Morris of Castle Morris, on the Opposition Front Bench as regards pit closures. Where was the noble Lord during all those years of Labour Government when pits were closed every week and every month? I am not criticising the Labour Government, which he presumably supported at that time, for what they did. They took the right decision but that does not mean to say that at the end of a period of Labour Government all pit closures should cease. We must be realistic. We could not expect the Treasury to continue to subsidise an industry to the extent which it had to do when the market was dropping all the time. Governments of both persuasions accepted a formula for closures which the NCB and the National Union of Mineworkers had negotiated and which worked satisfactorily. Redundancy terms were paid that were the envy of other industries which were treated less favourably.
When I was in another place I did not represent a mining area but my constituents experienced the trauma of the closure of a major aluminium smelter with the loss of 1,000 jobs overnight and another 2,000 ancillary jobs. That occurred in a rural area. Therefore, I know only too well what people must feel in mining areas when pit closures take place. However, I only wish that I had been able to obtain for my constituents the sort of redundancy money which miners are paid when they are made redundant.
Perhaps the unfortunate handling of the 1993 closures caused embarrassment to the Government and proved more costly than might otherwise have been the cause. However, in their subsequent actions regarding investment in the areas worst affected, the Government have demonstrated their continued commitment to the industry and the industry has responded with record-breaking production achievements. It is sad to think that had such improvements in production taken place 15 or 20 years ago the story of the coal industry might have been quite different. By the end of this financial year almost £20 billion will have been spent since 1979. That is more than all the investment made by every other government since the war added together. Over £1 billion has been spent this year alone.
I must make special reference to British Coal Enterprise and congratulate it on the excellent support which it has given in helping redundant miners to set up businesses of their own or to seek alternative employment. And so the scene is set for the industry to make its own way forward in the private sector. Already considerable enthusiasm is building up and new companies as well as going concerns have expressed interest. Certainly there has been no lack of interest in the 28 pits that British Coal is not keeping. Two have been licensed to RJB Mining Limited and detailed negotiations are in progress at four others. Tenders for a further four are being evaluated.
1308 The proposals to privatise the industry in five regional businesses will give plenty of scope. While I support the principle of there being no restriction on the number of bids made by any one company, I have some reservation about one company or consortium taking over all regions. I very much hope that some provision may be included for a forward work plan to be evaluated to ensure that no pits will be purchased and then not developed in a satisfactory manner. Perhaps my noble friend will care to comment on that a little later. If not, it is something to which we could return in Committee.
I am glad that the UDM has formed a consortium for an employee-led bid and that Mining (Scotland) Limited—which includes Campbell Christie, the general secretary of the Scottish Trades Union Congress, as one of its directors—hopes to bid for the Scottish region. I hope that the noble Lord, Lord Morris of Castle Morris., and Mr. Campbell Christie will have a word with Mr. Robin Cook because evidently he has said that he will renationalise the industry. I see nods of approval from the Front Bench opposite. This has certainly not put people off or diminished their interest in participating in the industry. All it has done is to highlight the differences which still exist within the Labour Party over Clause 4.
The noble Lord, Lord Ezra, said that he was disappointed that the coal industry was not to be kept as a privatised unit. I am sure that he would have been speaking entirely as an individual. I had the pleasure of seeing quite a lot of the noble Lord, Lord Ezra, while I was a Minister at the Department of Energy and he was chairman of the National Coal Board. I pay tribute to the excellent work that he did and to the esteem in which he was held by everyone who had dealings with him. However, I am sure that his noble friends on the Liberal Democrat Benches must have been a little concerned at his enthusiasm for nationalisation because their January 1993 alternative White Paper stated that they would increase the demand for coal by 50 per cent. by interfering with the market. But they conceded in their document on carbon tax of September of the same year that such a tax would increase the price of coal by 58 per cent. Far from increasing sales that—it would appear to me at any rate—would destroy any chance of world market participation. I believe that part of the Liberal Democrats' energy policy could not have been vetted by the noble Lord, Lord Ezra, before it was printed.
§ Lord Ezra
My Lords, I hope I may add a few words to what the noble Lord has just said. When I referred to nationalisation I was speaking about what I considered had been achieved under nationalisation during the period that I was involved in it. I made no further comment on that and immediately passed on to what is proposed under the Bill. I am not quite sure, therefore, that what the noble Lord has just mentioned is relevant to my remarks.
§ Lord Gray of Contin
My Lords, it may not have been relevant to the noble Lord's remarks but it was certainly relevant to the Liberal Democrats' policy on energy. The success of privatisation and competition is there for all to see. For example, since 1986 when British Gas was given its freedom, customers per 1309 employee have risen by 30 per cent. and gas sales per employee have risen by 18 per cent. British Telecommunications has increased the number of telephone lines by 40 per cent. Associated British Ports has increased tonnage per employee by five times, and still we hear no demands from employees of any of those industries which have been privatised for a return to nationalisation —and little wonder when we consider further that North Sea oil and gas, freed from state control by the abolition of the British National Oil Corporation and the privatisation of the remainder of BP, are expected to reach a second production peak this decade keeping the United Kingdom, alone in the European Community, broadly self-sufficient in energy.
A number of points arise in the legislation concerning the environment. They will no doubt be examined more closely in Committee. But I can confirm what the noble Lord, Lord Morris of Castle Morris, said about the fear of Durham County Council. I think that it has probably done a very good job at the early stage of the Bill. I am sure that many other noble Lords will also have had communication from the council. I mention the matter purely to put it on record. No doubt we shall return to it later.
I am convinced that the future of British Coal in the private sector is the only possible way forward for the industry as it approaches the next century. It will provide the opportunity to implement the productivity and efficiency improvements which British Coal still requires to become competitive in today's energy market. The Bill provides the basis either for management buy-out teams or for established companies to participate, and the fact that the Government have accepted in full the health and safety commissioners' report on safety after privatisation should calm any fears which previously existed on that score.
A challenging and exciting future awaits these new ventures in the mining industry. The expertise which has been perfected over so many years will now be shared among these new mining companies; and that will provide them with the technology which they can export particularly to Eastern European countries, many of which have considerable resources but antiquated technology. I recently attended a seminar organised by the Institute of Energy and the Parliamentary Group for Energy Studies, which dealt specifically with the initiatives in central and eastern Europe, where countries formerly dominated by Communist regimes are gradually aiming to share our goals in the private sector. Hungary, Poland, Slovakia and the Czech Republic have all expressed their aspiration for membership of the OECD and, by extension, the International Energy Agency.
I feel confident that under skilful management and with the active co-operation of a highly talented workforce the future could be very positive and successful for those companies which become involved in the new mining industry in the future. I wish the Bill a speedy passage through its remaining stages.
§ 4.43 p.m.
§ Lord Mason of Barnsley
My Lords, the Government have decreed, and another place has agreed, that the remnants of the publicly owned coal mining industry shall be privatised. Your Lordships do not divide on a Second Reading, so the die has been cast. Like the noble Lord, Lord Ezra, perhaps I may reminisce for a moment or two before I deal with the Bill.
I went underground in 1938 at 14 years of age. I was a pit boy. My coal face was two feet two inches high; even the mice were bowlegged. I worked eight hour shifts, descending at 5.30 in the morning. Conditions were appalling: thick dust, dirt, noise, heat, gas and roof rockfalls with sweating, half-naked bodies covered in coal dust. The working conditions were filthy. There were no conveniences. The pit was overrun with mice and there was pony dung everywhere, in the midst of which we ate sandwiches of bread and lard. It was all we could afford. Pork dripping was a luxury. I think that prisoners on hard labour fared better than we did. It was the rottenest and the most uncivilised work in Britain. I saw men fighting for an empty tub as they came down the roadway to the stalls—an extra tub to fill to get them above the minimum wage. That was piecework in privatised coal mining.
I saw the cattle market at the pit bottom where men were corralled together and the deputy (the overseer) looked them over and picked out those for various jobs in the seam—a most degrading and demeaning scene. Those not chosen got the menial and lowest paid jobs. There were no arguments. It was 1938 and male unemployment in those northern districts was 50 per cent. The higher the number of unemployed, the more servile the man in work becomes. I worked underground for 14 years. I was stretchered out three times and saw men killed by my side. Those are a few memories of privatised coal mining.
I joined the union. It cost sixpence a week. I was there in 1947 when we unveiled the plaque at the pithead. Nationalisation—the pits were ours. I became a union official at 23 until I entered Parliament at 28. When I left, I asked the National Coal Board, "What of my pension?" The reply was, "If you wait until you are 65 you will be entitled to 1s.6d. per week (which is 7½p) or a lump sum of £26". Twenty-six pounds for 14 years graft in the bowels of the earth. That looks pretty sick compared with the redundancy payments of today.
However, after the pits were nationalised there was a remarkable transformation. Pit safety improved. Training for young miners before going underground was introduced. Health received similar priority. There were ambulance rooms at the pithead. There was immediate casualty treatment.. X-ray units visited the mines checking for signs of pneumoconiosis and silicosis. Pit inspectors were appointed checking all the roadways, coalfaces and electrical equipment and testing for gas. Then we had pithead showers. I could now leave my clogs and pit muck at the pithead.
I became Minister of Power in 1968–69. There were pit closures. The National Coal Board closed nearly 30 in one year. But there were no demonstrations against 1311 the closures. There were no strikes by the National Union of Mineworkers. There were still plenty of pit jobs available. There was little unemployment—not the figure of over 2 million today. There was relatively no strife.
I suppose that in retrospect we should rejoice that so few pits are left and pray that the day will arrive when they are all closed, provided that we care for our coalfield communities. Prior to nationalisation between 500 and 1,000 miners on average were killed every year. Since public ownership our coal industry has become the safest in the world. I was privileged to represent that hardy, proud, courageous breed of men for 35 years in Parliament as one of their sponsored MPs.
I must, however, charge the Government with a cruelly rapid —that is the point—rundown of the coal industry, resulting in heartache, misery and unhappiness on a dehumanising scale in all our coalfield communities. Historically, it will prove to be a totally disgraceful period of government. It was a heartless action. Indeed, most men and women in the coalfields consider it vindictive. It meant a period of industrial change, the pace of which crippled communities. That will never be forgotten.
The Government will never rid themselves either of the charge that the fuel and power market was rigged to kill off coal, especially through the encouragement of subsidised cheap fuel alternatives. There was also the insensitive statement on pit closures by the President of the Board of Trade—a shock announcement which incurred the wrath of the nation. Rarely have so many different groupings from every strata of society marched together through London in condemnation of the Government's vindictive attitude against coal miners—another episode in a saga that will not easily be forgotten.
Yes, the market has been rigged against coal. Cheap coal imports of 20 million tonnes a year from countries employing cheap labour and subsidised production have involved the loss of 20 pits and about 20,000 men. Opencast coal production has risen to 18 million tonnes. It is the most environmentally damaging industry in the country. But production is destined to rise still further, encouraged by government legislation. A land grab is foreseen after the Bill is enacted.
Opencast mining has cost another 20 pits and over 20,000 men. Those are jobs lost. There is also subsidised nuclear power, including imported electricity from France—equivalent to the loss of a further five pits and about 5,000 men. Then there is the dash for gas and so on. It is the unleashing of market forces and the rush to make quick profits with no national cohesive energy policy. We have cast aside the vast investment of British Coal in the mining industry, now technologically the most advanced in the world. What a waste!
Let us also not ignore the unforgivable neglect of our coalfield communities while one of our major traditional industries was being run down and the knock-on effect for scores of allied and supportive industries. Many have gone to the wall. Unemployment in South Yorkshire area blackspots amounts to 17 per cent. in parts of Barnsley; 18 per cent. in parts of Doncaster; 16 1312 per cent. in Rotherham; and up to 20 per cent. in Sheffield. What a tragic, depressing by-product of the preparation for pit privatisation.
Now, regarding the Bill, I must register my concerns. Of paramount importance is the safety of the mines and the men. Private owners will not maintain safety investment at the level of British Coal. Therefore, will the Coal Authority be directed to secure the safety, health and welfare of persons in their employment, not just the securing of co-operation and the exchange of information with the Health and Safety Executive? Should not the Coal Authority have powers to refuse or withdraw a licence on safety grounds? Allied with this is concern regarding the future of the mines rescue service. The service is provided by British Coal and therefore should be transferred to the Coal Authority. We fear that private operators, called upon to fund this vital emergency service, will introduce a cut price option of part-timers, seriously and probably catastrophically lacking the specialist skills required in highly dangerous work. There are not many such specialists. It is a vital service, and the Coal Authority should see that it is preserved and should be responsible for it.
Unions and workers are also perturbed about the future of their pension schemes: the mine workers' pension scheme and the staff superannuation scheme. I notice that the Minister said that discussions are still proceeding. We shall seek assurances that the schemes will continue untrammelled by government intervention, especially powers of veto by the President of the Board of Trade. There does not appear to be any guarantee that the trustees will be fully independent of government control.
On the question of concessionary fuel entitlement, I gather that the Government have agreed to safeguard the position of former miners and widows. But worries still exist regarding working miners. Why cannot it be the company's responsibility to ensure that working miners receive concessionary fuel as under existing arrangements, including the freedom to take cash in lieu of coal? There is a fear that the Government are determined to slash the cost of concessionary fuel cash in lieu, to reduce future private owners' liabilities. We shall want some assurances on that score.
I now turn to subsidence and pollution. When licences have been issued to a private owner, there is a need to ensure that if the private owner cannot meet his subsidence damage claims—especially when whole streets or estates have been affected—it should be incumbent upon the Coal Authority to oversee the cost, as is the case with British Coal. It will be taking on historic subsidence liabilities, present and future. But we can visualise that claims will not be met. The restoration of property, the anxieties of householders and many land damage claims will be at risk. To date, Her Majesty's Government, through British Coal, have dealt satisfactorily with such problems and they should continue to do so through the proposed Coal Authority.
In that regard, I am the chairman of the Anglers Co-operative Association of England and Wales. We have 17,000 members, including 1,000 angling clubs. One of our major concerns is pollution caused by mine water discharges, resulting from the cessation of 1313 pumping underground on the closure of a mine. It would appear that the Government do not intend to impose any duty to prevent pollution discharges from abandoned mines on either the Coal Authority or the private operators. It is essential for the protection of the water environment that an obligation is placed on the Coal Authority and private operators to ensure that the standard of effluent discharge is satisfactory to the National Rivers Authority. Otherwise, the private mine owners will have carte blanche power to turn off all pumps and pollute rivers without liability. In this day and age, that is totally unacceptable. It is wrong that the private owners, British Coal and the Coal Authority should be able to walk away from liability for environmental damage.
During the Committee stage of the Bill in another place the Government sympathised with the problems of CISWO—the Coal Industry's Social and Welfare Organisation. They have been prepared to offer some financial assistance. CISWO provides social welfare and benefits for 500,000 beneficiaries, covering mostly the aged, the frail, the ill and disabled miners, usually on small incomes. There are 72,000 people in receipt of benefit, suffering from pneumoconiosis, and thousands more with chronic bronchitis and emphysema. CISWO also helps miners' widows. It helps with holidays for disabled miners and the provision of special aids and adaptations for disabled people. It deals with convalescent homes and holidays for mentally and physically handicapped children. It services charitable trusts and welfare schemes in many mining communities.
It is unlikely that private owners will contribute to an organisation which is financing health, welfare and social activities of former workers and their families, not forgetting the playing fields and sports fields, the paraplegic centre, the colliery brass bands and mining museums. The whole framework and social structure in our mining communities depends greatly upon the activities of CISWO. There must be a fresh, sympathetic assessment by the Government. CISWO cannot possibly maintain its existing commitments and level of essential services in the long term and, in addition, cope with the new wave of pit closures.
British Coal Enterprise is not mentioned in the Bill. It has done remarkably well. It has helped create about 87,000 employment opportunities. May I ask, therefore, how the Government see its future in the privatisation era? It is a successful subsidiary of British Coal; its survival is essential. May we have an assurance that funding for British Coal Enterprise will continue?
The All-Party Coalfields Campaign Committee has been superb in alerting the nation and Parliament to the problems arising from pit closures. It has been well organised, linking local authorities with similar problems. It has made a massive impact on Brussels, the regional commissioners, the DTI, the RECHAR requirements and all the elected representatives in coal mining areas. It can be assured that all its efforts have been most appreciated and the organisation has proved its worth.
1314 Finally, since 1947 we have developed the finest and safest coal mining industry in the world—a fine example of public enterprise. I believe that the British people were proud to be seen supporting men who worked in the most hazardous industry, combating nature in the bowels of the earth. That proud and dignified race of men and women formed highly respected and closely knit coalfield communities. The Bill has come like a death threat to them all. It has been shattering. It has reduced our mining villages to ruin and despair. It will take years to revive them. But, with their spirit and determination, they will try; and I believe that they will succeed. That is another struggle that has to be faced and fought. I would have wished this Bill to fail. In the light of the nationwide damage that will be done to so many of our communities, industries and people, the Government should feel ashamed.
§ 5 p.m.
§ The Lord Bishop of Sheffield
My Lords, I declare a professional skill in conducting funerals. I rather hope that this measure is not a funeral, and that those noble Lords who have spoken of the great growth of the industry that will come with privatisation are right. Perhaps they are. Nonetheless, for those of us who have lived most of our lives in coal-mining areas it feels like the last rites for an industry—one has to add, an industry that has been slain in its prime. The noble Lord, Lord Gray, said that pits have always been closed. But they have not always been closed at the very height of their productivity and prosperity. It is that fact which is particularly hard to bear.
It is not of that matter, however, that I wish to speak. It is too late for that. One of the things that I learnt when taking funerals was that one's concern was not with the corpse:the souls of the righteous are in the hand of God, and there shall no torment touch them",We dare to hope! One's concern was with the mourners, the bereaved. My sadness at this particular Bill is that the tasks of the Coal Authority, which could give so much comfort to the mourners, the victims and even the survivors, are somehow or other set down in so narrow a form that it seems unlikely that it will have the opportunities that it could have.
I shall speak first, and for a moment only since so much has already been said, of the survivors—a growing number of whom (we hope) will work in the revived collieries of the future. We have heard what conditions in the industry were previously like under privatisation. God be praised, it could not be as bad as that in the future. I was encouraged by the fervent words of the Minister on safety. But it is worrying that those words do not appear in the Bill. The Bill is brief on the subject. I have to say that those miners to whom I have spoken are not reassured by the words. They are proud of what British Coal has achieved in respect of safety. (That has been said by a number of noble Lords.) They do not like what they see elsewhere. They wish—and I share their wish passionately—that there could be written into the Bill a responsibility to the Coal Authority for safety that is comparable to that which British Coal has at present.
1315 Many have spoken of what we all know will be the effect on our local communities of the closure of the mines. Indeed, I believe that the figures for unemployment given by the previous speaker are optimistic. It is not difficult to find areas close to the mines where they are much worse. It is almost a responsibility of this Bill that it should help the unemployed.
I echo what the noble Lord, Lord Mason, said about about British Coal Enterprise and the strained silence on this subject. It is a body at which everybody began to scoff, until they thought that they were to lose it. They suddenly found that it was making jobs where jobs were most needed.
I worry a great deal about the phrase in the Bill about land sales. It refers to "the best terms". I ask: the best terms for whom? The "successor authority"—I must get my vocabulary right—the Coal Authority could play a great part in the industrial regeneration of the coalfield communities. That authority will have the land. If a way can be found for it to be released speedily and on sane and sensible terms to bring jobs to those areas, then that too ought somehow or other to be written into the Bill, so that it does not just depend on goodwill later on.
One of the points that has already become clear to me during this debate is how much we have taken for granted in the past British Coal's "good neighbour" policy; and how much those who live in the coal-mining areas have benefited from, and if the truth were told have not always appreciated, that good neighbour policy. But we have no reason to believe that it will exist in the privatised mines of the future. It needs to be built into the structure of the Coal Authority.
Coal mining is not quite like any other industry, in that its effect upon the community in matters such as subsidence, pollution, and so forth—I shall not go through all that again because it has been said—can be devastating. In relation to subsidence and pollution, speedy help is needed. It is no good knowing that there will be compensation 20 years on. It is now that one wants one's house and one's church (I have a vested interest here) propped up—not after a long, expensive and exhausting legal confrontation with people who are so much better resourced and so much cleverer than oneself that one is tempted, and indeed expected, to give up half-way.
There are smaller issues involved as well. To those who are involved, the museums are not a small issue. The museums will go under unless this Bill provides something of the support that is at present given by British Coal. However we regard the future of the coal industry, none of us can dispute its significance in the past. We want a record of that significance to be preserved. It is within the power of this Bill to preserve that record. It is equally within its power to see that it is lost. I hope that something can be done.
I am one who believes that we are making a terrible mistake in underestimating the importance of coal. Other fossil fuels will be lost. The alternatives, whether nuclear, wind or tide, have more disadvantages the more we go in for them. It is of the greatest importance that somebody somewhere looks to the long-term future of the coal industry in research and so forth. I am 1316 presumptuous in saying so, but I do not quite share the more enthusiastic view of the noble Lord, Lord Ezra, of the part played by British Coal and the NCB in that respect. I believe that had we done a little more research on how to get the stuff out of the ground more easily, we might not have had some of the problems that have occurred in recent years. Somebody has to do that research. I do not really see that anybody is to do it, as I understand this not very reader friendly Bill.
In thinking about the mourners, we can go beyond the coalfield communities that are most affected by what has happened. It has all been done for the sake of the customers. But we do not really see much benefit for the customers. I continue to puzzle as to why, when in the cause of cheap electricity I have seen the like of those communities destroyed, I look out and do not find that cheap electricity pumping into my house. One day perhaps that will happen.
It is in respect of opencast coal that I found what the Minister had to say most alarming. I could tell that his conscience was not very clear on opencast coal. He is bothered about it. But the Government's "bothering about it" is in relation to the landowners. My "bothering about it" is in relation to the people who live where opencast mining takes place. It is an almost intolerable experience to have opencast mining going on around one in built-up areas. It is happening and will go on happening on a massive scale if something is not done about it in this Bill. The great British public deserves to be protected against it unless there is a more overwhelming economic need than has ever been suggested for this unpleasant, destructive activity going on. So far as one can see, the only real reason for it is that it enables some people to get rich more quickly. In itself, that does not seem to be a sufficient reason for maintaining something that is so hurtful to so many people while it is happening and indeed afterwards.
The word that I feel is missing from the Bill is "generosity". The destruction of the coal industry may have been inevitable—I do not believe so, though many noble Lords may think otherwise—but the price has been paid by a large number of people largely in localised areas of the country. I should like to see their interests—and a far reaching series of interests—protected with greater warmth, wholeheartedness and generosity. I agree with what was said almost at the beginning of the debate by the noble Lord, Lord Morris of Castle Morris. What we need is a coal authority which has built into its purpose something more than the giving of licences; which has built into it protection of the real interests of the British people.
§ 5.10 p.m.
§ Lord Peyton of Yeovil
My Lords, reference has been made on more than one occasion this afternoon to a user friendly Bill. Before I go further, I should like to suggest that in modern times such a thing is a mere pipe dream. Presumably, what is meant by a user friendly Bill is a Bill that one can read without discomfort, understand with some ease and whose aims on the whole one can generally applaud. On the first two counts every piece of modern legislation for many years has failed. I welcome the reference to a user friendly 1317 Bill, particularly by the right reverend Prelate. I feel that it is a dream that must be left for another and better world.
I agreed with much that was said in an admirable speech by my noble friend Lord Gray of Contin. To an extent I share his welcome of the Bill, although I am not quite so enthusiastic. I believe that the Bill has a number of blemishes. On the other hand, the Bill is to be welcomed in that at last it frees what remains of the coal industry from the rigidities of public ownership and, above all, from the shackles of the Treasury—a body of people who, to my mind, ought never to be allowed to have anything to do with any industry, for the very good reason that they are indissolubly wedded to the short-term view.
One of the major problems of recent years has been that the Government—not the present Ministers but their predecessors are responsible—very firmly shoved the cart in front of the horse. The electricity supply industry preceded coal whereas it most certainly should have been the other way round, as many of us said at the time. Had that been so, the two generators would not have been able to hammer the coal industry in the way in which they did. Moreover, the new coal industry would have had the opportunity of re-grouping and the freedom to manage, which it certainly has not had over the past two or three years. I was somewhat disappointed by its apparent immobility and rigidity and sorry that it did not find it possible to do anything other than close pits. The run-up to the Bill has been very long and painful. If the Government had had the opportunity to go over the course again, I feel sure that they would have acted differently in many respects.
There are some extremely important points to which I should like to make very brief reference and then leave them for more detailed attention at a later stage. I refer to pollution and then pensions. I should like at this point to pick up a remark made by my noble friend in his opening speech. He said that the discussions had been taking rather longer than before. I am the most unsuspicious of men, but that remark caused to spring up in my mind the shadow of a fear that perhaps the same people who had been discussing railway pensions for such a long time were parties to this other matter too. In that case, I hope that somebody will show those very slow moving minds the direction to move their feet so as to give the accelerator just a little touch.
Other matters which will obviously attract considerable attention are subsidence and compulsory purchase. I have the gravest doubts about the wisdom of transferring compulsory purchase powers to a private company when those same powers were used on such very few occasions by British Coal and the National Coal Board.
Others of your Lordships will be as interested as I am in the powers of the Secretary of State. I suppose, by the way, that the "Secretary of State" means the President of the Board of Trade, which means in turn that the President of the Board of Trade does not in fact exist. Such a state of affairs would obviously be greeted with mixed feelings by many people. But let us assume that the Secretary of State, as President of the Board of 1318 Trade, will have that very wide panoply of powers. As I have said before in this House, I am not an absolutely wholehearted subscriber to the belief that Secretaries of State are either omniscient or infallible. One should pause and take care before conferring too many powers on them.
Perhaps I may change to another aspect and raise the question of the industrial strategy of the Government. The Government have always been a bit coy about it. On a number of occasions noble Lords have asked the Government to state their industrial strategy. We felt that it would be helpful to industry and to the Government in their relations with industry to reach an understanding. It is very different from interfering with detailed management. On the whole, I had the impression that the Government said that they had an industrial strategy but that it was quite unnecessary to say what it was. Such a strategy is particularly important when it comes to dealing with manufacturing industry, the significance of which has come to enjoy a belated recognition on the part of even the most important and highly placed personages. I hope that my noble friend will be able to confirm it later.
I should like to know whether the events of the past few years have occurred as part of that industrial strategy or whether they have occurred despite it. What is absolutely certain is, that those events have had a tremendous impact upon the country's economy; its people; its industries other than coal; and places, particularly mining areas.
I hope that it will not be considered entirely irrelevant for me to say that long ago, the first time when any government even thought of accommodating myself in their ranks, I was in the Ministry of Power, as it was then called, as the Parliamentary Secretary. I made a habit at that time of visiting as many pits as I could find time to visit. I aimed at one a month. I did not achieve that but reckon that I achieved one every two months or so. I learnt a great deal which I would not otherwise have learnt from books, papers or hearsay. It is an extraordinary industry and one which must be handled with care.
I share the regret of my noble friend Lord Gray of Contin in his reference to the wounds which the mining industry inflicted upon itself. But I hope that I shall be forgiven for focusing upon one specific area; that is, Northumberland. Northumberland already has an unacceptably high level of unemployment. The casualties have been coal, steel and shipbuilding. There may be worse to come. I wish to refer to the aluminium industry and at the same time declare an interest in that I used to be the chairman of British Alcan. I am still a kind of antiquated president—I am not sure exactly what presidents do. I do not have expert knowledge but I have a smattering of knowledge of what the aluminium industry is about and what it seeks to do.
Alcan first came to this country attracted by the availability of plentiful coal at a reasonable cost. One could say that British Alcan is now the base of the United Kingdom's aluminium industry and the Lynemouth smelter is its heart. As a result of the recession and distressed exports from the old Soviet bloc, the world price of metal is at an all time low. That 1319 has had its impact upon the Lynemouth smelter as it has on other parts of the world. In addition, the smelter has had to bear fuel costs for generating power which are in the top 10 highest of the 104 smelters worldwide. If that fuel price cannot be reduced to somewhere near the world average, then the other half of the smelter will close. There will be knock-on effects. There will be little chance of making anything of whatever prospects are left to the Easington colliery. Blyth port will close; Blyth power station will probably be affected. In all 3,000 to 4,000 jobs may disappear.
It is only fair that I tell your Lordships that the Minister for Energy and his colleagues listened with care, attention and sympathy to our comments. But the question which the Bill affords a reasonable opportunity to ask, concerns what steps the Government now contemplate taking to reverse the terrible decline in the North East. I am certain that the costs of doing nothing will be vast and will be reckoned in terms of misery and desolation as well as in cash.
I return briefly to the time when I had a closer acquaintance with the mining industry and the people and places of which it consists. I express the hope that my noble friends will understand the depth of feeling which exists in this closed-in industry. People understand its problems without always understanding how those problems are seen from outside. Those of us on the outside find it difficult to understand that behind the surface of toughness —and that is quite real—there is a very great depth of feeling which will be ignored at our peril.
§ 5.27 p.m.
§ Baroness White
My Lords, no one coming, as I do, from South Wales, can be indifferent to the fate of the coal industry. So much history—social, family, religious and personal—is connected with it that we must feel deep concern. But we must recognise also that one cannot live on nostalgia alone and that our duty today is to make the best we can of what is left.
As I have told the noble Lord, Lord Strathclyde—for whom I have a warm personal regard—his attitude in the House on 23rd March when we were discussing energy policy, and his attitude today of sitting with a broad smile on his face when my noble friend Lord Morris of Castle Morris was discussing matters which are to us extremely sad and serious, does not inspire complete confidence in the Government's handling of what remains of our coal industry. Privatised it will be. But we shall be dealing not only with a matter of business, but with the forces of nature which can be far stronger than those of the market, and with vital questions—in the full sense of that word—of human health and safety.
We do not know what degree of confidence we should put in the regulatory proposals for health and safety in the privatised deep or drift mines which may be left. Together with other noble Lords I received a copy of the proposals of the National Association of Colliery Overmen, Deputies and Shotfirers (NACODS). Its covering letter rightly emphasises the weakness of Clause 4 of the Bill—not the Clause 4 to which the noble Lord, Lord Gray of Contin, referred, which invites 1320 quite different fears. To my mind, it is time that clause was put to bed; but I shall not pursue that matter today. There are just 18 lines in a Bill of 160 pages devoted to,Duty of the [coal] Authority with respect to safety".Our concerns are simply not covered by the Bill. Clause 4 refers only to exchanges of information between the Coal Authority and the Health and Safety Executive. There is nothing I can find about responsibility though there is some rather unclear reference in Clause 55 to rescue teams. I am told that the Government have already turned down a proposal to introduce minimum safety requirements as part of licence conditions for the new privatised mines. Yet as several noble Lords have already emphasised, it is common knowledge in the industry that in such private mines as already exist the safety standards are markedly lower than in the mines still under the regime of the 1946 coal industry Act; namely, those still controlled by British Coal. My Lords, most of us on these Benches cannot leave the matter as it now stands in the Bill. That must be strengthened and improved.
Our concerns do not, of course, stop at operative mines. Abandoned mines present their own problems, as those of us familiar with mining areas know only too well. A relatively minor but important detail, which was referred to by several speakers, is to ensure the full availability of the geological maps of all abandoned coal mines. The Minister himself referred to this point. They must be kept freely available when British Coal disappears. I shall not go into details at the moment.
Meanwhile, we are aware of the loophole in the Water Resources Act 1991 whereby pollution clauses are held to apply only to working mines and not to abandoned ones. A useful note on this is obtainable incidentally from the Library in another place. The National Rivers Authority—I am delighted to see the noble Lord, Lord Crickhowell, in his place—has publicly expressed its concern at the legal position with regard to the Act. The NRA has only just published its own excellent survey of minewater discharges to rivers in Wales. It points out that,the spate of mine closures in recent years has led to serious discharges of growing public concern".More problems for the Committee stage!
If I may refer briefly to a more positive challenge which faces us in Wales, it is to the best way to use our unique stock of anthracite. I do not think that this has been mentioned so far by other speakers in the debate. It is a high grade, smokeless and hard coal which is found in Britain only in West Wales. It is of the highest quality and can fetch a high price. But so far it has never been adequately marketed. There does not seem to be anything sensible about it in the Bill. There certainly should be.
It has been pointed out to me that there is nothing in the Bill as it stands to enable the authority to withhold or withdraw a licence except for some form of financial failure. Surely an outstandingly bad safety record of any company which may be applying for a licence or holding a licence should be taken into account.
There are many interesting points that we can discuss about the Bill; but in fairness to other speakers, I shall not pursue them. With that happy thought, I look 1321 forward to the next stages of the Bill and plead that we have sufficient time between the stages to have some chance to try to put things right. I say that partly because we did not receive a copy of the Bill from the other place until 28th March. We were busy with some other matters between that date and 31st March. Frankly, I was not prepared to spend the whole of my Recess in reading all the debates in another place. It was only today, following the reference by the noble Lord, Lord Strathclyde, that I went to the Printed Paper Office in this House to find the explanatory documents to which he referred. I can hardly hold them up. This is one set! Would noble Lords have taken the documents with them on Recess? The answer in all parts of the House would have been no!
§ 5.35 p.m.
§ Lord Elliott of Morpeth
My Lords, like the right reverend Prelate, I have spent a great deal of my life living very close to a major coalfield —that of East Northumberland and County Durham—and so I claim to know a bit about the coal industry. In East Northumberland there is a town named Ashington. It used to be known as the biggest pit village in the world. After fighting twice there as a parliamentary candidate in the Conservative interest, I certainly believed that it was the biggest pit village in the world. It was a very difficult place for a Conservative at that time to fight. But I took greatly to Ashington where now there is not a pit at all. They have all gone.
I would just say a cheering word about Ashington and other places in the North-East like it. The unemployment level, as my noble friend Lord Peyton said, is still high—much too high—but it is not nearly as high as I have known it. In the County Durham towns of Consett and Ashington and other places there are shining new factories in which former miners are working, in very much better conditions than those described in the very moving speech of the noble Lord, Lord Mason. The noble Lord talked of his early years working at a two-foot seam. Here I would refer again to the speech of my noble friend Lord Peyton in which he said that when he was a Minister in power he tried to visit as many mines as he possibly could. When I was a prospective parliamentary candidate I sought permission from the then National Coal Board to work a shift in a mine, the Duke pit in Ashington. When I say I worked a shift in the mine, that is very much a misstatement. I was at the face in charge of a delightful senior deputy whose name was Jack Lee. I tried very hard not to get in the way. I would agree with my noble friend that one learnt a great deal from actually visiting a pit and going to the face. So it is that although we have many problems still to solve, a great deal has happened in the North-East on the plus side, and with many others I shall continue to do everything I possibly can to bring more employment to the North-East and to villages and places where there were pits previously.
My main reason for intervening in the debate is on the all-important issue of minewater pollution in the North-East, an issue referred to by several noble Lords. The noble Lord, Lord Mason, referred to it at some 1322 length. Perhaps I may add a little more on this all-important subject as will, I know, the noble Lord, Lord Dormand. Until just a year ago I was chairman of North-East Water, which company supplies 1,350,000 customers with drinking water. A large part of the company's area of supply is in County Durham, one of the past principal coalmining areas of the country, where indeed coalmining has been carried on for hundreds of years. Now the pits are closed, but a vast area of the county is undermined by workings.
The water company extracts and supplies an enormous quantity of water from the River Wear. The company's considerable concern at this time is that if pumping associated with the two central remaining mines ceases, the old workings will fill with water very quickly. Indeed, an NRA report of 1993 suggests that the end of pumping water would quickly mean the filling up of the empty pits to the water level in a few months. So I should like to suggest to my noble friend that this is a problem of considerable urgency.
At the present time the NRA and British Coal are working together trying to ascertain the impact of a gradual withdrawal of pumping. A number of bore holes have been sunk and levels are being monitored as pumping is varied. At the present time British Coal is suggesting that water will find its way to the sea naturally through disused workings. That is splendid if that is the case; but that is far from being the opinion of consultants employed by the National Rivers Authority. Pumping has ceased in certain pits which have been closed and which are close to the coast. It will take a long time there for water to rise to a dangerous level. But two pits inland are still having water pumped. It is in the all-important interest of the River Wear and the water company which extracts water from it, that pumping should carry on for some time. Alternative possibilities have been sought by the company of which I was chairman. It is conservatively estimated that if these have to be utilised, the cost of doing so will amount to about £24 million.
In addition to the problem of purifying the water, the River Wear runs through some very lovely countryside. There have been a number of times in my life when it has been suggested to me that what a lovely County Durham must have been before it was shattered by industry. Now it is not shattered by industry—which was mainly coalmining—to nearly the same degree. It is a very beautiful county. Here I pay tribute to Durham County Council which have done a very great deal to improve the environment in the whole county, particularly in the area where the pits were.
But the problem of the river is not just that of purifying water. If that river is polluted, it will be very unfortunate for the beauty of County Durham. Indeed, the Lumley treatment works look down exactly on a most beautiful piece of countryside where the Durham County Cricket Club will soon have its new ground. That is currently under construction. So the thought of that river being polluted is really awful.
My noble friend has previously referred to reviewing the legal framework for discharges from mines. It is made clear in the Bill that current abandoned mines will become the responsibility of the new authority. What is 1323 missing in that context is specific reference to the responsibility for water from abandoned mines. I believe that that is an omission which should be fully addressed by the Government and that the Bill should be suitably amended to cover that all-important aspect of it. There could be amendment to the Water Resources Act 1991. I believe that it is Section 25 of that Act which makes it an offence to pollute rivers and water courses; but for some unknown reason (I should like to know what it is) water from mines was excluded. So there is the possibility of the Water Resources Act being amended. But what I seek at this time from my noble friend and the Government is that through the provisions of this Bill financial liability should rest with the new Coal Authority and should not be a potential cost to North East Water and its customers.
§ 5.43 p.m.
§ Lord Dormand of Easington
My Lords, I hope that the Minister will recognise the value of the two contributions which we have had from the noble Lords, Lord Peyton of Yeovil, and Lord Elliott of Morpeth; and I say that not only because they have spoken about the North-East, which I know so well. I am sure that the Minister will agree that they are two of the most formidable debaters on his side of the House and it is therefore quite devastating for the noble Lord, Lord Peyton, to ask what the industrial policy is or whether there is one. That is perhaps something which we can discuss at a later date.
§ Lord Peyton of Yeovil
My Lords, I am grateful to the noble Lord for giving way. The phrase I used was "industrial strategy" which is important.
§ Lord Dormand of Easington
My Lords, I am happy to be corrected on that. I believe that that emphasises my point even more as regards strategy but I recognise the point which the noble Lord made. As the noble Lord, Lord Elliott, rightly said, he is connected with North East Water and therefore speaks about it with very great knowledge. When he was talking about the beauty of parts of County Durham, he might also have mentioned the phrase which is now going around the county that that wonderful site where the cathedral and the castle are situated in Durham City and which is one of the most beautiful sights in the country is going to have an "orange necklace". We know what that means: pollutant water is going, as it does, around about three-quarters of that particular site. That would be a terrible thing for the county.
I am sorry that I cannot say such kindly things about the noble Lord, Lord Gray of Contin. We are political enemies, but we are old personal friends. He said two things today which are repeated and with which we on this side of the House would take issue. First, he spoke about the amount of subsidy which is being given to the coal industry, and we do not deny that. The noble Lord was a very respected Minister of State for Energy so he was a party at least to some of that policy—perhaps all of it—as a Minister of the Government. Secondly, we seldom hear about the amount of subsidy which the 1324 agriculture industry receives. I do not grumble about that either, but it seems that whenever we discuss coal this argument is given to us.
The noble Lord also mentioned the number of pits which the Labour Government closed. Of course they closed many pits. Something has to be said about that. First, there were other jobs available in other pits for most of the time. When this Bill was debated in another place one of my honourable friends there pointed out the fact that when he lost his first job in the pits he was offered places at no fewer than six pits. I can say myself that some of my own relatives, including a brother, were offered places at other pits. Not only that, there was a choice with other industries. That is partly a point which the noble Lord, Lord Elliott, made. He knows about the new towns such as Peterlee, Newton Aycliffe and others. So the alternatives were there, and that should be said.
We are only half way through the debate but there has been considerable repetition on a number of issues. That shows how concerned people are about them. No doubt they will be repeated during the rest of the debate. Some noble Lords will recall that I frequently refer to and speak about unemployment, so I hope that my credentials are acceptable in certain parts of the House on that subject. I do not wish to refer to it today, important though it is. It has already been referred to by a number of speakers.
There is a fundamental and overriding question to be asked at the very start of our deliberations and it is this: why is this Bill being introduced at all? Those who are such fervent advocates of privatisation, like noble Lords opposite, say that privatisation itself provides the answer to the question. In the course of my speech today I wish to examine that proposition. First, its advocates would say that privatisation brings about greater efficiency. I challenge the Government to say which industry has brought about higher productivity than the coal industry in the past decade. In those 10 years there has been a three-fold increase in productivity. That increase has been referred to by Members of the Government. There is nothing wrong with that. It has been a success of public enterprise.
The introduction of the Bill, its advocates will also say, will save taxpayers' money. If that is so, I hope that the Minister will be able to convince me and many others of it. As I read the provisions—perhaps I shall be corrected—there is to be a continuing subsidy of £1 billion for at least the next six years or so. With the inevitable loss of jobs—here we refer to unemployment again—many millions of pounds will have to be paid in unemployment benefit; and the other side of that coin is the loss of tax revenue.
One of the most interesting—perhaps it is more appropriate to say one of the most astonishing—features of the measure is that the Coal Authority will not be cash limited. We shall be asking a number of questions about the vague position and powers of the Coal Authority in Committee, but this aspect is spelt out clearly in Schedule 1. There can be little doubt but that a great deal of money is to be spent by the new body.
Another question can be asked, and one would have thought that it was an obvious question: is the Bill 1325 related to an overall and coherent energy policy? It seems clear surely that a private industry will pursue its own objectives and interests. It has to be said that perhaps the best example —it has already been referred to—is that the electricity industry has been largely responsible for the death of the coal industry.
If the proposals in the Bill are related to a coherent energy policy it will require a great deal of explanation from the Minister. As recently as 29th March the Minister was asked about the timetable for the 1994 review of the role of the generation of energy from nuclear sources. In reply it was revealed that even the terms of reference have not yet been formulated. I remind your Lordships that the report of the review was expected by the end of 1993—I am pleased to see the Minister agreeing with that statement—but here we are with a quarter of 1994 already gone.
The short answer is that the privatisation of the coal industry is based purely on Tory dogma. That has been compounded by the depletion of some 15 years' worth of valuable gas reserves in the building of gas-fired power stations although it is completely unsuitable as a fuel for a power station base load. Furthermore, it is now clear that gas is more expensive than coal. If the Government had a coherent energy policy they would not have allowed coal imports to rise from 4.3 million tonnes in 1983 to the present 20 million tonnes with, of course, the attendant effect on the balance of payments.
I am sure that some noble Lords opposite are now saying, "But what about all that stocked coal which cannot be sold?" The answer to that question was given by the Select Committee which, I remind your Lordships, has a Conservative majority. The Select Committee made nine key recommendations about widening the market for coal—recommendations which the Government disgracefully chose to ignore. I shall not read out all those nine recommendations as I think most noble Lords will remember them, but I have them here if any noble Lord wishes to press the matter at a later stage.
I look to one other rational explanation for the introduction of the Bill. I refer to the question of protecting the environment, which has been referred to by every speaker so far. The Bill would have been a golden opportunity for achieving such an objective, but it will not achieve that aim either. There will be an escalation of opencast mining at the expense of deep mining. So much has been said about the effects of opencast mining that it need not be repeated here today except that unless one has lived with and among the effects of opencast mining—as I and some other noble Lords have—it is difficult to appreciate how bad it is. I believe that one other noble Lord referred to that. Of course, some good reclamation and restoration work has been carried out, but a high price is paid before that stage is reached and I have to say that it has not all been successful.
Even worse than the effects of opencast mining is the effect of minewater pollution from former pit workings. I am delighted that the noble Lord, Lord Elliot, made such a major point of it in his speech. The Government have been receiving representations on this matter from 1326 dozens of organisations not only recently but over a number of years and yet there is no mention of it in the Bill. This is not a party political issue and I hope that when we debate it in detail in Committee, there will be support for our proposals from noble Lords of all parties.
I have with me a copy of the document that has been produced by Durham County Council on minewater pollution. As a County Durham man, I am delighted that this splendid document has been mentioned four times already. I should like to read just four sentences from it which cover the nub of the problem. These are:If pumping is stopped, ground water will rise to its original level. As the water rises through the workings it comes into contact with pyrites in the abandoned coal faces. These pyrites have become oxidised through contact with the air during the course of mining and will acidify the water and release iron, manganese, aluminium and sulphates into it. On reaching the surface, the water will be stained orange from the iron oxide … and will find its way into the streams and rivers of the county".Those things are already happening and they will apply to every part of the country where there are pits that have been closed.
The Minister may say that it is a matter for the new Coal Authority. If so, how can we be sure that that authority will have both the resources and expertise to meet such a massive problem? We are talking not only about environmental damage, but possible danger to human life. Much more will need to be said on this issue in Committee.
That lack of concern and commitment applies to other parts of the Bill. What will become of the Coal Industry Social Welfare Organisation—or CISWO as it is commonly called? That question has been raised in a number of speeches. The Bill provides for the winding up of CISWO and, if so ordered by the Secretary of State, for the transfer of its functions to another body. It is important to stress that those services relate chiefly to former mineworkers and their families so there will be no rush from private operators to provide the necessary finance. Those of us who come from mining families had the benefit of excellent physical and social welfare facilities in the mining villages where we lived. Most people think that it is a purely physical matter, but it is much more than that. Some of us, including myself, received considerable support (financial and otherwise) in getting through college and university. These are not small matters. They have made major contributions to the lives of thousands of sons and daughters whose parents never had such opportunities.
Similar questions have not been answered on a whole range of important issues related to the coal industry. I believe that the noble Lord, Lord Ezra, referred to research and development, which I have also raised in a number of speeches. The coal industry is perhaps more dependent than most on research and development. Is coal liquefaction to be developed under the new regime? Is the research into the by-products of coal to be pursued? Some of the wiser and more percipient heads who are experienced in the coal industry have, for a long time, used the phrase:Coal is too valuable to burn".The Coal Research Establishment is pre-eminent in the field of mining technology and research into coal 1327 utilisation. The Bill contains no specific provision for continuing government investment in R&D and that augurs badly for the research establishment.
The problems associated with subsidence were vigorously pursued by my honourable friends in another place, but with unsatisfactory answers from Ministers. I concede to the Government—it is not often that I do this—that there are problems with this matter. Some of us dealt with our constituents' problems when we were Members of another place. However, it seems to me that the provisions in the Bill will not meet the problem.
I had intended to refer at some length to safety in the mines, but that has been dealt with in some detail so I leave it and say only that it is a major issue. I hope that the Government can convince your Lordships much more readily than so far.
The real basis of the Bill—I know that these words will not be accepted happily by Members opposite—is revenge and spite, but such motives will be remembered, not just by the mining communities but by those men and women with no connection with the industry who came onto the streets in their thousands to protest when some months ago the Government announced the closure of 31 pits.
We have the good fortune to live in a fuel-rich country. Coal, oil, gas and nuclear power are at our feet. Many countries, some without any fuel resources, look upon us with envy and dream of what they could and would have done with such a bounty. The Government could have produced an energy strategy, giving coal its rightful place, which would have been the admiration of the world. What do we see after 15 years of unbridled power? A piffling, mean and irrelevant measure whose narrowness equates with the minds of those who produced it.
§ 6.1 p.m.
§ Lord Haslam
My Lords, as the noble Lord, Lord Ezra, graciously indicated, I followed in his distinguished footsteps as chairman of British Coal. I am also now a grateful pensioner. I believe that I am also one of the few mining engineers who operated in the private sector industry before 1947 when I was working for Manchester Collieries. I left the industry nine months after nationalisation. I hope that your Lordships do not read too much into that! Nevertheless, I was proud and privileged when I was asked to become chairman of British Coal in 1986. I am labouring my personal experience because the only time I had an enjoyable experience when negotiating with Mr. Scargill was based on this history. He was ranting on about strike service counting for pension fund purposes. This of course related to the one-year strike. He also emphasised that he believed that "breaks in service" should count for pension fund purposes. I said, "Arthur, I am delighted to hear that. It is the first thing you have said with which I have any sympathy, because I have 36 years' broken service with British Coal". He never referred to the subject again.
To be serious, during the period 1985–91 British Coal closed 120 pits, leaving 50 in operation. That happened with the public being hardly aware of that massive restructuring. Redundancy was voluntary, and no one 1328 was forced to leave the industry. But having said that, one cannot take any pride in these depressing statistics and one must recognise too the serious hardship that they have inflicted upon mining communities and their families. However, it had to happen if a meaningful core of the industry was to survive at all.
In October 1992, the President of the Board of Trade made his statement that 31 of the remaining pits would have suddenly to close. By contrast, that caused a widespread public outcry which led the Government to review the situation. The president's most recent book was entitled Where there is a Will, but despite a constructive report from the Trade and Industry Select Committee of the other place, there was clearly no will here to find a way.
Having made the clarion call:There is no further market for coal",the president seemed determined not to disprove it. His only apparent concession, whereby up to 10 pits might be reprieved, was obviously not well based. In fact, not only were those pits not saved, but some of the 19 core pits which were to survive have also been closed. At privatisation, the number of British Coal's operating pits will probably be about 15. That is in line with Rothschilds' (the Government advisers) long-standing view, and has, like Mr. Scargill's earlier predictions, become something of a self-fulfilling prophesy upon which other people have based their thoughts and actions. All this is sadly water under the bridge.
All this contrasts markedly with the approach of the German and Spanish governments who are determined to conserve their coal resources at all costs by heavily subsidising their coal industries. As a result, for the past five years we have been closing pits which have far lower costs than even the best German mines. I am not, however, advocating the German solution. Indeed, while I was chairman of British Coal we made a number of strong pleas to the Commission that these German subsidies, and the equally massive government subsidy that the French nuclear industry enjoys, should be phased out. The Commission professed much sympathy with our view, but argued that it was impossible to pursue it while the UK Government were ring-fencing and subsidising our nuclear industry. That support for our nuclear industry seems a blatant contradiction of the Government's avowed policy of market forces, and is a classic example of how the UK market has been rigged against coal. Surely the Government might at least have taken this opportunity to level that playing field a little to the benefit of British Coal.
Some noble Lords will be thinking, "Hold on a minute", as the noble Lord, Lord Gray, highlighted, "what about those massive subsidies that British Coal has been receiving?" What is not generally appreciated is that British Coal has constantly made an operating profit since 1986, and hence in recent years has not received any direct operational support. Government subsidies have been essentially to cover the massive restructuring and redundancy costs, and interest charges on historic loans which have had to be paid back to the Government—in 1990 that amounted to a staggering £574 million. Those figures are rarely referred to in government statements. I must however praise my noble 1329 friend Lord Wakeham for he was the architect of a financial restructuring in 1990 which had the effect of reducing the interest charge to a more acceptable commercial level.
Today noble Lords have paid tribute to the generosity of the Government in relation to redundancy terms, British Coal Enterprise and so forth. I am delighted to endorse that tribute. During the period that I was chairman I never found the Government reluctant to spend money if I asked for it. That extended also to capital expenditure. I have to pay tribute to the Government for that. Indeed, we would never have carried out the restructuring operation in the way we did if that generosity had not prevailed.
Having spent 50 years in industry (42 in the private sector and eight in the nationalised industries) I am fervently in favour of privatisation, and believe that the most deep-rooted problem facing British Coal has been state ownership. It was my hope that on privatisation British Coal would have a solid core of about 35 pits, including the five Selby units, plus of course its opencast mining activities. That would have provided the critical mass for a core industry which could operate profitably in world markets. It would also have been possible to invest overseas for the first time. Mining deep-mine coal in the USA, South Africa and Australia is like "falling off a log" and our mining engineers who are second to none would for the first time have been able to operate in these much more favourable geological conditions. In that way, one could visualise building an international coal business, based on that UK core, which could follow in the path of British Gas in developing a successful worldwide operation.
The cost of building and sinking large new deep mines in this country is now almost prohibitive. However, with 35 low-cost pits preserved, one could visualise maintaining access to a high proportion of the best coal reserves in the UK, without resorting to creating totally new mines. There is no doubt in my mind that these reserves will be needed in the next century, when gas prices will inevitably have risen, and supplies will need to come from farther afield, and when nuclear energy will have declined. One reflects too, on what would happen if there were to be another Chernobyl or Three Mile Island accident. That could have a nightmare impact on the nuclear industry worldwide, and particularly in countries like France with high dependence.
Although it is late in the day, the Government should state that their priority is the unitary privatisation of what is left of British coal, and that splitting it into five units should be a policy of last resort. The key objective must be to maintain the central coalfields as a cohesive whole. From my informal discussions with some of the potential buyers, I found that a few were very interested in a unitary privatisation, but their enthusiasm has tended to wane as the size of British Coal has shrunk and the Government have decided to sell off individual pits prior to privatisation. However, this will be our last hope of maintaining a meaningful and durable low-cost British coal industry.
1330 The fragmentation approach is based primarily on increasing internal competition. The output per manshift after the miners' strike was just over two tonnes. The comparable figure for the year just ended will be nearly nine tonnes. In the latest quarter the remarkable figure of nearly 12 tonnes was achieved. This performance hardly reflects a lack of competition and indeed I do not know any other major UK industry which can match these dramatic productivity figures over the past decade. I have been involved in many industries in my career and without reservation the competition I experienced in coal was much the toughest. To sum up, British Coal needs more competition like "a hole in the head".
If British Coal is broken up into five units we really will have a "rag-bag" of an industry. Coal mining is very different from manufacturing. If you build a new plant the capital is spent at the outset whereas in mining your workplace is moving all the time through varying geological conditions. This involves capital constantly being committed on development activities. If individual pits are competing with each other the first one to be in trouble will inevitably cut or eliminate its development expenditure to enable it to survive. Others will eventually then be forced to follow this lowest common denominator approach. This leads inevitably to a rape and pillage culture. Short-term competition of this nature will be strategically destructive. That was precisely what was happening in the private sector industry prior to 1947. It led to many collieries joining together to form sales co-operatives, as the noble Lord, Lord Ezra, highlighted.
If this fragmentation policy is pursued, I predict that only a minimal coal industry will be left at the end of the decade. We must also recognise that the highly productive Selby complex, which represents five of the surviving pits, has a predictably limited life and will be exhausted in 12 to 15 years' time because of the environmental constraints within which it was established.
To sum up, I had always looked forward to the privatisation of British Coal in terms of revitalising management freedoms and the opening up of new opportunities. But I am very sad at the way the Government have declined to act to arrest this final disastrous period of decline. History will undoubtedly recognise that this was ill-judged and that a major UK resource has been unnecessarily sacrificed. This sadness I am sure is shared by the management and the mineworkers, who must feel that it is a scant reward for all their commendable efforts during the past decade and for all the hardships that mining communities and their families have suffered.
§ 6.12 p.m.
§ Baroness Lockwood
My Lords, like my noble friend Lord Mason, I am somewhat ambivalent about the desirability of men continuing to work underground in our mines. However, if that is to be so the Bill does not provide an adequate framework.
During the first few years of my childhood, my father was a miner. He left the industry as a result of victimisation. Like many of today's redundant miners, he entered into a small business and, sadly, it was not 1331 successful. Despite that, I recall in later years my mother saying that she was relieved when he left the coal industry. She added that she could never rest while he continued to work underground. Many women have felt like that about their husbands and sons. Your Lordships will admit that it is not the most desirable way of earning a living.
Yet mining has been a vital element of our industrial and economic life. Given the right conditions it could remain so. Close communities have developed around coal mines in a way that has not been evident in respect of other industries. Sadly, those communities are deteriorating. As was said by the noble Lord, Lord Ezra, and my noble friends Lord Morris and Lord Mason, after the nationalisation of the coal mines in the post-war years many changes in conditions transformed the way in which men of my father's generation worked in the mines. Health and safety, modern technology, research, shorter working hours, proper holidays and welfare facilities made the lives of the mining families easier. Above all, the proper wages and terms of employment of miners made not only for greater financial security but placed mining near the top of the pay league where it deserved to be.
Regrettably, the Bill does little to safeguard those hard won benefits. It does nothing to preserve let alone to promote the future of the mining villages and communities, which need alternative employment. For all those reasons, I fear that the Bill is inadequate and I hope that during its passage through the House it will be amended and improved.
My main reason for speaking today is in the interest of safeguarding the mining museums. As was said by the noble Lord, Lord Ezra, there are three mining museums in the United Kingdom. In two of those, the underground conditions of miners at work have been re-created and can be experienced by visitors. That experience includes not only the pit top and pit yard environment but the pit cage and the coal face. Those two museums are in South Wales and in West Yorkshire. I know very well the Yorkshire museum at Cap House colliery near Wakefield. Each year some 80,000 people visit the museum, many in school parties. It provides the unique opportunity to understand what coal mining was like and it re-creates and preserves for posterity the mining culture.
With an ever-increasing number of pits being closed—there are now fewer than half a dozen in Yorkshire and the remaining pit in South Wales is to be closed—museums could become our only opportunity to understand what mining was really like. Yet there is no mention of those museums in the Bill. It is also silent on many important subjects which have been mentioned today.
The Yorkshire Mining Museum Trust was set up in 1982 by the then West and South Yorkshire metropolitan county councils in consultation with district councils and the then National Coal Board. The coal board agreed that if the local authorities could ensure that there was only one coal mining museum for the entire Yorkshire coalfield, and if the local authorities provided cash funding, British Coal would provide the technical expertise, mining machinery and equipment. It 1332 was on that basis that the project went ahead in 1983. The museum came under threat in 1986 when the two main funders—the West Yorkshire and South Yorkshire metropolitan county councils—were abolished. It then became a charitable trust with local authority interest, and the Wakefield District Council is now one of the main financial contributors to the fund.
But for three years the Government supplied transitional funding and I believe that there is a case at present for similar funding to be made for the continuation of those mines on the understanding that the private mining companies, when they are set up, similarly take over responsibility for them in due course.
The financial assistance from British Coal to Cap House Colliery Museum amounts to approximately £100,000 per year. Without that assistance, the museum would not be viable nor safe because the technical assistance from British Coal involves safety and maintenance measures and the availability of the services of the mines rescue service. Mention has already been made of the fears of both the NUM and the deputies association as regards the continued availability of the mines rescue service under privatisation. The mining museums are also anxious about that.
When the question of museums was raised in Committee in another place, the Minister said that the proposed coal authority would not be able to help. He suggested that the best way forward would be to begin exploring now with the private mining sector what help may be available. Like the noble Lord, Lord Ezra, I feel that the British Coal Authority should have some responsibility in that regard and I found the Minister's response extremely disappointing.
I believe that the Government too have some responsibility to ensure the continuation of those mining museums. I hope that we shall be able to return to the matter at a later stage of the Bill.
The Minister also said that he did not believe it necessary to go underground to appreciate the conditions in which the miners had to work. Clearly the Minister, unlike the noble Lord, Lord Strathclyde, had not visited the Cap House Colliery Museum. The Cap House Colliery Museum not only contributes to our heritage, but it contributes also to the local economy in terms of the employment which it creates and in terms of attracting tourists. As was pointed out in the other place, it is not possible to re-create on the surface the descent in the cage, the walk along the underground roads and the claw through to the coal seams.
Cap House Colliery Museum is not lacking in self help. As well as all the facilities associated with a coal mine—that is, pit ponies, pithead baths and so on—and the modern sound and visual techniques of a museum, there are excellent catering facilities. There is an enterprising programme of exhibitions, and educational functions and conferences also take place there. But the running of such museums, with all the necessary safety measures, is an expensive business. I hope that today we shall have a more favourable response to some of those problems from the Minister. I hope that the response will be positive and will allow us to find some way forward to ensure that those museums are preserved for the future.
§ 6.25 p.m.
§ Viscount Caldecote
My Lords, several noble Lords who have spoken today have deplored the state of the coal industry as it is now, in particular the greatly reduced market. But it is no good looking backwards. We need to do the best we can for that important industry in the future. Therefore, I support this privatisation Bill. It provides greater flexibility in operating and in employment practices and provides varied incentives and opportunities for diversifying into related industries. And as has already been said, there is no lack of competition. I believe that the provisions in the Bill will create greater competitiveness and lower prices, which are greatly desired by my noble friend Lord Peyton.
I believe that that will be the case, in particular if there are management buy-outs with employee participation. I welcome the fact that the Government propose to give financial assistance to those management buy-outs in the future. However, that financial assistance will have to be patient money and it must be kept in for a long time and not just put in like a flash in the pan.
Finally, as has already been said, the Bill will remove the dead hand of the Treasury from the industry.
Coal mining is a difficult business and there are many special factors which are not satisfactorily covered in the Bill. First, compensation for subsidence. Clause 43 puts responsibility on licensed operators in their areas of responsibility; and elsewhere the responsibility is on the Coal Authority. Two problems arise from that arrangement: first, there is bound to be confusion and argument at the boundaries; and secondly—and perhaps more important—no provision is made for meeting obligations for subsidence compensation if the operator becomes insolvent.
There is an extremely simple solution to both those problems. The Coal Authority should be made responsible for all subsidence compensation, and the costs should be recovered through indemnities from the operating companies or by regular payments by the operators to the authority, akin to insurance premiums.
I now turn to environmental factors, and in particular opencast mining operations, which have been referred to already. They cause enormous damage to the environment unless they are very carefully controlled. As I understand it, Clause 52 enables compulsory rights orders to be made up to December 1999. Although planning authorities are required by Clause 53 to take account of conservation and the protection of the environment, it seems that no such duty is laid on the Secretary of State. I hope that my noble friend who is to reply can clarify that situation.
Another problem relates to derelict sites. British Coal has an indifferent record as regards clearing them up quickly and disposing of them to encourage and stimulate job creation. It seems that the delay has often been caused through pressure to obtain the best financial return. However, I suggest that job creation is far more important and should be given priority in the Bill.
Another very serious problem to which the noble Lords, Lord Ezra, and Lord Mason, have referred 1334 already is that of pollution, in particular as regards the need to continue pumping in derelict mines in order to protect rivers and water supplies from pollution by chemicals, gases and minerals. British Coal has played an extremely constructive role in that connection. However, the future arrangements for dealing with that are too vague in the Bill. Future responsibility must be allocated clearly for, as drafted, there is no indication of who will be liable.
Lastly, there is the important issue of job creation for redundant miners. The noble Lord, Lord Mason, referred to British Coal Enterprise which has been the main instrument for helping to create jobs for the miners. It has been funded by British Coal together with revolving loans. But I can find no provision in the Bill to deal with the future of British Coal Enterprise. That must be put right; or is it proposed to wind up BCE after privatisation? Again, I hope that my noble friend can clear up that position. The Bill can be made into a good one. However, we will need to do much work in Committee. I very much hope that the Government will be flexible in co-operating to correct anomalies, many of which have been mentioned today.
§ 6.30 p.m.
§ Lord Alport
My Lords, when, in a few years' time, I say to my great-grandchildren that something is like sending coal to Newcastle, they will wonder what the old boy is talking about, because there will not be any coal in Newcastle and, indeed, very little coal anywhere else. Even to someone like myself, who has never lived or worked anywhere near a coal field, the decline and fall of the greatest historic industry of Britain has an ominous, even tragic significance, far greater than the loss of cotton in Lancashire or shipbuilding in the yards of the North East. After all, coal provided the energy on which British power was based during most of the past two centuries. It dominated the policies of successive governments and provided challenges to the social conscience of the nation, which have not been successfully met even to this day.
We pride ourselves in this House on having a great deal of experience on many subjects. However, I never remember a debate during the past 30 years when more of those who spoke had better, closer, more intimate and expert knowledge of the subject about which they were speaking. Therefore, I find myself in a minority of one. My only association with the coal industry is as a patron of the Coalfields Communities Campaign. Not only does that organisation represent the determination of those who lived and have worked in the great coal fields of Britain to fight for their future as communities, but what has impressed me most is the realistic and constructive attitude it takes to the problems which the Bill produces. The problems of the coal field communities now are not concerned, as in the past, with industrial conditions in the mines, wage levels or terms of employment; they are concerned with the social, environmental and financial consequences of privatisation which many speakers have already covered.
The Bill sets up a Coal Authority but fails to give it effective powers to assist the recovery of the coal field communities or to control and, I believe—as I think 1335 others believe—mitigate the residual problems of the coal mines, such as subsidence and pollution. As has already been said by the noble Lord, Lord Morris of Castle Morris, and other speakers, abandoned coal mines can, after privatisation—and British Coal's direct responsibility ends when the pumps that remove water from its workings are switched off—result in polluted water flowing into neighbouring rivers which supply the needs of large urban communities, besides destroying all life within them.
Curiously enough, in today's edition of The Times there is a very interesting example of the latter. The article reads:The Government may be prosecuted at the European Court of Justice after millions of gallons of poisoned water leaked from an abandoned mine. The European Union has asked Douglas Hurd, the Foreign Secretary, to explain how water contaminated with arsenic and copper was allowed to pour from the Wheal Jane tin mine near Truro, Cornwall, into the River Carnon in 1991–92, turning it bright orange".The article concludes that the Government have given £8 million for restitution. Admittedly, the latter is a tin mine, but it reflects what could very easily and, indeed, may well happen so far as concerns coal mines.
It is essential that the Bill now before us should make it quite clear that the Coal Authority assumes the precise responsibilities which British Coal has at present for environmental damage, present or potential, which in the words of the President of the Board of Trade is,the physical legacy of historic mining".The second aspect of the problem to which reference has already been made is subsidence. It is dealt with in Clauses 42 to 48 in Part III of the Bill. Reading it and trying to understand it, I gained the impression that, as the Bill is drafted at present, the legal profession would make more money out of privatisation than any future investors in coal mining. The appointment of an independent subsidence adviser without power to do more than advise and make reports provides no solution to a major problem affecting the owners of land and buildings over a wide area. The Coal Authority must be given overall responsibility. I hope that the Government will agree to amend the Bill to enable that to be done.
However, most important of all is the future of the coal field communities—the men and women who for generations have depended upon the mining industry for their livelihood. I believe that the money raised by the privatisation of the remaining mines and the sale of British Coal's valuable assets should not just disappear into the hungry maw of the Treasury, but that it should be hypothecated—I believe that that is the correct technical term—for the social welfare, the economic development and the restitution of the environment of the areas in which the coal field communities live.
Two or three years ago I made a visit to the Barnsley area to see what the problems looked like on the ground and what was being done to solve them. I was greatly impressed by the resilience of the community there against formidable odds. But much needs to be done there and elsewhere. There is still high unemployment, a generation imbalance and very limited prospects of new industrial development.
Under the Bill, the Coal Industry Social Welfare Organisation is to be abolished. It will have limited 1336 financial support for the next five years, although it is likely to be needed for the next 30 years to cope with the welfare problems of an estimated 500,000 increasingly elderly and, in many cases, disabled former miners and to support the many welfare schemes providing social and recreational centres in the mining areas to which the noble Lord, Lord Mason, referred.
There is also the other organisation involved to which reference has been made more than once during the debate. I refer to British Coal Enterprise which helps with training and loans for small business creation and to provide employment. What is to happen to that organisation? Is it to be taken over by the Coal Authority?
The profits to be made as a result of privatisation should be used, perhaps under the Coal Authority, to fund, first, a successor agency to the Coal Industry Social Welfare Organisation to deal with the special social and welfare problems of the coalfield communities. Secondly, it should be used to finance and encourage new industrial development and investment in those areas which will bring employment and hope. Thirdly, it should be used to provide a reserve to help meet the cost of dealing with the legacy of historic mining in the shape of subsidence and environmental damage and pollution.
There is much to be proud of in the story of British coal mining over the past two or three centuries, but there is also much to regret. I believe that both government and Parliament have a special responsibility to ensure that the provisions that they make in this Bill, not only deal fairly and effectively with the problems which are a legacy of the past, but also lay foundations for the future. After all, there may come a time when we need coal once again—our greatest natural asset—to support the economy of Great Britain.
§ 6.38 p.m.
§ Baroness Dean of Thornton-le-Fylde
My Lords, the Bill before us deals with an industry which has been devastated. The families whose livelihoods depend upon it have been brutalised and their communities blighted. Yet, here we are discussing the legislation which is not yet law. Many of us have been concerned to read reports in the press about the undue haste involved—which, I suggest, could easily be interpreted as intimidation—in telling the few remaining people working in the industry that if they do not make a decision this weekend about their Welsh mine being closed, they will lose some of their redundancy pay.
The story in the Financial Times on 31st March, the day the House rose for the Easter Recess, reported that the Government—I expect that the Minister will say that it is British Coal, but I see both as being almost one—are "considering" stopping the enhanced redundancy payments to miners working in the industry at the end of April. By that means they will remove even more miners from the industry in preparation for privatisation. Those who choose to remain may be tempted with bonuses on condition that they agree to far-reaching changes in working practices and payment structures. I hope that that report is wrong. I hope that the Minister will be able to refute it.
1337 The Bill deals with the rump of what was once a proud, strong and important industry in Britain. Many noble Lords have already covered some of the areas I intended to mention and I shall not test the patience of the House by repeating a number of the valid comments made about the weaknesses of the Bill. However, I wish to refer to two areas which have been touched upon and which I feel are important for those who are left in the industry. The first area is health and safety and the other is the Coal Industry Social Welfare Organisation. The Bill is woefully inadequate in both those areas in terms of dealing in a reasonable and fair minded way with the people in the industry who are dependent upon health and safety and the welfare organisation.
Before nationalisation, on average about 1,000 miners a year were killed. It is a dangerous industry in which to work and the benefits of nationalisation in this area were soon recognised. Last year three people lost their lives in the industry. That is still three too many. The reduction in fatalities was not achieved because someone had good intentions and it was not achieved through new technology, although that must have been a factor. It was achieved because when Parliament nationalised the coal industry it was far-sighted and responsible enough to know that it needed to adopt as a priority the health and safety of the people working in the industry. Yet what do we see in this Bill? An almost fleeting reference to safety in Clause 4. The clause provides only that the Coal Authority enter into agreement with the Health and Safety Executive,for securing co-operation and the exchange of information".That is in pretty stark contrast to the provision in Section 1 of the original nationalisation Act which states that,the Board shall be directed to securing … the safety, health and welfare of persons in their employment".I was heartened today to hear the Minister say that the Secretary of State had declared that safety was paramount in the industry. Yet the Government have rejected the suggestion that a reference to safety should be included in the terms of the licences of potential private operators. Why have they rejected that suggestion if safety is paramount? The Coal Authority will have no power at all under the Bill to refuse or to withdraw a licence on safety grounds. Why is that if safety in this dangerous industry is paramount? Under the 1946 Act there is a responsibility to set up and maintain,joint machinery for consultation on questions relating to safety, health and welfare".There is no such requirement under this Bill. Why is that? Are the Government so opposed to consensus and to joint machinery for consultation between workers and employers that they will not include such a requirement in the Bill? It is crucial to establish joint machinery for consultation. It is not sufficient for management to take on the sole responsibility for health and safety at work, especially in this kind of industry. Those working in the mines must be involved in health and safety aspects as they see the day to day dangers which prevail in the industry. It is not too late to alter the position. We can amend the Bill in Committee, and I hope that we will do so.
I know that it may be said that the accident and 1338 fatality rate among workers in the industry has declined. It has declined; the statistics bear that out. However, that has only happened because of the hard work and commitment put into the area of health and safety. Let us consider the recent accident figures among workers of private mining contractors in the industry. The major accident rate for workers of private contractors is 62 per cent. higher than the comparable figure for British Coal and the fatal and major accident rate combined is, I believe, about 32 per cent higher.
As I said, the health and safety provisions in the Bill are woefully inadequate. I suggest that any responsible employer would insist that a reference to health and safety should be included in the terms of the licences and would insist that joint consultation should be established between workers and employers on health and safety.
My second area of anxiety is the Coal Industry Social Welfare Organisation which is mentioned in Clause 22 of the Bill. The Government have said that they will provide something like £15 million over the next five years to fund it. However, that is not good enough. The position must be improved and a number of noble Lords have suggested how that might be done. Some half a million people have been helped by the Coal Industry Social Welfare Organisation. I am not talking about a provision that is a fringe benefit or a luxury but a provision that lies at the heart of the wellbeing of those who work in the industry and those who have worked in the industry but are no longer in it. By and large those who are helped by the welfare organisation are aged, frail, ill or disabled. They are usually disabled as a result of an accident that occurred when they worked in the mining industry. They are usually on limited incomes. The Bill needs to be strengthened to protect those people. I look forward to the Committee stage. I hope that Members on all sides will give support to any provisions that make the Bill more responsible without in any way endangering the Government's intentions as regards competition.
§ 6.46 p.m.
§ Lord Wade of Chorlton
My Lords, I have listened with enormous interest to those who have spoken who have great experience in this industry. I have listened to noble Lords who have spoken of the history of the industry and of their close involvement in it. I do not for a moment disagree with anything that has been said as regards the importance of the Coal Board and the way it has contributed to the development of the coal industry. However, today we must consider the future of the industry. We must consider the industry in terms of its making a powerful contribution to our economy and in terms of its competitiveness in the world market. We must consider how we can improve the technology in the industry and how we can remove the hardship that people have suffered and to which many noble Lords have referred in this debate. We must consider how the industry can take advantage of the opportunities that are now open to it with the development of new technologies and other developments.
There are in this country companies which are among the leaders in the development of new technologies in 1339 the mining industry. Those companies need to be given every possible opportunity to grow and to market their skills throughout the world. I support the Bill and I am sure that the way ahead for the industry is through its privatisation and through encouraging entrepreneurs to take full advantage of future developments.
I agree with the noble Lord, Lord Ezra, and with my noble friend Lord Haslam that the Government need to be careful to maintain an industry which is of a sufficient size to take advantage of opportunities which may arise in the future. The Government have stated in the Bill that they will consider establishing five regions and perhaps six. However, I believe that the Government must consider any offers which may be made to establish a larger organisation. If a unitary offer were to be made, I believe that it would need to be considered seriously as a larger unified industry may be able to provide the finance, resources and the marketing skills which are necessary to make a success of the industry. A unified industry could make use of the full panoply of the pits which will be available to it—as my noble friend has said, it is not likely that there will be more than 15 pits available—and could provide the best opportunities for the British people as a whole. As so many noble Lords have already said, in the past the industry has made an enormous contribution to the country and we must ensure that that continues to be the case.
We are now living in a world economy. We have heard during the course of many debates in this House how important it is that we in Britain should understand that we face competition from the rest of the world. We cannot deny that fact and we cannot turn the clock back. We must now live in the future. I believe that to enable the industry to make a full contribution to the country, it needs to be governed by an enterprise that is of a sufficient size to offer the best opportunities for development.
A number of speakers have remarked that as the industry changes some workers will have to move to other employment. I am aware that the coal industry is to a great extent a rural industry. I am well aware of the problems that sometimes face those who want to move to other activities in rural areas. I am aware of difficulties with planning authorities and other such problems. Great changes will have to take place within the coal mining industry. Pits will have to change to new technology. As other industries are created they will need the opportunity to grow and expand. It is important that the Government understand the need for flexibility with regard to necessary planning developments in order that wealth may be created.
I do not understand why there has been no reference to the stocks of coal. Perhaps in summing up my noble friend will indicate what will happen to the stocks of coal now at the surface.
I have heard with great interest the references to British Coal Enterprise. My experience with it has been enormously satisfactory. It made a great contribution in the North West to alternative businesses, and has been very supportive. Perhaps my noble friend will explain how he intends to maintain that support.
1340 As we are all aware, the Government have gone through an extremely difficult time with regard to coal. We have seen great economic pressures and changes to the coal industry, not brought about by Government but through great changes in world economic situations. The Government are now responding, possibly a little belatedly, but they are responding in a positive way. The quicker the legislation is on the statute book, the quicker we shall have people interested in investing the finance and bringing the industry together. We shall then resolve the uncertainty in the pits. Pits are not being kept open as they should be and opportunities are being lost because the Coal Board has to make short-term decisions to deal with the problems.
I hope that the Bill will be passed quickly and easily in much the way that it is presented to us. I am sure that the Bill presents an opportunity which will encourage the entrepreneur and the investor, and encourage the industry to establish itself for a long time to come.
§ 6.52 p.m.
§ Lord Prys-Davies
My Lords, perhaps I may begin by saying that the firm of solicitors with whom I have been associated throughout my professional life acts in South Wales for the NUM and CISWO; indeed, it acted for their predecessor bodies, the South Wales Miners Federation and the Miners Welfare Commission. Consequently, I have a degree of familiarity, but no more, with some of the subjects which will be affected by the Bill. That is why I venture to take part in the Second Reading debate.
I deeply regret that we have seen this Bill which dismantles one of the last surviving measures of the reforming Attlee Government. That is a sobering thought. But the Bill is before the House and I very much hope that we can improve its provisions. In the time available—I do not wish to be too repetitive—I want to deal in a little detail with three issues which are within my experience. I want to ask a number of questions in the hope that the answers the Minister gives will help us when we consider the Bill in Committee.
I turn first to the standard of safety in the licensed mines. We are particularly concerned with the standard of safety in these mines in South Wales. In fact, we currently have two-thirds of the licensed mines in the South Wales coalfield, employing about 800 men. I should point out that a coal mine employing less than 15 men does not have to be managed by a qualified mining engineer; and that a coal mine employing less than 10 men is not covered by the existing fire and rescue regulations. The majority of the licensed mines in South Wales employs less than 10 men each. We have knowledge of their safety records, and that knowledge is the cause of anxiety.
As my noble friend Lord Morris of Castle Morris and others have pointed out, the statistics in the private mines reveal that standards of safety in too many of the mines are below what is necessary. They disclose that the anxieties about safety in the private mines are absolutely justified. Private mines must therefore be made safer to work in. It is clear from the speeches today from both sides of the House that that must be one of the highest priorities, yet the Bill has almost nothing 1341 to say about safety. What little it has to say about it in Clause 4 is totally inadequate. Therefore, I am at a loss to understand the Minister's reference to the Bill maintaining the present high standards of safety. That statement cannot possibly apply to the private mines.
I believe that it is agreed that the safety regulations have to be strengthened substantially. The issue has been the subject of consultations. May we see a draft of the revised regulations before the Bill leaves this House? They are not among the documents that I have collected from the Printed Paper Office. If they cannot be produced before the Bill leaves this House, may we know what issues are still unresolved? If the draft regulations are not made available perhaps I may also ask the Minister whether it is intended that every mine, irrespective of the number it employs, will be inspected for safety purposes on a regular and frequent basis. That must surely be right if we value human safety and life. Is it intended that there will be a joint statutory machinery for thorough consultation between all the parties concerned on matters relating to safety and health in all the pits within an area covered by the proposed regional block of licences? Will the revised regulations comply with the latest EC Extractive Industries Directive?
I have not seen the draft licence which the board will issue to the new operators. Again, that is not among the documents that I have with me. Therefore, is it true, as my noble friend has heard, that the operator's licence will not contain any terms and conditions relating to health and safety of employees which should be observed by the licensee?
We accept that, unfortunately, accidents will occur notwithstanding the highest standards of safety. Therefore in advance of privatisation, there must be in place acceptable arrangements for rescuing injured miners. When we speak of acceptable recommendations we have in mind standards equivalent to the existing well-proven national rescue service about which the noble Lord, Lord Ezra, has spoken. Will the Minister explain to the House how it is proposed in future to maintain and fund the central rescue stations which are manned by full-time specially trained rescue brigadesmen on call 24 hours a day. I believe that there were 10 at the end of last year. Alternatively, is that service to be abandoned? Can the Minister tell us how many such stations will be in existence 12 months from now? The Minister is smiling at me. That is fine by me, but I hope that he will be receptive to the anxieties which have been expressed in the House this afternoon about pit safety and rescue arrangements.
My second subject of concern is the future of CISWO. I thank my noble friend Lady Dean in particular for concentrating an important part of her speech on the requirements of CISWO. To my mind, the importance of the organisation is far greater than the Minister suggested in his brief reference to it—possibly no more than a sentence or two—when he introduced the Bill. His treatment of CISWO confirms the impression that many of us have formed that the 1342 department does not really understand its role or—and this is even more worrying—feels that it is a role which Ministers do not want to recognise.
Perhaps I may briefly put to the House evidence of CISWO's main work in South Wales. I do not believe that it is materially different from its role in other coalfields, but I have knowledge of its role in South Wales. Relying on five full-time social workers and a network of 60 part-time volunteers, it provides counselling and practical help to disabled miners, ex-miners and their widows. Last year in South Wales there were 2,731 visits to elderly, sick or disabled miners or their widows living at home, often in conditions of hardship, and the demand continues to grow. That must be a core activity of CISWO, whatever standard we apply.
We know, regrettably, that miners have a high standard mortality rate for pneumoconiosis, although I am glad to acknowledge that it has been improving markedly in recent years. They have a high SMR from TB, bronchitis, respiratory disease, industrial asthma and accidents. The convalescent home for the South Wales mining industry provides convalescence for sick and injured miners, ex-miners and their dependants. Its work is supported financially by another charity, the Convalescent Endowment Fund, but the administration work of both charities is undertaken by CISWO. However—and this is the point I wish to stress—both foundations are independent charities, independent of CISWO and answerable to the Charity Commission.
CISWO in South Wales also fulfils a small but significant educational role, providing grants for miners, redundant or retired miners, or a dependant who wishes to pursue a course of further or higher education or training. That role is mainly discharged in alliance with three other South Wales charitable trusts which have been built up in the coalfields, but the administration is undertaken by CISWO. Again, I stress that those trusts are independent foundations and their trustees are accountable to the Charity Commission. We would be interested to know how low a priority the department considers that the successor body should give to CISWO's educational function.
Its third role is better known. It often provides legal and financial advice to the trustees of 60 miners' welfare halls and 15 recreational grounds throughout the South Wales coalfield. It pays direct grants for repairs or improvement of their buildings. Again, a glance at their trust deeds confirms that every welfare hall is an independent charity. Although assistance for halls and recreation grounds is not a major function of CISWO, we wish to know whether it is the department's thinking that this role should cease on privatisation.
Having read the speeches of the Minister for Energy, Mr. Eggar, on behalf of the Government and in particular some of his observations in the other place in Hansard for 23rd March at cols. 341, 343 and 344, I have a feeling that the department or the Minister for Energy does not fully realise that it would be illegal for the trustees of the benevolent trusts, the educational trusts and the welfare halls to realise their assets and 1343 apply them towards CISWO's running costs. It is quite wrong to suggest, as Mr. Eggar did, that those assets may be restructured to suit CISWO's purposes.
Today, CISWO's central role is the provision of personal welfare services for disabled, sick, redundant and retired miners and their dependants. I firmly stress that that is its dominant role and not the support of bricks and mortar. So it follows that if all coal mining were to cease altogether at privatisation, the role of CISWO would not then cease. There would be a long-term need for CISWO or a successor body to serve the members of the former mining communities. I am advised that according to the actuaries —though I have not myself seen the report—the need will probably not peak until the end of the second decade of the next century. If CISWO's successor does not obtain the resources which are needed for the long term, then in the end it is the old, the disabled, the sick and the poor who will suffer because the necessary personal welfare services will not be available to them. But of course, in time the whole community will suffer.
We have heard this afternoon how CISWO is funded by the coal industry. We have heard about its running costs being at about £2.3 million. In his letter of 22nd February to Mr. Neil Clarke, the chairman of CISWO, it was proposed by Mr. Eggar that the successor body, in order to enable it to provide services "in the longer term"—that is the Minister's phrase—should receive a capital endowment of £10 million, together with an annual revenue grant of £1 million. But amazingly, that is only for a limited period of five years, beginning at privatisation. We are also immensely surprised that the department has not deemed it fit to include in the proposal an allowance for inflation. May we have some explanation for that omission?
I have not been able to find a detailed explanation of how the department has arrived at the figure of £10 million. Neither have I seen a definition of what are "the core services" referred to by Mr. Eggar in his letter of 22nd February. The Minister in this House said nothing at all about why the annual revenue grant is not to continue beyond a period of five years, despite the recognition in Mr. Eggar's letter of 22nd February of "the longer term" need. May we please have a little more consistency about the longer term? We would welcome enlightenment by the Minister.
Of course, we are encouraged that the Government have conceded that they have a continuing responsibility towards the casualties of the mining industry, but in South Wales at least we are not impressed by the proposal. Having accepted that they have a responsibility, the Government should ensure that the necessary funding is available. We therefore firmly urge the Government to increase the endowment, to index the annual payment to allow for inflation and to extend the five-year period. To our mind, they have no alternative, morally. I trust that the Government will study with great care the speech of the noble Lord, Lord Alport, and accept his conclusions.
My time is up, there are other issues to which I could refer this evening and I may well write to the Minister with a couple of questions. I have to apologise to the House that I shall not be able to take part in the first day 1344 of the Committee stage as I have a commitment to the British Irish Inter-Parliamentary Body, of which I am a member.
§ 7.10 p.m.
§ Lord Beaumont of Whitley
My Lords, we are witnessing today, as many noble Lords have pointed out, the winding up of one of the great British institutions, one which lies deep in our history. You do not have to be closely connected with the coal industry—as many noble Lords who have spoken this evening have been —to have some connection with it, so deeply is it woven into our fabric.
My grandfather and the grandfather of my noble kinsman, the noble Lord, Lord Gainford, were coal owners and royalty takers of the mines in the North of England. As part of my theological college training I myself went down a mine, in the same way as one or two noble Lords have done, for the experience. I do not know that it has done me much good, theologically speaking, in my ecclesiastical career. Nevertheless, it shows the right kind of feeling on the part of the Church. That was also shown in the moving speech of the right reverend Prelate. We are seeing off an institution of which the noble Lord, Lord Ezra, on our Front Bench was a luminary, and of which the prophet of the ecological teachings which I myself espouse, Schumacher, was a slightly unlikely economist.
As with any great institution, the winding up of what has been there for years and years, deeply intertwined with the life of the country, leaves all sorts of loose ends. I am extremely attracted to the idea of the noble Lord, Lord Alport, that it is only right and proper that all the money that comes from winding up this great enterprise should be devoted to seeing that the people, involved in it, the countryside, and the various matters that will need to be dealt with for decade after decade, are properly handled. Those matters should not be skimped by future generations which do not remember what we have to be thankful for and how much the industry is part of our history.
The emphasis of the speakers in the debate has varied slightly according to party affiliation and the Benches from which they have spoken. We are all concerned with the competitiveness and efficiency of the future of our energy industry. But it would not be unfair to say that the main drive for that competitiveness comes from the Government Benches.
We are all deeply moved and concerned with the communities which have lived for generation after generation in and about the mines and which now find themselves almost literally at a loose end, with nothing to do and their culture destroyed. It would be silly if it were not true that such feeling and commitment to dealing with the matter carne strongly from the Labour Benches. That feeling has been so strong as so many Labour Members have been involved in the mining industry, both now and over the years.
One of the issues to be strongly argued in Committee will be the need to make certain that in the future—say, two generations from now and thereafter—there is a sustainable economic power system and also that we have not done any harm to the environment, and 1345 particularly to the biodiversity, of this country. I do not believe that the Bill provides enough safeguards for important areas of nature already affected by the coal industry and likely to continue to be affected if there is much opencast mining. I serve notice that we on these Benches, although we shall be very involved in all the issues that have been debated, will pay particular attention to this one.
§ 7.15 p.m.
§ Lord Crickhowell
My Lords, my primary purpose in speaking in this debate is to address some of the environmental questions which have so far not been adequately answered—although many noble Lords referred to them. The debate coincides with the closure of the last British Coal pit in Wales. It is not the last pit—we have some small private operators—but it is the last significant example of what once constituted one of the world's great coalfields. No Welshman could view that event without a sense of emotion. I am left with feelings of sadness, relief, anxiety and astonishment: sadness at the passing of a great industry with the jobs that it provided and the impact that that will have on close-knit and vital communities; relief that the worst features of an often harsh, hazardous and lifethreatening occupation seem to be substantially features of the past; anxiety for the men and their families whose jobs have ended and for whom the transition to new industries and new opportunities may be a step too far; and astonishment that it has happened so quickly and with so little effort to exploit the opportunities that even now remain.
Of course competition—for example, in the form of cheap coal from overseas and from gas-fired power stations—was going to have its effect, particularly in mines in which the seams are thin and faulted and where the easiest coal was extracted long ago. But British Coal's perverse concentration in Wales in recent years on long wall mining requiring vast investment and relatively straightforward geological conditions always seemed perverse in an area where those conditions no longer exist. Other organisations with considerable expertise and experience have long argued that competitive coal could still be mined, even in South Wales, using much more flexible low-cost techniques that are more suited to the twisted and fractured geology of the region.
Over recent years all the efforts made by private firms and some of the men who have worked the South Wales field for British Coal to take over former British Coal pits have been resisted and effectively blocked by British Coal—at the same time the licensing authority and a competitor. I therefore welcome this Bill, even if it comes almost too late, if it removes that outstanding example of a top-heavy, over centralist competition and initiative-destroying bureaucracy, and creates the possibility of some pits again being worked by organisations with the capacity and incentive to make them profitable.
The noble Baroness, Lady White, referred to the anthracite of West Wales. The efforts of one company—Ryan—to re-open an anthracite mine in that area have 1346 been blocked and delayed for many years by British Coal. Thank goodness!, this Bill now provides the hope that in future some initiatives of that kind will be given an opportunity to succeed. It is, I have to say, just one of the ironies of life that some of the former senior managers of British Coal who were at the heart of the resistance to all private sector initiatives are now leading intending bidders for opportunities under the new regime.
I turn now to the environmental issues and particularly those which concern me as chairman of the National Rivers Authority; namely, the protection of the quality of surface and ground waters in England and Wales. The NRA has frequently raised its anxieties about the inadequacy of the existing mines legislation: in evidence to the Welsh Affairs Committee in March 1992; in its response to the DTI's coal review in November of the same year; in its response to the DTI's consultation on the role and functions of the Coal Authority in February this year; and in its evidence to the Department of the Environment's consultation on the revision of the minerals planning guidance circular. On Thursday of this week we shall publish a detailed report on the whole subject, along with another report about contaminated land.
We need to put the problem in proper perspective. It can be exaggerated. There are those who talk as though the closure of every mine represented a grave threat. But that is not so. Many hundreds of mines have been closed with very little damage to water quality. The number of sites likely to be adversely affected is relatively small and the impact often very localised. But in a few cases the damage can be severe, and in a handful of cases—notably but not exclusively in the Durham coalfield—the resultant economic and social effects would be even worse than those associated with the Wheal Jane Tin Mine in Cornwall, where the NRA, on the taxpayer's behalf, is currently spending many millions of pounds seeking long-term solutions. Also, as we heard from my noble friend Lord Elliott of Morpeth, we face a threat to drinking water supplies in the North-East. The way in which the geological formations in north-east England slope toward the sea means that when the pumps of some of the remaining pits are turned off, we are likely to see very heavy pollution of the River Wear, where so much effort is being devoted to urban regeneration and new job creation.
The NRA has negotiated a memorandum of understanding with British Coal so that at least we shall have a warning if the pumps are to be switched off. But we are anxious about the position that we shall face after privatisation. There is a critical question that needs to be answered. If transfer schemes of property rights and liabilities from British Coal to the Coal Authority or to any other person are to include transfers of abandoned or closed mines, will those transfer schemes transfer any civil or criminal liabilities for water pollution, and will those liabilities be clarified?
Speaking in another place, the Minister stated that the Coal Authority will take all environmental obligations currently imposed on British Coal unless and until separate licences are given to private sector operators. One problem that we face is that there are many doubts 1347 about what existing environmental obligations may be. I do not argue that the complex issues that need to be addressed, if we are to find adequate solutions to the problem of pollution from long abandoned mines, many of which are not coal mines, can be dealt with in this Bill. It is true that the Department of the Environment is carrying out a review of these issues, which include the whole question of legal liability for pollution from both abandoned mines and contaminated land. If they are not covered in this Bill, they need to be covered in the environment agency Bill when it is introduced —though if past experience is any guide, I fear that all kinds of excuses will be found when that time comes. Indeed, my impression is that officials are not at present planning to widen the environment agency Bill in that way.
But surely there are some things that should be covered in this Bill. A key issue in terms of present or future mining operations is the definition of what constitutes an abandoned mine. So long as the provisions of the Bill and statements by Ministers about the transfer of liabilities refer only to the existing uncertain and unsatisfactory situation, it will be extremely difficult for any potential licensee to quantify potential risks and liabilities.
There is nothing in the Bill which addresses the existing exemptions under Sections 89(3) and 161(4) of the Water Resources Act 1991. So there are still exemptions to criminal offence and civil liability for clean-up when waters from an abandoned mine are permitted to enter controlled waters. At present there is no definition of what constitutes an abandoned mine. A definition introduced from a specific date would at least have the advantage of separating the problem of mines abandoned prior to privatisation from those abandoned in the future by private sector operators. There would be advantages if we could both limit the liability of the newly formed Coal Authority and prevent the problem becoming worse in the future. I should like to see a clarification of those steps that constitute closure, including the removal of equipment and the decision to stop pumping, together with a requirement that effective pollution control measures be put in place and approved by the NRA or its successor body prior to abandonment.
When we come to look at the subsequent clauses, we shall want to make sure that new operators are able to meet their potentially large liabilities, without undue delay caused by divided responsibilities. In his opening speech, my noble friend Lord Strathclyde referred to proper financial security. Like the noble Lord, Lord Mason, I am a little anxious and would like to hear more about the way in which the Coal Authority is expected to fulfil that duty in cases where liabilities become the responsibility of licensees. The commitments may be large and long lasting. To give just one example, there are many NRA flood defence banks that repeatedly have to be raised in order to prevent flooding as the land sinks. When such commitments have formed the past but ongoing obligations of British Coal, will they be adequately provided for? I suspect that many other property owners will have similar anxieties and would like to have those doubts removed.
Within the Bill as it stands there are environmental clauses that seem inadequate. Clauses 3 and 53 should 1348 surely include the words "water" or "water environment" and use a more robust phraseology to place a duty on the Coal Authority in relation to protecting the environment and to consult the NRA. We should have a requirement under Clause 53 that any person who formulates a coal mining proposal be required to produce a proper environmental statement. That is an almost basic requirement of any planning these days.
No doubt the Government will resist any amendments tabled to cover the points to which I have referred, as they have done in another place, on the grounds that this Bill is not the place to cover changes that should be put in an environment Bill following the DoE's review, and that existing British Coal liabilities are being transferred in an appropriate way. The trouble is that the post-privatisation situation will be quite different from the present, with a number of new owners and new operators, the ending of some operations and the beginning of others; and a large number of transfers of responsibility and liability. At the very least in the Bill we must not allow an existing had situation to become worse or create a void of responsibility where regulation will be ineffective or impossible and substantial damage might be done to the environment.
In conclusion, I must make clear that my remarks refer to the environmental shortcomings of existing legislation and of the Bill in its present form. Those are matters which can be improved in Committee. However, I firmly support the view so trenchantly expressed by my noble friend Lord Gray of Contin that the Bill provides new hope and opportunity for what can continue to be a most important industry.
§ 7.30 p.m.
§ Baroness Turner of Camden
My Lords, I am not in favour of privatisation. The Government have not demonstrated, to me at least, that their plans for the industry will be beneficial nor, indeed, that they have any coherent energy strategy. However, the Bill is now before us and I will leave it to my noble friends to deal with the broader aspects of energy policy.
I intended to concentrate on three issues of specific concern to me; that is, health and safety, protection of pension rights and general employment security. However, with regard to health and safety the ground seems to me to have been pretty well covered by a number of my noble friends. Suffice it to say that under Section 46 of the 1946 Act the corporation has a duty to set up and maintain,joint machinery for … consultation on questions relating to the safety, health or welfare".That resulted in a framework of pit, area and national level consultative machinery which underpins the existing safety regime. There is thus a recognised safety culture which involves the workforce and its unions—it is important to recognise the large role that unions played in establishing safety over the years—and that safety culture undoubtedly bears some responsibility for the improved safety standards achieved during the period of nationalisation.
The Bill gives no guarantee that those arrangements will be continued. In particular, there is anxiety over the future of the Mines Rescue Service. Currently it is 1349 proposed that the service will be financed by a levy on private owners. But that could well result in an inferior service staffed by part-time rescue workers rather than the full-time standby service currently in existence.
I hold in my hand a personal letter written to me by a member of the Mines Rescue Service. It is clear that he and his colleagues are extremely concerned about the future and that morale is low at the moment because of that concern. It seems to be quite inadequate that a Bill dealing with this industry should contain only one short paragraph—Clause 4—concerning the,Duty of the Authority with respect to safety".It surely is not surprising that the unions are anxious about that. I am told by the unions, and it was emphasised by a number of noble Lords in the debate, that safety standards in the private licensed mines sector are much lower than in the publicly-owned sector.
Memories in the mining communities are long. Older miners and pensioners in particular remember what it was like in the industry during the previous era of private ownership. We heard this afternoon from my noble friend Lord Mason what it was like to be a worker in the industry back in 1938. George Orwell, whom the Prime Minister is fond of quoting, described conditions graphically in his 1937 essay, Down the Mine, when he was explaining what it was like to his fellow intellectuals. It clearly was his idea of hell and he said that it was only because miners sweated their guts out in mines that superior persons could go on being superior.
Much has been done during the period of public ownership to improve working conditions. We must ensure in primary legislation that there is a firm commitment to the standards achieved. There must be no going back to the 1930s. For most working people, and for miners in particular, it was no golden age.
Then there is the matter of pension rights. It is an extremely complicated matter and I understand that negotiations are still in progress, at least in regard to the British Coal Staff Superannuation Scheme. One hopes that they will result in a conclusion satisfactory to the trustees and scheme members and that that happens speedily —at least more speedily than appears to be the case with the railways.
I gather that there are some problems in relation to the Mineworkers' Pension Scheme. I was surprised when I read the material relating to the MPS to learn that in final salary terms it is a fairly young scheme. The result is that a large number of existing pensioners are not receiving very high pensions. For example, those who left prior to April 1990—there are 196,000 of them—receive a pension of £27.10 per week. For those who left between April 1990 and March 1992–21,000—the average weekly award is £41.10, while the 24,000 who left post-March 1992 (when a sixtieths regime was in operation) receive an average of £84.20.
According to a document that I received from the trustees, over 130,000 pensioners receive less than £23 a week. We are therefore talking of people who are really rather poor, even though they may receive the state pension in addition. Protection for them is absolutely vital. Remember that they are people who have spent a lifetime in an important but dangerous 1350 industry. One presumes that had things continued unchanged and had the surplus continued to be satisfactory, the trustees could well have decided to increase above the rate of inflation the pensions paid to the poorest pensioners. What is now proposed is that for pensioners and deferred pensioners the Government will guarantee the scheme's solvency and ensure that pensions increase in line with inflation. But in return the Government will expect a 50 per cent. share in any surplus funds. For active members at the date of privatisation who continue to work in the industry the Government propose the establishment of an industrywide scheme to be operated jointly by all new mining employers and to provide the same package of benefits for past and future service as the MPS.
I understand that the trustees support those proposals in general but are worried about the proposition in relation to 50 per cent. of the surplus. They point out that while the schedule to the Bill empowers the Secretary of State to make regulations to guarantee the scheme's solvency, that is limited to the level of the pension at privatisation and subsequent inflation-linked increases to that pension. The trustees believe that in order to secure current expectations any additional pension increase awarded after privatisation and arising from the distribution of the pensioners' share of any future surplus, should be covered by the Government's guarantee of solvency and price indexation.
As framed, the trustees believe that the proposals will allow pensions to be reduced at some stage if the scheme were in deficit. Furthermore—and this is rather important—the Bill provides extensive powers to the Secretary of State to amend scheme provisions and to override decisions of the trustees. As the clause stands at present there is no guarantee that the chairman of the trustees or, indeed, the trustees themselves, will be fully independent of government control or appointment. With regard to the arrangements for active members, there does not appear to be any commitment to inflation-proofing, though there is reference to the need for the package of benefits on offer to be in line with those previously available. Those are all issues which will need to be further explored in Committee.
In regard to employment, I am pleased to note that the Bill contains a clear commitment to the operation of TUPE—the transfer of undertakings regulations to which we are bound as a result of European law. However, there are still some existing concerns. In particular there is the need to ensure that employees transferring take with them full pension rights as between one coal industry employer and another. I am assuming that with an industry-wide scheme in operation that will be provided for in any event. I would welcome some assurances on that point.
As we know, TUPE binds the employer taking over an enterprise to honour existing collective agreements and the terms and conditions applying to the employees who are transferring. However, there is no guarantee that private operators anxious to make as much profit as they can will feel disposed to honour arrangements in regard to employees and their unions for longer than they feel they absolutely must. I understand that under present arrangements it is a condition of the granting of 1351 a licence to a private operator that every local and national agreement or settlement reached by British Coal and the relevant trade union must be observed. Similar arrangements ought to apply after privatisation. There should be some form of industry-wide structure, and conciliation and consultation arrangements must be provided. If they are not, the bad employer will be in a position to undercut the good.
This is another Bill where a great deal is left to be accomplished through regulation rather than through primary legislation. We have often commented adversely from these Benches about the Government's tendency to employ that system. A failure to spell out clearly what is to happen is bound to lead to feelings of concern and real worry among people whose interests must be protected. I doubt very much that what is proposed will lead to more jobs.
As we know—and this has been referred to by a number of noble Lords—the industry has been in decline for the past decade, a decline which we believe to have been deliberately planned by the Government. It has led to the erosion of long-established communities and very high levels of male unemployment. Miners who in any other trade or profession would have been at the peak of their earning capacity have not found jobs after having been made redundant three, four or more years ago. And last week—a number of noble Lords referred to this point—there was the announcement that the last deep mine in South Wales is to disappear. The miners there are saying that this is enough. They are not willing to give up their livelihood. They are not willing, to misquote perhaps a famous Welsh poet, to go gentle into that good night, particularly when that good night looks as though it means an unending period of unemployment.
There are a number of other matters that need discussion. For example, we need to explore further the assurances as regards the provision of concessionary coal. There is also the question of welfare provision because, as a number of noble Lords have said, the Bill envisages the winding up of the Coal Industry Social Welfare Organisation.
In the meantime it simply remains for me to say that in my opinion this is another awful Bill. This is a backward step. Conditions in the privately owned industry before the war were generally acknowledged to be pretty deplorable. We cannot—must not—return to those days. One of the means of ensuring that we do not do so is by insisting on minimum standards to be applied by private operators and getting those written into the Bill. Let us aim to do that in this House.
§ 7.41 p.m.
§ Lord Northbourne
My Lords, I am somewhat humbled by the wealth of experience which we have heard tonight. I have been down a coal mine but I cannot say that I have worked in one. I put down my name to speak in order to raise a rather technical legal point—but I believe a very important one—which may be relevant to a number of pits and a number of people. Before I do so I must declare an interest in that I am a director and a shareholder of a family company which owns the freehold of one of the Kent pits.
1352 The problem is one of liability for the clearing up of pollution and contamination. Many of your Lordships will be aware that the European Commission issued a Green Paper last year on the subject of remedying environmental damage. In the paper the Commission referred to various possibilities, one of which was the imposition of strict liability in respect of not only future but past pollution and contamination. In its comments on the inquiry which it held into that Green Paper your Lordships' Select Committee said:the Committee thinks that it is not always difficult to decide who should bear liability for past pollution. Where the present owner or operator was responsible in the past for incidents causing pollution and where he knew or should have known that his activities were potentially dangerous, we think that he should be held liable for damage caused".The Select Committee went on to say:we considered the equity of strict liability and concluded that strict liability should apply to those who carry out dangerous or potentially dangerous activities which give rise to environmental damage".It is fairly self-evident that the Coal Board's activities fall into that category, yet the Bill shows no effective provision for the new Coal Authority to assume the responsibilities of the existing Coal Board.
There are two problems. First, there is no clear definition of pollution. What is not pollution today may be pollution tomorrow. The goalposts are changing all the time as the state of the art changes. So we cannot actually know what liability we may be facing in the future. My view is that British Coal must be liable for pollution or contamination arising from its activities, whatever that liability may ultimately be for clearing up. But British Coal is about to disappear. What will happen? The Bill does not lay squarely on the new Coal Authority the present or potential liabilities of British Coal for clearing up pollution or contamination.
The Secretary of State has said in another place on a number of occasions that the liabilities of British Coal will pass to the Coal Authority. However, that is not what the Bill says. I believe that the Bill must he amended to say what the Minister said. The Bill does not say that all property, rights and liabilities will be transferred to it. In practice, the Coal Authority is likely to be bypassed by the transfer of many, if not all, existing mines and quarries and those intended to be worked in the future direct to the private sector or to successor companies.
Unless the transfers are made to the Coal Authority with a direction from the Secretary of State on the terms of the subsequent transfer, the Coal Authority will have no interest and no liability in those mines. These will represent the majority of sites and will expose the innocent third parties affected by the consequences of mining to risk of liability. Is it the Government's intention under the Bill to ask Parliament to do a kind of conjuring trick by which the liabilities of the Coal Board vanish away and the taxpayer does not have to meet its liabilities for past pollution and contamination? If that is what the intention is, it is a most unjust solution.
§ 7.46 p.m.
§ Lord Sanderson of Bowden
My Lords, I support the passage of the Bill and immediately declare an interest in a company which may be interested in the Scottish coalfield. I support the Government in their disposal policy though I take note of what my noble friend Lord Haslam said on the matter. However, I recall the Government being told that Scotland should have only one electricity company. How right the Government have been proved to allow two healthy privatised public companies to surface north of the Border.
The noble Lord, Lord Morris of Castle Morris, will be surprised to hear that I support him on one matter—and one matter only, I fear—in that he laid emphasis on the importance of the human aspects of change in this very special and different industry. I believe it must be a top priority to do everything possible to bring management and workforce closer and closer together to share in the industry's future. That can be done, particularly by the help of employee share ownership. It will ensure the maximum co-operation industrially and the minimum interference politically.
In the disposals which will result from the Bill's passage the Government will need to be mindful of balancing their expectations—their reward or gain—with the liabilities that are being passed on; some of greater significance to private industry than to state-owned enterprises and insurance in the broadest sense being one of them. It is therefore vital to leave no room for misunderstandings during the bidding process. Otherwise, many tears are likely to be shed.
I do not take as gloomy a view of opencast mining, coming as I do from north of the Border, as seems to have been prevalent in this debate. I would just say a word about access which is a vital consideration of which we shall hear a lot during the passage of the Bill through your Lordships' House. The value attached to ready access should not be underestimated by the Government. I note that the Coal Authority has certain powers to determine the rights of access to coal reserves up to 1999. While I understand that rights of access to coal should be secured by agreement, voluntarily wherever possible, there is no doubt that in the disposals of reserves by the Coal Authority in the future the price paid for those reserves will reflect clearly the cost of ready access and could colour the success of the United Kingdom mining industry.
I believe that the United Kingdom differs in this respect from many of its world competitors. We do not have, being a small island, the large tracts of reserves as in other countries like the United States. And it could happen—bearing in mind that the coal price has to come as near as possible to or indeed be equal to the world price—that our indigenous natural asset could be literally a "locked up" asset. That would be a tragedy and is a matter with which the Government are quite rightly concerning themselves.
I want to say a little about the coal industry in Scotland and in particular its main customers. I have not heard much in this debate about the customer for coal. A business without a satisfied customer will surely die.
1354 I make no apology for raising the environmental concerns of the Scottish power companies as they are a vital part of the equation and affect coal's future.
Fossil fuel emissions are of concern to everyone, not least myself, having had a hand in taking the green Bill through this House in 1990. The emissions in question are sulphur dioxide, nitrogen oxide, and carbon dioxide. I wish to comment on two of these. The United Kingdom government made a commitment at the Rio Convention to return carbon dioxide emissions to 1990 levels by the year 2000, but rightly opposed the European Union's carbon-energy tax. In its current proposed form such a tax would not reward electricity companies who have access to a generation mix which includes carbon-free sources and severely disadvantages the use of coal in that mix. Therefore, I strongly support the Government's line on that issue.
But in the case of sulphur dioxide emission policy, I have an anxiety regarding the Scottish position. The requirement is for existing stations to reduce SO2 emissions in stages to 60 per cent. of 1980 levels by the year 2003. Under the directive due for review this year, these requirements have been implemented in the United Kingdom by a national plan under the integrated pollution control authorisation introduced by the Environmental Protection Act 1990.
The national plan in its current form is segregated on a sector-by-sector, country-by-country, basis. Hence there is a Scottish aggregate bubble within which generation activities must operate regardless of exports or fuel type selected. This has been allocated on an historic use basis and took no account of the low sulphur content of Scottish coals; the higher nuclear generation output; the change in the destination of the output from Chapel Cross or the increased exports from Scotland to England through the interconnector. As a result, despite lower emission rates per unit of electricity sold, the plan would require the fitment of a flue gas desulphurisation plant—a very costly business indeed in Scotland—around 1996 even though surplus limits would exist in the rest of the country.
I am aware of the discussions with the Department of the Environment on the possibility of introducing a quota-switching regime for sulphur dioxide emission limits. I ask my noble friend the Minister whether a consultation paper is planned for this approach and, if so, when will it be published? If not, what plans do the Government have to alter this anomaly and to give a much more secure future to fossil fuel generation north of the Border?
I wish to see a successful transfer to the private sector of the coal industry. The industry is now—for better or worse, for richer or poorer—inextricably tied up with power generation and as such has to be competitive in world markets. Like my noble friend Lord Haslam, I have serious anxieties about the subsidies which the nuclear industry in the United Kingdom is getting. I hope that the Government recognise the feelings on all sides of this House on this particular issue. However, despite enormous challenges, I believe a healthy industry will survive if fair trading is permitted.
From what I have said regarding the Scottish coalfield, inequitable legislation calling for higher levels 1355 of environmental control there could result in that coalfield's future being jeopardised. I believe that the Government must see to it that that does not happen. I know that my noble friend the Minister, coming from north of the Border, will see to it that it does not.
§ 7.55 p.m.
§ Lord Peston
My Lords, this has been a long but interesting debate. I hope that noble Lords will forgive me if I do not cover every single topic which came up. In particular I believe that noble Lords have spoken for all of us when questions of the position of individual miners and communities have arisen. I hope that I shall not be accused of insensitivity if I do not go over that ground again.
I would like to look at one or two other more technical matters. The Bill itself is long and difficult. The noble Lord, Lord Peyton, said that we were rather naive to hope to have what my noble friend Lord Morris of Castle Morris referred to as a user-friendly Bill. But as an amateur legislator I am loath to be a participant in the passing of a Bill into law which I, and perhaps other noble Lords, do not understand in most of its detail. Therefore, we must put down amendments so that in responding in Committee the Minister can clarify a great deal of the many relevant paragraphs.
There are clauses which are completely beyond me. I am sure that that is not true of other noble Lords. I merely ask them to look at Clause 10 which is a classic example of the whole being much less than the sum of its parts. I believe that I understand the meaning of every single word in that clause, but I have not the faintest idea what Clause 10 is about. Equally, it is clear that some parts of the Bill have been written by a computer with no human intervention at all. Noble Lords who doubt that should look at Clause 58.
So we have to scrutinise the Bill in some detail. I have heard noble Lords opposite say that they would like to hurry the Bill into law, but in general I do not see how we can do that. I heard the noble Lord, Lord Wade, say that and I always listen carefully to what he says. I do not believe that we can hurry it, but I say this: if the Government will agree to accept amendments in two key areas or to bring them forward themselves, that would certainly speed the passage of the Bill through your Lordships' House. I have in mind specific commitments on the face of the Bill, which have been mentioned by noble Lords of all parties, as regards safety, environmental pollution in general and water pollution in particular. If the Minister can make a positive response on these matters he will find that noble Lords on this side of the House and many on his own, extremely helpful in agreeing to the amendments. I am sure that that would both improve the Bill and get the business done rather more quickly.
One has to ask why we have this Bill and what is its point. Certainly its point is partly ideological. Without being more than usually acerbic, essentially the Government are saying: "What can we sell off next to offset the situation of financial profligacy which we have got ourselves into?" One of the difficulties as regards the Bill—again, I look forward to putting down amendments in Committee to enable the noble Lord to 1356 respond on this matter—is that it is not easy to see the net gain to the public exchequer from this privatisation. The sums which I have done suggest that the taxpayer may end up as a net loser from this particular Bill, but we shall come to that in due course. I have one or two questions on that issue.
One of the objects of the second part of the Bill is to enable the Government and the noble Lord himself, to avoid an energy policy by saying that it is all down to market forces. In my judgment markets are very good at short-term resource allocation. They are also less good, and sometimes bad. The right reverend Prelate the Bishop of Sheffield raised the point that markets are sometimes even bad when it comes to the long run, especially in areas dominated by risk, whether it is of an international political nature or otherwise. Certainly there are immense risks involved in anything to do with energy. That is why many of us believe that we must have an energy policy.
In that regard, perhaps I may draw your Lordships' attention to one remark about the duty of the authority. Clause 2(1) states:It shall be the duty of the Authority to carry out its functions … so far as practicable—(a) that an economically viable coal-mining industry in Great Britain is maintained and developed by the persons authorised".In other words, it seems that the Government are saying, "We have no duty to ensure that we have an economically viable coal industry, but we shall set up an authority to do that". One does not have to be a brilliant economist to point out that that can be done only if the Government invent an energy policy, because one cannot look at an economically viable coal industry unless one looks at energy in general.
In a way, the Bill appears to get the Government off the hook. Incidentally, I cannot find anything in the Bill to tell me what happens if the authority, having been set up, fails to fulfil its functions. I note that Clause 1(4) even goes so far as to suggest that one or two of the people appointed to the authority might have some "experience of" or have "shown capacity in" some matter relevant to the authority's functions. It is brilliant of the Government to think that one or two of the people who are appointed to the authority should know what they are talking about. I take it that being a member of the Conservative Party is not one of the criteria. The real point is, having written into law that the authority has to set up an economically viable coal industry, what happens if we end up without an economically viable coal industry? Do those people then get into some kind of trouble—and if so, what kind of trouble? That is one of the reasons we have to scrutinize the Bill line by line. It is full of what looks, to the naked eye, to be first-grade nonsense.
The noble Lord, Lord Gray of Contin, began by putting the whole question in a broad historical context. He reminded me that over our lifetimes—from the middle of the century —we have seen inland energy consumption rise by about 50 per cent. In a sense, that is remarkable because our gross domestic product has risen by a great deal more than that. One of the real triumphs of the modern economy is the improvement in the efficient use of energy and fuel in our lifetimes. That has been a remarkable achievement and shows why 1357 economists, my predecessors, got it all wrong when they were trying to make long-run forecasts of the nature of our energy demands.
If we go back to, say, 1950—I take that as an easy year —we see that virtually all our energy requirements were provided by coal. There was no nuclear energy at all; no natural gas and a little bit of petroleum which was used largely not for fuel purposes, but for burning in motor cars. Today, our energy consumption has increased by about 50 per cent. The dominant fuel is now petroleum. We should not forget that coal is still a major source of energy. Despite the gloom, the coal industry is not yet finished. It is still operating, producing and selling coal. There has been a great expansion in our use of natural gas. The reason many of us want to see an energy policy is that that is the position today. Our use of coal, petroleum and gas is more or less equal and despite all the fuss, nuclear power still plays only a minor part.
Our concern is for the future. My concern in particular is that, to put it at its mildest, it makes no sense to me that we should leave to market forces the split between those fuels over the next 25 years. Someone has to take an overall, strategic view of the matter. I agree that I am being irrelevant here because the next government will do that anyway, so why should I moan at the Minister and ask him to take this on board? I think it is enormously important to say what will happen, what balance we shall have and how we are planning towards it.
A topic which was raised by the noble Lord, Lord Northbourne, and on which I have written quite a lot—I shall not bore your Lordships with it in detail now but shall return to it in Committee—is the whole question of liabilities. As I read the Bill, I have great difficulty in following who, in the end, will be liable for what. It is no good saying that it will be no different from the existing Coal Board because the existing Coal Board is, in a sense, a public sector body. Whatever the law is, it has the Government and, in a sense, the Treasury behind it.
We must remember that so many of the liabilities are unknown. I think that it was the noble Lord, Lord Crickhowell, who said that in many cases we do not know whether particular mines will produce pollution. We do not know, but they might produce pollution. If one is the owner of land which might be affected, one is not reassured to be told, "We do not know"—quite the reverse; it makes one even more worried. I cannot see in the Bill precisely who is liable. I am somewhat torn on this issue. On the one hand, if I were to say that the Bill ought to mean that the new privatised coal producers should be liable, we would probably end up with what happened with nuclear power. That industry is not "privatisable" because private producers simply could not take on board such open-ended and indefinitely prolonged liabilities.
That seems to leave the poor old taxpayer as the only person who is liable and if the poor old taxpayer is liable, we should at least write on the face of the Bill in what way the poor old taxpayer is liable and on what kind of scale. Does the poor old taxpayer end up with 1358 any net assets at all? Another way of putting it—the Minister has not said this; it was not stated in the other place and it does not appear in any documentation that I have seen—is to ask: what is the net worth of the industry as it presently stands? How much is the industry actually worth if one takes into account its likely contracts, likely markets and all its likely liabilities? The answer may not even be a positive number, but whatever it is, I must advise the noble Lord, Lord Sanderson of Bowden, that anybody bidding for the industry had better work out beforehand, first, what he is getting and, secondly, what it is worth. We shall have to table amendments in Committee so that the Government can explain these liability difficulties to us.
Most of the liabilities relate to environmental matters, but not all of them. My noble friend Lady Turner and other noble Lords referred to the pension liabilities. Although noble Lords will not want me to deal with that matter right now, we need to consider the pension side in some detail to see the precise nature of the liability and precisely what is committed. With respect to the pension liabilities, the Government have put forward the proposition that the provisions are cost-neutral. I hope that the Minister will be able to supply me and other noble Lords with the documentation underlying his ability to prove that all is cost-neutral. I am not an expert, but I can do elementary arithmetic and it is not obvious to me a priori that it is all cost-neutral. I should like to see the hot-shot work that the officials have done so that they can persuade me of that.
A related matter goes back to the financial effects of the Bill. At one point, the Government rightly say that it is impossible to provide accurate assessments of the Coal Authority's costs and income "at this stage". I am interested to know when the Government will be able to provide accurate assessments of the Coal Authority's costs and income.
I am intrigued by the proposition which one noble Lord has mentioned that the likely annual subsidence costs will fall by the last year of the century. I do not see how that sum can be done. Given that we accept that we do not know what the subsidence costs are in the first place, how do we know now that it is likely that they will fall by the end of the century? As far as I can see, it is at least an even bet that they will rise by the end of the century or, if we split it three ways, that they will be the same by the end of the century. To put it at its mildest, the Bill's financial provisions are unimpressive.
Noble Lords will not be surprised to hear that I believe that the Bill is irrelevant to the current economic needs of the nation. They will not be surprised to hear that I think that there are other ways in which the Government could be occupying their scarce economic and legislative time than in privatising the coal industry. There are other priorities. However, as far as your Lordships are concerned, the Bill has gone through the other place. As has been pointed out, it was in the Conservative Party's manifesto. The public would be a good deal more impressed if other promises that had been made at the time of the last general election had been kept, but at least the Government want to keep this 1359 one. So, speaking particularly from this Bench, we must in no circumstances wreck the Bill. I assure the Minister that nothing that I shall do will do that.
However, I do believe and am convinced, like noble Lords from all parts of the House, that coal remains an important fuel. If we organise things properly, I cannot believe that it will cease to be important in the future. The British coal industry has a significant future. Its productivity has increased, and there is no reason to believe that under new hands it will not go on increasing.
I do not want to have a great debate today for and against nationalised industries, but if the Minister cares to put down such a debate he will find that I am able to take part in it without any fears. I would rather the industry stayed in public ownership, but if it is to go into private ownership we must amend the Bill to ensure that it succeeds under private ownership. In particular, the new industry must receive what I would call fair and proper support from the Government so that it can thrive. The least we can do is to be as supportive of our industry as our friends in the European Union and elsewhere are supportive of theirs.
As I said, those are only some of the points that I wish to make. I hope that noble Lords will not feel unhappy that I have not dealt with everything that they have raised, but we shall have a great deal of time in Committee to go into the detail of the Bill, and so for the moment it is time for me to conclude.
§ 8.11 p.m.
§ Lord Strathclyde
My Lords, it has indeed been a debate of mixed emotions. "Sadness", "relief", "anxiety" and "astonishment" were the words used by my noble friend Lord Crickhowell, and I agree. We heard reminiscences from the noble Lords, Lord Mason and Lord Ezra, my noble friends Lord Peyton and Lord Haslam, from the noble Baroness, Lady Lockwood, about her father who was a miner, and the noble Baroness, Lady White, to whom I point out that I share her understanding of mining communities. I live in a part of the world whose landscape, architecture, villages and the very people have been sculpted by the mining of coal. I am very much aware of the influence that coal mining has had not just on the area where I live but across the whole country.
We should kill the lie that it is the Labour Party only which is interested in miners. That may have been true a long time ago but it has certainly not been true recently, and it is not true today. It was my noble friend Lord Peyton who said that it was an extraordinary industry, and how right he is. That is different from the attitude of the right reverend Prelate who considered that these were the last rites for the industry or of the noble Lord, Lord Beaumont, who said that this is the wind-up of the industry. Those are negative attitudes, because it is an industry which has been in decline since 1913. What we are doing in the Bill is to provide a viable future in the private sector so that the natural enterprise and entrepreneurialship of those involved in the mining industry can take over and show the way forward.
1360 It is the speech of my noble friend. Lord Gray of Contin which should be read every time one feels depressed about the coal mining industry. It was a glorious speech, as indeed was that of my noble friend Lord Wade of Chorlton. The greatest surprise was perhaps the speeches from the Front Benches opposite. I had some doubts about the knowledge of the noble Lord, Lord Ezra, as to his own party's energy policies, especially the carbon tax that would do so much damage to the coal mining industry. Noble Lords on the Labour Party Front Bench also do not seem to have an energy policy, except that of nationalisation.
I can guarantee to the noble Lord, Lord Peston, that I have no intention of putting down a debate to discuss his views on nationalisation or even whether he can justify it. He may well find helpful the paper published by the Department of Trade and Industry entitled The Coal Industry Bill: An Introduction to the Provisions of the Bill and an explanatory note on the Coal Authority. Both are available and many noble Lords have found them helpful in understanding the various clauses. Of course, those are items to which we shall return in Committee.
The noble Lord, Lord Morris, talked about the market being rigged against coal. The noble Lord, Lord Dormand of Easington, compared the subsidy being given to coal to that given to agriculture. He said that we do not complain much about agriculture—I think that we do—and that we should subsidise the coal industry. Since 1979 the taxpayer has provided financial support approaching £20 billion. The largest single amount (a £6 billion grant) was provided in 1990. Since then, substantial further support has been provided to meet 90 per cent. of British Coal's restructuring costs. British Coal continues to receive more than the world market price for much of its output at the expense of the electricity user. Far from being rigged against British Coal, the market has, if anything, been tilted in its favour.
As my noble friend Lord Gray of Contin pointed out, we should never forget that it was in the 11 years of Labour Government (between 1964 and 1970, and 1974 and 1979) that the number of producing pits fell by 313. My noble friend Lord Haslam made an important and powerful speech. He mentioned the subsidising of the coal industries within the European Community, but the coal industry is in decline throughout the Community. In Germany, the number of hard coal workers underground has fallen from over 300,000 in the mid-1950s to under 70,000 to date, with further reductions in prospect. In France, the complete closure of the industry is planned. In Belgium, the last major pit closed in 1992. My noble friend pointed out that the division of British Coal into five companies for privatisation could lead to destructive short-term competition. That point was echoed by my noble friends Lord Wade and Lord Sanderson who wondered if we were in danger of creating too many small industries.
The Government consulted widely on their proposals to privatise British Coal. The decision to offer British Coal's deep-mined and opencast mining assets for sale in five regional companies was taken in the light of the range of views expressed. Potential purchasers, 1361 however, will have the opportunity to bid for one or more (up to all five) packages, and they will therefore be able to take their own views of what is the most robust structure for the industry as a whole.
The issue of health and safety has been a recurrent theme throughout the debate. I thought that I had made it absolutely plain in my introductory speech that the Government take health and safety matters extremely seriously, and yet throughout the debate I have sensed that noble Lords opposite have sought to demonstrate that we have no interest in health and safety and that we merely seek a regime that goes back to the pre-war days and to the 1930s. That is scaremongering of the worst kind. It is wrong to imply that privatisation will see a regression to pre-nationalisation conditions. Privatisation will not lead to a reduction in safety standards. Modern mining practice, new technology, and a tough regulatory framework will all ensure that the industry's current excellent safety record will continue.
The industry's safety record is determined not by the form of ownership but by the robustness of the regulatory framework and the safety consciousness of everyone in the industry. The noble Lords, Lord Morris and Lord Ezra, and the noble Baroness, Lady Dean of Thornton-le-Fylde, asked about the safety duty in the Bill. There is no safety duty in the Bill because coal operators will have the safety duties under the Health and Safety at Work etc. Act 1974. That is the Act to which we shall be referring.
The noble Baroness, Lady Dean, made the mistake of trying to measure the safety regime by the number of words in the Bill. She should have studied the advice of the Health and Safety Commission, which has advised that responsibility for regulating safety in the industry must remain clear and unequivocal. The commission must therefore continue as the regulatory body and its executive as the enforcement body. The Government have fully accepted the commission's advice.
The important aspect is the safety of mining operations in the UK. That will remain paramount. No mine will be able to operate in the UK unless it satisfies the rigorous safety standards of the HSE. All mines will be subject to the regular inspection of Her Majesty's Mines Inspectorate. Furthermore, the commission has made it clear that it is important that these processes should remain separate and distinct. It has advised that that principle cannot be blurred in any way because to do so would be to risk confusion, which could only jeopardise safety. I wonder whether the noble Baroness, Lady Dean, really suggests that we should ignore the commission's advice on this issue.
The noble Lords, Lord Morris and Lord Prys-Davies, used statistics, stating that the safety record of licensed mines is worse than that of British Coal mines. I wonder whether those noble Lords are aware that their statistics are selective in the extreme. It is true that in 1992-93 the fatal accident rate in licensed mines in the UK was not as good as that of British Coal. However, as regards the fatal and major accident rate in 1992–93, the record of licensed mines was better than British Coal's. I caution 1362 noble Lords against over simplifying this important issue by using only those figures which appear to suit their argument at the time—
§ Lord Strathclyde
My Lords, I cannot believe that we shall have a Committee stage without dealing in detail with this point. Using the Health and Safety Commission as my adviser, I have laid out the reason why we have decided not to go further on the face of the Bill by providing a safety aspect within it. Rather, we are relying on the advice of the HSE and on various pieces of legislation which are already applicable.
The noble Lord, Lord Morris, tried to suggest that the Coal Authority will be weak and ineffective. I do not believe that that will be the case. It will be a strong and effective body with all the powers that are necessary to carry out its functions. They broadly concern the licensing of the industry and the management of assets which are not appropriate for privatization—
§ Lord Morris of Castle Morris
My Lords, would that be true even if there were only two members of the authority?
§ Lord Strathclyde
My Lords, again, that is a matter that we shall discuss in Committee. I am not sure that it is entirely relevant to the point that I was trying to make. The Coal Authority's job is not to run the industry. That will be the role of the private sector taking over from British Coal. Its commercial management will make the right decisions. All that the Coal Authority will do is specified clearly in the Bill and where clarification is required I shall attend to that.
I turn to another area of serious concern which was raised during the debate. It is the issue of subsidence claims, raised by the noble Lord, Lord Ezra, my noble friend Lord Alport and the right reverend Prelate, who was concerned about the foundation of his church. In my view, it is essential that coal mining companies should have and be seen to have real and meaningful responsibility for their own subsidence. It would be wrong to start from the position in which everyone is implicitly turning to the taxpayer.
Various noble Lords suggested that the Coal Authority should be liable for any subsidence claims which were not met by the industry. The Coal Authority will have a statutory duty to look carefully at the financial standing of mining companies, especially in relation to their ability to meet subsidence liabilities. Where necessary, the authority will require companies to form special financial security arrangements. The Bill provides that these arrangements can be set up so as to ensure that the security is effectively ring fenced for subsidence claims. Operators will be required by their licences regularly to submit updated estimates of their subsidence liabilities. These will have to be prepared on a satisfactory basis and we expect that the Coal Authority will provide guidance to operators on what is 1363 satisfactory. I know that that is a subject that we must discuss in Committee in order to clarify the position. I look forward to having that opportunity.
The noble Lords, Lord Dormand of Easington and Lord Ezra, raised anxieties about the future of coal R&D. Of course, the Government recognise the importance of ensuring that full advantage is taken of advances in coal research and mining technology. However, it must be primarily for the industry to decide what research it will need to secure the long-term future of the UK coal industry, where appropriate in partnership with the Government through bodies such as the Advisory Committee on Coal Research.
The noble Lord, Lord Ezra, expressed anxiety about the abolition of the Domestic Coal Consumers' Council. The Bill contains powers for the council to be abolished. However, I assure noble Lords that it will not be wound up until arrangements have been made to ensure the continued protection of the interests of domestic coal consumers. My department is discussing the future protection of these consumers with various private-sector organisations with a view to creating a smooth transition to suitable new arrangements.
The third most important factor to come out of the debate is environmental liability, most notably water pollution. My noble friend Lord Crickhowell made an important speech on the matter and I welcome his contribution. He raised the issue of water pollution in its proper perspective. I welcome his recognition of the complexity of the issues. I also understand the worries of the noble Lord, Lord Mason. As a man keen on fishing, I understand the worries that he might have about water pollution. We are making sure that British Coal's current responsibilities in respect of abandoned mines will be passed to the Coal Authority. We are also reviewing the law on water discharges. However, we do not propose to make any hasty changes to the law without proper consideration of the wider implications of a complicated issue. Of course, I have listened carefully and shall continue to take note of what is said by my noble friend Lord Crickhowell and also my noble friend Lord Elliott of Morpeth who has a great interest in the North East and the River Wear.
§ Lord Dormand of Easington
My Lords, the Minister said that the responsibility will pass to the Coal Authority. As has been made obvious tonight, this is a massive problem. What about the financing? Is it possible to say at this stage where the money will come from to deal with the problem?
§ Lord Strathclyde
My Lords, if the responsibilities are passed on to a statutory body, then it must follow that the statutory body will be given the funds to continue to carry out its functions.
If it is a statutory body, then presumably it will be financed from the general fund. But there may be a variety of ways in which to fund such a body; for example, through the licensing system. We shall have to see exactly how that can be developed.
My noble friend Lord Elliott is concerned about the pollution of the River Wear. British Coal is in close 1364 touch with the National Rivers Authority on the consequences of closures in the Durham area. At present there is no question of ceasing pumping at the inland sites, which are relevant to the possibility of pollution to the river. Further research is in hand. British Coal has ceased to pump at other sites on the coast, subject to consultation with the authority in each case.
My noble friend Lord Caldecote asked why the environmental duty in Clause 53 does not apply to the Secretary of State. In fact, the clause applies to the Secretary of State as a planning authority. That is in Clause 53(4). Clause 53 deals with developments requiring planning consent. It would not be appropriate to impose an environmental obligation on the Secretary of State or the Coal Authority in respect of compulsory rights orders, which are dealt with in Clause 52 and Schedule 8, as those are concerned with legal rights of access and not the way in which opencast operations are carried out in practice.
The noble Lord, Lord Mason, and my noble friends Lord Caldecote and Lord Wade of Chorlton paid tribute to British Coal Enterprise; and I join them in that. British Coal has recently provided my department with its thoughts about BCE's future and those are currently being given very careful consideration, bearing in mind the extremely important work which we all know that BCE does.
My noble friend Lord Wade asked how coal stocks will be treated under privatisation. We expect that British Coal's stocks of coal will be offered for sale as part of the five regional companies. The Government are exploring with the generators a range of options for the levels of stocks to be held by them in future years.
The question of miners' welfare was raised by many noble Lords. I am conscious of the valuable work undertaken by CISWO and its associated bodies. We have put to the CISWO council our approach which is aimed at meeting the central concern that the core services provided to the old, disabled and ill can continue in the long term.
British Coal can rightly be proud of the high standards which have been established, particularly by the mines rescue service, which was an issue of particular concern to the noble Baroness, Lady Turner of Camden. The Government understand fully the importance of mines rescue and that is why they have taken steps to ensure that there will continue to be a service with a national capability. We accept fully that it is essential to maintain standards of rescue cover to all mines after privatisation.
My noble friend Lord Peyton, who apologised for the fact that he would not be here at the end of the debate, and the noble Lord, Lord Dormand of Easington, asked about the Government's industrial strategy. They will be pleased to know that a White Paper will be issued in the next few months dealing with precisely that issue.
I should say to my noble friend Lord Elliott of Morpeth that on my visits to the North East, I have been impressed by the enterprise, the enthusiasm and the vibrancy of the local economy. It is no surprise that it was to the North East that Nissan and so many other 1365 component manufacturers went because of the traditional hardworking and skilled workforce to be found there.
The noble Baroness, Lady Lockwood, was not to know but I can tell her that in 1989 I visited Cap House colliery, Wakefield, and was most impressed by the experience. I hope that it will continue to be successful in the future. Perhaps I may write to my noble friend Lord Northbourne in reply to his extremely detailed question.
The transfer of the coal industry to the private sector is a momentous step. It has widespread ramifications throughout the critical areas of safety, pensions, concessionary coal, subsidence, licensing and the environment. The Government have given those and other important areas the most careful consideration. They have brought forward to your Lordships' House a Bill which deals with those important subjects in a balanced and considerate way. The Bill offers Britain's coal mines the best opportunity to establish themselves as competitive suppliers in our energy market for many years ahead. I am sure that the industry, with its great traditions and history of achievement, will make full use of that opportunity. I commend the Bill to your Lordships.
On Question, Bill read a second time, and committed to a Committee of the Whole House.