§ 3.7 p.m.
§ The Minister of State, Department of Trade and Industry (Lord Strathclyde)
. My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Strathclyde.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The CHAIRMAN OF COMMITTEES (Lord Ampthill) in the Chair.]
§ Clause 1 [Establishment of the Coal Authority]:
Lord Morris of Castle Morris moved Amendment No. 1:
Page 1, line 9, at end insert:
The noble Lord said:
Huge liabilities for industrial diseases, site pollution and water leakage threaten to derail government plans to privatise the coal industry.
Lawyers of the Mining and Mineral Law Group, who individually represent many of the most likely bidders for British Coal assets, have told government advisers that unquantified costs threaten to deter potential purchasers".
That was what I read in The Times—not a newspaper given to sensationalism—as I worked my way through my humble breakfast this morning.
In moving Amendment No. 1, I wish to speak also to Amendments Nos. 8, 9, 25 and 28. This first group of amendments deals with the issue of liabilities in the future. The Secretary of State has said on a number of occasions that the liabilities of British Coal will pass to the Coal Authority. If I may announce one such utterance as a text, in Standing Committee D on 3rd February 1994 at col. 33 of the official record he said:
The historic liabilities that are associated with mining and which rest currently with British Coal will be transferred to the Coal Authority".
That is what the Secretary of State said. That is not what the Bill states. We propose that it should be amended to reflect the Minister's assurance.
§ The Coal Authority is responsible in Clause 1(1) (a) only for matters relating to interests or rights in unworked coal and other property transferred to it or acquired by it. The Bill does not say that all property rights and liabilities will be transferred to the authority. To assume the residual liability for all coal mining activities up to the date on which the industry is reorganised—the restructuring date—there should be specific and clear provision in the Bill.
§ In practice, as we have all become aware, the Coal Authority is likely to be bypassed by the transfer of all 522 existing mines and quarries intended to be worked in the future direct to the private sector or, more probably, to what are to be known as the successor companies. We shall probably return to that matter with a later amendment. If the best prognostications are to be believed, that will probably be at about 10.30 this evening. That will be done through Clause 12 under which the Secretary of State has power to prescribe a restructuring scheme. The shares of those successor companies, each covering one or perhaps more of the five regions, are intended for sale to the private sector. That will be the approach taken for the majority of the industry. Whether there will be separate purchasers for each company is not at all clear. Nor is there any indication as to precisely what property will be transferred to each successor company.
§ However, unless those 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, so far as I can see, have no interest and no liability in those mines. These will represent the majority of all sites and will expose to risk innocent third parties affected by the consequences of mining. If a contractor goes bust, there is no money to pay the bills and the Coal Authority will have no residual liability except for subsidence.
§ The Coal Authority will have an important interest in the industry as the licensing body and probably in the leasing of coal, although the freehold of that can be disposed of by the Secretary of State at the restructuring date, or by the authority at any time thereafter. But that does not imply any interest in the property rights or liabilities that are not transferred to it. Specific provision is made for subsidence, but there is none in relation to other liabilities.
§ There is a further uncertainty in the Bill. Clause 12 refers in subsections (2), (4) and (5) to property rights or liabilities. Where Clauses 1 and 3 address property issues, however, the references are to interests and rights only. There is no reference to liabilities in that context. So strict construction of the Bill suggests that there is an intention to distinguish the issue of liabilities under the restructuring scheme from the residual obligations of the Coal Authority.
§ Does that mean that the Secretary of State wishes to offload the maximum responsibility for liabilities on to the successor companies? That will probably represent best value for the taxpayer but it might very well frighten off potential bidders as The Times and most other national newspapers have warned us this morning. That would be bad news for the Secretary of State. Alternatively, is this strange confusion just a matter of keeping us guessing and his options open?
§ But let it be granted that the liabilities that we talk about are not easy to quantify. We can, however, indicate an order of magnitude. Over the past five years British Coal's liabilities for insurance and subsidence costs were over £700 million, the largest liability area being compensation payments to employees for a single category of claim—industrial deafness.
§ At the onset, British Coal did not consider that any real liability existed. Within months of preparing claims, the National Association of Colliery Overmen, 523 Deputies and Shotfirers (hereinafter referred to as NACODS) found that their legal advisers estimated that some £500 million of claims existed. The reason for the scale of the related liabilities was the potential number of claimants. There are in excess of 500,000 coal miners and ex-coal miners. The past 20 years of increased mechanisation, concentrated production systems and greater productivity have yet to feed through as a reason for pneumoconiosis claims. In the past 10 years further increases in production, diesel equipment, use of chemicals and abuses in safety dust checks are indicators of what will be increased liabilities. And to date, British Coal has refused to give estimates of liability costs to the DTI as it considers it inappropriate to estimate the liabilities. So in consultation with solicitors involved in the known cases, using the industrial deafness claims as a database, and a detailed knowledge of each type of category, NACODS has attempted to estimate some of those liabilities. It is impossible to quantify the claims relating to pneumoconiosis accurately. There are now 72,000 claiming benefit. The size of the workforce is over 500,000. Only one thing is clear: the claims will be very extensive.
§ Secondly, on industrial deafness, the claims procedure is well advanced and solicitors consider that more than half of the claims have been processed. The total cost to British Coal over seven years is in excess of £500 million. Liability outstanding is estimated at a further £400 million.
§ Thirdly, with regard to chronic bronchitis and emphysema, claims are now being processed through the courts. The DSS anticipates something like 100,000 claims. Many people consider that an underestimate. The estimate of liability is between £1 billion and £2 billion. With regard to vibration white finger, a case is soon to be heard in Newcastle Crown Court. The liability estimate for that category is something between £300 million and £400 million. Similarly with nitrous fumes poisoning, the figure is £300 million to £500 million. With regard to the harmful effects of nitroglycerine, the figure is £200 million. With regard to cancer from diesel fumes and particulates, the liabilities are at an early stage and cannot be estimated but they will be considerable. If we are not careful, industrial asthma is likely to be one of the biggest liabilities of the lot.
§ It is possible that NACODS' figures are wrong although I think that with its skill and experience they will be of the right order of magnitude. For industrial illness alone, the liabilities at a conservative estimate must be somewhere close to £3 billion, and the journalists this morning were estimating £5 billion.
§ Let me turn briefly to another category of liability of which we shall hear very much more: land drainage. Let us consider first some of the existing works. Engineers for five drainage boards in Yorkshire are very concerned about the future cost of pumping water from land where subsidence has occurred. Owners of land and houses have settled compensation for subsidence on the basis that such pumping will be maintained.
§ In the year to 31st March 1993, the cost of running the 31 pumping stations and other costs for the drainage 524 system in those same five boards was met by British Coal and amounted to £173,000. For the year to 31st March 1994, the cost will be much higher because of the amount of rainfall. Those costs include nothing for the replacement or refurbishment of the pumps. Those boards can cover 26,908 hectares. Other boards cover an additional 37,120 hectares. In addition, the Ouse and Derwent Board covers 19,801 hectares. One pumping station was built there about two years ago at the cost of £800,000, and the running costs which British Coal currently pays amounted in the same year, to 31st March 1994, to £26,638. British Coal also paid other costs of the board in the same year, mainly for supervising its remedial works. That came to approximately £31,600.
§ There is a continuing and perpetual liability for the protection of homes and farmland to maintain these pumps. Who is the rightful inheritor of these liabilities, the successor company or the Coal Authority; and why?
§ The issue of subsidence is too large to consider at this point. There is plenty in the Bill about it and we shall return to it. It is clear from the Bill that the Government are prepared to offer some protection to those with subsidence claims in the event of the insolvency of the operator responsible. There is no such protection for the employees of these companies. For example, a serving worker with 20 years' service could transfer to a private operator. On retirement, he would have a life entitlement to coal. However, if the operator becomes insolvent it would be lost. There must surely be provision to ensure that the Government, through the Coal Authority, will underwrite such liabilities.
§ This goes far further than the emotive issue of concessionary fuel. Much more important is the area of common law damages for industrial injury and sickness. Who will take on those liabilities? Many of them come. to the fore only after the passage of time, like. pneumoconiosis, vibration white finger, bronchitis, emphysema and industrial deafness. It is almost impossible to say when those industrial illnesses were contracted.
§ There must be some guarantee that these liabilities, which are potentially huge, will be met in lull. The amendment would clarify what is at present a dubious and inchoate area of the Bill. It would assist potential bidders to know who pays for what and it would relieve the anxieties of a large number of very worried people. I beg to move.
§ Lord Ezra
I support the amendment moved so effectively by the noble Lord, Lord Morris of Castle Morris. He has introduced an amendment at the start of this important Committee stage which strikes at the root of the Bill. It is the question of liability and how it is to be apportioned. Under the regime which still obtains for the time being under the former National Coal Board, and now British Coal, there was not the slightest doubt where those liabilities lay. We now have a situation of uncertainty.
I wish to start from the assumption that, in putting forward the Bill for consideration by Parliament, the Government have every intention that it should introduce a regime which would enable what remains of the coal industry to be operated effectively. It is from 525 that point of view that we must look at the various clauses before us. I very much regret that I feel that the uncertainty over liabilities overshadows that assumption.
The noble Lord, Lord Morris, referred to the items widespread in the press this morning. I happened to see an item in the Financial Times, and it must have been in all the papers, which dealt with the anxieties which the intending purchasers of the mines as now offered under the Bill are experiencing. They are worried. They are uncertain about the extent of the liabilities they would have to carry. They are uncertain about how they would get the acquiescence of their shareholders where they are quoted companies—and most of them are—and how they would get the approval of the Stock Exchange. The simple operation of a transfer of ownership, to which the Government are evidently dedicated, could be impeded by the uncertainty over the apportionment of liabilities.
However, it goes further than that. There is the human aspect to which the noble Lord, Lord Morris, referred, that the people who have served in the industry over many years and those who are still serving will now have grave uncertainties as to how their personal problems will be dealt with. Under the existing regime they have no doubt at all. They might be arguing through the courts possibly as to quantum, but the ultimate liability is clearly stated. We must therefore have something like Amendment No. 1 which clarifies the position.
I believe that the Government are bound to agree to that in the light of what Mr. Eggar said in another place on 3rd February 1994. He referred to all the environmental obligations and liabilities currently falling on British Coal which would be transferred to the Coal Authority. I assume that that means that all liabilities which are currently on British Coal will be transferred to the Coal Authority, with the exception of those specified to go with the sale of the on-going mines.
I ask the Government seriously to consider clarifying this fundamental issue. Until that is done, I very much fear that the process of privatising the mines could be in doubt and the livelihood of the people still working in the industry could be in doubt. I am sure that the Government will agree that that is not the objective of the Bill.
§ Lord Haslam
I am speaking essentially to Amendment No. 1 and I support what my noble friend Lord Ezra and the noble Lord, Lord Morris, have said so far. There will be a little repetition, for which I apologise, but nevertheless I think that I shall put a slightly different slant on the situation.
The Government's intention is that the restructuring schemes under Part I of the Bill will provide for the transfer to the new private sector employers of liabilities for industrial diseases such as pneumoconiosis, noise-induced hearing loss, vibration white finger and so on suffered by the mine workers transferred to them. That would include liability for damage to those employees caused by exposure to dust, noise and other environmental factors long before the date of transfer. 526 That means that the new owners will have to meet the cost of claims by such employees after privatisation but based in whole or in part on pre-privatisation exposures.
The number of industrial employees transferring to the new owners will probably be about 10,000. I think that we should keep that in perspective because it does not involve the high figures quoted by the noble Lord, Lord Morris. They relate to the present employment in British Coal. Nevertheless, the cost in relative terms is likely to be substantial for the new owners and totally unpredictable to quantify in advance. Also, they may eventually be hit with new diseases such as emphysema and chronic bronchitis, both now scheduled as coal mining industrial diseases.
As I indicated in my speech on Second Reading, I am as keen as anyone to see the rump of British Coal privatised, and we hope in a unitary state. Incidentally, that would dramatically have simplified the drafting and content of the Bill. We are in the process of making the best of a bad job, but we are rendering it even more difficult by trying to pass on these unpredictable historical liabilities to the potential new owners. I do not believe that this will be an easy privatisation in any way, and there is no doubt that some interested quality bidders—and I emphasise "quality", as we shall be looking for people who will sustain the industry and not just be in and out—may be frightened off by the liabilities. In any case, any bidders will have to incorporate substantial contingencies in their quote, thus markedly depressing the price at which the business will eventually be sold.
Another concern is that the Government have already decided to lease certain pits which were on a care and maintenance basis following recent closure by British Coal. In such cases all the ex-British Coal miners who are recruited will have had their full redundancy terms and other liabilities settled by British Coal. Hence they will be regarded as new employees in every sense and will have no claims for such historical liabilities on their new employers. The liabilities attached to the pits still to be privatised would therefore be much more onerous. That is hardly the best formula for establishing a level playing field of competition between the two future categories of pits. It is the second good reason why the historical liabilities should become the responsibility of the Coal Authority, or alternatively of the DTI, which I understand may handle common law claims after privatisation.
§ 3.30 p.m.
§ Baroness White
I am glad to support this amendment, proposed as it is by such experienced sponsors. There are difficulties, to which reference has been made. I hope that the Minister will be able to clarify the situation. For example, there is one small but awkward health liability which is disturbing. What is the position of those miners who have worked in the industry and who contract one of the serious illnesses? Such illnesses take several years to develop. How does one deal with that problem, particularly if their own pits have been closed? Those miners simply do not know where they will stand under privatisation.
527 There is a brief reference in the explanatory memorandum of the Bill to the fact that the liability for outstanding industrial diseases, sickness and injury claims will be met by the Secretary of State. But what happens if British Coal is timed to go out of existence before the necessary case hearings have been concluded? Does the Secretary of State foot the bill, or is it to be passed on to the new authority? There are real problems here. I do not want to take up the time of the Committee by going into them in detail. They affect a relatively small number of people, but they are causing a great deal of personal anxiety. We should like to hear clearly from the Minister as to what is the position of people in such situations.
§ Lord Renton
It may surprise the Committee that I have any reason for intervening at all in this matter. It is many years since I, like other Members of the Committee, had some responsibility for health and safety in coal mines. There were a great many coal mines then. We must be very careful. I am very strongly in favour of the Bill; but I am very anxious that there should not be any legislative vacuum created. The matters mentioned in this group of amendments are very important. We must ensure continuity of policy with regard to them, even though the changes are about to take place. I give as examples the environmental responsibilities mentioned in Amendment No. 1, and the more specialised issues in Amendment No. 8. We shall also have to consider most carefully Amendment No. 9, which talks of meeting,all obligations in respect of such damage".From the legal point of view, I hope that there would be no doubt about that, but I shall be glad to have an assurance.
When we come to Amendment No. 25 I am not quite so certain as to whether all the obligations that are mentioned there can feasibly be carried forward. But it is an expert matter on which my noble friend Lord Strathclyde has no doubt received advice.
As to Amendment No. 28, the last of the amendments grouped with Amendment No. 1, it is highly desirable that the authority should have power to recover the cost of discharging its various liabilities. I shall be interested to hear what my noble friend has to say.
§ Baroness Turner of Camden
These amendments deal with liabilities for the future. It has been stated by the Secretary of State that the liabilities of British Coal will pass to the Coal Authority. But, as some of my noble friends have said, that is by no means clear in the Bill. Obviously, we must get the matter clarified before the Bill leaves this House.
My objective in supporting these amendments is to try to pin down responsibilities in connection with social matters. My colleagues have dealt with issues such as subsidence costs, and so on. I have always had a particular interest in industrial disease and injuries. It is those aspects that I want to address.
We all know that mining is a hazardous business. Whatever is done—a great deal has been done during the period of public ownership and done, I may say, in conjunction with the workforce and their unions—the industry remains a hazardous one. Every so often an 528 accident makes the headlines, but the health and safety of mineworkers are continuously at risk. The industry is incredibly noisy and dirty, not to mention the other hazards. That being so, it is not surprising, as my noble friend Lord Morris said, that the largest area of liability is compensation for industrial deafness. My noble friend said that there are 500,000 coal miners and ex-miners. All of them are at risk of developing deafness due to their working environment, and many have already done so.
Then, of course, there is pneumoconiosis—a miners' disease if ever there was one. Foundry workers suffer from it too, but the greatest number of cases arise in the mining industry. Typically, it affects older miners and former miners, as the dust takes time to build up in the lungs. And build up it does, often to devastating effect.
I understand that a national agreement covers British Coal and licensed mines and extends to coal handling facilities on the surface, including ports. The future of that agreement is unknown. However, there are 72,000 benefit claims outstanding. Chronic bronchitis and emphysema have been mentioned, along with vibration white finger. What is a matter for concern is the levels of those conditions among older miners, many of whom are no longer working in the industry.
Who will take over responsibility for those liabilities? It is not clear that it will be vested in the new Coal Authority. It seems unlikely that the new owners will want to accept responsibility. It is not surprising that the unions are worried. It is not as though the Government's record when it comes to industrial injuries is a very good one. They have already undermined the industrial injuries scheme in a series of Bills, including the Social Security (Incapacity for Work) Bill, which was debated in this House last week. The Government have shown considerable hostility to the legislation that was designed to give support to those who suffer from industrial injury, saying that they see no reason why they should have preferential treatment. Clearly, there is every reason why employees who risk their health and their very lives in an important industry, one that has played an overwhelmingly important role in improving living standards for all of us, should have their right to compensation adequately protected. Their common law rights must be protected as well. Someone will have to pay. It must not be the injured or sick miners and their families. I support the amendment.
§ Lord Strathclyde
I value the opportunity at this stage of the debate of playing a part and responding on behalf of the Government. Perhaps I can say a word or two at the beginning about this Committee stage and the many amendments with which we are faced. Naturally, some of them provide a very welcome opportunity for the Government to explain and clarify the provisions of the Bill and to explain what it is that we mean by certain clauses. But the purpose of the Bill, as I explained at Second Reading, is to give the very best possible opportunity for the British coal industry to prosper and find new opportunities and to provide a long-term basis for a viable coal industry. Sadly, many of the amendments that we shall discuss over tine course of the next few days do just the opposite. They do not give the 529 Coal Authority or the successor companies the necessary freedoms. They tie them up in obligations and regulations which will only lead to the fossilisation of the industry.
In the debate this afternoon I recognise some very real concerns about those who have been working in the industry and those who will remain working in the industry for the successor companies. It is absolutely right that we should have those concerns. I shall explain what it is the Government's intention to do with those liabilities.
Let me begin by explaining how the Government intend to handle each of the liabilities that have been referred to. I shall then comment on the amendments which relate to the responsibilities of the authority. At this stage I apologise for the fact that my words may be lengthy. They will certainly be relatively complicated because we are dealing with technical issues.
First of all, there is the problem of industrial injuries and diseases. I fully recognise that questions about industrial injury and diseases are sensitive and important. We must ensure that claims in respect of industrial health continue to be treated fairly and properly. I believe that the approach that the Government have taken achieves just that.
The essence of that is that the Government would assume responsibility for British Coal's liabilities in respect of former employees. Liabilities in respect of continuing employees will be transferred to successor companies, including liabilities in respect of their period with British Coal. So, former employees would see very little change. Although the Government would assume overall responsibility, we propose that claims administration should carry on as now at British Coal's Pensions and Insurance Centre. I am sure that that is welcomed by many of those who will be affected.
The proposal that liabilities in respect of continuing employees' past service with British Coal should be transferred to successor companies follows normal commercial practice. There is nothing strange in what we suggest. British Coal workers who transfer to private sector firms would be entitled to claim against that employer. However, there has been mention of some of the very serious occupational diseases that occur as a result of a life spent in coal mining. Where a transferred employee would develop pneumoconiosis but was unable to claim damages from the new employer because, for instance, the company has ceased to exist, he would still be able to claim under the Pneumoconiosis, etc. (Workers' Compensation) Act 1979. As many Members of the Committee will know, that is a no fault scheme administered by the Department of Employment to provide compensation in circumstances where the employer responsible has ceased to exist. That also covers many of the other industrial diseases which affect those who work in mines.
Therefore I fully share the concern of Members opposite and indeed of some of my noble friends that we get right the treatment in these areas of legitimate 530 concern. But I do not believe that involving the Coal Authority in the way proposed in the amendment is the right way to go about it.
I shall touch briefly on the question of concessionary fuel. We are committed to safeguarding the entitlements of current and former British Coal employees and their dependants. On 17th January, the Minister for Energy announced how we proposed to fulfil that commitment. At privatisation, British Coal's responsibility for meeting the concessionary fuel entitlements of former employees and their dependants will be transferred to the Government. Responsibility for meeting the entitlements of continuing employees will be transferred to successor companies. I think that it is fair and reasonable that successor employers should become responsible for meeting the concessionary fuel entitlements of those transferred to their employ from British Coal.
Likewise, we attach great importance to the protection of the environment. We are determined to ensure that all British Coal's current environmental responsibilities continue to be discharged. My noble friend Lord Renton mentioned a very important word. That word was "continuity". So much of what the Bill is about is to pass on the liabilities that are currently shared by British Coal and to put them either onto the Coal Authority or onto the successor companies. There is no loophole. There are no gaps to plug.
My noble friend Lord Renton specifically mentioned Amendment No. 28. The amendment was spoken to by the noble Lord, Lord Morris. It would give the Coal Authority explicit power to recover any costs that it had incurred in discharging another person's liabilities. That is a very strange concept. We should not involve ourselves in giving the Coal Authority those sorts of powers. I suggest to my noble friend that it is positively undesirable. The authority does not and should not have a locus to discharge another person's liabilities. To give it such a sweeping power would enable it to discharge other persons' liabilities regardless of whether they were relevant to its functions or role. In consequence, the authority should not have the power to recover costs as proposed.
At the beginning of my reply I explained what I felt about many of the amendments with which we are dealing today. Perhaps I should finish with a look at the philosophy behind the way that we created this Bill. It is a very simple Bill, dealing with the transfer of assets of British Coal to the private sector, putting the Coal Authority as the main body looking after that privatisation. We do not attach any new liabilities; we do not extinguish any old liabilities. We very much want to preserve the integrity of the schemes that have helped miners over the course of the past few decades to overcome some of the very real problems that occur in the coal mining industry. I hope that what I have said will satisfy the Committee.
§ 3.45 p.m.
§ Lord Crickhowell
At the outset I should like to comment briefly on the difficult position in which I find myself on this Bill, as on previous occasions, in trying to interpret the Addington rules. The rules are fairly 531 clear: one can use one's general experience to speak about a debate of this kind. But again, I felt it wrong to table any amendments or perhaps even vote on amendments because they might be thought to be NRA amendments. The job of the NRA is to make its advice clear to the Government, the Chamber and the public at large. But having given its advice, it is then the responsibility of the Government to act. I try to draw that dividing line.
Therefore, I hope that it is not thought to be out of order for me to speak to some of the amendments. As I said, I have not tabled them on behalf of the NRA. It would have been rather absurd not to speak, bearing in mind that the NRA has given evidence to a number of Select Committees, has given advice to government and has recently published a study on the whole subject and commented about it outside the Chamber. I, of course, spoke at Second Reading.
I deliberately waited for my noble friend to speak from the Front Bench because I hoped that he would give some useful guidance to help remove some of the anxieties that I feel. Indeed, he certainly offered me comfort on some of the matters about which he spoke. I shall want to study what he said, but so far as concerns industrial injuries, pneumoconiosis and so on, I feel that what he said was helpful.
I am bound to say that I was surprised that his remarks about the environment were so brief. He told us that he would speak at length and that his explanation would be rather complicated. What he said was that there was no loophole because the liabilities would pass to either the Coal Authority or the licensees. But he failed to address the legitimate points made by the noble Lord, Lord Morris of Castle Morris, when he opened the debate, about the scale of the liabilities and the possibility that the licensees would be unable to meet them.
There can be no doubt at all that the liabilities could be very large indeed. We heard about the subsidence liabilities. I spoke about them at Second Reading. I received a letter from the regional Flood Defence Committee of the National Rivers Authority in Yorkshire expressing its grave concern about this very issue. That advisory committee—I should not say advisory committee; the Flood Defence Committee plays an executive role—has perhaps as much knowledge as any organisation of the scale of subsidence, its effects and costs. I pointed out at Second Reading that as the land sinks the National Rivers Authority must continue to build up the flood defence banks and that will go on for many years.
There are all kinds of other subsidence liabilities about which I am not qualified to speak; the trouble is that they are unquantifiable. But when we turn to other liabilities they are equally difficult to quantify and may be very large. We have before us, painfully, the example in another industry of the Wheal Jane tin mine in Cornwall, where a number of interconnected mines finally burst out when pumping was switched off by the final operators. A major pollution incident occurred of which so far, simply on research and development and setting up a pilot plant, the NRA is spending around£8 532 million of public money. That is only the start. We are looking for a long-term solution and no doubt expenditure will run on in that one case for many years.
There is no doubt also that the potential costs of pollution arising in the Durham coalfield, to give just one example, are very great because of the geological conditions that exist there and the likelihood that there will be pollution in the weir. I do not know how great those liabilities may be. I am concerned about whether any organisation that is licensed will possess the ongoing resources to meet such unquantifiable liabilities. I can speak with some experience because for a time—a relatively brief time—I was a director of a mining company which is likely to be seeking licences when the bidding begins. I know that any company of that kind would find it difficult to create the capital base that would provide us with the assurance that we require.
I am equally dubious whether it will be possible to obtain insurance cover or bonding protection in the market. As a loss-making underwriting member of Lloyd's I hope that the insurance market will approach the problem with a greater degree of prudence than it did environmental liabilities on the other side of the Atlantic. I hope, too, that those who are applying for licences will approach the matter with equal prudence. The reports that we read about in the press today suggest that they will. Therefore, I am raising this issue not only because I am concerned about the environment and the responsibilities of the organisation of which I am chairman, but also because, like my noble friend Lord Renton, I want the Bill to succeed. I am an unashamed advocate of privatisation and I have grave doubts that, if there is no clarity about the matter, we shall be able to have a successful privatisation.
Of course we will have the opportunity to explore some of the complexities later on in other amendments. But the more I look at the documents published—for example, the details published by N.M. Rothschild and Her Majesty's Government entitled Sale of the Coalmining Activities of British Coal Corporation— and read the guidance issued about the interaction agreements, the more concerned and confused I become. Regional coal companies will be possibly bidding for or taking over the regions, but within those regions will be individual collieries—perhaps those on care and maintenance at the moment. There is a need therefore to set up licensing arrangements to deal with the potentially horrendously complex questions of liabilities between different mines in the same area. They may be mines that have operated over hundreds of years; mines at different levels, one on top of the other; mines in which there will be flows from one to the other with potential for substantial damages.
Ministers have spoken outside this House of the possibility of seeking to clarify the position by drawing clear lines on the ground and carrying the liabilities down a kind of cylinder below, but that does not help me much either. We all know that a mine face may he miles from the shaft. Is the line on the surface to extend right out to where the shaft may be? As I observed earlier, there may have been successive mining operations at successive levels in that shaft. There may already be 533 damage taking place at one level from which, in due course, liabilities will flow, caused by the actions of British Coal or earlier miners. Can it be right that, as a consequence of a privatisation Bill, the liabilities incurred by British Coal and therefore underwritten effectively by the state, should be passed on to companies that may not possess the resources to meet them, particularly when those liabilities may have been incurred a long time ago and be no fault of the companies taking on the task in the future?
I am bound to say that I am extremely unhappy about that prospect. I have probably said enough. I hope that it will be possible to clarify those issues. At the end of the day it must be possible for us to look to the coal authority to underwrite any gap. I am concerned that we shall fall into a void, through no fault of individual organisations but because they simply will not be in a position to provide the cover that may be required.
I understand when my noble friend is hesitant about trying to underwrite the liabilities of successive companies. He criticised some remarks made by my noble friend Lord Renton on this particular issue—I should say that he commented on some remarks; he would not dare to criticise my noble friend Lord Renton. He commented adversely on a suggestion made about the liabilities being passed back to British Coal or the costs being recovered. I understand that we do not want to be in a position where we cause future operating companies to think that they can disclaim their liabilities and therefore act irresponsibly. We therefore need a clear line drawn between the future activities and any past activities. It is because I am not yet convinced that that line exists and because I am not certain that we can leave it entirely to the operating agreements to settle it without some further reassurance before Parliament, that I am speaking this afternoon. I hope that as the Bill proceeds the Government will be able to give me the assurance that I need.
§ Lord Callaghan of Cardiff
I rise to ask a question but in doing so perhaps I may say that in an odd way, as I listened to the noble Lord, Lord Crickhowell, I caught some echoes of the debates that we had in 1945 when we were using those arguments in favour of nationalisation of the coal mines. But that is not my purpose in rising. I ask the question for information.
I understood the Minister to say that it is the Government's wish that those employees who will work in private mining companies, but who then incur injuries that arise out of their employment while under British Coal, or those employees who work in private companies outside the coal industry but who then incur injuries which arise as a result of their role in British Coal, should be treated in exactly the same way as those who are now with British Coal and will remain with it. If that is so, is it not highly doubtful that they will be able to secure the same level of compensation? If I am right, and it will be difficult, how do the Government propose to ensure that the two types of employee are treated in exactly the same way?
§ 4 p.m.
§ Lord Renton
Following up what my noble friend Lord Crickhowell said, I wonder whether my noble friend the Minister would be good enough to say something about past and indeed existing liabilities and those which may be incurred in the future. The best illustration of what could happen is in Clause 1(1) (c), where we find a reference to,carrying out functions with respect to coal-mining subsidence and in connection with other matters incidental to the carrying on of any opencast or other coal-mining operations".My noble friend Lord Strathclyde—and I was very grateful for the clarification he gave—was anxious to stress that the Government do not intend to extinguish old liabilities. Can he therefore please confirm that this responsibility for carrying out functions with respect to coal mining subsidence relates to the hundreds of examples, some of which have not yet been noticed, of coal mining subsidence which have taken place over many generations as well as coal mining subsidence that may occur in future?
It is vitally important that we should know that the Bill covers both, but I am not at all sure, looking at the drafting of it. It may be that there is a provision in the Bill which has escaped me, or the significance of which I have not understood, which makes it quite plain that, for example, the reference in Clause 1(1) to coal mining subsidence is a reference to liabilities that have already arisen with regard to coal mining subsidence which has already taken place, liabilities which could arise in relation to coal mining subsidence which has already taken place but has not yet come to light, and any future subsidence that might arise from future coal mining operations.
§ Lord Sanderson of Bowden
I did not intend to intervene on this amendment, but on the general point that I raised at Second Reading, insurance will be a key to the success or failure of this privatisation. I do not want to see the fossilisation of the fossil fuel industry by any means, but I have to say—I declared an interest at Second Reading so I will not do so again—that I am very concerned that the price that is offered by those who wish to take the licences for the various areas of the coal industry in the United Kingdom could be seriously jeopardised unless some of these matters are cleared up, as my noble friend Lord Crickhowell said, at an early stage. The whole question of how to quantify that insurance risk is very real, given the fact that the Government never insure anything. One reads in the Financial Times today that certain people who wish the success of the privatised coal industry are extremely worried as to what price they can put on that industry.
§ Lord Strathclyde
As my noble friend Lord Crickhowell has made what I thought was a very useful and interesting speech, perhaps I may have the opportunity to respond to it. We are in Committee, which means that we can get up and down as many times as we like. Because some of these issues are quite complicated it may be easier to deal with them as they arise rather than losing the thread of them. I very much welcome the words that have just been said. I am particularly pleased that the noble Lord, Lord 535 Callaghan, has spoken. It shows the great beauty of this House that we can have the historical perspective from those who were involved in 1945 and can raise with us the arguments that were brought forward at that time.
What my noble friends Lord Crickhowell and Lord Sanderson said about the private sector taking on these liabilities is very important. There are two ways of looking at this. As my noble friend Lord Sanderson announced, he is a potential bidder. The reports in the newspapers that we read this morning indicate that many private bidders will not be seeking to bid if they think that the liabilities will be too great. That is entirely a correct decision for them to make as members of the private sector who will decide the risk which they are willing to take before they make a bid and will presumably adjust the price in relation to the bids that they will make.
When I responded adversely to my noble friend Lord Renton, what I did not want to see was a situation whereby the Coal Authority had a power to put right certain things which it believed had gone wrong with the private sector and then to charge the private sector for doing so. I cannot see any private sector bidder taking on the remnants of the coal industry on that basis. That is what I was dealing with then.
My noble friend Lord Crickhowell charged me with not going far enough in my opening words. I stand guilty of that. He is absolutely right. I did not. I had much more to say but I felt that the debate needed to be taken forward before I did so.
Perhaps I may turn to the question of subsidence. Clause 2(1) (c) imposes a strong duty on the Coal Authority to secure so far as practicable that licensees make proper provision for subsidence liabilities. The Government recognise that the right to withdraw support which will be conferred on mining companies is altogether exceptional and the regime for protecting those affected by subsidence must be strong. The duty will lead to rigorous supervision and licensees will have to supply regular and detailed estimates of their subsidence liabilities in a form satisfactory to the Coal Authority. This regular monitoring is necessary because subsidence liabilities can generally be. predicted. Indeed, no business would conduct its mining except on the basis of confidence about its ability to meet future liabilities. It is not possible to achieve absolute certainty.
Where necessary the authority will require operators to make special financial security arrangements and the Bill provides that these arrangements can be set up so as to ensure that this security is effectively ring-fenced for the protection of subsidence claimants. The monitoring arrangements will mean that the Coal Authority is well placed to adjust the security requirement or impose one as soon as it appears necessary. Amendment No. 9 would strengthen the duty so that the Coal Authority must seek to ensure that all conceivable claims, however unlikely, are met. It seems to me that this may lead the authority to require financial security well in excess of any reasonable estimate of the liabilities. The requirement for security would be an onerous burden. In my view we should need the strongest justification to add to this burden by requiring security well beyond any 536 reasonable estimate of the liabilities. The coal industry faces enough challenges already without being put under that additional strain.
When my noble friend Lord Crickhowell talked about the cylinder approach to privatisation, he was absolutely right. Lines will be drawn on the ground and the liability will be accepted in a cylindrical approach to that. My noble friend asked about the shaft that goes beyond the cylinder. My noble friend will not be allowed to mine beyond the cylinder because he will not have bought the right to mine coal beyond the line, and therefore that situation will not arise.
Perhaps I may now turn to the very important question of water pollution responsibilities. Before I do so I shall answer the substantive point raised by the noble Lord, Lord Callaghan. I may not have explained it sufficiently well. Perhaps I may now do so briefly. For former employees of British Coal, their liability will fall to the Government. For current employees of British Coal who are then taken on by the private sector, the whole of the liabilities will be taken on by the successor companies. That is normal commercial practice, as understand it, when one company takes over the employees of another. I hope that that deals with the point.
§ Lord Callaghan of Cardiff
Perhaps I did not make myself clear. May I have another go? Can the Minister assure me that those employees whose disease arises after they have left the authority of British Coal will be treated as well as those whose injuries arose during the course of their employment with British Coal and which have already been dealt with?
§ Lord Strathclyde
Yes, that is undoubtedly the case. Where an employee has left the employment of British Coal and is perfectly healthy but years later discovers that he has a disease which was caused during his time at British Coal, that liability will be taken up by the Government.
§ Lord Barnett
I am sorry to intervene, but I am not sure that the Minister is right. He says that in certain circumstances the responsibility goes to the successor company. If that is the case and the successor company has miscalculated its bid and eventually goes bust, perhaps in a very short space of time, who is then responsible?
§ Lord Strathclyde
Where an employee was formerly employed by British Coal and ends up working for no one or is retired, the liability will fall entirely on the Government. Where an employee has worked for British Coal and is taken on by a new private sector company, then all the liability will fall on the successor company. Where that company has gone bankrupt and the injury has been caused by mining, pneumoconiosis and so on, it will fall under the terms of that particular Act, as I explained in my initial reply.
§ Lord Richard
It is Committee stage and therefore all sorts of strange people can intervene. I hope the Minister will forgive me. Does that situation apply even if the causes of the disease were incurred—as pneumoconiosis may well have been—during his 537 employment with British Coal when he was underground? If he then joins a successor company and is given a surface job where he will not be subject to the perils of pneumoconiosis, does the successor company have to take responsibility for the exposure even when the employee was employed by British Coal?
§ Lord Strathclyde
Yes. When a successor company takes on an employee from British Coal it accepts all the liabilities that go with it.
§ Lord Haslam
We are back on my second point. The Minister for Energy has said that he anticipates that 32 pits will survive, but that I very much doubt. Sixteen of those pits are in British Coal at the present time and the other 16, if they arise, will be leased. Those leased pits will take on former British Coal employees who have been totally discharged. Is the Minister saying that if they join these companies they will be treated precisely the same way as the employees who have been transferred? I do not believe that that is the world's understanding of the situation. In fact, people like Malcolm Edwards have said that they will not take on pits in a privatised form because the terms are too onerous compared with the ones which they already have. I do not understand my noble friend's statement against that background.
§ Lord Strathclyde
I am not entirely certain of the situation as regards workers on a care and maintenance contract. I thought that I was being absolutely clear on this point, but I may have inadvertently muddied the waters. It is a very simple concept that a new private sector company taking on a former British Coal employee will take on all the liabilities. As to any former employee of British Coal who does not go into a successor company, his liability will be taken up by the Government. I think I am now clear on that point.
§ Lord Callaghan of Cardiff
I thank the Minister very much. As far as I am concerned he has cleared the point. I do not believe that he has muddied the issue at all. There will be the same equal treatment for employees who have left British Coal and who are taken on by a private mining company and for those who have already incurred their injury or pneumoconiosis, which was particularly bad in South Wales. So the compensation will be the same. The fact of the transfer to a private company will not affect the man's compensation. That is as I understood the position. I am very grateful to the Minister for giving me that assurance.
§ Lord Haslam
It is not a question of compensation but who pays it. The fact is that a person who has left British Coal and who is re-employed, particularly by pits which have been leased, will have no call thereafter. That person has left British Coal having been compensated and having received his redundancy payments. Therefore he has no call on the new employer. That is the point I was making about competition. There could theoretically be 16 pits in this country leased to new employers with no accountability for historical liabilities whereas the other 16 pits which 538 have been sold as part of privatisation will have those liabilities attached to them. That is the point I am making. I am saying that that sets up immediately a false competitive situation. People like Malcolm Edwards have already realised that factor.
§ 4.15 p.m.
§ Lord Strathclyde
It is not a question of false competition. If a successor company wishes to take on working miners from British Coal—and presumably that company wishes to do so because they are the people with the skills, experience and knowledge—then it takes on the liabilities as well. I do not believe that there is anything unfair about it. One of the points raised earlier was the supposition that the successor company goes bankrupt and ceases to exist. Then the liability will fall under the new pneumoconiosis Act.
§ Lord Cledwyn of Penrhos
If the successor company becomes bankrupt by mischance, who then takes the responsibility?
§ Lord Strathclyde
I had hoped that that was the point I have just mentioned. Because in the mining industry there are problems of long-term illnesses, particularly as regards the chest, skin diseases and so forth, then under the terms of the pneumoconiosis Act liability is picked up by the Government. What that means in practice is that no working miner can end up with no cover because ultimately the Government will pick up that liability.
§ Lord Ezra
There is still the issue raised by the noble Lord, Lord Haslam; namely; whether there is a difference in the terms as regards liability for pits which have been leased by British Coal compared with those which are likely to be licensed by the Coal Authority. That is a very important issue and we need to know the answer to it.
§ Lord Strathclyde
It depends who employs an employee. If it is British Coal then it will ultimately be responsible whether the pit is leased or licensed. Where it is a successor company then it will be the successor company. Perhaps I am misunderstanding the point, but I do not believe I am. In my mind the matter is relatively clear, but I feel that the more we discuss it it becomes increasingly more difficult to understand. I have done my best to make the situation clear.
Perhaps the most helpful way in which I can take the matter forward is to write a letter to the noble Lord, Lord Morris of Castle Morris, who raised the matter in his amendment in the first place. I shall put a copy of that letter in the Library. Perhaps the noble Lord and myself can bring it to the attention of those Members of the Committee who have an interest in the matter. I shall lay out the liabilities vis-à-vis the workers' allowances in the event of illness. I shall make it clear so there is no confusion in order that we can go on to future stages of the Bill without any confusion. I hope that that will be helpful.
§ Lord Crickhowell
Before my noble friend was diverted to pneumoconiosis he said that he was going to talk about water pollution. What I have to say follows 539 very neatly on that. I wish to make a point which I hope my noble friend will think about even after he has replied because I am sure we shall have to return to it. My noble friend made an extremely interesting statement. He said that in the event of bankruptcy or the failure of a company, as regards pneumoconiosis there is a fallback on the Government under the 1979 Act. It is precisely because there is no such fallback at present for water pollution or any other form of pollution, that some of us are so very concerned.
The fact is that someone seeking to license a pit may be seeking to do so for only a relatively short time. There may be only a limited amount of coal and he will bid accordingly. He may get landed with a pollution liability that arose, without his being fully aware of it, long before. It is exactly the problem that we had at Wheal Jane, the tin mine, where the last operator, in difficult financial circumstances—indeed, about to go bust because the DTI had withdrawn its grant—stopped pumping. The pollution that occurred was largely because that pit was connected with over 40 other pits, some of which had been mined hundreds of years previously, in an area where mining dates back to the Phoenicians. That is the complexity with which we are dealing.
At the moment we have the protection that British Coal is responsible for its own liabilities and for any actions that it may have taken. As I understand it, some of those British Coal liabilities are now being passed off to future licensees who may not have the resources. Unlike the pneumoconiosis situation, as the Bill is drafted we have no comeback on the Coal Authority and the Government. I think that that is what the amendment seeks to provide. Other amendments that we shall debate later have the same objective.
§ Lord Strathclyde
Although my noble friend puts his case extremely well, I think that there is a difference between the point that he raises and the subject we were considering earlier. Parliament has already decided the pneumoconiosis case. We are still in discussion on the question of water pollution liabilities. It is no less important an issue—in fact, it is a very important issue —but I do not want Members of the Committee to go away with the feeling that somehow the taxpayer should underwrite the ability of the private sector to take over British Coal's assets. I do not think that in the long term that will suit anybody.
I said a few moments ago that I would deal with the very important matter of water pollution responsibilities and, with the leave of the Committee, I should now like to do so because it is an issue which has given rise to a great deal of concern, and I hope that it will be helpful at this stage for me to explain our latest thinking on how these responsibilities will be handled after privatisation. We do, of course, understand the concerns about the threat of pollution related to mine closures and the related concerns about the legal framework applicable to abandoned mines. I think there is something I can say this afternoon which should be of material reassurance on the actual problems of pollution and the potential risks of future pollution. Before doing so, however, perhaps I should set out the existing legal framework.
540 As many of your Lordships will be aware, it is an offence under the Water Resources Act 1991 (or in Scotland under the Control of Pollution Act 1974) to cause any polluting substance to be discharged into any watercourse—strictly into controlled waters—or knowingly to permit any such discharge. But there is an exemption in respect of discharges which are permitted to occur from any abandoned mine. Even if such a discharge results in pollution of a watercourse, no statutory offence has been committed; and if the NRA in England and Wales, or any river purification authority in Scotland, should act to put right any such pollution, they cannot recover their costs from any person. For completeness, I should mention that, even for abandoned mines, there is no exemption in circumstances in which the discharge is "caused" rather than "permitted"; and that, if any pollution results from a discharge from an abandoned mine, the owner or, if there is one, the operator, may also have a civil liability to any person whose interests are thereby harmed. Nevertheless, there is an exemption from the statutory pollution offence defined by the Water Resources Act in respect of discharges from abandoned mines where these are "permitted" rather than "caused".
The Government indicated in the White Paper This Common Inheritance, The Second Year Report that they were considering the framework of legal responsibility for pollution relating to abandoned mines; and a consultation paper on the review of contaminated land and liabilities published in March of this year, Paying for Our Past, outlines the exemptions and invites views on what should be done about them. A similar consultation is in hand in Scotland. As foreshadowed in this House by my noble friend Lord Crickhowell, the National Rivers Authority published on 14th April a report on abandoned mines and the water environment. I should add that I very much welcome the fact that my noble friend is taking part in this debate because as chairman of the NRA he brings a useful knowledge and focus to our deliberations.
That important and useful report covers the nature of minewater discharges and the scale of the problems related to abandoned mines, both as regards coal mines and metal mines. It puts the problems in perspective and sets out the NRA's views on the way ahead. It will clearly be studied with great interest by all who are involved in these issues. I am sure that it will provide an important contribution to the Government's review of the legal framework. My honourable friend Mr. Robert Atkins has indicated that he expects the overall review on all the issues related to contaminated land and liabilities to be concluded later this year. I think that this represents good progress given the complexity of the issues. I am sure that it will be followed with interest by many of your Lordships.
There are many difficult issues which arise in connection with these exemptions. In particular, careful consideration has to be given to the possible impact, if the exemptions were to be removed or amended, on landowners who may happen to have long-abandoned mines on their land and to the issue of retrospection generally. The same issues, of course, are also of concern in the broader context of contaminated land and 541 liabilities. I have no doubt that it is right that these issues should be very carefully considered and that it would not be sensible to seek to consider the exemptions in isolation from the broader issues. I do not think, therefore, that it would be right to deal with the substantial parts of the exemptions through this Bill.
However, I recognise the concerns which arise about the threat of water pollution from coal mines and about the effects of privatisation. What I think I can do at this point is to provide, on an interim basis pending the outcome of the review of the legal framework, some further assurance on how the Government intend that these matters should be dealt with after the restructuring and privatisation. I emphasise that this is strictly an interim step and that it will not prejudice the review. It will not prevent new responsibilities being imposed later if we conclude that it is right to do so. But it should provide an important measure of reassurance in the meantime for those affected by the threat of potential pollution related to mine closures.
The Coal Authority will, of course, be the owner of abandoned coal mines throughout Great Britain, irrespective of when these may have been worked. The Government have set out in the Coal Authority explanatory note that they envisage that the authority would set itself certain broad policy aims in respect of the management of property, including all the mines which are not licensed to the private sector. These include the aim, where reasonably practicable, of protecting and enhancing the environment. I should like there to be no doubt that so far as water pollution or potential water pollution is concerned the Government will not be content for the authority to rest on the present effect of the exemptions. On the contrary, we will expect it to go beyond the minimum standards of environmental responsibility which are set by its legal duties in these areas and to seek the best environmental result which can be secured from the use of the resources available to it for these purposes.
The authority will naturally have to set priorities for its activities in these areas. We will expect it to do this in consultation with the NRA and the appropriate river purification boards. Further discussions are going on between the relevant departments on the right framework and on the resources which can be made available. For the moment, I should like to make just two points.
As to priorities, I think that there must be widespread agreement that the first priority should be to prevent serious new problems from arising. I note that this is, for example, the approach adopted by the NRA in the proposals set out in its report. A high priority should attach to tackling situations such as that in Durham. There, on the best advice at present available, it seems that continued pumping is required to prevent a serious pollution incident; or at all events to give assurance that such an incident can be avoided. Whatever else might come out of the consideration of priorities, I am certain that it must include a commitment to maintain pumping there for so long as it is needed in order to prevent the 542 risk of serious pollution; and there may be other cases elsewhere where pumping should likewise be maintained.
We do of course expect that the Coal Authority should seek to meet its commitments in the most cost-effective way. Often, the most cost-effective approach to a threat of water pollution will be by passive treatment. Where the Coal Authority can convince the regulatory body that such techniques are acceptable, it will be freeing resources which can be applied to dealing with the inheritance of the past—that is, pollution which has already occurred—and it will be able to take positive steps to address such environmental problems. That leads me to the second point, the resources which can be made available. The authority will of course discharge all its legal obligations, and its funding will have to provide for that. But, in so far as it has any discretion as to its spending, noble Lords on all sides will recognise that its resources will necessarily be limited. However, I can assure the Committee that it will in due course have a specific budget earmarked for these purposes and that this will enable it to carry forward in full the role and activities of British Coal in this area.
To complete the picture, I should say a word about private sector operators under Coal Authority licences. Operational mines will, of course, be subject to the normal statutory requirements. In particular, all discharges to watercourses will require the consent of the relevant regulatory body, either the NRA or a river purification board. The freehold of the underground mine will remain with the Coal Authority, but the lease will make clear that all costs of meeting regulatory requirements, including requirements for the protection of the water environment, will fall on the operators and not the authority. In time, however, some mines will reach the end of their economic lives and the operators will wish to terminate their leases. It will clearly be necessary for the operator to consult the appropriate regulatory body about the possible consequences for the water environment of abandoning the mine. Before agreeing to termination of the lease, the authority will expect him to institute any reasonable treatment measures and to make an appropriate payment for any continuing costs. Once the lease has come to an end the authority will be responsible for the mine as for any other abandoned coal mine.
I hope that my statement provides a positive assurance that, at the least, what British Coal already does in these areas will be maintained. To the extent that the higher-priority objectives relating to prevention of new pollution can in time be met more economically, there will be scope to seek actual environmental improvements. I repeat that these interim measures will not prejudice any new legal responsibilities which may fall on the Coal Authority as a result of the current review. What they will do in the meantime is ensure that privatisation does not exacerbate the situation in any way. I hope that this information has been helpful.
§ 4.30 p.m.
§ Lord Peston
I intervene largely with a view to trying to be as helpful as I can to the Minister. We seem to have ranged over almost every single topic that could be debated on the Bill already. There are quite a few other amendments which cover topics already dealt with; I hope that Members of the Committee—I shall try to do so myself—will refrain from putting up similar speeches for a second or a third time.
Unlike noble Lords opposite, I do not care for the Bill. What we have in common, however, is the desire, given that we are going to have the Bill, that it should be a workable Bill rather than an unworkable one. That is really what we are about in this Chamber. The Minister, I know, has done the best he can. The text I would start from is the one referred to by the noble Lord, Lord Ezra: that is, the remarks made by the Minister for Energy, Mr. Eggar, on 3rd February at col. 30 in Standing Committee D when he said that all British Coal's obligations will be those of the Coal Authority. That is what he said. I ask: where in the Bill does that appear? As Mr. Eggar tells it, the Bill makes it absolutely clear. I invite the Committee to look at the precise words in Clause 7 (3). He goes on to talk about the environment, which is not quite the same. The key word in Mr. Eggar's statement is that "all" British Coal's obligations will be those of the Coal Authority.
I think it would satisfy the Committee in the first instance if the noble Lord the Minister were to respond by agreeing that that is the Government's policy. Then, although it may be absolutely clear to brilliant people like Mr. Eggar but does not seem to be absolutely clear to the rest of us, I hope the Government would come back with an amendment that simply amends Clause 7(3) so as to include the statement that all British Coal's obligations will be those of the Coal Authority. One could then proceed to discover whether any of those obligations get passed over to the licensee, depending on how the licence is drawn up and things of that sort. I hope that the Minister—I do not say this with any lack of generosity of spirit, because he has dealt with all sorts of detailed matters which perhaps he would have preferred to deal with later—will agree to think about it. It cannot be absolutely clear if a number of Members of the Committee do not see it as being clear. Therefore there is the danger that the Bill will fail in terms of its objectives because people will not want to buy the leases. I believe it would help us, and certainly it would help me, if the Minister would simply get up and say that he realises there is a good point being made here which is not dealt with simply by making statements but could be dealt with by amending the Bill.
I take it that the Minister has no objection in principle to amending the Bill, because he has one or two amendments of his own to put forward. Therefore I would ask him whether he is willing to say now, without any commitment, that he has listened to what we have said; that he appreciates there are certain difficulties here:, that it is not absolutely clear what Clause 7(3), or any other part of the Bill, says; and that he is willing to 544 go away and at least consider whether a more definite statement on obligations can be incorporated in the Bill. That is my attempt to help the Minister.
§ Lord Strathclyde
Perhaps I can briefly deal with that point. The noble Lord, Lord Peston, is very seductive in these matters. He starts off by saying that he does not wish the Bill well but that he wants to make it work. I dispute that, with respect, because I do not think that the noble Lord wants to make the Bill work. He wants to make it unmanageable because he does not wish to see the coal industry privatised. He wants to see it remain very much under the control of civil servants and indeed government Ministers and, hopefully, under British Coal. Anything that the noble Lord can do to make that more likely to happen, the noble Lord will do.
§ Lord Peston
I am sorry to intervene. The noble Lord says that I do not like the Bill. I find it a rather peculiar Bill in some ways. But if the Government say something which they also say is government policy, and if noble Lords cannot see that in the Bill, there is a minimal requirement here. The noble Lord has got me worried. I had not thought for a moment that incorporating what Mr. Eggar said was policy would sabotage the Bill. The Minister cheers me up a bit if it will undermine the Bill. I had not seen that at all. I had seen it more or less in the terms of his noble friends. If something like that is not in the Bill, then no one but an idiot will bid for a coal lease, because they would be buying a pig in a poke. I have other amendments which will undermine the Bill, I can tell the noble Lord. This one simply says that the Government should take seriously what Mr. Eggar has put forward.
§ Lord Strathclyde
I knew I should not have given way. The noble Lord seeks to create a difference between the Minister for Energy and myself; and there is absolutely none. I have nothing against amending the Bill and clarifying it where necessary. but I do not believe in amendments for the sake of amendments or in seeking clarification where none is necessary. Clause 7(3) makes it absolutely clear that all British Coal's interests in coal and coal mines, including all historic and disused mines, will pass to the Coal Authority. This means that obligations falling on the owner of the mines will pass automatically—
§ Lord Callaghan of Cardiff
Will the noble Lord give way? Do the coal and coal mines referred to in subsection (3) also include coal miners?
§ Lord Strathclyde
Not coal miners, because, of course, British Coal does not own coal miners. All these assets will pass automatically to the authority on the restructuring date. So far as disused mines are concerned, no matter how long ago they may have been worked, the obligations will stay with the authority. The obligations that relate to working mines will generally be passed to the mining companies. The detailed arrangements for achieving that are spelt out in the draft leases which are available in the Printed Paper Office. Noble Lords can look at them and I know that the noble Lord, Lord Peston, has already done so.
§ Lord Callaghan of Cardiff
The Coal Authority or British Coal have responsibilities and potential liabilities in respect of coal miners. Does this clause include those liabilities and those responsibilities?
§ Lord Strathclyde
The whole clause deals with exploitation rights. It does not deal with people; they are dealt with in other parts of the Bill. I explained the position earlier but I cannot point to the relevant parts at the moment. The point is that the liabilities of individuals, which are currently British Coal's, will be taken up by the Coal Authority, the successor companies or, indeed, by the Government.
§ Lord Morris of Castle Morris
We have had a brisk and breezy debate. No one can say that it was not wide-ranging. I listened most carefully to what the Minister said. At the beginning he said that what he would have to say would be lengthy. It was not—at first. He said that it would be complicated, and in the beginning it was not complicated at all. I was following him quite well and easily, but once he sat down that was the end of that.
The noble Lord, Lord Ezra, in his experienced wisdom, pointed straight away to the absolute heart of this matter: uncertainty. Uncertainty in this area of the Bill surely endangers the entire privatisation procedure. I join with my noble friend Lord Peston in saying that I wish that this Bill was not here; I wish that the privatisation was not to happen. But as I said on Second Reading, this wretched Bill will not go away. What we must do at this stage is to try to make it at least a better Bill and a clearer Bill than it is at present. No bidder will appreciate being asked to put in a price for a pig in a poke. Surely it is as much in the Government's interest as in everyone else's to try to clarify the position once and for all.
The uncertainty and the lack of clarity are facts. Many of us have struggled with the language of this Bill for week after week. We cannot give the answers, which is why we ask the questions. Lawyers who have been retained and are advising many of the most likely bidders, as we learnt from the newspaper this morning, are no further forward than we are. Public companies, they warn us, will be unable to bid unless they can make any offer conditional upon shareholder approval. Uncertainties over these liabilities may make it either impossible or very expensive indeed for a purchaser to obtain insurance. Questions keep on coming to me from all sides, even while the Minister is on his feet. How will companies treat all these contingent liabilities in their accounts? Can they remain viable or will the allocations to reserves drain their reserves and weaken their capital base and so destroy them?
Will the Minister not realise that many of us are quite seriously concerned about these uncertainties? Will he not agree to take away what he has heard from all sides of the Committee about what we would like assurances on? A letter setting out a child's guide to the liabilities in this Bill might be a very good start. But will he not accept our continued and deep bafflement about many of these issues? Will he, and I plead with him, agree to read carefully what we have all said—perhaps some of us at too great a speed properly to be understood—and when 546 he has read it come back at a later stage with clearer explanations and perhaps, without commitment, some amendments of his own which will deal with some of our concerns? We should indeed be most grateful if he would.
At this early stage I do not want to divide the Committee on an issue as wide-ranging and as deep as this. If the Minister can assure us that he will take these issues away, consider them and come back with some answers and suggestions at a later stage I shall be most grateful to him.
§ 4.45 p.m.
§ Lord Strathclyde
I am delighted that the noble Lord is not minded to divide on the amendment. It is a long amendment which deals with all the important issues that we have discussed today. As far as concerns the Government, the question of where the liabilities lie is absolutely clear. Noble Lords opposite may disagree on where the liabilities should lie. Indeed, one or two of my noble friends may disagree on where they lie. However, there should not be any disagreement on where they lie.
The noble Lord, Lord Callaghan, asked me a question about where the people end up in all of this and I did not answer him. I refer him to pages 76 and 77, which deal with the Transfer of Undertakings (Protection of Employment) Regulations, otherwise known as TUPE, which govern the issue. I should have had that to hand earlier.
The noble Lord, Lord Morris, then made another kind offer and asked whether I would read carefully all that has been said. Of course I shall. I make him an offer at the same time to read carefully what I have said, in particular my statement on water undertakings and my explanation of industrial disease and subsidence. I believe that I covered a great deal of the ground.
There may be room for improvement or clarification and I do not set my face against that. However, I have no commitment to bringing forward any amendments and I have not been convinced by the case that I have heard so far. Naturally, I shall continue to look carefully at where we can improve the Bill.
§ Lord Peston
Before the noble Lord sits down, I take it that in his reply to me he was certainly accepting what his honourable friend Mr. Eggar said: that all British Coal's liabilities pass to the Coal Authority. Will he reiterate that that is absolutely the Government's view?
§ Lord Strathclyde
I explained carefully what was clearly meant in Clause 7(3), which I reiterated a few moments ago. I see no reason to do so again. The point that I was making to the noble Lord, Lord Peston, was that if he were trying to create a disagreement between myself and the Minister for Energy I can confirm that I agree with what my right honourable friend said.
§ Lord Crickhowell
I wish to make only one comment but it needs to be said because I raised some difficult issues. My noble friend made an extremely important interim statement. It was most helpful and we all wish to study it carefully before we return to these issues.
§ Lord Morris of Castle Morris
I too wish to pay tribute to the way the Minister handled that one. He was stormed at from all sides by shot and shell and many of the comments that he made have been extremely helpful and have produced some clarification. Nevertheless, a great deal remains unclear.
I am grateful for the assurance that he will take the matter away and have another look at it without commitment of any kind. On that basis, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Lord Ezra moved Amendment No. 2:
Page 1, line 9, at end insert:
§ The noble Lord said: I shall seek to be briefer in dealing with this amendment, which affects an issue as important as the one that we have just debated. I refer to the issue of safety. Anyone who has worked in the industry or been connected with it will know that safety in mining is absolutely paramount. I suggest that one of the great achievements, among many, of publicly-owned coal has been the very high standard of safety in the mines that has evolved during the years. In tabling the amendment, we seek to ensure that those high standards are not only recognised but also maintained.
§ It is clear that the Government have been reluctant to specify safety responsibilities in the Bill because they are the responsibility of the Health and Safety Commission and its executive; and, indeed, that is the case at present in relation to British Coal. British Coal is the operator and the Coal Authority will not be the operator. Nevertheless, we feel that because of the paramount importance of safety, a more positive reference to safety should be made in the Bill than the somewhat tortuous phrasing in Clause 4. Therefore, we indicate as a suggestion the wording in Amendment No. 2 which is similar to that in the Coal Industry Nationalisation Act 1946.
§ My experience in dealing with safety in the mines tells me that it is an issue on which it is impossible to say or do too much. It is paramount; it is vital. As the Bill sets a new framework for the conduct of the coal industry, that vital importance should be emphasised more effectively than at present. I beg to move.
§ Lord Haslam
As my noble friend Lord Ezra has already said, the Government constantly stress that they regard safety as paramount, but the Bill is very light on how this will be achieved. It deals essentially with regulation but does not address the issues of organisation and culture needed to ensure compliance.
The importance attached to safety in British Coal far exceeds anything that I have experienced in other industries. It is sometimes implied that British Coal has been sacrificing safety on the altars of productivity and profitability. That is not justified. For example, since 1985 British Coal's productivity has improved by over 400 per cent., while over the same period the accident and fatality rate has markedly improved. I believe, incidentally, that that performance reflects great credit 548 on management and mineworkers alike, which has led to British Coal standing at the top of the world deep-mine safety league.
Privatisation must not threaten those standards. If the industry is fragmented, it will end the central direction of technical and safety policy. Some mechanism will be required to circulate safety information which will have to overcome the natural reluctance of the new owners to disclose commercially valuable information, which relates equally to technical and safety developments. Prior to nationalisation that problem was never solved. The proposals for an industry advisory committee seem weak by comparison with the current role of British Coal.
The Health and Safety Commission will obviously have the key role in determining and policing statutory safety requirements. I pay tribute to the thoroughness and dedication of the mines inspectorate in overviewing all aspects of safety. Its task in the future will be even more challenging. At present the Mines Inspectorate also enforces British Coal safety instructions. Those have been introduced by British Coal to set standards of safe practice when new technology has been introduced or an accident investigation has identified deficiencies in existing practice. Those procedures have obviated the need for further legislation. I understand, however, that on privatisation only 10 of those safety instructions are to be given legal status, but that is a tiny fraction of those that currently exist. How is the remaining void to be filled?
However, safety is not solely a matter of regulation. Indeed, safety performance is in all probability more a matter of sound management systems and the safety culture of the industry rather than regulation. After all, it is not the lack of policemen that gives rise to increased crime so much as cultural behaviour and cohesion which outlaw criminal activities.
The final element, therefore, is the behaviour of the mineworkers themselves. One has to recognise that because of the arduous nature of underground jobs, there is always a temptation to cut corners—and in my career I have seen that many times—which can often lead to accidents. British Coal has commendably developed a safety culture which permeates the whole workforce. This is not a once and for all effort but requires a constant and creative approach to sustain it. This safety momentum will obviously carry over into the private sector, but it will prove fragile if the new owners are not prepared to devote the time, effort and investment to maintain it.
I believe, therefore, that the Coal Authority's procedure for licensing must give very serious consideration to the potential licensee's safety record and its ability and willingness to maintain the existing systems and culture.
§ Baroness White
I hope that the Minister will accept the amendment without any difficulty whatever because it merely indicates that there is at least a minimal concern for the safety of the small but important group of people who will continue to work in the industry. After all, this Bill is relevant to the future.
549 The amendment will at least register our regard for the well-being of those people. As we have said before, coal mining remains a dangerous industry, notwithstanding the good safety records to which the noble Lord, Lord Haslam, has just referred. But there is considerable anxiety, as he also indicated, about how those standards are to be achieved. I have received information from the British Association of Colliery Management which has recently emphasised its sharp dissatisfaction about the way in which the Government have handled this whole matter. The association contends that a significant number of today's legal safety requirements will become ineffective when a mine is taken over by a private owner. It tells me that it is discussing the matter with the Health and Safety Executive. Frankly, I do not know how far it has been able to go.
Surely it is unacceptable that we in this Chamber should be expected to approve a Bill when such important considerations are precluded because they are health and safety matters. I presume that those matters will be determined more fully only when the new authority has been appointed and has agreed to the document referred to in the miserable Clause 4. Why should we have to wait? Why are we put in the position that we cannot have assurances on matters which are of primary concern merely because they are health and safety matters and, therefore, do not come under the direct control of the authority?
I hope very much that the Minister will clarify that situation because there is a great deal of anxiety about it. There has been very great respect for the arrangements made in recent years. If they are to be ineffective in the future, we must know to what degree they will be ineffective and we should be able to debate the matter before we accept the Bill. I hope that the Minister can give us clarification on this point.
§ Baroness Dean of Thornton-le-Fylde
I urge the Minister to accept the amendment. On Second Reading this was an area about which I was particularly concerned. As I recall, on that occasion the Minister said that the Health and Safety Executive would deal with that whole area and that that was sufficient protection for the people within the industry.
When the coal industry was nationalised, there were about 1,000 deaths each year. The Health and Safety Executive did not even exist at that time. It may be said that that is an argument for transferring all safety matters to the executive; but I would say that that is not so. Only by having hands-on responsibility for health and safety at the core of the organisation have we seen a reduction in the fatalities in the industry.
A few moments ago we had a detailed debate about pneumoconiosis. As we tackle one industrial disease, other diseases emerge. One of the new emerging industrial diseases in the industry is industrial deafness. The 1993 accounts show that British Coal paid something like £70 million in compensation. That will continue.
Companies have a responsibility for health and safety. Here we are writing legislation, and it is only 550 right that that protection should be in it. The Minister said earlier that we do not want to impose upon commercial enterprises requirements that are too onerous, but of course the responsibilities about which we are talking already lie with British Coal. It is not a case of introducing new provisions but merely of continuing the present ones in the new set-up. I do not see that they would be onerous. They would be some kind of assurance for people who work in a dangerous industry. It is an industry unlike any other in the UK. It is a dangerous industry in which to work. It is one in which industrial disease creeps up over the years and in which the whole area of health and safety has to be at the forefront of the day-to-day activities of the companies which will own the industry in the future. It should not be effected by working to the policemen of the HSE, important though that is and important though its role will be. There is no conflict. The two go hand in hand, and very closely.
§ 5 p.m.
§ Lord Gray of Contin
I wonder whether my noble friend the Minister will clarify one or two points when he answers this debate. There will be no one in this place who is not extremely concerned about health and safety. Everyone is aware of the dangers that miners face in their daily work. So none of us would wish to see any measures taken which would dilute in any way the authority of those responsible for safety.
After privatisation, will not the companies which take over the coal industry be subject to exactly the same law as presently exists and to which the Coal Board has had to give credence? From reading the Bill, in particular Clause 4, which has been maligned to a certain extent by some of those who have participated in the debate, the point seems clear. Clause 4 states clearly:It shall be the duty of the Authority—(a) in conjunction with the Health and Safety Executive, 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".I understand that at present everything suggested by the commission has been accepted. Is that the case, or do I misunderstand the Bill? I do not want to make any political point; I merely seek clarification as to whether the law is being changed in any way or whether it remains exactly as it has been for some years.
§ Lord Callaghan of Cardiff
I have only one small point to make. British Coal has sustained for several years a group of colliery workers who have been trained especially to deal with mine accidents and disasters. That team is naturally being run down because there are fewer mines. My correspondence shows that there is concern among those who have been specially trained about the extent of the rundown.
I am speaking to the amendment, but I really want to ask the Minister to do me a favour. Perhaps he will be good enough to look into this matter which has caused concern to those men who have been specially trained. They feel that it will be a little difficult to know what will be their dealings with the new mining companies even though they will come under the aegis of the new 551 authority. Will he please let me know in some way—I do not press him now because I do not expect him to know—what are his observations and views about the extent of the rundown, and whether the organisation of colliery workers which is now under the authority of British Coal will be maintained at a sufficient level to enable the service to be provided properly in the event —we hope that it will not take place—of a further disaster?
§ Lord Peston
I intervene, first, to draw to the attention of the Committee that there are three amendments in the group: Amendments Nos. 2, 16 and 22. Amendment No. 22 of course refers to the possible relevance of European directives. I tabled that amendment partly to remind the Committee that we sometimes debate matters such as health and safety in too insular a fashion. We now live in a world in which broader considerations are brought to bear on these matters by Brussels. That relates to the point raised by the noble Lord, Lord Gray of Contin. To anticipate the Minister, clearly the Bill does not get rid of all previous legislation to do with such matters. That legislation is still there. The new companies will obviously be obliged to obey the law.
But I do not believe, and here I follow my noble friend Lady Dean, that the amendment undermines the view that the law is there and has to be obeyed; what the amendment does is supplementary to that, or is congruent with it. It is essentially to do with two matters. One is that matters of safety, health and welfare are not achieved merely by following the letter of the law. To use the current parlance, they are achieved by having an appropriate culture in which such things occur. One's concern is that that culture will not necessarily be transferred to the new companies. I hasten to add that if the noble Lord, Lord Sanderson of Bowden, is successful in his bid, I am certain that in his case it will, but that does not mean that we can make that assumption about other companies. That is the reason why we have put down the amendment.
Perhaps I may go further. This relates to a matter raised on the previous group of amendments by my noble friend Lord Callaghan. He said that we were discussing all this, and he asked, "What about the human beings? What about the miners?" He asked where in the Bill was there any concern for the miners. My judgment is that in the case of the mines safety, health and welfare are of the essence. If we were discussing a Bill to regulate professors of economics, I doubt whether anyone would be raising issues of safety, health and welfare.
I recall the speech of my noble friend Lord Mason on Second Reading, which, I must admit, upset me terribly. He reminded me of what life must have been like going down a mine. My view was, "Thank goodness, I didn't have to do anything of that sort". That is why the amendment is important.
Following the noble Lord, Lord Gray, I do not claim for one moment that the amendment suggests that there is something deficient. It merely says that in a Bill of this sort which the Government are seeking to justify to the world to have something specific about the purposes 552 or duties of the Coal Authority right at the beginning would make the legislation, to say the least, look slightly more attractive than a piece of legislation where the human beings seem to come in very late indeed. The point of the amendment is to emphasise that matter.
As I know now that the noble Lord, Lord Strathclyde —he has upset me—does not trust me at all, this is also not my undermining of the Bill. That comes later. The amendment is put forward sincerely as something which would benefit the Bill.
§ Lord Strathclyde
It is always nice to hear the noble Lord, Lord Peston, differentiate between his sincere amendments and his insincere amendments. Long may that continue because it makes it easier to spot the difference. I entirely agree with him about health and safety. My noble friend Lord Gray of Contin put it extremely well: this is not the time to make political points but to deal with the issue as it stands. I can confirm that what my noble friend assumes is correct. He put it in a way that I shall probably copy.
First, I deal with the question asked by the noble Lord, Lord Callaghan, about trained colliery workers and safety. I shall follow up that point with a note to him. We are working closely with British Coal to ensure that the safety culture will be transferred, first, to the Coal Authority; and, secondly, of course to the successor bodies, because British Coal can be rightly proud of the high standards that have been established by the Mines Rescue Service. That service is second to none. We fully understand the importance of mines rescue. That is why we are taking steps to ensure that there will continue to be a service with a national capability.
§ Lord Mason of Barnsley
Will the Mines Rescue Service remain as it is, full-time and experienced, and under the responsibility of the Coal Authority ?
§ Lord Strathclyde
I do not wish to go too much into the question of the Mines Rescue Service because I know that later there is a specific amendment under which we shall deal with the issue and I do not wish to have another wide debate. Suffice it to say that it is an important issue. I do not want to go further than what I have already said to the noble Lord, Lord Callaghan. I hope that the Committee and the noble Lord, Lord Mason, will accept that. We shall return to the issue, when we shall deal with it in some detail.
I turn now to the important central question of the role of health and safety. The Committee may be aware that in the comprehensive advice to the Minister for Energy about the post-privatisation safety regime, which has been made available, the Health and Safety Commission made clear that the prime responsibility for safety should remain with the employers in the industry while the regulation of health and safety should be the responsibility of the Health and Safety Commission, enforced by the Health and Safety Executive. The Government have simply accepted the commission 's advice in full.
The commission argues for the retention of a clear separation of licensing and health and safety regulation. Its advice is that the use of the licensing system to 553 enforce compliance with health and safety law or to impose penalties on offenders is neither necessary nor desirable. It has made it clear that the two processes must remain separate and distinct. To do otherwise would risk confusion, which can only jeopardise safety.
Health and safety legislation contains very clear duties on mine owners to make financial and other provision to secure, so far as practicable, that the mine is managed and worked in accordance with the relevant statutory provisions and is so planned and laid out as to enable that purpose to be readily secured. There are also specific duties to appoint a qualified and competent manager and substitute a qualified and competent surveyor, as well as to have a suitable management structure composed of sufficient qualified and competent people. There are already legal duties in place to achieve the objective of the amendment and to ensure that mine operators have the necessary expertise available to them to ensure that mines are worked safely. HSE's Mines Inspectorate already has the power to enforce them, including the power to shut down a mine if there is not a duly appointed qualified and competent manager. I might add that that mirrors the approach taken in relation to the offshore oil and gas industry since the recommendations of the Cullen report were accepted by the Government.
The commission has also advised that there will need to be continuing liaison between the authority and the HSE. In line with the provisions of Clause 4 of the Bill, a draft memorandum of agreement governing the relationship between the Coal Authority and the HSE has been made available as part of the Coal Authority explanatory note. One of the basic undertakings proposed is that the authority and the HSE should co-operate with one another in order to secure the exchange of information necessary to enable both parties to carry out their functions effectively and efficiently.
That brings me to Amendment No. 22, which proposes that that memorandum should be made without prejudice to European directives. That is an important issue to have raised, but the amendment is a vague and unnecessary one because European directives relevant to health and safety are implemented through regulations made under the Health and Safety at Work Act 1974 and the implementing regulations become relevant statutory provisions. I have to refute absolutely the implication that the protection offered by our health and safety law falls short of the protection offered by the European directives. I do not believe that that is the case.
My noble friend Lord Haslam asked a question about the industry advisory committee. The Health and Safety Commission has proposed the establishment of an IAC for deep mines. The proposal was set out in the HSC's report. I understand that the establishment of such a committee would be along the lines of IACs successfully established by the commission for other industries.
My noble friend also referred to the need for the transfer of owners' rules into regulations. Those of British Coal's operating instructions which are 554 necessary to ensure that the Mines Inspectorate has all the necessary powers following privatisation have been given legal status by regulation. In the interests of maintaining the existing safety culture in the industry, British Coal and the HSC are working to codify the great majority of remaining British Coal safety codes, rules and instructions in order to ensure that they can be made available to the privatised industry. That work is now nearing completion.
The noble Baroness, Lady Dean, said that in 1948, when the coal industry was set up, there was no health and safety at work Act. There is now such an Act, which was enacted in 1974. If we had taken the advice of the Opposition when we were drafting the Bill and had included the amendment, I wonder whether, when the advice of the HSC became apparent, noble Lords opposite would have tried to remove that power from the Coal Authority and would have accepted the advice of the HSC. Perhaps I tease the Opposition on this question. On page 51 of the report produced by the HSC it is stated that the commission's view is that it should remain as the sole regulatory body for health and safety in the coal industry and the Health and Safety Executive should remain the enforcement body. I believe that that is a very powerful voice.
It is worth having this debate because central to so many people's anxiety is the record on health and safety in an industry which, over generations, has shown itself not to be overly concerned about the effects on the people who work in that industry. I believe that that is no longer the case. I believe that we have given the Health and Safety Commission the powers to deal with the private sector. We now have substantial experience of many difficult private sector industries which affect the health of individuals.
I hope that in the light of that very full explanation and the clear advice of the Health and Safety Commission the noble Lord will withdraw his amendment.
§ 5.15 p.m.
§ Lord Ezra
I am grateful to the noble Lord for his explanations. Those of us who have prepared carefully for the debate have read the document of the Health and Safety Commission and realise that there must be no confusion on the ultimate responsibility for ensuring safety throughout the length and breadth of industry. Coal is no exception, although at the time there was great reluctance on the part of the coal industry to give up its own inspectorate. However, that is in the past.
We are asking that, without changing that in any way, some recognition of the importance of safety in the industry should figure in the Bill. Could it not be mentioned parenthetically in regard, for example, to Clause 4? All we ask is for that to be done. We would be quite satisfied. We are not asking for any fundamental constitutional or legal changes.
I do not propose to suggest that the Committee should divide on this issue. We all agree—on both sides of the Chamber —that safety is important. However, I should like to leave the noble Lord with the thought that perhaps he could come back to us and, having reflected on the matter, without altering the fundamental situation 555 there could be some wording which represents a recognition of the importance of health and safety in this unique industry.
With those remarks, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
The Lord Bishop of Sheffield moved Amendment No. 3:
Page 1, line 20, at end insert:
§ The right reverend Prelate said: Amendments Nos. 3 and 21 are grouped together. I propose to speak only to Amendment No. 3 and I hope to have an opportunity to speak to Amendment No. 21 later in the day.
§ I note what the Minister says about continuity and his concern that the Coal Authority should not be encumbered with too many duties to distract it from its main duty of running the privatised coal industry. I also note what the noble Lord, Lord Renton, says about a legislative vacuum. There is a danger of British Coal Enterprise falling into such a vacuum or a black hole. If that were to happen it would be a great misfortune for those who live and try to work in the former coal mining areas and for the nation as a whole.
§ British Coal Enterprise was founded in a dark period for the industry in 1984. But in what has proved again a difficult decade for the industry—"dark" may be the right word—it has proved to be a burning and shining light, to use a biblical phrase. Sometimes that light has not been as bright as some of us would have hoped. But when one looks back at what it has achieved over the years, the result is remarkable for an expenditure funded by the Government, and supervised by British Coal. We need to be grateful for British Coal Enterprise.
§ As noble Lords will know, its areas of activity are manifold. In conjunction with both private enterprise and local authorities, it has funded a considerable number of small, and sometimes now not so small, businesses creating a large number of jobs. It is hoped that by now 46,000 jobs have been created in that way. Through the conversion of existing mine buildings, and later by construction of new buildings—managed work spaces—a considerable number of people have been enabled to set up their own places of work. It is worth noting that British Coal Enterprise has never felt committed to providing work only for ex-miners. It recognised that the life of a community is an economic unity and all work is good work; one aspect helps another. Therefore British Coal Enterprise does not only help ex-miners; it helps the community as a whole.
§ However, it is the ex-miners who in particular have been helped with finding work. It has set up job shops which have an astonishing record of finding work for people and helping people to present themselves in a way that is most effective. The skills training places also have taken many highly skilled miners and enabled them to become highly skilled at activities which range from rugby coaching, mountain climbing, selling of vegetables—I could keep going a long time describing a wide range of work. We need to be grateful for what British Coal Enterprise has done.556
§ Its work covers six sections of the country. I am most familiar with its work in South Yorkshire. My diocese of Sheffield covers an area far beyond Sheffield—now, alas, almost entirely an ex-mining area. In the past 15 years I have seen 50 pits and 50,000 miners become one pit, perhaps two half-pits, and a few hundred miners. In the past 10 years 41 pits have become one, or perhaps one-and-a-half, and 41,000 miners have become a few hundred. The same tale has been repeated throughout the country.
§ We have to be grateful for what has been done to rehabilitate, to regenerate and to bring new industry to those neighbourhoods. But we should be deceiving ourselves if we were to think that the work was now complete, that there was nothing more to be done, and that we can allow British Coal Enterprise to pack its bags and to say goodbye with a sense of a job well done with nothing further needing to be done. The situation is not like that.
§ One of the more esoteric duties of a diocesan Bishop is to conduct a formal visitation to his diocese from time to time. I am in the midst of conducting just such a formal visitation at present. It involves my visiting each of the 12 dioceses in turn and haranguing, encouraging or whatever, churchwardens, counsellors and clergy. Last night I was in one of the areas affected by the closure and therefore the total disappearance of Kiverton Park and its collieries. After those people had survived my hour long discourse, it was moving to listen to the ex-miners who told me of their experiences. Some were doing very fragile private enterprise work; they were not at all sure that they would survive. Alas, quite a few had still not found work and were beginning to despair whether they ever would.
§ It is a matter of considerable importance that the work of British Coal Enterprise is not only affirmed but secured for the foreseeable future. The most appropriate way to do that is for British. Coal Enterprise to continue to be one of the continuing responsibilities of British Coal which is handed on to the Coal Authority. I see it —perhaps it is a rather naive image—as sitting firmly on a branch of the British Coal tree. I worry that when that tree is felled, that enterprise will collapse with it. I hope the Minister will be able to assure us that that will not be the case and that one way or another, preferably by incorporation in the Bill, the future of British Coal. Enterprise can be secured. I beg to move.
§ Lord Mason of Barnsley
I support the amendment. I am very pleased indeed to follow the right reverend Prelate. He has worked hard on behalf of the miners and their families in South Yorkshire. We all know that well; and I am sure that they are all grateful to him.
What surprised me was that British Coal Enterprise was not mentioned in the Bill. Why was that? That factor immediately aroused suspicion. What is our future? In the coalfields we know that we need British Coal Enterprise more than ever. It had a difficult start. There were many criticisms. Many people said that it would never find jobs. But it has overcome those criticisms and has done remarkably well. British Coal Enterprise created tens of thousands of jobs in all the mining districts in the country.
557 Its main objective has been to help provide alternative employment in the areas affected by all those pit closures. In 1985 when it was put forward that this enterprise should seek to solve some of our problems in the coalfields, no one ever visualised the task that lay before it. The rapid rate of pit closures has tended to swamp its endeavours. But it has been a major saviour in our coalfield communities. It has been most helpful in placing redundant miners in new employment or on training courses. It has found factory space for new businesses usually on pit sites and using former pit buildings. It has assisted with small loans on favourable terms to launch small and medium-sized businesses.
So far British Coal Enterprise has been funded by British Coal, Government grants and European Regional Development Fund allocations. Consequently British Coal Enterprise is now a major business with 180 full-time staff, 400 counsellors in mining districts and 60 financial consultants, giving advice to the many distressed men and their families when plunged into unemployment in areas of little hope. Yet it has managed to find or create directly 105,000 jobs. Another 4,300 projects have been established which employ a further 46,000, and with the establishment of business parks through partnerships with the ERDA another 13,000 jobs have been found. One can just imagine the impact that that enterprise is having on our rundown mining communities, giving them hope for the future as the activities of British Coal Enterprise expand.
What is to happen to British Coal Enterprise? There is a great deal of anxiety in the coalfields about it. First, will it continue to be a Coal Authority responsibility, as it should be? Will European regional development money still be forthcoming if it is hived off? Will the DTI still be actively and financially interested? There is a fear that it will be privatised—another hived-off venture. But really, in the light of the recent run of further pit closures, should not the BCE be given a more enhanced status to tackle what will be the ever growing problems in our old coalfields, and should it not be the Coal Authority's responsibility?
Two small issues arise from my own personal experience of working alongside British Coal Enterprise. I happen to be the chairman of the Prince's Youth Business Trust covering South Yorkshire—Sheffield, Rotherham, Doncaster and Barnsley—where the unemployment levels are extremely high. We launch between 12 and 14 new businesses every month, mostly with unemployed persons between 18 and 29 years of age. British Coal Enterprise has been invaluable to us —the PYBT—as regards allocating buildings, office equipment, expert advice that it has at its fingertips and liaison with our PYBT managers. It has been invaluable not just as regards creating individual jobs, but as regards helping us to create new businesses which in themselves are creating more employment.
Likewise, but a bit more so, I happen to be the chairman of a business and innovation centre: the Barnsley Business and Innovation Centre. There are not many in the country—I guess about 20—and British Coal Enterprise has been a major investor in that enterprise. So far, it is a development of over two dozen 558 different units within a complex which is developing high technological and innovative products. Over 120 persons are involved. New hi-tech industries sprouting in a dying coalfield, aided by BCE investment: it is a classic example of British Coal Enterprise's use of a coalfield and its impact on a coalfield community.
So there is a need for its continuation at least at its present financing level. Our coalfield communities are struggling to combat the ever-rising levels of unemployment and this will be true for some years to come. It would be a double tragedy on top of all the recent pit closures if British Coal Enterprise's activities were also to be curtailed.
§ Lord Dormand of Easington
I wish to put a straightforward question to the Minister which I hope he will deal with when he replies. In doing so perhaps I may say how much we all share the views expressed by the right reverend Prelate about the splendid work which is being done by BCE in the coal mining or former coal mining areas. The money is provided by various grants and loans, but BCE may not continue after privatisation. As my noble friend Lord Mason said, nothing has been said about it, but one would have thought it obvious that something would be said, even at this stage. If I were a betting man I might say to the Minister, "I bet it will not continue". In those circumstances, if those factories or workplace units, as they are usually called, are sold, there will be substantial capital receipts.
My question is: what will happen to the capital receipts? Is there a likelihood of them going straight back to the Treasury so that the coalfield areas will never see that money again? I see a smile from the Minister, he may think that is a silly question, but I bet he will give me a silly reply. This is a serious matter; we do not pretend that it is not. That money should remain in the coalfield areas. It would be terrible if such a well-established scheme, which has brought help to the coal mining areas, were to be discontinued.
§ Lord Morris of Castle Morris
Perhaps I may first say a word or two on the amendment so eloquently proposed by the right reverend Prelate the Lord Bishop of Sheffield, my diocesan Bishop. I pay tribute as well to what everyone in the area says about the extraordinary way in which he has looked after and backed up the miners and the mining industry in that area.
On the question of BCE, like all Members of the Committee, I have read every word of what was said about the Bill in Standing Committee D in another place, to which my attention was drawn. On 8th February at col. 73 of the Official Report, the Minister said about British Coal Enterprise:No decision has been taken about the long-term future of BCE. British Coal is considering the matter at present. However, I anticipate that BCE will retain its present role up to and immediately after privatisation. After that, it will be appropriate to examine how the BCE approach might function in co-operation with other local and national agencies"."No decision … about the long term"; it is being examined—"up to and immediately after privatisation"; then it will be appropriate to examine it. Who will examine it? How will it be appropriate? You either 559 examine it or you do not; it is not particularly appropriate. Appropriate to what? "How the BCE approach": does that mean that the underlying philosophy, the theological commitment, the social ideology of BCE, its message, its mission will somehow be transmitted through other local and national agencies or what? What does it mean? I hope that the right reverend Prelate is more full of hope after he has heard the Minister's words than I was on that occasion.
I wish to turn to Amendment No. 21. The Bill is about privatising the British Coal corporation.
§ Lord Strathclyde
Perhaps I may interrupt the noble Lord. I heard the right reverend Prelate say that he would deal with Amendment No. 21 later on. I regret that because it would have been good to have the debate now but it is the right reverend Prelate's amendment and if he wishes to deal with it later on then that is right.
§ Lord Morris of Castle Morris
I thank the Minister for that. If I heard the right reverend Prelate correctly, he did not say that he wished to ungroup the amendment. If he wishes to ungroup it—and I shall give him a moment or two to think about it and continue speaking while he does so—I do not know whether he will be in order in doing so at this late stage. It probably requires the consent of the Committee.
§ The Lord Bishop of Sheffield
I am an innocent in the jungle of the Committee stage. I have no idea whether or not I should do so. I just felt that I did not want to run my two speeches into one.
§ Lord Morris of Castle Morris
I believe that the two amendments are grouped together. I was seeking to make sure that the case which I imagine the right reverend Prelate would be likely to make did not go by default. I welcome guidance from the Minister as to whether the right reverend Prelate should make the case or whether I may do so.
§ Lord Strathclyde
The right reverend Prelate has moved Amendment No. 3. He can keep the amendments grouped, he can unbundle them, he can speak to Amendment No. 21 now or later. Whether or not he moves it formally is entirely up to him.
It was my feeling that it was absolutely right to group the amendments together because the issues are linked. Although the right reverend Prelate recently said that he did not wish to run both speeches together, I hoped that he would, because I felt that they fitted together well. I suspect that the noble Lord on the other side also felt that.
§ Lord Morris of Castle Morris
I am grateful to the Minister. If the right reverend Prelate would like to speak to Amendment No. 21, I should be delighted. I should be happy to hear what he has to say and if any little crumbs fall from his table which I could pick up afterwards, I should be happy to do so. I give way to him.
§ The Lord Bishop of Sheffield
I shall speak more briefly than I had intended on Amendment No. 21. Occasionally I feel that I am jinxed as regards the effect that I have on the diocese which I have the privilege to 560 serve, because in the 15 years that have been there disaster has followed disaster. First, steel and now coal. As I drive around the diocese—as I do diligently and constantly—it has become a familiar sight: the former coal mine, sometimes with a rather pathetic wheel marking the spot where once so many people worked. Sometimes it is rather smart and tidy, with marks of new life around it. But very often it is an area of quite considerable desolation. It seems to me that the desolation of the area is in itself a powerful dissuasive to people who might have felt that they wanted to bring their industry and workplace to the neighbourhood.
It bothers me a little that in this Bill the responsibility for dealing with that area is simply left to the Coal Authority, with the command that it gets the best terms possible for the land that is sold. This is indeed continuity with what has gone before with British Coal. I have to say that British Coal's record of developing some of those sites, which seem to be very capable of development, has not been an entirely happy one. There has been delay upon delay. Sometimes I think that the delay has been caused by the desire to get the best price, when selling at a slightly lower price would have made possible a quicker development and therefore a more rapid creation of new job opportunities in the neighbourhood.
It is my view that we might do better if such sites could be transferred to bodies which, unlike British Coal or the new Coal Authority, have as their top priority employment creation and economic renewal. The bodies that I have in mind are the Government's own development agencies: English Partnership, Scottish Enterprise and the Welsh Development Agency. Ail three are set up specifically to assist the recovery of regions that are affected by industrial decline.
I must emphasise that I do not speak here of the great bulk of British Coal's land. People tell me that only the Church of England owns more land than British Coal. I rather hope that that is true and that we do; but we may not. I am speaking of a relatively small number of key sites which, because of their location, are ideally suited for redevelopment, for new factories, offices and other commercial uses. There are numerous examples of extraordinary delays—I am not talking about months but about years of delay—arising from British Coal's abortive attempts to maximise financial return from the sale of sites.
At Easington, in County Durham, proposals have been put forward by the local council to provide on former colliery land a much needed car park to serve a local shopping centre and to alleviate congestion. The British Coal Corporation has vacillated over selling that part of the land that is required, in the hope that a better price could be obtained for the larger parcel of land. The decision has been put off from year to year and leaves the community with a melancholy spectacle of derelict land.
Some of the unreclaimed sites that are owned by British Coal are even more significant. They are sites capable of the development that can bring some hope of a reasonable economic future to devastated communities. They are sites where communications are good, and where the infrastructure already exists or can 561 be readily installed. They are capable of attracting industry in areas suffering unemployment caused by colliery closures.
One such site is Glass Houghton colliery, just outside the diocese of Sheffield and Wakefield. That colliery closed as long ago as March 1986. It is a site of considerable potential, with excellent communications, close to Junction 32 of the M.62 motorway and within half a mile of the stretch of the A.1 that is scheduled to be upgraded to motorway standard. Half of the 300-acre site where ground conditions are suitable has been designated in the development plan for industrial use. The presence of two town centre shopping areas within a few miles makes any change of use for retail purposes inappropriate and unlikely to receive planning approval. But that is the road down which British Coal has steadily gone; it is determined that that is the sort of development it should be. That has not happened; it is not likely to happen. After eight years the people of Pontefract and Castleford are still waiting for the work of reclamation and reconstruction to begin.
A site like Glass Houghton, properly developed, can provide a focus to attract new industry and investment into an area. But left as a derelict eyesore it positively discourages enterprise anywhere in its vicinity. It is sites such as that with which this amendment is concerned —key sites with the potential to unlock the economic development of their surrounding areas.
Transfer of sites like the one I have mentioned to the appropriate development agency may well be disposals on the best available terms—best for the communities thrown out of work by the mine closures. But there is a strong argument that such disposals would also be for the best in financial terms. This is a suggestion with which the Minister might sympathise, in that the real job of the Coal Authority is not development of this sort of land. If it could be given to those whose job it really is, there would be a focus, a concentration, on the immediate development and the immediate success of new industry and commerce coming to those areas and on new jobs being created. I do not believe that it would result in significant financial loss. It could result in significant financial gain. I believe that it would be an important sign that job creation arising out of the closure of the mines is something that we as a House, a nation and a government believe to be a very high priority indeed.
§ 5.45 p.m.
§ Lord Dormand of Easington
Before the right reverend Prelate sits down, will he kindly tell me why in the amendment he does not include the words "local authority"? The organisations that he does include are extremely important. We have all had dealings with them. But the amendment mentions "local Development Plan". It also mentions the "local economy". It seems to me that the local authority in many cases—perhaps not in every case, but in many cases—would be the most appropriate body to deal with this matter.
The right reverend Prelate pleased me very much when he mentioned Easington District Council. I had the honour to represent that area in another place. The 562 council has written a very long letter to me asking me to raise these matters. I had intended to do so anyway. Easington District Council—this is not simply publicity for the council; it is one of the most dynamic local authorities—has suffered greatly from the closure of pits. There is not a single pit in the constituency now. There were 16 when I was Member of Parliament there. That is the measure of the destruction, if I can use that word, that has taken place. In some circumstances the local authority could be the most appropriate body to deal with the particular matter that the right reverend Prelate raised.
§ The Lord Bishop of Sheffield
I note with sympathy what the noble Lord says. I share his respect for the magnificent work that is done by local authorities. I am under the impression that the bodies that I have mentioned are very ready to work with local authorities. I also believed that this amendment was more likely to be accepted by the Government if it put emphasis on the government development agencies, which I hope they support, rather than the local authorities, which (if I am not being tactless) they seem to view with such suspicion.
§ Lord Wade of Chorlton
I am sure that my noble friend will have a great deal of understanding and sympathy for what the right reverend Prelate said. It is surely one of the responsibilities that the DTI accepts very strongly that positive action should be taken by government so that, as one industry dies, every encouragement is given to use the resources in manpower, energy and finance to develop new industries for the future. The DTI and the Government have a number of schemes throughout the country that make those activities possible.
I support those who have said what a splendid job British Coal Enterprise has done. I endorse all that the noble Lord, Lord Mason, said about the work that it has done in his area; and it has done equal work in the North West, from where I come. But the one point that was perhaps not made relates to the way that the functions of British Coal Enterprise make it a very flexible organisation: it can put money quickly into companies and respond very quickly to changing circumstances; it will also not be so hidebound by the financial restrictions that apply to many other bodies that provide money.
What is important in this issue is that, as the coal industry changes—as it will change, dramatically—there are operations in place that continue to make money available for small businesses which, it is to be hoped, will be generated. There must be a willingness on the part of government and local authorities, which are often the planning authorities in these matters, to take heed of what the right reverend Prelate said about the need to adapt quickly and to redevelop land for other purposes. That is particularly important as coal mines are often in rural areas, where sometimes it is difficult to get the development that one wants. But whether that is a matter for this Bill is another issue. If the Bill were to cover all the ramifications and changes that will take place in society as a result of the mines moving into private hands, that would be another matter altogether.
563 I should be grateful to have from my noble friend an understanding of how the Government see these changes being brought about and what they intend to do if British Coal Enterprise is no longer to be the functioning body. I should like to know what other bodies they see as being able to take over its responsibility and having the power and flexibility of British Coal Enterprise. I should like to hear how the Government view the importance of local authorities and government bodies responding to what the right reverend Prelate said.
§ Lord Haslam
British Coal Enterprise and its counterpart, British Steel Industries, continue to be, I believe, the most successful industrially based job creators in the UK. The latter—British Steel Industries —continues to operate under the umbrella of British Steel. Having had its debt written off, it is now self-financing, except when an exceptional sudden demand arises, such as, for example, the closure of Ravenscraig.
The right reverend Prelate the Bishop of Sheffield, the noble Lord, Lord Mason, and, more recently, my noble friend Lord Wade, have already very effectively described the role of BCE and its achievements. Perhaps I could just add a little more flesh to their statements.
First of all, there is what is called business funding. That involves providing loans to job creating projects in the UK coalfields. Those projects are part funded up to 25 per cent. of the cost or £5,000 per job created. A sum of £86 million has been committed since 1984 into 4,300 projects, which have led to 46,000 jobs being generated. Looking to the future, to continue annually to make £10 million of loans available to 500 projects, thereby creating 5,000 jobs, is an achievable and desirable objective. As these are revolving funds, the total cost of the operation, including all overheads and provision for bad debts, is about £8 million per annum.
I turn to managed workshops. That has involved both the conversion of former British Coal buildings and newly built business park ventures. There are currently 34 operational sites, which are soon to be increased to 43. Those managed workshops have housed an astonishing range of small burgeoning businesses started by miners and their families.
I have been amazed at the diversity of the entrepreneurial things that happen. There is one extraordinary story of a miner who read the Board of Trade journal and saw that £300,000 worth of pythons was imported every year into this country for museums, schools and universities. He decided that in one of those managed workshops—and it is not too much liked by some of his near neighbours—he would breed pythons. He built a business in that particular area. It was quite unimaginable.
About £30 million of capital has been expended and over 13,000 job opportunities have been created in those managed workshops. On a revenue basis, that activity is breaking even and will make a growing positive contribution as sites mature to higher occupancy. However, if British Coal Enterprise is to expand its 564 workspace, there will be a modest demand for capital. A net expenditure, after European grants, of £3 million per annum would allow five new sites to be built each year.
On the outplacement front, BCE has a service contract with British Coal to deliver a comprehensive outplacement package. That facility is also made available to other selected companies and that activity is profitable. Over 44,000 former British Coal personnel have been resettled since 1987. That is an 80 per cent. success rate of those who registered at BCE jobshops and who actively sought work. Thus, in total, British Coal Enterprise has participated in the creation of about 105,000 jobs since its inception in 1984. The corresponding loss of jobs in the mines during that period was about 180,000.
To sum up, I strongly support the view of those who have already spoken that British Coal Enterprise should be preserved in the public sector. I believe that its present debt of £30 million should be written off. A single cash injection of £50 million would then be: sufficient to ensure its future for all time, as British Coal Enterprise's profitable activities continue to grow. It is very interesting now that, particularly in the eastern European countries, its advice has been sought to establish similar organisations in places such as Poland, Hungary and so on.
An alternative would be for the Government to agree to continue funding at, say, £2,000 per job created. That cost is considerably less expensive than other government comparable enterprise agencies and I believe would stand any market test.
The Minister for Energy recognised in another place the positive achievements of BCE and indicated that it would be retained in its present form for the immediate post-privatisation period. I understand that discussions are taking place with British Coal about longer term plans. I look forward to hearing the outcome. It is to be hoped that the emphasis will be to build on the success and achievements of British Coal Enterprise. Accordingly, I support Amendment No. 3.
§ Lord Morris of Castle Morris
I should just like to put the position of those of us on these Benches briefly and quite clearly on the main amendment, Amendment No. 3. Since 1984, 180,000 miners have lost their jobs. Since 1984, BCE has created thousands of new jobs around the country. We support it strongly.
The Coalfield Communities Campaign recently undertook some research into BCE. Its preliminary findings show that BCE has been cost-effective as a job creation agency by comparison with other job creation agencies and has made a most creditable contribution to job creation in coalfield areas. It can be justly proud of that.
BCE, as the only economic regeneration body specifically working within British coalfields, will be needed more and more over the next few years, not less and less. Given its prudent track record and given its cost-effectiveness, BCE's existence ought to be assured for the foreseeable future and the resources available to it should be increased.
In that way, the process of regeneration in the coalfields can be accelerated to try to match the rapidly 565 growing need for assistance to coalfield local economies, a priority not only for those communities themselves but for the national economy as a whole.
§ Lord Strathclyde
I am very grateful for the contributions that have been made on BCE. I particularly thank the right reverend Prelate for his words and for speaking to both amendments. I feel that the amendments hang together extremely well. It is on that basis that I shall reply.
It was interesting that the right reverend Prelate mentioned the steel industry. It will not have escaped the Chamber's notice that the steel industry in this country is one of the most efficient and productive steel industries within the European Community. It is a testament to those who work in the industry. This Bill is about producing the same result for the coal industry, so that the mineworkers in the privatised coal industry will also share in that success.
I shall not follow the example of other noble Lords in eulogising BCE. The very great importance and the tremendous contribution that BCE has made to the regeneration of the coalfield areas are clearly recognised by the Government. What is more, the regeneration of the coalfield areas is an avowed objective of government regional policy in order to help the situation in those areas. In 10 years BCE helped to create 100,000 job opportunities through job placement and training of former British Coal employees, managed workspace developments and business funding for small firms. My noble friend Lord Wade of Chorlton is absolutely correct when he says that it is a flexible organisation with few financial restrictions and one which can move quickly.
But I understand the concerns of the Committee. What I am wary of in the amendment is that we are simply putting the responsibility of British Coal Enterprise into the hands of the Coal Authority. I am by no means certain that that is the right thing to do. The Coal Authority will be looking after the privatising of the industry and is not therefore the appropriate body to look after British Coal Enterprise.
What is to happen to BCE? I must tell the Committee that we do not know what is its long-term future; that remains to be decided. But in the medium term we envisage that BCE will be retained in its current form throughout the transitional and immediate post-privatisation period. The longer term future of BCE needs to be carefully considered. The mini debate we have just had goes some way to furthering that consideration and the Government will take note of what Members of the Committee said. I could not resist a smile when the noble Lord, Lord Dormand of Easington, asked a specific question in relation to capital receipts. On one side because I do not know the answer; but on the other because I suspect that the heavy hand of the Treasury will do its work in this respect and it may be difficult to ring-fence or earmark specific receipts for specific areas.
What is important is our overall policy towards the regeneration of coalfield and other areas around the country. It will not have escaped the notice of the 566 Committee that under the single regeneration budget, under the Urban Regeneration Agency which is run by my noble friend Lord Walker, we have a clearly focused policy to help exactly the kind of areas that have been helped so successfully in the past by BCE. For instance, it is important that English Partnership and the other relevant agencies mentioned in the second amendment of the right reverend Prelate, should be able to contribute to the regeneration programmes in the areas affected by colliery closures. Members will be aware of the work that has already been carried out by those agencies.
Coming to the matter of disposal of British Coal's land, the Government have in mind the possibility that, as part of the process of allocating the property and land of the corporation itself, those properties which should be beneficial to the regeneration process in coalfield areas should go direct to the local authorities or development agencies rather than to the coal authorities. That seems to me to be the best way of dealing with the issue.
I want to draw the Committee's attention to the fact that the authority's duties are designed to lead it to take a constructive and flexible approach to the disposal of land and property which will be vested in it after the due date. First, Clause 3(2) places a duty on the Coal Authority to dispose of such of its land and property as, broadly, is not required for coal mining. That means that there is no question of the authority simply hoarding land. It can therefore be freed up to deal with the kind of regeneration which the right reverend Prelate wishes to see. The clear intention is that land and property should be released for beneficial use. That will be helpful to regeneration as the authority makes land available for new housing, industrial or leisure developments.
Secondly, there is no need for the land to be transferred before it is developed. The authority has the power to develop land under Clause 5(3). Thirdly, there is no need to transfer the land to develop it in partnership. The authority has the power to do that without the private or public sector. Lastly, planning permission is required for any new use of land or new development. There is now a presumption that planning applications will be determined in accordance with any relevant provisions of the local development plans and that applies just as much to any development on or use of Coal Authority land. The authority itself has no privileged position.
In short, the authority has a basic duty to dispose of land not needed for coal mining purposes. It has flexibility as to how it does so. It will be governed by the planning law like anyone else and will need to take account of local development plans in formulating proposals or collaborating with others. The role of BCE in the short term is assured; in the longer term we shall need to look at it in the light of our overall objectives. But I join with other Members of the Committee who have spoken in the debate to congratulate and welcome the work that has been done over many years.
§ 6 p.m.
§ Lord Ezra
It is encouraging to hear from the Minister the support that the Government give to BCE. They have said that in the short term it will continue as it is until the process of privatisation develops; in the longer term it is still open for debate as to how it will operate.
I am a little disturbed by that. From past experience the discussions take a long time and I hardly think that it will be one of the Government's urgent priorities in the months ahead. Therefore I suggest to the noble Lord that we who support BCE—I include the Minister as a supporter of BCE —would be happier if it were proposed that after the interim period, unless by then some other arrangement is arrived at, the Coal Authority will retain responsibility for this important endeavour.
§ Lord Strathclyde
It is an interesting suggestion. However, I do not believe that the Coal Authority should be responsible for BCE. Ultimately the Coal Authority will be dealing with other matters that are laid out in the Bill. We need to find a solution as to what is to happen to BCE, particularly in respect of overall government objectives for regeneration in the coalfield. But it is an interesting suggestion and one that I am happy to look at. I do not want to throw a bucket of water on it because I have not considered it in detail. However, I want the Committee to be absolutely certain about what is our general policy.
§ The Lord Bishop of Sheffield
I welcome the greater part of what the Minister said. I must admit that I remain puzzled that so large and important an enterprise as the British Coal Enterprise should be left hanging in space in this way. It seems puzzling that the problem of what is to be done was not addressed much earlier. I welcome the Minister's later comments about the land, which I find encouraging. I therefore seek the leave of the Committee to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Lord Peston moved Amendment No. 4:
Page 2, line 3, leave out ("two nor more than").
§ The noble Lord said: Amendment No. 4 is grouped with Amendment No. 5 and perhaps therefore I may start with Amendment No. 5. It simply asks a question. In the sort of legislation we have had before us in recent years on quangos, there has tended to be a clause of this sort saying that XYZ will be consulted. I am somewhat taken aback that the Bill chose not to have such a clause and perhaps the Minister can tell us what it is about this specific quango that the Secretary of State is not constrained to consult in an explicit way. Is there some reason for that?
§ Amendment No. 4 is rather stronger. The subject was raised by my noble friend Lord Morris of Castle Morris at Second Reading. I find it inconceivable that in the real world—by which I mean the world outside—we would set up a Coal Authority with only two members. I take it that the draftsmen do not put in a number like "two" unless it is meant to have some significance. As I say, I find it difficult to believe that we can set up the Coal 568 Authority with as few members as that. Amendment No. 4 therefore asks the Minister to give a rational argument as to why two can ever be the right number.
§ Baroness Nicol
I support my noble friend, particularly on Amendment No. 4. The idea of two people making up an authority with one of them being appointed chairman seems to me to be ludicrous. It appears to me that we are appointing a dictator and not the chairman of an authority. As an old committee hand, therefore, I ask the Government to accept my noble friend's amendment.
With regard to Amendment No. 5 it is important that all the different expertise that is available should be tapped. That is another reason for appointing more than two members. To find two people who embody all that degree of expertise is frankly impossible. To cut my comments short, I wish to support my noble friend in both his amendments. I hope the Minister will give him a serious answer.
§ Viscount Torrington
I cannot support Amendment No. 4 in the name of the noble Lord, Lord Peston. I am not sure whether it is one of his helpful amendments or one of his wrecking ones. I take it that it: is one of his helpful ones. However, it raises the question of the composition of the Coal Authority. The Committee may be aware that in the United States there is a whole new industry for the extraction of coal bed methane. It has been going on for a number of years and is a big and valuable industry. Essentially, it is rather similar to drilling oil and gas wells except one is deliberately drilling into coal seams to extract the methane. So far British Coal has been pretty unhelpful in the development of that kind of industry in this country. There is little reason to suppose that future private miners will be any more helpful. I hope therefore that my noble friend might consider that the Coal Authority, as a kind of regulator, should be even-handed in this matter and assist in all forms of economic development of coal assets. Accordingly, I hope that there will be some expertise either represented on the authority or available to the authority to make sure that the industry is fostered.
§ Lord Beaumont of Whitley
I do not believe that the Government are likely to concede Amendment No. 5, nor do I think that they should. No, probably they should, because it is important that all these various organisations should be consulted before the body is made up and that it should consist of people who have real expertise.
This is the first opportunity I have had to plug an interest which is dear to my heart and to which we shall be coming back in Part V of the Bill. I know that the noble Baroness, Lady Nicol, is also interested in the matter. I refer to the whole question of the environment. I know that we shall be dealing with opencast mining in a big way but there is something much greater than that. As we have heard, a great deal of land has been in mining over a period of time. Everyone in the Chamber wishes to make sure that when all the controversy has died down and we have either a thriving, small, dynamic coal industry, as the Government tell us they expect to 569 have, or probably no coal mining left anywhere in the country, which I think is much more likely, we should have a situation where the land which has been used for, and exposed to, coal mining over a long period of time is in a state which is available and which can be enjoyed by the community as a whole.
We all know what happened as a result of tin mines closing in the South West. Anyone who has travelled by rail in that area will have seen the great devastation left by the clay workings around St. Austell. We must seek to ensure that that is put right as we move from this chapter of our history. It is likely that the environment will be almost pushed out by the very important matters we are discussing —I am not under-rating them at all —concerning safety, the future of the communities and their livelihood. However, it is important that we do not omit the whole consideration of the countryside. We must ensure that very important environmental organisations are among those consulted in the setting up of this body.
§ 6.15 p.m.
§ Lord Strathclyde
I disagree with the two amendments. I do not believe that they are particularly helpful. My noble friend Lord Torrington asked about coal bed methane. My noble friend is absolutely right. It is an important subject. He will know that the position is dealt with in Clause 9. However, that does not deal with appointments, which are dealt with by these amendments.
Amendment No. 4 increases the minimum number of members of the Coal Authority from two to eight and removes the upper limit so there could be no fewer than eight. The clause as drafted provides for the Coal Authority to have a minimum of two members and a maximum of eight. In practice this must mean that there have to be more than two on the basis that there may be a sudden loss of one or two members—for example, through illness or resignation—bringing numbers below the statutory minimum. So we would always have to appoint more than two.
The present numbers allow for a sufficiently broad range of experience and expertise for the Coal Authority to carry out its duties effectively now and in the future. They also permit a prudent degree of flexibility. If we had a minimum of eight people we could well end up with a Coal Authority that was insufficiently flexible and had too many people on it. Anyone who has sat on a committee knows that very often the most effective committees are those with fewer people on them. There is no magic in two or eight. It is simply the figure which we believe right to make sure that the Coal Authority carries out its functions.
Amendment No. 5 requires the Secretary of State to consult coal industry employers, trade unions, local authorities in coal mining areas and environmental organisations before he appoints a member of the authority. If the Secretary of State had to consult all those people it would take an awfully long time to get round to appointing anyone. Then, even after having consulted them, he does not have to take their advice. Therefore, the provision is meaningless. When the 570 Secretary of State makes his decisions about people to put on the Coal Authority he will consult widely with a whole variety of people, some of whom are not mentioned in the noble Lord's amendment. It is absolutely right that the Secretary of State should do so because it will be his responsibility to make sure that the Coal Authority does its job and does it properly.
I note in passing that there is not a consultation requirement in the Coal Industry Nationalisation Act 1946 for appointments to what is now British Coal. I make no great point about that but the requirement was not in before and I do not think it should be in now. The process of making appointments is thorough and exacting. I know that because in my capacity as a Minister I have occasion to make appointments. It takes a great deal of time.
I hope that all the noble Lord, Lord Peston, was doing was seeking to probe our views. I trust he has the answer. I hope he will withdraw the amendment.
§ Lord Peston
I am afraid not. On Amendment No. 5 I was probing to some extent but I hoped at least to receive a proper answer. The noble Lord did not explain why such clauses appear in so many other Bills that the Government put forward and which the noble Lord has supported. My direct question to him on Amendment No. 4 has not been answered. I asked the noble Lord point-blank: is it conceivable that the Government would appoint two? Before deciding what to do, I should like to know whether the answer to that question is that it is conceivable because otherwise two would not be there.
§ Lord Beaumont of Whitley
Before the Minister answers, I must say that I did not understand the logic of his reply. He said that it would be far too great a burden and far too dilatory a process to consult all these people, but of course the Minister would consult them anyway. What on earth is the logic of that? If they are to be consulted anyway, why should it not be put in the Bill?
§ Lord Strathclyde
The answer to the noble Lord, Lord Peston, is that it must be conceivable. But it is extremely unlikely. That is the point I tried to make in my original answer.
The noble Lord, Lord Beaumont of Whitley, raises a greater point. I come from the school of legislation that believes that we should have less, not more. We have to depend on the common sense of Ministers either to do a good job or to make a mess of it. If they make a mess of it, sooner or later they will leave. Following that, it must be incumbent on Ministers to do what they want when they are appointing people. I simply said that if it were me I would consult as widely as possible. But I do not believe that it should be a statutory duty on the Secretary of State to consult with all these people, particularly if at the end of the day he can tear up that advice and throw it in the waste-paper basket.
§ Lord Peston
Unlike the noble Lord's earlier replies to all the other amendments which were satisfactory although not always convincing, I have to say to him that these answers are unsatisfactory. If his argument held on Amendment No. 5 then it would hold for all 571 kinds of other legislation, but clearly other departments do not agree with that. What really appalled me was his view that "two" means "two". It would be "four" if he meant "four", but the Minister says "two". I believe that we could do with a bit of exercise at twenty minutes past six. I wish to test the opinion of the Committee.
§ 6.20 p.m.
§ On Question, Whether the said amendment (No. 4) shall be agreed to?
§ Their Lordships divided: Contents, 49; Not-Contents, 126.572
|Division No. 1|
|Addington, L.||Kilbracken, L.|
|Airedale, L.||Kitchener, E.|
|Beaumont of Whitley, L.||Mackie of Benshie, L,|
|Blackstone, B.||Masham of Ilton, B.|
|Bonham-Carter, L.||Mason of Barnsley, L.|
|Broadbridge, L.||McNair, L.|
|Callaghan of Cardiff, L||Merlyn-Rees, L.|
|Carmichael of Kelvingrove, L.||Meston, L.|
|Carter, L.||Milner of Leeds, L.|
|Dean of Beswick, L.||Molloy, L.|
|Dean of Thornton-le-Fylde, B.||Morris of Castle Morris, L.|
|Donaldson of Kingsbridge, L.||[Teller.]|
|Dormand of Easington, L.||Nicol, B.|
|Ezra, L.||Parry, L.|
|Glenamara, L.||Peston, L.|
|Gould of Potternewton, B.||Pitt of Hampstead, L.|
|Graham of Edmonton, L.||Rochester, L.|
|Gregson, L.||Rodgeis of Quarry Bank, L.|
|Grey, E.||Sefton of Garston, L.|
|Hanworth, V.||Taylor of Blackburn, L.|
|Haskel, L.||Turner of Camden, B.|
|Howell, L.||Whaddon, L.|
|Jay of Paddington, B.||White, B.|
|Jeger, B.||Williams of Mostyn, L.|
|Addison, V.||Dean of Harptree, L.|
|Allenby of Megiddo, V.||Denton of Wakefield, B.|
|Annaly, L.||Dixon-Smith, L.|
|Archer of Weston-Super-Mare, L.||Donegall, M.|
|Arran, E.||Dormer, L.|
|Astor, V.||Downshire, M.|
|Balfour, E.||Eccles of Moulton, B.|
|Barnard, L.||Elliott of Morpeth, L.|
|Bathurst, E.||Elphinstone, L.|
|Beloff, L.||Faithfull, B.|
|Blatch, B.||Forester, L.|
|Blyth, L.||Fraser of Carmyllie, L.|
|Boardman, L.||Gardner of Parkes, B.|
|Borthwick, L.||Glenarthur, L.|
|Boyd-Carpenter, L.||Goschen, V.|
|Braine of Wheatley, L.||Gray of Contin, L.|
|Bridgeman, V.||Greenway, L.|
|Bruntisfield, L.||Gridley, L.|
|Cadman, L.||Hacking, L.|
|Caithness, E.||Halsbury, E.|
|Campbell of Alloway, L.||Harmar-Nicholls, L.|
|Carnegy of Lour, B.||Harmsworth, L.|
|Chesham, L.||Harrowby, E.|
|Clanwilliam, E.||Haslam, L.|
|Clark of Kempston, L.||Henley, L.|
|Colwyn, L.||Hertford, M.|
|Constantine of Stanmore, L.||Hives, L.|
|Courtown, E.||Holderness, L.|
|Craigavon, V.||HolmPatrick, L.|
|Craigmyle, L.||Hood, V.|
|Cranborne, V.||Hothfield, L.|
|Crickhowell, L.||Howe, E.|
|Cross, V.||Hylton-Foster, B.|
|Cumberlege, B.||Kinnoull, E.|
|Liverpool, E.||Sanderson of Bowden, L.|
|Long, V.||Seccombe, B.|
|Lucas of Chilworth, L.||Sharples, B.|
|Mackay of Ardbrecknish, L.||St. Davids, V.|
|Mackay of Clashfern, L. [Lord||St. John of Fawsley, L.|
|Chancellor.]||Stanley of Alderley, L.|
|Mancroft, L.||Stockton, E.|
|Marlesford, L.||Stodart of Leaston, L.|
|McColl of Dulwich, L.||Strange, B.|
|Merrivale, L.||Strathcarron, L.|
|Miller of Hendon, B.||Strathclyde, L.|
|Milverton, L.||Strathmore and Kinghorne, E.|
|Munster, E.||Sudeley, L.|
|Napier and Ettrick, L.||Swinfen, L.|
|Northbourne, L.||Swinton, E.|
|Onslow, E.||Tebbit, L.|
|Oppenheim-Barnes, B.||Teviot, L.|
|Orkney, E.||Teynham, L.|
|Oxfuird, V.||Thomas of Gwydir, L.|
|Park of Monmouth, B.||Torrington, V.|
|Pender, L.||Trumpington, B.|
|Prentice, L.||Tugendhat, L|
|Rankeillour, L.||Ullswater, V. [Teller.]|
|Reay, L.||Vivian, L.|
|Rennell, L.||Wade of Chorlton, L.|
|Renton, L.||Waverley, V.|
|Rodger of Earlsferry, L.||Westbury, L.|
|Rodney, L.||Wharton, B.|
|Romney, E.||Young, B.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 6.29 p.m.
§ [Amendment No. 5 not moved.]
§ Clause 1 agreed to.
§ Schedule 1 [The Coal Authority]:
Lord Strathclyde moved Amendment No. 6.
Page 67, line 26, at end insert:
("(5A) In addition, service as an officer or employee of the Authority shall be included in the kinds of employment to which a scheme under section 1 of the Superannuation Act 1972 can apply; and, accordingly, in Schedule 1 to that Act (which lists the kinds of employment to which a scheme can apply), the following entry shall be inserted at the appropriate place in the list of "Other Bodies", that is to say—
(5B) The Authority shall pay to the Treasury, at such times as the Treasury may direct, such sums as the Treasury may determine in respect of the increase attributable to sub-paragraph (5A) above in the sums payable out of money provided by Parliament under the Superannuation Act 1972.
(5C) Where any person is both a member of the Authority and a participant by reference to his service as an officer or employee of the Authority in a scheme under section 1 of the Superannuation Act 1972, the Treasury may determine that his service as such a member (including service before he became an officer or employee) shall be treated for the purposes of the scheme as service as an employee of the Authority; and any such determination shall be without prejudice to paragraph 2 above.")
§ The noble Lord said: This is a technical amendment which makes it possible for Coal Authority staff to be members of the Principal Civil Service Pension Scheme. The amendment is a common-form provision, precedented in other legislation; for example, the Education Reform Act 1988. It was inadvertently omitted from the original draft for which I apologise. I hope that this amendment meets with the approval of the Committee. I beg to move.573
§ 6.30 p.m.
§ Lord Morris of Castle Morris
I am grateful to the Minister for that brief explanation and for his letter to me on this subject dated 26th April. Because of that date, he will understand—I hope that the Committee will also understand—that I saw the letter only 15 minutes before coming into the Chamber, so I have not been able to give it the mature consideration which it so richly deserves.
At first sight, without much consideration, and reserving our right to revisit this provision at any one or more of the later stages of the Bill, the amendment looks harmless enough. However, one question emerges and I should be grateful if the Minister could help me. The third paragraph of his letter states:The amendment also provides for the Authority to pay appropriate contributions to the Treasury's Civil Superannuation Vote, and gives the Treasury the discretion to allow".Can the Minister explain why the Treasury has only "discretion" in this matter? Does it mean that the Treasury could in certain circumstances—and if so, what would they be?—refuse consent, and is an appeal possible? I do not understand the point of the word "discretion".
My only other point is to express mild surprise at the poignant irony that the Government have introduced this additional benefit in favour of the pensioners of the Coal Authority, a body which does not yet exist, when they have not fully and properly settled the pension rights of the thousands of miners and ex-miners in the MPS and Salaried Staffs' Pension Scheme.
§ Lord Strathclyde
I am sorry if the noble Lord received that letter only a few moments before we began. I shall have to ensure that he receives letters from me rather earlier in the future. It was designed to be helpful.
The reason why there is discretion in the third paragraph—(5C)—is that the situation may vary from time to time. Rather than make it an absolute definite, we took the view —as I said, this is well precedented in other legislation —that it was easier to give the Treasury discretion, because it would need it in order to adapt the scheme in the ways mentioned. If any further explanation is required, perhaps I can follow it up by a further letter to the noble Lord.
§ On Question, amendment agreed to.
§ Schedule 1, as amended, agreed to.
§ Clause 2 [Duties of the Authority with respect to licensing]:
Lord Morris of Castle Morris moved Amendment No. 7:
Page 2, line 24, leave out ("so far as practicable").
§ The noble Lord said: In moving this amendment, I should like to speak to a lot of other amendments also —to wit, Amendments Nos. 14, 15, 18, 26 and 27—although not at great length on all of them.
Amendment No. 7, to leave out the words "so far as practicable", is one to which we attach some importance. The duties and powers of the Coal
Authority are set out in the Bill as drafted in the very vaguest of terms. The authority must carry out its functions,
in the manner that it considers is best calculated to secure, so far as practicable".
Those are not exactly bold terms. Further, it has,
to have regard to the desirability of securing".
It does not secure anything. It does not do anything; it has to have regard to the "desirability of securing" certain things. I suggest that that is language more fitted to a university department of philosophy than to a piece of legislation which is going to get someone to do something about the coal industry of this country.
§ The Government's draft paper on the role of the Coal Authority states that the authority will focus primarily on facilitating coal mining operations. That is a duty. That does not imply a neutral position. Its response to any matter which comes before it is bound to be coloured by the need to promote mining which is placed upon it. However, it is the authority which, as the licensing authority, must check the financial standing of prospective licensees, must protect third parties from loss arising from the problems caused by mining operations and must have regard to the need to secure the safety of the public, and it is the authority which has the power to make a compulsory rights order. We shall be returning to that with some power and ferocity at a later stage of the Committee proceedings.
§ There are many phrases in the Bill which would lead any mining company to expect the authority to assist and accept its proposals even when the authority should be expressing reservations. There is no fixed point on which any member of the public or any person with an interest in property who is adversely affected by the activities of a mining company can take issue with the Coal Authority.
§ We believe that the Bill should be amended to give the Coal Authority an explicit remit to balance the interests of those involved in coal mining against the interests of those who are affected by it. To achieve that balance, the authority should have clear duties laid down on the face of the Bill without escape clauses of this sort, and should be liable in damages for the performance of them.
§ In large parts of the Bill, the term "so far as practicable" is used, undoubtedly to try to give the Government, the Coal Authority and the private operators as much discretion as possible when it comes to compliance with parts of the legislation. They have fulfilled their duty if they have secured or given consideration to securing something "so far as practicable". They may then not do anything about it, but they have fulfilled the requirement. In our view, the use of the term "so far as practicable" serves no purpose whatever in the Bill except to provide an escape route from more onerous decisions, such as those contained in Clause 2(1) (a), which has far-reaching policy implications.
§ Similarly, turning to Amendments Nos. 14, 15 and 18, but in particular to Amendment No. 15, it is essential in our view that anyone embarking on a coal mining operation must have adequate experience and expertise available to them. There can be no question of the 575 authority considering the "desirability of securing" such an ability to perform. A phrase like that radically weakens the ability of the authority to reject an application for a licence. It takes away its teeth. It takes away its power. Any lack of expertise would imperil others who might be affected by the works.
Despite the decision of the Committee when we divided just now, the two people who might conceivably be the sole arbiters of these decisions need to have access to a high level of expertise and experience which, even between them, they might not have. We know that,
where two or three are gathered together [there art Thou] in the midst of them",
but I wish that we could be quite sure that spiritual grace would descend upon the members of the Coal Authority, so few in number. We are dealing with law, not with grace, and as somebody once said, "First tether your camel and then trust in God". I think that this amendment is designed to tether the camel.
§ The amendments have been tabled in an attempt to put some backbone into and to give some strength to the Coal Authority. We did not want it in the first place, but since we have to have it, it might just as well be a decent Coal Authority as a bad one. I beg to move.
§ Lord Ezra
I should like to support these amendments on the grounds which have just been put forward. I feel that these words are far too qualified and I am particularly puzzled in Clause 2(2) and 2(2) (a) to read that there should be any qualification of the duty of the authority in carrying out its functions under Part II of this Act so that persons authorised by virtue of that part should have the necessary expertise. For them to have regard to the desirability of ensuring that they have the necessary expertise strikes me as being extremely odd. Surely it should be possible to determine whether or not people have the expertise. It seems to weaken what is required of the Coal Authority to a considerable degree. It is already left to its discretion to decide these matters. I do not think that words such as "so far as is practicable" and "to have regard to and the desirability of are necessary. Indeed, they minimise the apparent intent of the Bill.
§ Lord Strathclyde
Amendment No. 7 to which the noble Lord, Lord Morris of Castle Morris, has just spoken—and incidentally, I am also speaking to Amendments Nos. 14, 15, 18, 26 and 27—would delete the words "so far as practicable" from Clause 2(1). This would place absolute duties on the authority which I suggest it would not be in a position to meet. While clearly it is important that the duties in Clause 2 are strong obligations, they also have to be meaningful and workable. Putting it in another way, could we expect the authority to do what is not practicable?
§ Lord Ezra
The noble Lord has just said that it puts an absolute duty on the authority. It does not, because the way it reads is:carry out its functions under Part II of this Act in the manner that it considers is best calculated …I do not consider that to be an absolute duty. It is left to its discretion to decide what it should or should not do. I do not see that any further qualification is necessary.
§ Lord Strathclyde
I take the point the noble Lord, Lord Ezra, makes, but I am advised that these words are important. They are important because "so far as practicable" is not a let-out phrase. It imposes a strong obligation. In law it means "so far as can be achieved in practice". That is why we believe that "so far as practicable" should be maintained.
Interestingly enough, my officials in the department, who were very concerned about this amendment, pressed a button on the computer to find out where and how often the phrase "so far as practicable" has been used in the past. It is interesting to know that in the post-war Labour administrations the words "so far as practicable" and "so far as reasonably practicable" appear in 49 different sections. So if it was good enough for them, I hope it is good enough now. I have a list of them; but I am merely trying to make a general point on that.
Let me take a little time now to go through each of the subsections in Clause 2(1) in turn. Starting with Clause 2(1) (a), it is not within the authority's power to guarantee that an economically viable coal mining industry is maintained and developed by licensees. That depends more on the action of licensees and developments in the market. What the authority can do is to provide information, make available the coal resource and property within its ownership; and establish a competitive licensing regime to facilitate development of the coal industry by licensees.
Similarly, with Clause 2(1) (b), there is no such thing as absolute certainty about the financial affairs of a private company. To have pretended otherwise would have been dishonest and would have placed on the authority responsibilities which no organisation could discharge. The authority can look carefully at the resources available to applicants for licences in relation to the proposed venture and the obligations that go with it and its commercial prospects. It will then have to make a judgment as to whether the licensees will be able to finance their operations and the discharge of associated liabilities, whether from revenue or by raising external funding.
It will have to look at the impact of the way in which it discharges its licensing functions on the ability of the applicant to finance the venture and the associated obligations. This might, for example, lead the authority to make its licences transferable, to help licensees to borrow money on the security of a lease of coal. The authority's duty cannot provide absolute certainty. No duty could ever do that. But it does provide reasonable assurances for third parties, particularly those to whom obligations may be owed by the private mining companies who will be licensed by the authority, but those companies will be of appropriate financial standing.
Clause 2(1) (c) reflects the exceptional nature of subsidence liabilities. The Government recognise that: the right to under-mine, which will be conferred on mining companies, is altogether exceptional and that the regime for protecting those affected by subsidence must be strong. That is why there is a separate obligation placed on the authority specifically to address the financial provision for subsidence.
577 It requires the authority to look beyond the overall financial position of a proposed licensee and consider whether there is adequate financial provision for meeting both present and future subsidence obligations. This then is a very strong duty on the authority. As the licence documents which I have made available to noble Lords illustrate, we expect it to lead to the imposition of a rigorous subsidence regime on the mining companies. No such regime can provide complete certainty. The authority will be operating in the real world. That is why the words "so far as practicable" are included. But the authority can do a great deal to provide effective protection for those affected by subsidence damage.
Perhaps I should add just one further point, which I do not think was mentioned by the noble Lord. It is important. The phrase "so far as practicable" certainly does not imply that the authority is free to pick and choose which of its duties to carry out in a certain case. Specifically, the authority is not free to license a company which does not meet the requirements relating to financial standing and provision for subsidence simply because it judges it to be in the interests of the coal mining industry to do so. I simply mention that point in passing. I hope that what I have done has been to justify why the wording is as it is. I totally understand why the noble Lord, Lord Ezra, asked the question, but I hope that the explanation that I have given will suffice.
§ 6.45 p.m.
The Earl of Harrowby
Before my noble friend the Minister sits down, I wonder if he is aware that the Coal Liaison Group is composed of a number of eminent organisations which take exactly the opposite view. The Coal Liaison Group comprises the following organisations: the CLA, the National Farmers Union, the CBI, the Royal Institution of Chartered Surveyors, the Association of County Councils, the Coalfield Communities Campaign, the British Property Federation, the Law Society, the Association of British Insurers and the Council of Mortgage Lenders. All, or most of, those organisations are hoping that this amendment will be passed, and I think that my noble friend the Minister ought to take cognizance of such a wide spread of views which are quite different from his own. They regard the words complained of in this Bill as not only undesirable but damaging, and they would like to see them eliminated.
§ Lord Crickhowell
Having been a little "difficult" earlier in the afternoon, perhaps I may now say that I support the Minister on this occasion. I remember once taking a civil service examination and being asked by the examiners to define in a single sentence what an educated man was. I said, "Well, it is somebody who knows that you cannot define an educated man in one sentence." I do not think that reply advanced my cause very greatly. I think the noble Lord, Lord Morris of Castle Morris, would, even in an institution of which he is the head, accept the advice of the university department of philosophy if it advanced the argument that it was wholly unreasonable to suggest that you could guarantee the economic viability of any industry 578 in a world that depends upon markets, or even that you can guarantee the financial viability of an institution. Indeed, earlier this afternoon he and I spent some considerable time saying that there could be no absolute certainty about the financial affairs of the licensees; and indeed that was why we were pressing the Government to provide a guarantee, by ensuring that those liabilities were provided by the Coal Authority.
Clearly I say to the noble Lord, Lord Ezra, who I know from time to time has had to select people to do jobs, that with the best will in the world and having carried out every check one can one sometimes gets it wrong. I do not see that it is reasonable to impose an absolute duty and I believe that we must be realistic. As the noble Lord, Lord Morris of Castle Morris, knows, I would like to provide greater assurances in part of the Bill but I think that he is up the wrong track on this one.
§ Lord Strathclyde
I am grateful to my noble friend. I only wish that he was on my side for all occasions that I have to defend it.
My noble friend Lord Harrowby made an interesting statement and read out a long list of organisations. I hope that all of them will be able to write to me explaining why they believe the Government are wrong.
§ Lord Morris of Castle Morris
Perhaps I may first take issue a little with the noble Lord, Lord Crickhowell. If for many years he has been a most distinguished president of what was University College, Cardiff, and is now the University of Wales, Cardiff, and believes that a department of philosophy in any university ever gets anything done, he is much more of a politician than a philosopher.
I am grateful to the Minister for some parts of his reply. However, I found the majority of his argument unconvincing. It added no touch of verisimilitude to an otherwise bald and unconvincing narrative. He said, for example, that all the acts of the Coal Authority must be "meaningful" and "practicable". Of course they are; all our acts ought to be meaningful and practicable. However, if we were to go through life with the phrases that occurred in these amendments hung round our necks then in the course of a year we would do no more work than a department of philosophy.
The Minister says that he is advised that the words are important and that they impose a strong legal obligation. I suggest that they do not impose a particularly strong legal obligation. In fact, the legal obligation would exist firmly and strongly even if the words were not there. However, I am glad that he has gone into the matter in such detail that he has caused officials in the department to press some computer buttons and find out what the Labour Government long ago thought was right and proper. If only there had been computers for the postwar Labour Government, he might not be sitting there today. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 8 and 9 not moved. ]
Lord Haslam moved Amendment No. 10:
Page 2, line 38, at end insert:
§ British Coal has had two research establishments. Much of the world's most advanced deep-mining techniques were developed at the mining research and development establishment at Bretby. It has now closed and its functions are being fulfilled by its much smaller successor, the Technical Services and Research Executive. I believe that plans are being discussed for the future of the highly effective international mining consultants, and it is to be hoped that a worthwhile relationship will be developed between these two bodies.
§ This, however, is a limited response to the needs of the industry in relation to developing new mining technology and health and safety improvements. The bulk of the cost of the work at Bretby has been carried for decades on British Coal's profit and loss account. Contrast this with the US, where the private sector coal industry has virtually had a cheap ride, as this type of research is provided for it by the US Bureau of Mines, which is a government agency. It has just announced a new programme, which includes such topics as environmental research designed to clean up mine waste and health and safety research focused on developing accident prevention technologies and processes which significantly reduce mineworkers' risks.
§ The second unit is the coal research establishment at Cheltenham. This is regarded as a world centre of excellence in its activities on coal utilisation and more recently on clean coal technology. Its help and advice is currently being sought in 17 countries, including China and the Ukraine. Clean coal technology is the key to the future of the coal industry, as it will markedly improve the efficiency of coal power generation and will greatly improve the environmental characteristics of coal burning. Although coal burn is declining in western Europe, worldwide it continues to expand and currently stands at 3.5 billion tonnes per annum, of which the UK now contributes only a meagre 70 million tonnes. If the greenhouse effect is eventually proved to exist, UK coal burn will account for less than 0.5 per cent. of the resources and the whole European Union for only 2.5 per cent. China, on the other hand, now burns a billion tonnes of coal per annum and plans to raise consumption by the end of the decade to 1.5 billion. There is no hope of persuading the Chinese to use gas or nuclear energy as an alternative on any significant scale. Thus, CO2 emissions worldwide will continue to grow unless clean coal technologies are quickly introduced, particularly in those developing countries such as China and India. However, the technologies will have to be developed and proven in the West.
§ In another place the Government have claimed that they have already established a firm foundation for coal research in the UK. They have increased funding from £3 million to £7 million a year until 1995–96. But even that will be less than 5 per cent. of the cost of nuclear 580 research in this country. I doubt whether the nuclear industry has a happier future than the coal industry. The Government are also establishing the almost mandatory advisory committee. These I believe rather cynically tend to be a recipe for inaction. The Government also expressed every confidence that the privatised coal companies will be able to find the most appropriate mechanisms for co-ordinating their activities where there is benefit to be derived from doing so. All experience points to this being a highly optimistic assumption.
§ Compare all this with Japan, which relies primarily on imported coal but is spending 50 times as much on clean coal technology as the UK. The US provides an even more dramatic contrast. Since the US Department of Energy announced its clean coal programme in 1990 there have been five rounds of clean coal projects funded by it, which in toto have received 7 billion dollars in federal funding. The basic formula for these projects has been a 50–50 cost-sharing between the US Government and the private sector participants. In practice, government funding has amounted to about 40 per cent. on average. Most of the companies participating have been power utilities, construction companies and equipment manufacturers, with the coal companies playing a relatively minor role.
§ Clearly this US programme is much more than one could reasonably expect from the UK alone. But, recognising the international importance of this issue, I am disappointed that the European Union and the member governments' energy departments have not worked out a cohesive policy on these lines. This disappointment also extends to the lack of interest shown by comparable European companies in developing clean coal technologies for use both at home and in their growing international involvements. This would obviously be a long-term initiative should it be undertaken. Meanwhile, it underlines the need to sustain and enhance the outstanding role of the Cheltenham establishment.
§ To sum up, my contribution is more in the nature of a probing amendment focused on how the Government plan to rectify the virtual omission of plans and procedures to deal with the research topics listed in this amendment. I commend Amendment No. 10 to the Committee. I beg to move.
§ Lord Ezra
I support the amendment so effectively moved by the noble Lord, Lord Haslam. I too was personally involved in building the research capability of the National Coal Board, as it was known in my time. On the basis of limited resources, we established a worldwide reputation. As regards Bretby, the mining research establishment, we devised ways in which long-haul mining was totally revolutionised throughout the world. In the case of the Cheltenham coal research establishment, I need hardly remind Members of the Committee old enough to remember: the famous Bronowski briquette was developed there. It was our response to the clean air legislation of the mid-1950s. Ways in which coal could be burned smokelessly and with minimum noxious emissions also gained a worldwide reputation.
581 The noble Lord, Lord Haslam, explained that there is a vast amount of work still to be done as regards the development of both mining and coal technology. It seems most unfortunate if, as a result of the Bill, yet another great achievement of the British mining industry in the past 50 years should be threatened, because I cannot see how that capability can be maintained if no reference to it is made in the Bill and if it is left entirely to the new owners. They will have a great deal more on their hands than concerning themselves with long-term research. They will have limited resources to devote to that end and they may not agree among themselves. In fact, that is most unlikely to happen. As the noble Lord, Lord Haslam, said, countries which have private mining enterprise, nevertheless have a system for maintaining, through statutory arrangements, central coal laboratories of one kind or another. They expend vastly more than we have ever done and certainly much more than we are likely to in view of the lack of new arrangements.
I hope that the Minister can give us some comfort in this area, which worries a number of us.
§ 7 p.m.
§ Lord Mason of Barnsley
I rise to support the amendment to provide:that sufficient investment in research and development is provided to develop and maintain the British coal industry's strength in the fields of clean technology".I am particularly interested in fluidised bed technology. I was Minister of Power in 1968 and the research establishment at Leatherhead received my first tranche of money in order to begin research into that technology. Indeed, I had to get half a million dollars from the Americans in order that we could start the research into and development of fluidised bed technology.
I remember in particular how difficult it was at the time, but foreign interests were involved right from the outset. With coal technology based on a fluidised bed of coal, we visualised cleaner, more efficient power stations based on coal. That has been a long, painstaking development. Eventually a prototype was built at Grimethorpe, near Barnsley. A number of foreign countries became financially and technologically involved, especially Germany and the United States of America.
I received the impression that the Government's interest appeared to wane as that fluidised bed technology was developing at Grimethorpe. I put down a Written Question in 1988:What is the estimated cost of the research and development of the fluidised bed combustion technology by the British Government and each of the foreign contributors to this development".The noble Viscount, Lord Davidson, replied:Department expenditure for British Coal's participation in the pressurised fluidised bed combustion work at Grimethorpe under International Energy Agency auspices amounted to £17 million during the period of 1976 to 1984. The National Coal Board contributed £3 million. The Governments of the United States of America and the Federal Republic of Germany each contributed £20 million during this period".—[Official Report, 22/2/88; col. 1042.]582 It did not appear that the necessary finance was forthcoming from the British Government.
I notice that the Select Committee on energy deplored the fact that the United Kingdom was giving away the development of pressurised fluidised bed technology. The Coal Research Establishment was described by the Parliamentary Office of Science and Technology as a world centre of excellence. Indeed, POST feels that it would be a tragedy for the nation if the technology developed at that establishment were lost to overseas research and development establishments which, while recognising its worldwide potential, are putting huge sums of money into its development, especially the Germans, Americans and now the Japanese.
Perhaps I may ask, following from the developments in relation to fluidised bed technology, what is happening about British Coal's Topping cycle clean coal technology, which is a development from the fluidised bed work. Is not the coal task force, set up by the Department of Energy to deal with the future of coal research, concerned that we may be slipping behind our overseas competitors as regards clean coal technology and the further development of fluidised bed technology?
In The Times on Wednesday, 13th January, there was an article which had the headline:Britain gets another chance to embrace clean coal technology".The article went on to say:A Swedish manufacturer has achieved commercial success with an idea for clean coal technology that was developed, but then abandoned, by British Coal. If British Coal is to have a long-term future, the use of such a technology to supply Britain's power needs is critical.The technology has suffered from a lack of interest and piecemeal funding. ABB Carbon, a Swedish company owned by Asea Brown Boveri, of Switzerland, has three plants running, in Sweden, America and Spain, and further orders from Japan and the Czech Republic. It is now looking for partners to sell its pressurised fluidised bed combined-cycle technology back to British electricity generators".We do not have one working power station. It appears that that is a sad reflection on our own initial efforts and I hope that the Minister can give us some assurance along the lines of the amendment.
§ Lord Morris of Castle Morris
The purpose of the amendment is to oblige the Government to underwrite the future of the Coal Research Establishment and the Technical Services and Research Executive and other industry research bodies. We put forward the amendment because, so far as I can see, there is absolutely no direct mention of R&D in the course of the Coal Industry Bill. I should be grateful if the Minister would cause his officials to press buttons all over their computers and bring forward a list of the occasions that I have overlooked. If he can find one or two such occasions, my point will remain about that vitally important subject. If we are to have a viable and economic coal industry in this country, developed in this country—and not just run down in this country—as the Bill requires, R&D is absolutely essential. No commercial company cuts R&D unless it is on the very edge of bankruptcy because it is the shortest way to receivership.
583 We are concerned that as British Coal disappears, so will the Coal Research Establishment at Cheltenham and the TSRE, currently located at Bretby. Private owners, successor companies, whose major motive is profit—and rightly so—will simply not have the capital or the rates of return to make the kind of commitment which is vital to proper R&D.
What is more, in competitor countries it is accepted that the state must underwrite R&D in its coal industries due to the fact that the market simply does not provide. That shows that it regards it as necessary and is prepared to devote resources to it. For example, in Australia, which is no mean exporter of coal, especially to this country, 150 per cent. tax rebates are offered for R&D. In the United States, 700 million dollars per year from Federal Government are spent on R&D. In South Africa, very much in our thoughts today, there is a levy on coal production for safety-related research. In comparison, UK clean coal R&D funding over the next two years will be just £33 million, of which only £6 million will come from government. Now, British Coal has an excellent record in coal R&D both in the area of coal utilisation and coal mining technology and in mining safety—second to none. Coal utilisation R&D has grown in importance as preoccupations with the impact of fossil fuel use on the environment have grown in public estimation over the past 20 to 25 years.
British Coal's research establishment in Cheltenham has centred on three main aspects of coal R&D: fuel efficiency —how to get more usable energy while burning less coal; emissions reduction—how to burn coal more cleanly at higher efficiency in order to eliminate wherever possible acid rain emissions and reduce the emission of global-warming carbon dioxide; and the fuel handling and waste disposal aspects of coal use. That area of research covers fuel storage and dust emissions control as well as the environmentally acceptable methods of ash and other waste product disposal. Its record again is second to none. Other countries come to it, send people to it to learn what we have discovered.
Coal mining R&D has been carried out at BC's technical support research establishment at Bretby in Staffordshire, and this work has centred largely on improving coal mining efficiency and safety, for the most part by the development of automated long haul mining systems, and we all know how successful they have been.
The TSRE has undoubtedly contributed to international improvements in mining safety while at the same time helping BC massively to reduce costs and improve extraction efficiency through its new mining technology developments. Why throw this away? We are in the lead. Let us stay there. We are not talking about vast amounts of money. There are all manner of ways—we can go into them at a later stage if the Minister wishes us to—in which this small amount of money could be found. What I beg him to do is not to throw the baby out with the bath water, not to get rid of R&D as a cheap means of effecting quick savings; not to refuse to saddle successor companies with some responsibility for this. It is an urgent and vital matter.
§ Lord Wade of Chorlton
I hate to disagree with the noble Lord, Lord Ezra, and my noble friend Lord Haslam, but to ensure R&D expenditure in the coal industry it is not necessary to write it into the Bill. The noble Lord, Lord Morris of Castle Morris, referred to R&D development. Most of the R&D in this country is carried out by private companies. About half the total expenditure on R&D in the UK is provided by government (about £3.5 billion) and the rest is provided by industry. The pharmaceutical industry is probably the most technologically advanced industry in this country. Most of its R&D comes from investment within the industry itself.
Surely it does not follow that because we have not written into the Bill that it is the responsibility of the Coal Authority to carry out R&D it will not happen. To make sure that R&D is carried out within the industry, it is much more important to ensure that the Government transfer the industry to companies which are, as my noble friend Lord Haslam said when introducing the first amendment, top quality companies which will be able to take a large part of the industry and run it as a major world industry, as was said on Second Reading. R&D investment by the companies involved will have much more to do with the quality of the companies that will run the industry than with the Government deciding now that they will make a contribution.
The other point is that the Government already invest about £3.5 billion a year in R&D development throughout industry. The noble Lord, Lord Morris, referred to £6 million. That is peanuts as compared with the total amount of money now spent by government on R&D developments across the whole range of manufacturing. It is essential that government see the. importance of coal technology in the development of the whole of their R&D investment, which I am sure will continue. No doubt my noble friend will be able to give assurances on that point. R&D in such sectors is already something that the Government support and encourage.
I say with great trepidation that I disagree with some of the proposals contained in the Bill, but at the same time I believe that, once an industry is transferred into the private sector—which is what the Bill is about—it should be treated like any other part of the private sector. We have not passed a resolution in this place which says that we should provide R&D for agriculture, the pharmaceutical industry or the engineering industry. Companies in those sectors make large contributions to R&D. The Government also make large contributions to R&D development in those sectors. I am sure that once the Bill has been passed the same will happen here.
§ 7.15 p.m.
§ Viscount Goschen
The Government recognise fully the importance to the UK coal industry of ensuring that full advantage is taken of advances in coal research and mining technology. For example, the noble Lord, Lord Mason of Barnsley, mentioned the important issue of fluidised bed technology which is now commercially available. It must be primarily for the industry to decide what research will need to develop, where appropriate, 585 in partnership with the Government through bodies such as the Advisory Committee on Coal Research and the programme conducted by the European Commission.
The Government have already established a firm foundation for coal research in the UK by, first, increasing government funding, as my noble friend Lord Haslam said, from under £3 million to £7 million a year up to 1995–96. In fact, in the year 1993–94, funding amounted to £7.8 million, more than 10 per cent. up even on what we stated in the coal review White Paper. Our Advisory Committee on Coal Research will be undertaking a review of the programme and future funding requirements in 1995; industry will be involved fully in that process through its membership of the committee.
We have also established a new advisory committee on coal research to replace the Coal Task Force to advise on UK coal research needs across the board. UK industry and universities are playing a leading part in the work of that new committee. We have also established collaborative research links between UK industry and universities and other EC countries and the US.
Like my noble friend Lord Wade of Chorlton, we do not believe that there is a need for the authority to take on a role of co-ordination, which is already being fulfilled adequately. The Department of Trade and Industry's coal research and development programme is increasing and is contributing to some 115 projects with a total value of over £170 million. The department's contribution amounts to some £35 million over the life of the project and is instrumental in enabling it to attract the necessary external funds to go ahead.
Since the coal review White Paper, we have initiated over 60 coal research projects, covering coal utilisation and mining issues. Many more are at the planning stage, involving the CRE as well as UK industry, universities and overseas agencies. We intend to publish later this year a detailed strategy paper setting out our future plans for coal research and describing the work under way in the present programme.
The noble Lord, Lord Morris of Castle Morris, mentioned the Coal Research Establishment. The future of the CRE is a matter for British Coal, which I understand has taken no decisions on its future. However, the Government believe that the best way of widening the opportunities available for the CRE in the world market is for it to become an independent organisation. The increased support the Government are offering over the next two years will ensure that the CRE's senior management has sufficient time to develop further the CRE's business and attract funds from elsewhere. I might mention in particular that the CRE is already being highly successful in obtaining overseas business, and some 26 contracts worth over £1.5 million are now under way. Only last week a major new contract was announced for technical assistance to the Ukraine.
Turning to the important issue of health and safety research and development, which again was raised by the noble Lord, Lord Morris, the Health and Safety Commission's report on the post-privatisation safety regime pointed out its executive's work in this 586 important area and noted that the commission will continue to encourage health and safety related research by British Coal's successors. However, the commission was very clear that it must be for the new employers to decide what research is required to meet their obligations under health and safety law.
Nevertheless, the commission highlighted the expertise in certain areas that is contained in British Coal's Technical Service Research Executive relevant to the issue of health and safety, and drew attention to the desirability that that expertise should continue to be available after privatisation. In the light of that advice the Minister for Energy announced in another place on 21st March that the Government have approved expenditure of £2.1 million between 1995 and 1998 to ensure the completion of British Coal's current health and safety research and development programme. I hope that the Committee will agree that this is a major commitment which will ensure that the expertise necessary to carry out important health and safety research will continue to be available to the new owners for a considerable period after privatisation.
The Coal Authority is intended to be a non-interventionist body and should not support research and development work which is more appropriately co-ordinated by the industry itself. We have every confidence that future coal companies will be able to find the most appropriate mechanism for co-ordinating their activities where there is benefit in doing so.
In the light of those assurances and that explanation, I invite my noble friend to withdraw his amendment.
§ Lord Dormand of Easington
Before the noble Lord sits down will he say a little more about the review? I understood him to say that there will be a review. For example, is it to relate only to the coal industry? After all, we are debating the coal industry tonight. Is he talking about research and development across the whole range of industry, including the public sector? It would be very helpful if he could clarify that point. Finally, can he say when the review is likely to start and when it is likely to finish, in broad terms?
§ Viscount Goschen
To clarify the points raised by the noble Lord, Lord Dormand of Easington, the strategy paper that I mentioned was intended to set out our future plans for coal research specifically. It will describe the work under way in the present programme. I believe that the strategy paper will be published later this year, but I am afraid that I cannot be more specific about the noble Lord's inquiry tonight.
§ Lord Morris of Castle Morris
Before the noble Viscount sits down again, could I ask him whether he can help me? I may have overlooked something. He mentioned in his reply that universities are involved in coal R&D. I would be most obliged if he could let me know which universities and to what extent. I do not expect him to do this necessarily off the top of his head standing at the Dispatch Box, but it is a genuine inquiry. So many departments of mining and mining research have been closed down in British universities over the 587 past. 15 to 20 years that I should be very interested to know who is left and what they are doing. If the noble Viscount could write to me I should be most grateful.
§ Viscount Goschen
The noble Lord, Lord Morris, is right that I cannot answer him specifically without notice of that question. I shall, of course, find the information that he requires and write to him on the point.
§ Lord Haslam
This is my maiden amendment so I am not too sure about the etiquette for dealing with the situation.
I believe that in any industry, whether it is manufacturing or extracting, there are three basic elements. There are production, selling and research and development. The Bill does not refer at all to research and development: that does not give it credibility. It is important that something is incorporated in the Bill in that regard.
The other point that has come home to me today on a broader front is the fact that, if we were dealing here with a unitary privatisation, it would be very much easier to accept what some Ministers are saying. If at the end of the day the industry is fragmented, as I said at Second Reading, that will be very destructive. Every mine that gets into trouble will do three things: first, it will stop development; secondly, it will stop investing in safety, which is very important; and, thirdly, it will stop investing or collaborating in any kind of research. Therefore the situation is very different if the industry is fragmented as opposed to a unitary privatisation. We must remember that at all times.
Having said that, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Lord Morris of Castle Morris moved Amendment No. 11:
Page 2, line 38, at end insert:
§ The noble Lord said: This is a substantive amendment intended to ensure that the coal industry as a whole retains its responsibilities in the areas of environmental improvement, energy efficiency and customer support.
§ I may say, without fear of successful contradiction, that when this amendment was originally suggested to us it was a great deal more emphatic and a great deal more extensive than it now is. People were quite cross. In its original form it adjured the Secretary of State to require the coal industry to promote energy efficiency and fuel cost savings in the domestic and industrial fuel market sectors, to encourage best environmental practice in the design and operation of solid fuel domestic appliances and industrial boilers, and to administer a levy raised on all customers of less than 5,000 tonnes per site per annum outside the electricity and steel sectors for the purpose of achieving the above objectives, the size of the levy to be determined by the Secretary of State on an annual basis. We thought that that was coming on a bit heavy.588
§ We have sympathy with the intention behind the amendment to stress the vital importance of energy efficiency. I attack Her Majesty's Government, I am afraid, in that I do not believe that over the past four or five years they have given the high priority to energy efficiency which they might have done. I shall be grateful if the Minister will refute that in his strongest way. I should be quite pleased to have it refuted, but I am not convinced at the moment that it has been a very high priority, or a successful one, for Her Majesty's Government.
§ British Coal presently provides a range of customer support services which over the years have resulted in higher fuel efficiency and improved design, both in plant and equipment, and in better environmental performance. With the passing —the burial—of British Coal, there is again no indication from the Bill that these essential functions will be retained. I would have been a much happier noble Lord tonight had I found on the face of the Bill that the Government were concerned to do something about retaining British Coal's achievements in energy efficiency. Without such a service there is every likelihood that coal will sustain further contraction in the domestic and industrial markets, losing out to other fuels which benefit from energy saving trust incentives to customers to invest in new and refurbished equipment which saves energy and reduces running costs.
§ The energy saving trust for coal would assist in—I shall not use the tired cliché "levelling the playing field", let us say evening up the odds, balancing the seesaw or putting things a bit more on a flat level—allowing coal to compete with other fuels on a fair basis while making an important contribution to increased energy efficiency and sustainable development.
§ Would the Government consider, say, a modest levy of 1 or 2 per cent. of the cost of each tonne of coal sold into the domestic industrial market? That could generate sufficient revenue to ensure that a major service to both consumer and the environment would be provided; and, if not why not? Such a scheme would be aimed at the small and medium end user and individual households where a shortage of capital to invest in energy efficient methods of energy use may well hinder investment in energy saving. The cost to the customer would be more than offset by energy savings and the potential for reduced fuel costs, given the steady reduction of coal production costs, and such a service would benefit the more elderly beneficiaries of the concessionary fuel scheme who, given the cost base rather than the tonnage base nature of the scheme, face very real fuel hardship when required to convert to higher cost smokeless fuel.
§ I am suggesting only one possible way of increasing energy efficiency. I shall be quite happy if the Minister could produce a few more. I offer it only as an example. Our amendment seeks to persuade the Government of the general desirability of and the high priority which should be given to improving energy efficiency in the Bill. In that spirit, I beg to move.589
§ 7.30 p.m.
§ Lord Ezra
I support the amendment. In doing so, I remind the Minister that such a clause has been inserted in both the Gas Act and the Electricity Act. When they were being debated in this House a great deal of attention was attached to those clauses. I believe that the Bill would be much weaker if no reference were made to energy efficiency. The Government have recently shown their commitment to the Rio proposals. They have brought out a number of documents which have stated in terms how this country will be able to reduce its CO*2 emissions and to increase its fuel efficiency. A figure of something like 20 per cent. has been mentioned as fuel savings that can be made.
Over the years the coal industry has contributed substantially to savings in its sector. Had the industry been privatised in the way in which the noble Lord, Lord Haslam, and myself preferred—that is, on a unitary basis, in order to enable it to compete more effectively against other fuels—I would not have pressed so strongly for the amendment. However, in view of the way in which the industry is now being privatised, with a number of individually operated mines, and five groups of mines if buyers for them can be found, I fear that the impetus towards energy efficiency which had been developed under the National Coal Board and British Coal successively could diminish.
There is an extremely strong case for introducing the amendment to the clause setting up the duty of the Coal Authority. I hope that the noble Lord is convinced that we should not leave the coal Bill without that obligation, whereas we have it in both the Gas Act and the Electricity Act.
§ Lord Strathclyde
Perhaps I may briefly reply. The amendment would give the Coal Authority a duty in carrying out its licensing functions in relation to the promotion of energy efficiency and fuel cost savings in the domestic and industrial coal market sectors. Important though energy efficiency and fuel cost savings are, they are not matters in which it would be appropriate for the authority to have a role. That is what we are dealing with. I believe that it is vital to the success of the Coal Authority and therefore relevant to the future success of the coal mining industry in this country that the Coal Authority is focused on functions directly linked to coal mining.
I am absolutely delighted that the noble Lord, Lord Morris of Castle Morris, did not come forward with his initial amendment and that he saw at least some sense in coming forward with an amendment which makes some sense although I do not agree with it.
I do not agree also that there is any doubt about the Government's commitment to energy efficiency. Unfortunately the noble Lord, Lord Morris of Castle Morris, picked the wrong Minister with whom to have an argument about energy efficiency. Immediately after the election I became Minister with responsibility for energy efficiency when the Energy Efficiency Office came over from the Department of Energy to the Department of the Environment. I was delighted to launch a variety of campaigns. "Helping the earth begins at home" was a memorable campaign, I hope 590 firmly implanted in the Opposition's mind. "Making a corporate commitment" campaign was very important. I have lost count of the number of receptions that I have attended hosted by the noble Lord, Lord Ezra, dealing with the question of energy efficiency. I am delighted to tell the Committee that the annual budget of the Energy Efficiency Office is currently more than £100 million. The noble Lord, Lord Ezra, mentioned our commitment vis-à-vis the Rio conference and so on.
The noble Lord, Lord Morris of Castle Morris, asked: why not a levy? It will not have escaped his notice that recently the gas regulator said that there should not be a levy for the gas industry. Obviously Government will have to have another look at that. But I am not convinced that a levy approach is the right one for the coal industry. Increasingly consumers are well aware of the advantages of energy efficiency. They are making informed decisions on the best advice available on what kind of industry is most energy efficient. It will be up to the sellers of coal, the domestic market, and to the commercial market to demonstrate just how efficient coal can be when compared with its competitors.
No doubt the noble Lord sees an analogy between the Coal Authority and the utility regulators such as Offer who have roles in relation to energy efficiency. But it is important to recognise that the utility regulators have a direct relationship with and responsibility to consumers which the Coal Authority will not. That is not an invitation to the noble Lord to put forward an amendment to that effect when we reach Report stage.
I hope that I have demonstrated, first, that the Government have a clear commitment to energy efficiency; secondly, we do not believe it is necessary to put those words in the Bill; and, thirdly, why the Coal Authority is different from the regulators of the other power utilities.
§ Lord Morris of Castle Morris
I am grateful to the Minister for his reply. I am delighted that he has enjoyed the receptions to which he went. I was very interested in energy efficiency in the days before it was transferred with the rump of the Department of Energy into the bowels of the DTI. It was not at the very highest point of the then Minister's list of priorities. I am delighted that the noble Lord facing me across the Dispatch Box is so well informed and so deeply personally concerned in matters of energy efficiency. I leave with him the question to which I invite him to come back with an answer at a later stage: if not the Coal Authority, as the prime mover in energy efficiency, then who? Leaving that question in the air before we go for our dinner, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Viscount Goschen
My Lords, I beg to move that the House do now resume. In moving the Motion, perhaps I may suggest that the Committee stage begin again not before twenty-five minutes before nine o'clock.
§ Viscount Goschen
No, because I said "not before".
Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.