§ 8.38 p.m.
§ House again in Committee on Clause 2.
Lord Sefton of Garston moved Amendment No. 12:
Page 2, line 38, at end insert:
("( ) In the exercise of its duty under subsection (1) above to secure an economically viable coal industry in Great Britain, the Authority shall have regard to the availability in Great Britain of reserves of coal in relation to reserves of other fossil fuels.").
The noble Lord said: At Second Reading the noble Lord, Lord Strathclyde, opened the debate by saying,
our continuing programme of privatisation … will enable the coal industry to find its rightful place as a competitive supplier in the energy market".
It is a great pity that the Bill does not deal with the energy market completely. The noble Lord went on to say that the powers of,
the Coal Authority [are] to own, and grant access to, coal reserves".—[Official Report, 11/4/94; cols. 1292–3.]
I was glad to see that because of its relationship to my own belief as regards fossil fuels either here or anywhere else in the world.
§ I have sat in the Chamber time after time listening to environmentalists talk about nature and the environment and about how important it is that we should regard them as a trust; that we should not consider that they are ours to use as we wish, but should hold them in trust for future generations. I think that it is more apposite to take that view of fossil fuels than of any other part of the environment. We are all familiar with the graph that depicts the generation and use of fossil fuels. The long straight line represents the millions of years that it takes to form fossil fuels, but there is suddenly a peak up and down, representing the period in which we use those fossil fuels.
§ The Bill refers to the coal industry having to be competitive. I suppose that the coal industry could be competitive provided that, to use a cliché, it is on a level coalfield. However, we all recognise that when the question of the coal mines being closed in considerable numbers arose, there was no level playing field. In fact, coal was being driven out by another form of energy. I do not believe that that form of energy was being used in the correct fashion, but I am not prepared to try to prove that. I heard a noted professor say on television the other night that using oil and gas to generate power was the wrong way to use those fuels. He may be right; he may be wrong; I do not know.
§ I tabled this amendment to ascertain what the Government believe should happen to fossil fuels. The Minister looks puzzled that I should use the phrase "fossil fuels", but he should read the amendment because it deals with fossil fuels. When I first attempted to table such an amendment, I was told that I could not use the phrase in a Bill relating to coal, because "fossil fuels" are not coal. In the end, however, I managed to table an amendment mentioning "fossil fuels".
§ I turn now to the question of competition. If we were talking about something in continuous supply and which was easy to obtain—and if all forms of fuel were equally easily obtainable—I think that there could be competition. However, when one tries to put natural gas (which simply bubbles to the surface) into a fair and competitive market alongside coal (which in some cases has to be brought up 1,000 feet) one sees that it is nonsense to talk about competition.
§ We should be very careful. We should never lapse into thinking that things will continue smoothly and that nothing will happen. We should think back. It seems to me that we need a crisis to outline the necessity of doing something about scarce resources. It did not take long in the Suez crisis to impose a limit of 50 miles per hour on all vehicles on the motorways or to ban neon lighting. It did not take long for the country, when threatened with such a crisis, to realise how it should treat scarce fossil fuels.607
§ When I attended the Second Reading debate, somebody asked me, "Are you interested in coal?". I said, "Not particularly. I do not come from a coal mining area; I am not an ex-miner and the nearest that I have got to coal mining is a coal miner's lamp that was presented to me by the late Lord Gormley, so I am not an expert in that field, but I think I have always been interested in the energy question because the whole of the modern society in which we live depends on energy".
§ I make the point again. I believe that fossil fuels, having existed for so long, are not ours to treat as we want and for the moment. We are the trustees of that energy for future generations. Let us not kid ourselves. Their supply will come to an end. It will not be long before fossil fuels have gone. I do not know whether the country is in such a state that it will take lightly to nuclear power. I sometimes doubt it although it seems to me to be the only thing that could possibly take the place of our present energy system. On the other hand, some other system of energy might be developed.
§ We need a breathing space. We need the time in which to develop alternative sources of energy because if we do not, we shall really be in trouble. We must find some way to give ourselves that time. How long will it be before we make up our minds that at the moment our only alternative power source is nuclear energy? It seems to me that waves and windmills are simply not on as power providers and that we must go somewhere else. Indeed, it does not seem as though the Government are very keen on wave energy.
§ Above all, however, what we need before talking about energy is information about resources. The Minister and the Government are saying, "Let us have competition". Does that mean that the Government can find out what this country's reserves of oil are and their rate of depletion or will they be faced with a competitive organisation saying, "We cannot disclose that because it is of commercial value. You cannot ask us that"? I have been told such things even here in London when I asked why a building was built and occupied for only 21 years and it was then decided to pull it down. When I asked about the cost of that, I was told that I could not have that information because it was of commercial value. I was told, "It's a commercial secret", so I do not know what the oil industry will say if the Government start to ask it, "What reserves do you think you've got? What is the rate of depletion? What money are you making out of it?". The industry will say that that is a question of commercial confidentiality. If the licensees are asked the same questions in regard to their plans for mining coal, would not they say exactly the same?
This is a simple amendment. It does not ask for a lot. It merely asks that an authority,
shall have regard to the availability in Great Britain of reserves of coal in relation to reserves of other fossil fuels".
I selected the Coal Authority to be that body because I believe—I think that this information is correct—that our largest reserve of fuel is coal. I thought that the Coal Authority would be the suitable body to give us an overall picture of fossil fuels because all such fuels are related. They were all created in the same way. They all lie in the earth. According to some people, they are
God-sent and, according to others, they are sent naturally. It depends on one's beliefs. However, they are there; we are their trustees, and we have a duty to find out what is there.
§ In my opinion, we also have a solemn duty to find out the extent to which we use fossil fuels. We have to find out the depletion. I do not believe that we can have a really sound energy policy unless we begin to get that information and unless we begin to make real comparisons, long term. The Minister is smiling. That means he does not believe it: I do not expect him to. Nevertheless, in my opinion that is the real way in which we should consider this.
§ The Government may—I give them the credit because I have not been told otherwise—have in mind a simple procedure for examining the energy and the fossil reserves that are in existence. If so, I should like to know. I do not intend to say much more: in this situation we are very lucky because I can have another go when I reply. I do not know what the Government are going to say but it seems to me that they must say something if they are going to reply at all. Either they must say they believe in examining the fuel reserves. they believe in a proper energy policy and they believe in finding out what is happening to it and what is going to happen to it in the future, or they must fall back on their time-honoured answer "Leave it to the market". I do not think that leaving it to the market is good enough for this country, or in fact for the world. I beg to move.
§ Lord Morris of Castle Morris
I support whole-heartedly the amendment proposed by my noble friend. The problem of coal reserves is an immediate problem, caused particularly when larger firms start to enter the market. In some of the British Coal collieries there are reserves ready developed which can be extracted at comparatively little cost because all the necessary investment has already been undertaken. We are concerned that many of those pits will have private owners coming in, taking all the easy coal and then closing the pit, sterilising large amounts of coal which in the event of future need would be very expensive to extract.
However, behind that, the issue raised by my noble friend lies quite close to the heart of the opposition from these Benches to the whole idea of the privatisation of the coal industry. We oppose it because of the lack of strategic planning for the industry itself. This amendment raises some even deeper issues, such as the whole problem of fossil fuel and time—what runs out when and what the economic cost of extraction is in each case, balanced against the national need. It highlights the need for a national energy strategy, but perhaps it is a little much to ask the noble Lord the Minister to produce that at this hour of the evening. We shall be interested to see how long and how deeply the Government have thought about that issue.
§ Lord Strathclyde
I am delighted to have the opportunity to reply and to say that much of what the noble Lord, Lord Sefton, has said I am not sure was within the compass of his amendment, to which I shall reply. This amendment seems intended to require the Coal Authority to manage the rate of exploitation of coal 609 reserves in the context of the availability of other fossil fuels. I think he misunderstands the role of the authority. The authority is not to be responsible for managing the coal or any other fossil fuel industry. Clause 2(1) (a) places a duty on the Coal Authority to secure, so far as practicable, that its licensees maintain and develop an economically viable coal industry. It is to those licensees that we are looking to develop a viable coal industry: one that is economically capable of standing on its own feet and able to compete with other energy sources. The role of—
§ Lord Sefton of Garston
The noble Lord doubts whether the amendment covers the matters I was referring to: I am seeking information about the reserves of fuel. If the noble Lord will read the amendment again, he will see that it states:In the exercise of its duty under subsection (1) above to secure an economically viable coal industry in Great Britain, the Authority shall have regard to the availability in Great Britain of reserves of coal in relation to reserves of other fossil fuels.I could have gone on and amended other parts of the Bill to say they should have the power to demand that information from the other energy suppliers, but I did not. I should have thought that anybody reading that amendment would realise that those powers would be necessary and that can be the subject of a further amendment.
§ Lord Strathclyde
I am grateful to the noble Lord for continuing to explain his amendment. The point is: what is the role of the authority? It is on that that the noble Lord and I disagree. I believe that the role of the authority is facilitatory: in other words, it can provide information. It can make available the coal resources and property within its ownership and establish a competitive licensing regime to facilitate the development of the coal industry by licensees.
It is clear that the Government should not attempt to impose all-embracing plans about how much energy of what kind should be produced or consumed by whom. Such plans are doomed to failure. The noble Lord says the market does not work. I have to tell him that the market has worked considerably longer than any other system. The Government's policy has been, and remains, to encourage effective markets and to make them work efficiently. That will facilitate the Government's objective to secure the development in the longer term of the largest economic coal industry possible.
Both noble Lords who spoke asked how much coal there is left and how much longer the reserves will last. Of course it all depends on how quickly you use them up—and you never know that because, as the lessons of the last few years have demonstrated, increased fuel efficiency naturally increases the length of time that known reserves will last. Add to that the fact that the known reserves are continually increasing because of the work done by exploration groups and it strikes me that the question which both noble Lords asked me is unanswerable.
§ Lord Sefton of Garston
The Minister has made exactly the same point that I made in moving the 610 amendment, except that he missed the point of what was implied in it. The Minister says that the market has worked. That depends on how long you give the market. Did the market work up to the last war? Did it meet the needs of the nation? I know the Minister was not born then, but he can read; he does know what happened. The coal market was free of all restrictions—and what happened? At a time when this country was in crisis in 1940, private coal owners closed down the mines because they could not find a market in France. Did the market work then? It is all right saying that the market is working but the market only works for a period. I am talking about the accumulation of reserves over thousands of years and about passing on those reserves. Would it not be a tragedy if, because of the competition between the different fuel suppliers, the coal industry were faced with the situation of abandoning tremendous amounts of coal because it could not meet the immediate competition with petrol, oil and gas? That is a very immediate likelihood. If it happens it could happen within 20 years. We could reach a situation where coal is being left in the earth without any possibility of regaining it, and what will the future generation say then, when gas runs out?
I want to conclude on this note. Coal is a fairly solid substance. Oil is very volatile, and I do not believe that the figures we are getting for the reserves of oil are right. If I am right, the Government are wrong and, if the Government are wrong, then future generations will tell them so.
§ Lord Dean of Beswick
May I just very briefly take up a point that the Minister made in his reply, which I think was a little bit casual? The Minister will recall that only a few weeks ago I raised a point with him through a Question about the reserves, known or unknown, of worldwide energy. The Answer was rather flippant. In a jovial way, it was aided by the noble and learned Lord, Lord Hailsham, who said that no one knew the answer when he was a boy and no one knows it now.
People have more knowledge about identifiable reserves of energy fuels. It is on record that this country has 300 years' worth of coal reserves below the surface. The action that is now taking place may lock them up for time immemorial.
Only yesterday I had lunch with an accountant who is working for British Coal during the winding down period. He put it to me quite clearly that the cost of re-opening some of the coalfields after they have been closed down as a result of this operation will be so large that it will not be viable under any circumstances.
I must take the Minister to task. I do not have figures and therefore I can give none. But neither can the Minister; he has given no figures of known reserves of oil but has said that the Government know that there are more. How do they know? They are assuming that there are. The world in general is so eager and hungry for energy that the depletion will increase at an enormous rate. The Chinese are hell bent on an enormous increase in the provision of energy, most of which will come from coal reserves. A noble Lord on the Liberal Benches said that at some time we may have to opt largely or entirely for nuclear power.
611 I put it to the Minister again that to go down this present road is an act of unbridled vandalism. The amendment moved by my noble friend Lord Sefton asks us to take another look at the situation. The Minister says that I have no figures to prove my argument about the reserves of coal, oil and gas. However, in trying to debunk my argument, the Minister does not have one iota of evidence to prove his own argument. No one can say that at this point in time the reserves are finished. We cannot find them for time immemorial, so that moment will come. My noble friend Lord Sefton has done the Committee a service by raising this matter.
§ 9 p.m.
§ Lord Dormand of Easington
Perhaps I may follow up the point made by my noble friend Lord Dean. The Government are undertaking a review of nuclear energy. Why are they not undertaking a review in respect of coal or oil ? The Minister told the House recently that the review is behind schedule. The report was due at the end of last year but they do not yet have the terms of reference. The Minister smiles, so perhaps the Government have received them during the past week or two. Why the difference? Perhaps we can have an explanation.
§ Lord Morris of Castle Morris
The information has just come to me. The Government's own coal task force of June 1990 put the UK coal reserves above 1,200 metres at 140 billion tonnes, 90 billion tonnes of which are classified as economic. Reserves below 1,200 metres were estimated to be considerably greater, lying in thicker seams but requiring technological investment for access. Therefore, at present, or at recent rates of extraction, the presently accessible reserve will last for 900 years. Does the Minister agree with that?
§ Lord Strathclyde
The noble Lord, Lord Dean, made his point, as did the noble Lord, Lord Dormand of Easington. The noble Lord, Lord Dormand, has forgotten that only last year we published the White Paper on coal. I suppose that there is a similarity between that and the nuclear review. However, as the noble Lord knows, we have not yet decided how the nuclear review will be carried out but we hope to make an announcement soon.
I too have received inspiration about the figures. I understand that British Coal told the Trade and Industry Select Committee of another place that currently economically viable reserves at continuing mines of British Coal would have a life of between 20 and 40 years. Those are somewhat different figures but the explanation is plain to see. In its report to the coal review, Boyds put at about 700 million tonnes the immediately accessible coal reserve base at the 17 pits that British Coal is continuing to operate, plus Maltby and Ashfordby. However, Britain has less than 1 per cent. of the world's coal reserves. As the White Paper indicated, plentiful supplies of coal are available on the international market from a wide range of sources, including the USA, South Africa, Colombia, Indonesia and Australia. There seems therefore little likelihood of a major disruption to supplies.
612 But there is a fundamental point. Members of the Committee opposite believe that it should be the Government's responsibility to extract this coal. We believe that it should be the private sector's responsibility to extract the coal and to weigh up the various merits of using different fuels. If that is what the debate is about, that is the fundamental divide which exists between us and which I believe is unbridgeable.
The noble Lord, Lord Sefton, knows that I always enjoy listening to his speeches. I hope that I have given him the right kind of information and that at least he likes the information, if not the conclusion.
§ Lord Dormand of Easington
The Minister cannot get away with that. Does he agree that nuclear power, gas and, I think, oil are more expensive than coal?
§ Lord Strathclyde
It depends from where one starts. As the noble Lord knows, it is a fact that during the past 15 years some £20 billion has been spent by the British taxpayer on the British coal industry. That is a considerable investment, which was unsustainable in the long term.
§ Lord Dormand of Easington
I am sorry to pursue the matter. But will the Minister tell the Committee how much has been spent by the taxpayer on nuclear energy? The figure normally quoted is £1 billion per year.
§ Lord Strathclyde
I do not have the figures to hand without notice. I am not sure what point the noble Lord is making. We are not discussing a competition between coal and nuclear; we are trying to privatise the coal industry. That is what the essence of the Bill is all about, because we believe that the future of the coal industry is best served by its being in the private sector.
§ Lord Dean of Beswick
I wish to take up one point which the Minister made. He referred to the amount of coal not being economically viable at present. However, what may not be viable today may very well be viable in the future. For example, I believe that the price of oil per barrel has almost dropped through the floor. According to the last figures I saw, oil was down to 13 dollars per barrel from about 20 dollars. if oil is at such a low price, we may find that it is guzzled and that we run out of supplies much more quickly than anyone has foreseen.
Therefore, we may find that our present reserves of coal, which are not economically viable, become viable. The Government should be careful when drawing up their programme for the future of the coal industry because present non-viable reserves of coal may become viable in the not-too-distant future. They may become economically more viable than oil. In fact, there may no longer be any oil.
§ Lord Sefton of Garston
The Minister said that he believes in the privatisation of coal. I am not going to receive answers to the questions I asked. I have a heavy responsibility because I could detain the Committee for 10 minutes on the matter; but I am not going to. I shall withdraw the amendment.
The Minister spoke about giving information. I have tabled two Questions for Written Answer on the subject 613 of reserves. Will he see to it that I am given the Answers to those Questions and any other information that he may have about reserves of coal?
I accept what the Minister says about his belief and my belief. As I said, we are considering God-given or natural assets which are in our trust. We are trustees. This is a fundamentally important matter and not merely an economic question. Moral issues are involved in the question of who should own the resources which nature has given to us. That is why I believe that no one has any right, merely because of the depth of his pocket, to own the ability to mine coal. I accept that there is a fundamental division between the Minister and myself; I am proud of that division. However, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Viscount Addison moved Amendment No. 13:
Page 2, line 38, at end insert:
("( ) It shall be the duty of the Coal Authority in carrying out any of its functions under Part II of this Act to further the objective of environmentally sustainable development.").
§ The noble Viscount said: This amendment seeks to strengthen the environmental duty which will guide the new Coal Authority, requiring it to further the objective of environmentally sustainable development.
§ I am concerned that the full importance of the environmental aspects of the Coal Authority's future operations are not adequately reflected in the Bill. Its responsibilities for licensing opencast extraction and for managing the legacy of dereliction and pollution of past mineworking are just two examples of the environmental responsibilities that it will have.
The Bill states that the Coal Authority's prime focus will be on facilitating coal mining operations. However, in licensing new coal mining operations or in managing the use and disposal of land, the new authority will clearly have a significant impact on the environment.
The effect of my amendment would be to ensure better integration between environmental and economic considerations in the Coal Authority's operations and so help to avoid unnecessary conflict. It would also be an important step towards implementing the Government's commitment to sustainable development. This House now has a Select Committee on sustainable development.
I recognise that the Bill sets out already an environmental duty for the Coal Authority in Clause 3(7). However, the scope is too narrow and the wording has changed little from similar duties introduced in the 1950s. I believe that there is a need to bring the environmental duties governing the activities of the new Coal Authority up to a modern-day environmental standard by requiring it to further, rather than simply have regard to, environmental objectives. That would be in line with the environmental duties placed on organisations such as the National Rivers Authority or the Office of Water Services which have been shown to operate very successfully. We are all very well aware of the importance of protecting and improving the environment. I hope that we shall not miss this 614 opportunity to place modern environmental responsibilities on the new body to ensure that its regulation of the coal industry avoids unacceptable damage to our environment. I beg to move.
§ Lord Moran
I give my warm support to the amendment. It is entirely right, and it is important that the Coal Authority should operate under a clear environmental duty covering the full range of its actions and responsibilities. The arguments which the noble Viscount so ably put forward are important, and I hope that we shall agree to them.
I should like to take the opportunity to introduce my amendment, Amendment No. 29, which has been grouped with this amendment. The aim of my amendment is to clarify the Coal Authority's power to carry out emergency operations to prevent any serious pollution of the environment. Clause 5 deals with the Coal Authority's general powers and subsection (1) provides:the Authority shall have the power to do anything whichfacilitates or is conducive to its functions. Although there are duties on the authority to have regard to the desirability of things such as natural beauty and conservation under Clause 3(7), as the noble Viscount told us, the authority does not have any function relating specifically to preventing pollution of the environment. Clause 5(6) and (7) place certain limits on the authority's powers, and my amendment is intended to put beyond doubt that the Coal Authority will have power itself to carry out preventive work or to arrange for others to do so in cases where there is an imminent risk of serious harm to the environment as a result of coal-mining operations.
There need be no conflict between the role of the Coal Authority and that of the NRA or any other environmental regulator. The amendment seeks to give the authority which will, as the Minister has made clear, retain the freehold of the nation's coal reserves after privatisation, some operational responsibility so that it can act in the way that any responsible landowner, industrialist or farmer would act in an emergency, irrespective of the powers of the regulator. The definition of "coal-mining operations" in Clause 63 includes at paragraph (e):depositing spoil from any activities carried on in the course of coal-mining operations and draining coal mines".In cases of immediate risk to the environment, particularly the water environment, it should be put beyond doubt that the Coal Authority will have the power to carry out such work, and any other works which are necessary, and to do that at once and without delay. My amendment would provide for just that. I commend it to the Committee.
§ Lord Elliott of Morpeth
I, too, support the amendment, and wish to speak to my amendment, Amendment No. 37, which has been grouped with these amendments. The purpose of my amendment is to ensure that the Secretary of State, in effecting transfers of property, should provide for the transferring of liability for water pollution to transferees. As the noble Lord, Lord Peston, said, what seems hours ago, the concern about mine water pollution has been well and 615 truly emphasised over a period of time. Speeches have been made in another place as well as here, and answers have, to some degree, been given.
During proceedings in another place and here, a catalogue of assurances have been given about mine water pollution and its effect on the environment, and the extraction of water from rivers which may be damaged by pollution. Those assurances were greatly added to today in the able and excellent speech which my noble friend the Minister made in answer to the first debate. I congratulate him upon it, and with, I am sure others, shall study it carefully tomorrow. Perhaps I may immediately assure him that his assurance that in County Durham pumping will continue in disused mines will be well received. There has been great concern. Indeed, the Northern Echo, one of the North's principal newspapers, had as its headline this morning:D-Day for the River Wear".I believe that that referred to the amendment that I had tabled, in that there was a hope in County Durham that the Government would at last include in the Bill an assurance that liability for any pollution that occurs would be placed fairly and squarely on the new authority.
Again, my noble friend gave an assurance—which we greatly appreciate—that the Coal Authority will be responsible for those aspects for which British Coal is now responsible. There is still no satisfactory answer to the question as to where in the Bill is there a guarantee on liability of the proposed new authority in relation to water pollution. That is what we very much wish to see. As in the Water Resources Act 1991 when for some reason which I have never understood the discharge of polluted water from an abandoned mine was exempted from being an offence, so also in this Bill mine water is excluded from liability should its discharge cause river pollution.
In his wind-up speech at the Second Reading of the Bill in this Chamber my noble friend said that there were many difficulties in this regard. I agree. I very much hope that British Coal's contention that polluted water from mines will find its way to the sea is correct. In County Durham there is an enormous number of workings. In pits close to the coast which have been closed that is already happening. However, we need an assurance. The National Rivers Authority and British Coal are involved in experimentation in relation to the effect of a reduction in pumping. We hope that there will be some satisfactory answers in future.
I assure my noble friend that water undertakers—and I was until recently chairman of North East Water—continue to be most concerned about the situation and would greatly welcome the inclusion in the Bill of something on the lines of the amendment that I have put down.
§ Lord Beaumont of Whitley
I rise to speak to Amendment No. 13. I am not entirely certain what our response should be to Amendment No. 29. I shall be interested to hear what the Government have to say on that matter. Amendment No. 37—on which my noble friend Lord Ezra may speak—carries widespread 616 support in this Chamber. The first amendment, which carries the rest of the amendments on its back, is that in the name of the noble Viscount, Lord Addison.
The objective of that amendment is one which we ought to support and which we ought to write into the Bill. Before we go that far and before the Government reply I should add that I have some queries about it. do not know what is meant by "environmentally sustainable development". I am a member of the Select Committee of your Lordships' House which deals with sustainable development. I am totally committed to the idea of sustainable development, as indeed, following Rio, are the Government of this country. But sustainable development on the whole can be defined as being ecologically sustainable; namely, development which can carry the population and the nature of a country forward to future generations without loss. To say that development should be environmentally sustainable seems to me to produce another slightly different objective.
It is quite clear what the noble Viscount means because he said in his speech that he wanted to see a duty to preserve the environment. To a large extent. I agree with him. Not everyone would want to sustain all the environment that surrounds the coalfields of this country. In many places we want to improve it. There should certainly be a duty that it should be either sustained or improved.
In so far as this is an environmental amendment I should very much like to support it. But environment and ecological sustainability are by no means always the same. Ecological sustainability will demand a use of fuels which will need extremely hard headed accountancy of the kind which the noble Lord, Lord Sefton, has just been talking about. If you are talking about ecological sustainability you have to work out how you can get the power that you need from the various sources available and in such a way that it is sustainable into the distant future. But that may well go right against the environment. It may mean that one has to undertake opencast mining or have fields of windmills covering the hillside. I do not say that the equation does mean that; I certainly hope that it does not. But it is all too easy to make a simple equation between environment and ecological sustainability which does not stand up to examination. I am not sure that the terminology of the amendment is right even if its heart is in entirely the right place.
§ Lord Mason of Barnsley
I support the amendments, in particular the thrust of the new clause moved by the noble Lord, Lord Elliott. As I have explained to noble Lords previously, I am the chairman of the Anglers Co-operative Association for England and Wales. It is an organisation dedicated to fighting pollution. It has been established for over 40 years. Having taken polluters to court, we have lost only two cases in that time. We have a team of legal experts who are unrivalled in experience, With regard to experience and knowledge in court cases, we can even rival the National Rivers Authority.
A particular matter of concern is pollution caused by minewater discharges resulting from the cessation of 617 pumping underground with the closure of mines. In particular, anglers in South Wales and Durham are, or will be, affected by those problems. The discharges invariably cause a deposition of rust sludge on the bed of the receiving water course. Apart from being unsightly, that deposit covers gravel in which fish might spawn and prevents plant growth. It consequently reduces insect life on which fish depend for food. In the case of a river such as the Wear in Durham—it is a most serious problem which confronts us—discharges may cause permanent damage to the salmon and sea trout populations.
In November of last year, the Anglers Co-operative Association—it has now changed its title to the Anglers Conservation Association—brought a private prosecution, to its knowledge the first ever prosecution, in respect of minewater discharges against British Coal Corporation alleging that it had caused or knowingly permitted polluting matter to enter the River Rhymney in Caerphilly in South Wales. After a two-week trial, the judge directed the jury to acquit. The basis of the reasoning was that British Coal had not caused the pollution.
Briefly, the prosecution case was that when controlled pumping (the resultant minewater being put into the river under discharge consents from the NRA) was stopped, the underground water table rose naturally. When it recovered its natural level, it moved laterally under pressure of gravity passing through old mineworkings and discharged through an old mine adit into the river. While passing through those old mineworkings, the water reacted with pyrites in those workings which caused the chemical reaction that results in the rust deposits in the river.
While the judge accepted that turning off the pumps was a cause, he found that the main cause was that the recovered groundwater was recharged by rainwater percolating through the upper soil which then reacted with the old mineworkings. Thus he concluded that the cause was a natural one and not British Coal's responsibility. He found that British Coal had no responsibility for or ownership of the old workings. My view is that the decision was wrong and I hope that we shall be taking it further.
The Anglers Conservation Association, the Salmon and Trout Association and all anglers are aware of the current privatisation legislation and see this as an ideal opportunity to deal with the environmental issue by way of legislation rather than litigation.
Clause 12 deals with schemes for the transfer of property, rights and liabilities to the transferees of the corporation. That has implications since a liability obviously includes abandoned mines. Yet no specific provision is made in respect of abandoned mines. I believe that it is clear that the Government do not intend to impose any duty to prevent polluting discharges from abandoned mines on either the Coal Authority or the new private operators.
I have before me a letter which the noble Earl, Lord Arran, at the Department of the Environment, sent to a parliamentary colleague in January this year. It stated: 618As you probably know, under the Water Resources Act 1991, discharges permitted to flow from abandoned mines are exempt from the National Rivers Authority's statutory controls".I know very well that the noble Lord, Lord Crickhowell, of the NRA would like to see the legislation strengthened in some way to give him reason to be able to take the polluters to court. The letter continued:The recent court case brought by the Anglers Co-operative Association against British Coal failed, I understand, not because of the exemptions in the Water Resources Act, but because the judge was persuaded that the pollution in the River Rhymney had not come from British Coal's workings.The Government recognises that the existing legislation may need to be reassessed and undertook, in This Common Inheritance: The Second Year Report, to consider the framework of legal responsibility for pollution in abandoned mines. A review of this subject is now under way, in tandem with an inter-departmental review of contaminated land and liabilities, which is addressing the broader issues of allocation of responsibility for the costs of pollution".That is clear. It will not be in this Bill and the Government intend not to recognise pollution from abandoned mines. There is no urgency on the part of the Government, as is clearly indicated.
In relation to the current pollution by minewater discharges and in relation to future pollution by cessation of pumping in the short term and the long term, I think we have no possibility of it being recognised by the Government in the Bill. I think it is all wrong and I hope that we can make some progress. But as indicated in that letter, I do not think we shall.
§ 9.30 p.m.
§ Lord Strathclyde
I did not interrupt the noble Lord as he was winding up, but he gave an impression on one important point. I cannot remember exactly what he said, but the impression was that the Coal Authority did not accept any liability. Once a mine has been abandoned—any mine, anywhere—it then becomes the responsibility of the Coal Authority. That is quite important. There is then a question about the Water Resources Act 1991 with which I shall deal in my more substantive reply later.
§ Lord Crickhowell
First, I wish to take up the points made by the noble Lord, Lord Mason. After many other distinguished services, he rendered distinguished service as a member of the board of the National Rivers Authority for some time.
Perhaps it is worth recording that he was not aware of any occasion on which there had been a successful prosecution for pollution of the water environment by a mine. However, there was one such case in 1981 in Scotland where it was possible to establish that the National Coal Board had caused pollution when it closed a Scottish mine which it had opened, operated and then closed. So the cause was the total operation; it did not depend simply on the act of turning off the pumps.
I must say to the noble Lord, Lord Mason, that he was a little unfair to my noble friend the Minister in saying that he was not addressing the problem adequately or with sufficient urgency. I believe the noble Lord ignored the important statement made by my noble friend earlier in the day when he said: "Yes, we are carrying out a major review of this complicated question, but in the interim we are making arrangements for the pumping in 619 Durham and elsewhere to continue". That was an extremely important concession and was very welcome to the National Rivers Authority. I should not like the debate to move on without acknowledging it.
At Second Reading I said that it might well be that the wider problem would have to wait for a future environment Bill for a full solution. I am not sure that we can adequately deal with it in this Bill, if only for the reason that it is a coal Bill; and there are other mines that need to be covered in future legislation.
I do not want to repeat the debates that took place earlier today, and I shall try to avoid doing so. Perhaps I may just say that in principle I welcome my noble friend' s amendment about sustainability. It is desirable that we should always seek to write into any legislation, or indeed almost any business plan, the principle of sustainability. I am not quite sure that we have got the wording precisely right. But the idea that sustainability should be set down as one of the duties that an organisation should pursue is desirable.
I also agreed with my noble friend when he cast some doubt on the adequacy of the environmental clauses, Clause 3(7) and Clause 53(2). Indeed, I expressed exactly that anxiety in my Second Reading speech. I explained earlier today why I did not intend to put down any amendments myself. But I am rather disappointed that amendments have not been put down. There will of course be later opportunities. I should at least like to see the words "the environment" and perhaps "the environment and controlled waters" added to the relevant sections of those clauses. It is rather curious that we have this list which includes "natural beauty", "flora and fauna", "geological or physiographical features", "sites, buildings, structures", and so on; yet we do not cover the environment and the water environment quite clearly in that same clause. We ought to look at that point again.
I particularly welcome the amendment that was put down by the noble Lord, Lord Moran, who again is someone who has given distinguished service in the past to the National Rivers Authority as chairman of one of our fisheries advisory committees. Perhaps I may take this opportunity, as he has ended his duties there, to thank him for that work. It is therefore perhaps not surprising that he has addressed this particular issue. Perhaps I might call it the Wheal Jane clause, referring yet again to that incident. The noble Lord said that he did not think that there was any conflict between the duties of the NRA and those of the Coal Authority. Indeed, that is absolutely right, and it helps to avoid a conflict. The NRA does not believe that it should be an operational organisation. It believes that it should be a regulatory organisation. In my view it should be the responsibility of the owner of land to make sure that adequate measures are taken to protect the environment if something goes wrong.
My particular anxiety about the Bill as it stands at the moment is that the authority,shall not have power … for commercial purposes or with a view to itself using any coal or product of coal, to carry on any coal-mining operations",and so on. What I am afraid of is that that clause might be deemed to prevent the Coal Authority from taking 620 emergency measures, which might include the need to dispose of coal as part of the operation in order to safeguard the environment. That is the point that we need to have clarified.
On my noble friend's Amendment No. 37, I do not intend to repeat the arguments that we had in relation to Amendment No. 1 earlier today. I do not think that my noble friend's amendment fully covers the anxieties that we then raised. I have one other difficulty with it. It talks about the responsibilities that arise from Clause 161 of the Water Resources Act. I feel that it probably ought to refer to Clause 85 of that Act, which is the clause which imposes the liabilities and the duties.
Clause 161, interestingly enough, takes us back to the amendment of the noble Lord, Lord Moran. It is Clause 161 which enables the National Rivers Authority to carry out certain duties to prevent pollution and then recover the costs of doing so. The National Rivers Authority does not want to be put in the position in which it was put in the case of Wheal Jane of carrying out the duties and then having to recover the costs. It would much prefer to see the duties carried out under its regulatory control by another body—on this occasion by the Coal Authority. That is why I so much welcome the amendment of the noble Lord, Lord Moran.
§ Baroness Nicol
I want very briefly to support Amendment No. 13 tabled by the noble Viscount, Lord Addison. As my noble friend Lord Morris of Castle Morris said at Second Reading, the potential for damage to the environment, particularly from opencast coal mining, is very great indeed. No doubt the Minister will tell us that planning controls will take care of that matter. But planning controls can only take care of future proposals. They cannot take care of existing operations; for example, the abandoning of mining operations that are going on at this moment and which could cause potential damage. Therefore we need to have a general duty placed on the authority.
The Government claim to support sustainable development. Most of us have seen the very impressive document which came out just a few weeks ago. Some of us are working on it in the committee dealing with sustainable development. We can expect to believe that everything that the Government do from now on will show their dedication to the cause of sustainable development. But it is not obvious in this Bill. I hope that when the Minister winds up the debate he will be able to reassure us about that. It seems to me that an industry such as the coal industry should be the last to be excluded from the Government's strictures on this matter.
The amendment of the noble Lord, Lord Moran, could be very valuable in certain circumstances, such as flooding, as we heard, possible river pollution and where action is needed in a hurry. I ask the Minister to tell us—if he is not minded to accept the amendment —how such a crisis will be dealt with in its absence. Does he feel that the existing powers in the Bill are sufficient? I support both the amendments very strongly. I hope that they will be accepted.
§ Viscount Torrington
I recognise the good intentions behind the amendment of my noble friend 621 Lord Addison. I realise that it concerns primarily matters such as water. However, taken at face value, I have a feeling that it would have one rather undesirable side-effect; namely, to prevent coal mining. Frankly, I do not believe that coal mining is environmentally sustainable in the long term under any circumstances. It took something like 300 million years for the atmosphere of this planet to become breathable as we fixed the coal in the coal measures. We are now digging it all up and chucking it back into the atmosphere and doing it within a couple of hundred years. So coal mining in the long term is not sustainable. But I suspect that, until we have something more effective, we shall have to continue with it.
§ Lord Dormand of Easington
I strongly support the amendment. I hope that we shall not hear too much criticism about the terms of the amendment. It seems to me that the very nature of coal mining requires the kind of control—I believe that that is the right word —that is contained in this amendment.
I understand what the last speaker said. I speak as one who has lived all his life in a coal mining area. But it is possible to improve the environment, even if one lives on a coalfield. I am glad to see that the noble Viscount agrees. There has been substantial improvement in what can be done in and around a coal mine. It would be quite wrong of society to ignore that fact.
I shall speak briefly and do so only because the noble Lord, Lord Elliott of Morpeth, and my noble friend Lord Mason of Barnsley both referred to County Durham, about which I have already spoken. However, I have to say again that this amendment pinpoints the problem of mine-working pollution. Here we are, on the first day of Committee, and the issue has already been talked about for a number of hours. As we know, the National Rivers Authority is the agency responsible for dealing with pollution of controlled waters. The authority is spending millions of pounds in that regard in relation to the Wheal Jane tin mine in Cornwall, as was mentioned by the noble Lord, Lord Crickhowell. The noble Lord, who I am glad to see in his place, has already made some notable contributions to the debate as chairman of the authority. On Second Reading, at col. 1346, he said that,in the Durham coalfield [and other cases] the resultant economic and social effects would be even worse than those associated with the Wheal Jane Tin Mine".It cannot get much worse than that. He said today, I believe—and I have read about it—that the costs so far at that mine are in the region of £8 million, and I assume that they are ongoing.
We must congratulate the noble Lord and his authority on the report entitled, Abandoned Mines and Water Environment. It is dated March 1994 which means that it is not only authoritative, but also that it is smack up to date. I hope that it will form the basis of any discussion that takes place on minewater pollution during the remaining stages of the Bill.
The report describes both the potential and actual damage resulting from abandoned mines and the legal and practical difficulties the authority faces in its efforts to prevent and clean up associated pollution. In the north-east of England the NRA is faced with 15 622 significant discharges and some 100 discharges in total. That is a measure of the problem facing my part of the country and, I have no doubt, other parts of the country unless the Government consider seriously this extremely important problem.
§ 9.45 p.m.
§ Lord Gray of Contin
I have met since Second Reading a wide variety of people connected with the coal mining industry. The representations made to me on behalf of those with environmental concerns have been far and away the most impressive. I want to emphasise to my noble friend therefore that whatever disagreement there may be between the various parties who are for or against privatisation, one item common to all those interested in the legislation is the question of the environment.
I attended a meeting where suggested amendments were put forward. I offered the view to those consulting us—it was quite a representative meeting—that it was the environmental issues that were likely to receive the most serious consideration in your Lordships' House. As the noble Lord, Lord Dormand, said, much of today's discussion has been on environmental issues. I venture to suggest that those issues will form a significant part of the remainder of the discussions in Committee and indeed on Report. I say that purely to emphasise to my noble friend that as one who is a strong supporter of the Bill and of the privatisation of the coal industry I feel that it is one issue to which we must pay special attention.
The Earl of Lindsay
I wish to pick up a point made by my noble friend Lord Torrington and also anticipated by the noble Lord, Lord Beaumont, in the definition attaching to sustainable development, especially the definition implied by the wording of the amendment tabled by my noble friend Lord Addison. The phrase "environmentally sustainable development" implies that it is not sustainable development in the normal sense. My noble friend Lord Torrington is therefore correct that, on face value, the way that the amendment has been tabled suggests that coal mining should cease forthwith.
The international definition which has found some consensus is that sustainable development should allow the needs of the current generation to be met without compromising the needs of future generations. Therefore, it is not involved with arresting all ecological loss, as the noble Lord, Lord Beaumont, pointed out. The entire way in which we live our lives has some form of environmental impact. Sustainable development is about options. It is about analysing those options and choosing the better and more sustainable options.
I would encourage my noble friend to take this amendment forward in principle. This is an excellent opportunity to write into primary legislation the words "sustainable development". I back other Members who have lamented the lack of a general environmental duty. Clause 3(7) is rather quaint but in 1994 it is very old-fashioned. It does not have the general environmental duty which the Government have vested in other 623 recently created agencies and authorities. The amendment would not only cover that duty but would also write in sustainable development where it belongs. Sustainable development is about integrating economic and environmental needs. Legislation about the future of the coal industry is probably an ideal opportunity for this.
§ Lord Ezra
I was at the meeting to which the noble Lord, Lord Gray of Contin, referred. His remarks then made a considerable impact, as I am sure they have in the Committee today. The question of the environment is a wide-ranging one which will certainly keep recurring as we go through the Bill. At the moment the main issue has turned out to be the problem of minewater pollution, which is specifically dealt with in the amendment of the noble Lord, Lord Elliott. There is a very serious problem, as we have heard from both sides of the Committee, and it is important that a message should go from here in consideration of this issue which will give some measure of alleviation to the very real concern that exists. This is an immediate issue. There are also longer term issues, to which the noble Lord. Lord Crickhowell, has referred, which are implicit in the discussion we are having at the present time.
I rise only with great deference after noble Lords, including the noble Lord, Lord Crickhowell, who are great experts. Has not my noble friend the Minister given a most valuable and interesting answer in saying that the new Coal Authority will in fact take on all the obligations of the old Coal Board? If that could be put into the Bill in some way or another, would it not meet all the troubles and fears expressed by noble Lords opposite and other noble Lords who know something about the subject? Perhaps my noble friend could expand on that answer. It was a most interesting one to all who have problems with the Bill.
§ Lord Strathclyde
Perhaps I may have the opportunity to reply to what has again been an interesting debate on the whole question of environmental liabilities and on the statutory duty on the environment which we may put on to the Coal Authority. It is probably a rather better opportunity to have the debate in the quietness of the evening than in the heat of the afternoon when I replied to the debate on Amendment No. 1.
The three amendments would, respectively, give the Coal Authority a broad statutory duty to promote environmentally sustainable development; deal with the detailed issue of whether the authority can carry out mining operations where the aim is the avoidance of pollution; and provide for the transfer to the authority of British Coal's liabilities under the Water Resources Act. I join entirely with what my noble friend Lord Gray of Contin said about the importance of environmental liabilities. He said that the greatest consideration should be accorded to it. I agree with him on that point, as I do on so many others.
Amendment No. 13, moved by my noble friend Lord Addison, would place a duty on the Coal Authority, in carrying out its licensing functions, to further the objective of environmentally sustainable development.
624 In a very useful contribution, the noble Lord, Lord Beaumont of Whitley, explained some matters which I did not know about the difference between environmentally sustainable and ecologically sustainable development. That has helped the debate on. Clearly there is some doubt about the meaning of the words and therefore they are not acceptable. I believe that the terminology used is important. The noble Lord, Lord Dormand of Easington, suggested that I should not use terminology as an excuse for not accepting the amendment. It is important that we stick to the terms. If the noble Lord did not say that I apologise to him.
I described in some detail earlier the role that the authority will play in dealing with water pollution from coal mines. I shall return to that in a moment. The Coal Authority explanatory note sets out more broadly the role of the authority in respect of works carried out on its land. That goes much further than the duty in Clause 3(7) which has been mentioned. But the responsibilities that it will discharge will be those of the owner of these mines. To give the authority a specific statutory role relating to environmentally sustainable development would cut across the existing detailed and well-developed framework of legislation dealing with environmental issues relating to mining. The planning authorities, the local authorities, the environmental regulatory bodies such as the NRA, the bodies in Scotland and the nature conservation bodies which exist in England already have carefully defined roles. During the course of the debate I have not understood what is the new role of the Coal Authority and how it will fit in to the environmental duties which are already imposed on so many other bodies.
I began by saying that I agreed with my noble friend Lord Gray of Contin. I do, but I do not see how the provision is going to mesh. I believe that it could create, confusion, particularly given the fact that this House has, a Select Committee specifically dealing with the issue of sustainable development. Its report may well give us the kind of guidance that would be useful on how to apply legislation to these kinds of statutory bodies in order to allow the kind of sustainable development which my noble friend mentioned. Where appropriate, we have taken steps to strengthen the planning mechanisms. I refer my noble friend not just to Clauses No. 53 and 54, which broadly place obligations on the Coal Authority and the operators under the planning system.
I now turn to the amendment of the noble Lord, Lord Moran, who addressed the detailed question of prohibition in coal mining operations by the authority which is set out in subsection (6) of this clause. I understand the anxiety that this prohibition should not prevent the authority from acting where necessary to secure that any operations which are necessary to prevent an imminent risk of serious pollution to the environment are maintained.
I understand entirely the point of this amendment and the anxieties of the noble Lord, Lord Moran, with his responsibilities for the angling fraternity, and those of my noble friend Lord Crickhowell. However, I am advised that the amendment is not necessary. It adds nothing to the Bill because the situation is already beyond doubt. If that is the case, then I do not believe 625 that we need take the debate any further. If it is not the case, I shall seek further advice, because the matter should be put beyond doubt. I believe that it is beyond doubt because the prohibition on coal mining operations by the authority, as my noble friend Lord Crickhowell noted, is solely a prohibition on the carrying out of certain operations for commercial purposes. There is no such prohibition in respect of other purposes. Since the purposes which the amendment addresses—namely, the prevention of pollution—are clearly not commercial purposes, they will not be caught by the prohibition in Clause 5(6) of the Bill.
My noble friend Lord Crickhowell mentioned a situation in which the authority might need to move coal. I do not believe that the prohibition would apply as regards that example. Moreover, minewater pumping on its own is not an activity which falls within the category of coal mining operations that would be prohibited if commercial.
§ 10 p.m.
§ Lord Crickhowell
I am grateful to my noble friend for what he has said and am to some extent reassured. However, I should be glad if he could look at this again to make quite certain. It might, for example, be highly desirable for the Coal Authority, having had to shift coal and incur a lot of expenditure, to be able to sell the coal in order to reduce its costs, but as part of the operation and not for commercial purposes. I want to make quite certain that such contradictions do not exist.
§ Lord Strathclyde
There is no intention on the part of the Government to create any contradiction. However, I shall look at this matter again. As I said, I am advised that the noble Lord's amendment is unnecessary because the provisions are already in the Bill. Obviously we have to make sure that that is the case and I shall ask my officials to look at the question carefully.
I turn now to the third amendment, Amendment No. 37. This is a very important amendment—not just in specific terms but because of the issues with which it deals which would impact on any restructuring scheme made under Clause 12. The Secretary of State will be obliged to transfer all criminal and civil liabilities of British Coal under Section 161 of the Water Resources Act 1991 to the successor company in whose favour the scheme has been made. The purpose of the new clause is to clarify the position with regard to the responsibilities for water pollution following the privatisation of British Coal.
As has been noted, I made a statement this afternoon on this question. I do not want to overstate the importance of that statement, but it was specific and important because of its acceptance of two things: first, that there is a problem with water pollution and, secondly, that the Government are going to do something about it in practical terms, although it is only an interim step. I explained why it had to be an interim step because of the review. However much we may think that we are qualified to legislate, we are not qualified to legislate on this issue until we have had the 626 full review with the help of the NRA's excellent report. The assurance that I gave this afternoon was designed to allay fears about the possibility of minewater pollution and the role of the Coal Authority during the run-up to privatisation, post-privatisation and before we have the new regime in place after the review. In that respect, it is an important issue.
The other reason why I felt that it was important to come to the Committee this afternoon with a prepared statement was to avoid noble Lords having to write further amendments for the next stage of our consideration of the Bill when we would simply get ourselves further into a muddle. I hope that the statement that I made earlier is clear enough to alleviate the majority of the problems raised by my noble friends and noble Lords in all parts of the Committee.
I hope that what I have said in this debate is helpful and reinforces my earlier statement. I say again to the noble Lord, Lord Moran, that we shall look again at the issue to try to get it right. I am sorry that I cannot accept the amendment of my noble friend Lord Addison. It could well be that we need to discuss this further, but I am not convinced that a case has been made or of the way in which the proposals would work in practice. In the light of that, I hope that my noble friend will withdraw his amendment.
I am grateful to my noble friend for his response to my amendment and for the support of noble Lords. I am glad that my noble friend recognises the serious nature of the environmental aspects of the Coal Authority's operations, but it is disappointing not to see that more clearly stated on the face of the Bill. However, at this stage, I shall not press the matter and beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn,
§ [Amendments Nos. 14 to 16 not moved.]
§ The Deputy Chairman of Committees (Lord Airedale)
I have to say that if Amendment No. 17 were to be agreed to I could not call Amendment No. 18.
Lord Morris of Castle Morris moved Amendment No. 17:
Page 2, line 47, leave out paragraph (b) and insert:
§ The noble Lord said: The purpose of this amendment is to ensure that the authority is established in a way that ensures that the United Kingdom coal industry as a whole achieves competitiveness with other fuels. That is the form of competitiveness that we are interested in. Subsection (2) (b) is not satisfactory to us because it sees competitiveness solely within coal mining operations. There are several factors which will influence the competitiveness and the viability of the coal industry in the future. First, the structure of coal's biggest market: electricity generation, where the contracts are for three years only. Secondly, the structure of the industry when it is sold off: for example, how many mining operators will there be? According to the Bill it can be anything from one to five regionally, plus some other smaller fish around the edges of the 627 pool. Thirdly, the ability of the Coal Authority to improve the viability of the industry, though it would be difficult to raise productivity greatly.
§ The fact that the market against coal has been rigged over the past few years is one which we have not ceased to preach and the Government have not actually conceded to us, but we still believe it. As we have often said, the nuclear subsidy, the dash for gas and the electricity imports via the link from France, have made it difficult for coal to be anything other than squeezed out of its largest market, electricity generation in England and Wales. The result of that has been the wholesale pit closures of the last 18 months. A further contraction of coal's market share seems to us to be almost inevitable over the next three to four years, as more gas-fired stations come on stream.
§ In many respects then, the process of privatisation will not really be the key determinant of coal's future. The overall scale of the industry is constrained very tightly by the unfair structure of its principal market. In fact, whether the pits are publicly or privately owned, little can be done to increase the total size of the market for coal. However, in other respects the structure of the mining industry after privatisation and the current wording of Clause 2(2)(b) could have a significant impact on the future survival of deep mining.
§ I noted very carefully the remarks made by the noble Lord, Lord Haslam, former chairman of British Coal, in the debate in your Lordships' House on Second Reading of this Bill, which were very relevant to this matter. He talked of a minimum of 35 pits being necessary to provide a critical mass, to allow continued access to a high proportion of the nation's coal reserves and to compete on the world market. Those remarks appeared on 11th April in the Official Report, at col. 1329.
The noble Lord, Lord Haslam, argued particularly strongly against fragmenting the industry which the Government are encouraging with the five regional packages recently announced as the basic structure of the sell-off and the inclusion of this clause which encourages the Coal Authority to promote competition. Referring to British Coal's tremendous recent record of productivity increases, he said —and I quote—
This performance hardly reflects a lack of competition and indeed I do not know any other major UK industry which can match these dramatic productivity figures over the past decade. I have been involved in many industries in my career and without reservation the competition I experienced in coal was much the toughest. To sum up, British Coal needs more competition like a 'hole in the head'."—[Official Report, 11/4/94; col. 1330.]
He added a little later in the same column:
If British Coal is broken up into five units we really will have a "rag-bag" of an industry… If this fragmentation policy is pursued, I predict that only a minimal coal industry will be left at the end of the decade".
The Government should heed the words of the noble Lord—or is that what the Government want to happen?
§ The noble Lord, Lord Haslam, echoed fears expressed by many other commentators that the break-up into small units will be strategically destructive. The nature of coal mining is such that constant capital investment is needed for development. Additionally, in Britain geological conditions are particularly unpredictable. Geological problems can potentially halt production at any time in any area. If 628 individual pits or small mining companies are competing with each other, the incentive will be to minimise development expenditure, leading to pits being operated on what has been dramatically, but I think accurately, described as a "rape and pillage basis", in which collieries are kept open only until the reserves requiring the bare minimum of development are exhausted.
§ The requirement in Clause 2(2)(b) that the Coal Authority promotes competition is therefore, in our view, likely to result in a deep mine industry which shrinks to virtually nothing within a decade. That is clearly contrary to the requirement in Clause 2(1)(a) that it maintains and develops an economically viable coal industry.
§ What then can the Coal Authority do to protect the future of the industry? One practical area in which the authority could exercise some influence would be to encourage the drawing up of long-term contracts between new operators and the electricity generators when the present contracts expire in 1998. There is plenty of example for that. Many US coal operators have contracts of 15 or even 30 years with electricity companies. This would have two positive effects. First, mining companies would have sufficiently long-term horizons to encourage proper capital investment in development. That would result in the better utilisation of the nation's most abundant energy resource. Secondly, longer-term contracts with the generators would put coal on a more equal footing with nuclear power, which has a guaranteed market share, and gas-fired stations, which typically have 15-year contracts with the RECs.
§ In our view, the Coal Authority should encourage co-operation between mining operators in areas which would be beneficial to the future of the industry as a whole; notably research and development in mining techniques, in clean coal technology and in marketing, as we mentioned earlier.
§ In summary, most of the damage to Britain's mining industry has already been done. By the end of the year when leasing and privatisation processes are complete there will be perhaps 20 operating pits compared with 170 at the end of the miners' strike in 1985. The likelihood is that still more collieries will close if the present structure of the electricity generating market in England and Wales is not altered. Access to most of Britain's plentiful coal reserves has already been lost and the nation will pay the price for this in the early years of the next century when our gas reserves are undone and we become dependent on imported fuels. There are, nevertheless, steps which the Coal Authority could take to maximise the size of the coal industry into the future if it is allowed to take a pro-active approach. As it stands, the Bill suggests that the authority should promote competition between the new mining operators when the industry as a whole already faces intense and unfair competition from its competitors in the electricity generation market.
§ This amendment seeks to replace this needless requirement with one which will encourage and enable the authority to promote the interests of the nation as a whole, which lie, I suggest, in sustaining the largest 629 possible deep-mine industry well into the next century. That will be done not by internal competition but by a united and competitive coal industry. I beg to move.
§ 10.15 p.m.
§ Lord Strathclyde
What an extraordinary speech made by the noble Lord. It shows that the politics of central planning and socialism live on in the noble Lord's brain. I suppose that I should be grateful for that, because it makes my job and the Government's job much easier.
Clause 2(2) (b) imposes a duty on the Coal Authority to have regard to the desirability of promoting competition. This amendment seeks to remove that duty and require the authority to have regard to the desirability of securing a viable and sustainable industry over the long term and to retain a competitive position. The Government's objective is to facilitate the development of the largest economic industry in the longer term.
We believe unashamedly that that is best achieved through the mechanisms of the market place, which provides the most effective and efficient means of meeting energy needs. It is within competitive markets that prices are best determined and costs can be exposed to rigorous test. That is why Clause (2) (1) (a) places a duty on the authority to secure, so far as practicable, that its licensees maintain and develop an economically viable coal industry.
Attempts to impose all-embracing plans about how much energy of what kind should be produced or consumed by whom are doomed to failure. I am sure that in his heart of hearts, the noble Lord recognises that. It is not within the Coal Authority's power to guarantee that an economically viable or sustainable coal-mining industry is maintained and developed by licensees, or that the industry will retain a competitive position. That depends more on the action of licensees and developments in the market.
What the authority can do is to provide information. It can make available the coal resource and property within its ownership. It can establish a competitive licensing regime to facilitate development of the coal industry by licensees.
The Government firmly believe that the workings of the market are the best way of securing an efficient and effective industry for the future. The Bill as drafted provides the right balance of duties on the authority and the noble Lord's amendment is unhelpful.
Perhaps I may take up one point which the noble Lord made. He used the words of my noble friend Lord Haslam to support him. He said that we are splitting the industry into five parts, and that that is bad. We are not splitting the industry into five. We are giving the private sector the opportunity to decide for itself what kind of industry it wants. As the noble Lord knows, it is perfectly possible that one buyer will come forward to buy all five separate areas. Therefore, it is not the noble Lord who is making the decision about the future make-up of the industry; it is the private sector.
The noble Lord may say that the private sector is wrong. That leads us back to the unbridgeable gulf 630 which exists between us, because I believe that, ultimately, the private sector will make the right decision. The worst way of going forward would be by accepting the amendment proposed by the noble Lord.
§ Lord Ezra
In spite of what the noble Lord has just said, I believe that there is a strong point in the main issue raised by the noble Lord, Lord Morris; that is, that the competitive threat facing coal is really from other energy sectors, and that that should be the object of the whole exercise. A thriving, revived coal industry, under this new regime, will be possible only if it can fight other forms of energy. An internecine battle between small coal companies will do the reverse. It would set us right back, as I said on Second Reading, to the situation which existed between the wars, when a former Conservative Government, under Mr. Baldwin, had to intervene to bring together the warring companies and to put some sense into the marketplace.
Therefore, I am entirely at one, as I was on Second Reading, with the noble Lord, Lord Haslam, that the real competition is between coal and other forms of energy and the emphasis in this clause that the competition should be between the different coal companies seems to me to be misplaced.
§ Lord Strathclyde
Of course we want a competitive industry. As I have always said, that is the essence of the Bill. However, the noble Lord, Lord Ezra, has not answered the point which I made; namely, that it is neither I nor the Government who are making the decisions about the future shape of the industry. It is the private sector which will make those decisions. If what the noble Lord says is so true and self evident to everybody apart from the Government and myself, then surely the private sector will come forward with one bid.
§ Lord Strathclyde
What is so essentially different in the energy market in the last decade of the 20th century compared to what it was between the wars is that we already have a much more diverse energy market than we have ever had. There are already so many choices that the coal industry does not need to compete with itself. Its position will be to compete with the other energy industries. The noble Lord and I can probably agree on that.
§ Lord Morris of Castle Morris
On one matter I think that the Minister and I can agree. On the question of competition, between you and me there is, in the words of the Holy Writ, "a great gulf fixed". There are various forms of competition. It is not one single concept. Some are destructive and mean; others are stimulating and good.
I am grateful to the Minister for the exegesis which he has given of his position. I shall read it with great care tomorrow. It has all the virtues of clarity. This issue, of course, will not go away, and, like General 631 MacArthur—was it not?—during the Second World War, I say, "I shall return". Meanwhile, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 18 not moved.]
§ Clause 2 agreed to.
§ Clause 3 [Duties of the Authority with respect to property]:
Baroness Turner of Camden: moved Amendment No. 19:
Page 3, line 21, at end insert:
("(2A) It shall be the duty of the Authority to retain freehold ownership of the coal and coalmines transferred to it in accordance with section 7(3) below.").
The noble Baroness said: I move the amendment in the absence of my noble friend Lord Peston. I am sure that he would want me to say that it is a helpful amendment. One might even describe it as sincere. It is also a probing amendment. As will be seen, Clause 7(3), to which the amendment refers, states:
On the restructuring date the Corporation's interests in unworked coal and coal mines, including its interests in any coal that, notwithstanding having been worked at some time, is so attached…shall vest without further assurance in the Authority.".
§ The amendment seeks to ensure that the freehold of the coal, and the liabilities that attach to it, rest ultimately with the Coal Authority. Of course, leasehold interests and other rights can be granted, but on the termination of such interests ownership and the accompanying responsibilities should revert to the Coal Authority. That seems a reasonable proposition given what is set out in Clause 7(3). After all, someone has to hold the freehold. It seems to me in the circumstances that the appropriate body is the new Coal Authority. I hope that the Minister will accept that the amendment is intended to be helpful and to fill what we see as a slight vacuum in the Bill. I hope that he is prepared to accept the amendment. I beg to move.
§ Lord Strathclyde
I am grateful to the noble Baroness for the way in which she moved her noble friend's amendment. In my opinion she probably moved it rather more speedily and effectively than he would have done. I hope that perhaps she can move some more of her noble friend's amendments in like manner. It is an important issue. It is certainly envisaged that the Coal Authority will normally retain the freehold of coal and coal mines. But we cannot rule out the possibility that there will be circumstances in which it is appropriate for the authority to dispose of the freehold. It is just possible that a purchaser might, for one reason or another, having earned out, say, opencast operations, attach substantially greater value to associated freehold surface land in the authority's possession if he also had the freehold of the coal. If it were in an isolated area of open grass it is not obvious that there would be disadvantages in selling the freehold. However, there is no suggestion—and I would not like the noble Baroness to understand it in that way—that that would be a likely or frequent occurrence. However, it would not be prudent to rule it out altogether.
Perhaps I may reassure the noble Baroness that we recognise that freehold disposal on a large scale would be undesirable. In the past fragmentation of ownership 632 has made exploitation more difficult. We shall therefore want to minimise the extent to which that happens, especially because there is always a possibility of new methods of exploitation.
I hope that that reassures the noble Baroness. I hope that it also explains what is at the root of government thinking on this issue and that she will withdraw the amendment.
§ Lord Northbourne
Before the noble Lord sits down can he confirm that there is a significant number of pits which are not owned freehold by British Coal at present but are owned by third parties?
§ Lord Renton
Before my noble friend answers that question perhaps I may make this point. He has properly made a distinction between freehold ownership of the surface and freehold ownership of the coal and coal mines. Here we get into a slight state of confusion because coal mines necessarily have to have works on the surface. It would be impossible to work the coal mines and to use the freehold rights in the coal without having access to and in certain circumstances ownership of the surface. Perhaps that is a matter which my noble friend would like to clarify or confirm.
§ Lord Sefton of Garston
I see no reason why the Minister cannot accept the amendment. In the Second Reading debate (at col. 1293 of Hansard for 11th April) the Minister described the powers being given to the Coal Authority as being to license coal mining, to own and to grant access to coal reserves. That does not mean freehold ownership.
§ Lord Strathclyde
I am sorry if the noble Lord, Lord Sefton, misunderstood either what I said or the Bill. The idea is that the licensee is given exactly that—a licence on the coal and a lease on the coal which gives him the ability to dig it out and then to sell it. I explained to the noble Baroness the thinking behind that.
The noble Lord, Lord Northbourne, asked me a perfectly valid question. I do not know what the proportions are, but it is true that British Coal owns some mines which are leased, sometimes on very long leases.
As regards the comments of my noble friend Lord Renton, British Coal owns the freehold of the underground mines but does not necessarily own the freehold of the land itself.. I am not sure whether my noble friend made some neat legal point. I do not pretend to be an expert on this issue. It had not been raised in my mind as being a particularly awkward issue. I am sorry if I have misunderstood my noble friend.
§ Lord Renton
Perhaps I may attempt to elucidate. The original surface belongs to the owner of the freehold, whether it be a landowner or some other legal person. But when the freehold in the coal—what used to be called the mining royalties —comes to be exploited that can only be exploited if there are surface works. As I understand it, under the present law, which has existed since the days more than 60 years ago when mining royalties were unified—which was the euphemism which was used at the time—those surface works ceased 633 to be in the ownership of the original owner and came into the ownership of the people who were working the coal —in other words the coal mine. That was my point.
§ Lord Strathclyde
My noble friend is absolutely right. I am sorry that I did not understand him the first time around. I believe that he has clarified the situation. I agree with him.
§ Viscount Torrington
Perhaps I may ask a point of clarification. Am I right in believing that the ownership of the freehold of the coal is what is vested in the authority under the Bill? Therefore surely it cannot demise that in any way. The amendment seeks to make the authority retain the freehold, but it is duty bound to do so. It cannot demise coal rights.
§ Lord Strathclyde
The Bill allows in exceptional circumstances—I explained what the circumstances would be—the sale of the freehold of the coal. Otherwise what my noble friend has said is right, and in general circumstances the Coal Authority will not sell the freehold but simply give a lease.
§ Baroness Turner of Camden
I welcome the assurances which the Minister has given in response to the amendment. I welcome that he states that the Government recognise that it would be undesirable to fragment ownership and that one would wish to minimise the extent to which the possibility of disposal of the freeholds could occur. In view of the concern that has been expressed in various parts of the Chamber this evening, will the Minister reconsider the matter to see whether at Report stage, if they do not like the wording of our amendment, the Government would be prepared to introduce their own amendment to make the situation clear?
§ Lord Strathclyde
I am happy to have a look at the provision. I certainly thought that I was very clear in my initial answer. However, I shall consider whether the provision should be clarified.
§ Amendment, by leave, withdrawn.
§ 10.30 p.m.
Lord Northbourne moved Amendment No. 20:
Page 3, line 33, after ("Authority") insert
§ The noble Lord said: With the permission of the Committee, I beg to move the amendment standing in the name of the noble Lord, Lord Stanley of Alderley, and myself. I shall speak also to Amendment No. 35. I have already declared an interest at Committee stage which I hope will be satisfactory to noble Lords.
§ Throughout the afternoon I have sought the origin of a quotation which I heard the other day. It was this: "Don't talk to me about a man's assets. Show me his liabilities". The amendments relate to liabilities—the liabilities which have been incurred by British Coal over the years in the prosecution of its operations. They relate to any current or future agreements between the authority or the Secretary of State (as the case may be) with third parties which permit those third parties temporarily to occupy the surface of the land in association with mining operations. I am assured that the mining operations in this context include the closing down of pits and the exploitation of the land surface on which they stood. I should be grateful if the Minister would give me guidance as to whether I have been correctly informed.
§ The amendments seek to ensure that third parties to whom assets and liabilities of British Coal are transferred have protection against liability at the same or comparable level to that which they would have had had British Coal retained the operating licence. Is it a big problem? How many pits in the country are held freehold other than by British Coal? How many are held under licence or lease? Perhaps the Minister will give a written answer; I shall therefore not trouble him for an answer now.
§ I cannot tell the Committee the number regarding land ownership of the freehold. But a number of other parties may be involved in liability, such as neighbours, householders, smallholders on the fringe of the site or owners of land under which mining is taking place. The liabilities about which I speak exclude subsidence. I believe that that is largely satisfactorily dealt with in the Bill. They exclude the escape of polluted minewater which has been admirably dealt with by the noble Lord, Lord Crickhowell, and the liability for industrial disease. I am told that that is covered by the industrial diseases legislation of 1978.
§ There are significant other liabilities and, still worse, potential liabilities: the possibility of the escape of methane gas, surface flood water, the collapse of tips, slipping on to neighbouring land, as happened at Aberfan, and blown dust. I know a case of that in the Kent coalfield where I live and where an adjoining farmer had a successful claim against the Coal Board for over £1 million. Above all, there is contamination and pollution. That is an uncertain liability. The Government have accepted the principle that the polluter pays; the European Community is fighting for the principle that strict liability should be involved in certain situations relating to contamination. The Green movement and the Community itself keep moving the goal posts, they keep inventing new forms of pollution and setting stricter control levels, so that none of us can ever know when we will be hit.
§ Are the Government asking Parliament to give carte blanche to the Secretary of State or the Coal Authority 635 to transfer those liabilities to operators with much less broad shoulders than British Coal and who could, either intentionally or by accident, turn out to be men of straw? Thus the landowner or the neighbour would have to shoulder the liability. We are talking of liabilities which can run into millions of pounds.
§ In commercial practice, the owner of a piece of land which is leased to an operator normally does not have to transfer that lease except to another acceptable operator. However, in this case the Government are waving a magic wand and saying, "It has got to be transferred to whomever we tell you to transfer it". That may be a totally unacceptable operator.
§ There are two questions that I wish to ask the noble Lord. First, he said earlier in the debate that the Coal Authority would be the owner of the mine. I have not been able to find that in the Bill, I have not found a clause which says that. In fact, Clause 12(2) provides for the Secretary of State to dispose of British Coal operations to persons other than the Coal Authority, prior to the restructuring date.
§ My second question is this. The noble Lord said that any mine anywhere, if abandoned, becomes the responsibility of the Coal Authority. I should be more than grateful if he could tell me how the Bill provides for that. To me, Clause 3 seems to say exactly the opposite. It says that the Coal Authority must sell land not used for mining operations.
§ Finally, I have a question for the Minister from the noble Lord, Lord Stanley of Alderley: if a bill demanding money comes to him for pollution on or under his land, and if the successor body which holds the licence to operate that land turns out to be a man of straw, to whom should he send the bill?
§ Lord Renton
I am enthusiastically in favour of de-nationalisation, but one must concede that when we had one coal board, the entire legal situation was simplified over the country as a whole. When we have the possibility of a number of new companies coming in, sometimes on land below which the coal has not been exploited before or has been only partly exploited, we have a new situation which should, from the legal point of view, be properly covered, as the noble Lord, Lord Northbourne said, with justice to the owners of the land. Undoubtedly, unless we are careful, problems could arise. The noble Lord mentioned some of them. Perhaps I may say in passing that I have no interest to declare. I am a native of west Kent, under which, so far as is known, there is no coal. But we realise that in east Kent, where the noble Lord, Lord Northbourne, owns and farms land, the situation is one which requires careful thought.
The problems of subsidence, contamination and pollution, to which the noble Lord, Lord Northbourne, referred, and the potential liabilities of third parties—it may be two third parties—that could arise are matters that we should not leave to chance. They are matters that we should try to anticipate. Any legal problems that might arise should be treated in such a way as to avoid unnecessary resort to the courts and without taking the risk of hardship to the landowner or anyone else. It is a 636 very good thing, if I may say so, that the noble Lord has raised these matters even at this late hour and with so few noble Lords present in Committee.
§ Lord Morris of Castle Morris
As I understand it, fleetingly and tangentially, this amendment has as its purpose to highlight the duty to insert clauses to provide adequate financial protection for those who may be disadvantaged by the operation of private sector mining companies on land with inadequate provision in existing working right agreements.
The Minister said that there are about 200 WRAs, some of which are near the end of the periods for which British Coal will retain responsibility. Others are in active use or awaiting the start of operations.
Without making specific provision in the agreements, which were signed with British Coal as a government-backed company, the owners of that land will be exposed to the risks of severe financial loss and dereliction as a result of the working. Without express provisions in the agreement, the owners, so far as I can make it out, will have inadequate, if indeed any, legal redress. In transferring the rights, the Government surely must protect the interests of those who are affected.
That raises a linked point, to which the noble Lord, Lord Northbourne, drew attention. If I am correct—and the Minister will correct me if I am not—in his first speech the Minister stressed the role of Clause 7(3), which is to ensure that all the coal and coal mines pass to the Coal Authority on the restructuring date. In his reply to Amendment No. 37, the Minister said that where a mine is abandoned the responsibility automatically reverts to the Coal Authority. Surely these assurances are only true if Clause 12(2) does not allow the Secretary of State to transfer interests in coal or other interests in property from the corporation to other companies before the restructuring date. If, as drafted, he can transfer coal, mines or other assets, then surely the Coal Authority has no role.
§ Lord Crickhowell
I had not looked very closely at these clauses almost until I came into the House. But a number of issues have been raised which need clarification. It is again a question of whether the liabilities are to be transferred to less broad shoulders than those of British Coal. In that sense they are the same issues that we discussed earlier in the day.
Under Clause 3, it is,the duty of the Authority, so far as practicable, to make available for acquisition by others such of its land and other property as does not consist in an interest in any unworked coal or coal mine [and] is not being put to a use which justifies its retention by the Authorityand so on. In other words, as I understand the matter, it is a duty to get rid of land which is no longer required for coal mining.
The trouble about land that is no longer required for coal mining is that it may have become heavily contaminated and polluted in the past. I have some knowledge of the work of derelict land clearance because, as Secretary of State for Wales, I was. responsible for what I suppose was the largest programme of its kind carried on anywhere in Europe. I know that the original intention was to remove the tips 637 which might, as at Aberfan, cause a tragic loss of life and to clean up the land to make it more suitable for development. In those early stages not a great deal of attention was paid to making sure that no contamination was left. Very often the sites were extremely complicated.
After I ceased to be a Minister, it happened that I found myself for a time a director of a company which was responsible for preparing the site at Ebbw Vale where the garden festival was held. It was a steelworks site and not a coal mine. The usual investigatory drilling was done. But it was only when people got to work that it was discovered that in fact there were about three or four (it may even have been five) successive steelworks, one on top of the other, which had just been flattened and sorted out, and that what was there was an unknown mess of unbelievable complexity.
To give another example, I could take Members of this Committee to contaminated land sites where refuse has been disposed of which contained material such as PCBs. Ownership has passed on, perhaps several times, to someone who was not responsible for putting the contamination there in the first place and who may be without any resources that would enable him to remove it, clear up the site or pay for any damage that might arise.
In replying to the debate my noble friend may say that it is the problem of contaminated land that is also being addressed in the great review that the Government are undertaking; it goes beyond coal mining. I shall understand that, because these are complicated and difficult issues. But we want to be clear that there are many sites where there is or may be contamination and where there may be risks to third parties of the kind described by the noble Lord, Lord Northbourne, and where the shoulders of those who acquire them may not be anything like as broad as those of British Coal. Therefore, again we need some clarification of exactly how the Government intend to protect third parties from the consequences that may arise.
§ 10.45 p.m.
§ Lord Strathclyde
The noble Lord, Lord Northbourne, introduced his amendments very clearly. Certainly, the speeches of my noble friends Lord Crickhowell and Lord Renton were very helpful. My noble friend Lord Renton said that we had to be clear about where the liabilities are. I think that he said that we must not leave it to chance. I entirely agree with him.
I believe that all the concerns that have been raised are dealt with either in the Bill or by the assurances that I gave earlier this afternoon vis-à-vis the water liabilities. What is not dealt with perhaps quite so easily, but if we are in favour of the Bill what I believe we have to accept, is the concept of the broad shoulders of British Coal. Because British Coal is owned by the Government, ultimately the taxpayer is a long stop. Where the operator is a private company, the long stop is not quite so obvious. But within the terms of the Bill the Coal Authority has to be absolutely certain that the 638 operators who will take over are financially viable and that they have the necessary finances to be able to deal with the problems.
Rather than ramble on, perhaps I may deal with the issues specifically. The Bill provides the Secretary of State with powers to transfer the property, rights and liabilities of British Coal to other persons by the restructuring scheme. Such powers are common in privatisation legislation. My noble friend mentioned the steel works. Of course, we privatised steel successfully, the private sector experiencing no problems in taking over substantial potential environmental liabilities and the arguments in relation to contaminated land are as serious and relevant to the steel industry as they are to the coal industry.
One of the uses which will be made of those powers will be to transfer British Coal's interests in contracts of various sorts to successor companies. It is inherent in this, as in any privatisation, that some obligations which were obligations of the public sector, and therefore ultimately the taxpayer, become obligations of the private sector.
The agreements, known as "working rights agreements", between landowners and British Coal, under which British Coal could come onto the land to extract coal for a period, come into that category. The amendments are all concerned with the transfer of working rights agreements. Their theme is that those agreements are a special class and should have a special treatment rather than that of the general transfer provisions of the Bill as proposed.
The amendments seek to ensure that where British Coal's working rights agreements with landowners are transferred by the scheme to successors, security provisions should be inserted into the agreements to guarantee the various payments due to the landowner under the agreements. However, I do not believe that the amendment would achieve the intended result because the Coal Authority has no general power to dispose of its rights and liabilities by means of a scheme. If an agreement had been transferred to the Coal Authority the liabilities under the agreement could not be transferred on by the authority save by agreement.
I do not accept that working rights agreements should be afforded special treatment. British Coal has all kinds of agreements which will be transferred. As I have said, that is the nature of privatisation. Of course there will be many cases where the other party may feel that he would prefer to be dealing with a public sector body. That is not unnatural. But it does not follow from that, that the agreements should be revised or excluded from transfer altogether. However, the Government recognise the concern of landowners and others about the persons to whom agreements will be transferred. I assure the Committee that we shall take that into account in exercising the restructuring powers in the Bill.
I appreciate that those to whom obligations may be owed by the operators will have understandable concerns about their financial standing. That is one reason why the Bill places a duty on the Coal Authority at Clause 2(1) (b) to secure, so far as practicable, that operators are able to finance the liabilities arising from their operations. That provides reasonable assurance for 639 third parties that the private mining companies licensed by the Coal Authority will be of appropriate financial standing.
There is no reason to think that private sector coal companies will not honour their obligations under those agreements. They will be contractually bound in exactly the same way as British Coal. Moreover, since operators will be rightly concerned that failure to honour obligations of this sort could affect their future licence applications, not to mention their success in negotiating agreements with other landowners in future, they will have every incentive to perform.
There is every reason to expect that the private sector will wish to maintain existing high standards. Since the future of any opencast mining business depends on being able to persuade local mineral planning authorities and public inquiries of the high standards to which opencast sites will be restored, there is every reason to expect continuing improvements in restoration quality. Furthermore, operators will be rightly concerned that failure to restore could work against the success of future licence applications.
I hope that that is helpful and provides some comfort to the noble Lord, Lord Northbourne. In reply to the various questions he asked, I must say that in relation to licence and freehold I will write to the noble Lord. I am afraid that we do not have that information to hand. In reply to my noble friend. Lord Stanley through the noble Lord., Lord Northbourne, who asked whether site restoration constituted coal mining operations for the purposes of the Bill, I can say that coal mining operations as defined in Clause 63 do not include site restoration; for example, that can be seen in Clause 53(1) (a) and (b) of the Bill. That is not to say that the Bill does not regulate site restoration. It does, and it does so in Clause 54.
The noble Lord asked two other important questions. What happens to abandoned mines? Are they owned by the Coal Authority? Underlying the whole essence of the Bill is this premise. Clause 7(3) explains quite clearly and categorically—I suspect my noble friend Lord Renton will tell me that it does not do what I think it does, but I am assured that it does—that the mines are transferred to the Coal Authority. That covers all mines whether abandoned or otherwise. Under the licensing arrangements the Coal Authority does not give up ownership of the mines. They still belong to the Coal Authority and ultimately their whole use falls back within it.
I know that the hour is late. Like my noble friend Lord Crickhowell, I think it is very worth while exploring these issues. My intention this evening was to give comfort to the noble Lord, Lord Northbourne. I hope that I have done so.
§ Lord Northbourne
While I am very grateful to the noble Lord, I cannot say that he has given me much comfort. Of course we are asking for these agreements to be treated as a special class because they are a special class. When Parliament uses its authority to make transfers of commercial agreements and to force them through against the will of one of the parties, that is a special situation. However, I should like to have the 640 opportunity—I am sure that the noble Lord, Lord Stanley, would also like to—perhaps to meet and talk about this between now and the next stage of the Bill. On that understanding, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 21 not moved.]
§ Clause 3 agreed to.
§ Clause 4 [Duty of the Authority with respect to safety]:
§ [Amendment No. 22 not moved.]
Baroness Lockwood moved Amendment No. 23:
Page 4, line 29, at end insert:
§ The noble Baroness said: As far as I can see, there is no mention of training requirements in the Bill. My amendment is intended to place on the Coal Authority the responsibility of ensuring that the current training programmes are maintained and that training records continue to be kept.
§ Earlier in the debate the Minister talked about the need to retain the health and safety culture in the mining industry. Training is an essential element of health and safety. If we are to maintain health and safety standards, we need also to maintain the training standards and the training culture of the industry. We were reminded earlier in the debate of the situation pre-nationalisation when safety was not such a high priority in the industry. The noble Lord, Lord Ezra, claimed for the nationalised coal industry the fact that it had given a very high priority to safety issues. He might also have claimed that the nationalised coal industry gave a very high priority and a high profile to training, too. We must not allow the situation to deteriorate when the mines are privatised.
§ The present training schemes under British Coal are carefully constructed and, among other standards, they conform to health and safety requirements. They cover a wide range of areas in all disciplines and take account of new legislation, where appropriate, new government initiatives and national standards, including achieving economies of scale, which I should have thought would appeal to the Government. The training schemes are responsible for ensuring accreditation with external bodies such as the Mining Qualifications Board, the National Council for Vocational Qualifications and the Health and Safety Executive. They provide advice and direction and, where necessary, train the trainers. They maintain a close relationship with the universities and colleges of higher education which set the academic qualifications required for statutory certificates of competency at all levels. They provide a cost effective centre for the administration of assessments for national vocational qualifications, the City and Guilds mine environment certificates and the engineering craft apprenticeship scheme.
§ These programmes are far too valuable to be allowed to disappear. At present I understand that the private mining companies rely on British Coal for their supply of trained personnel. Under this Bill each company will be responsible for its own training provisions. The noble Lord, Lord Haslam, said in an earlier debate, when 641 speaking of his own experience of industry, that it was easy to cut corners. Regrettably, training has been one of the areas where British industry has cut corners. In the past our training record has not compared favourably with that of other countries. But there have been honourable exceptions and the coal industry has been one of them.
§ As I see the situation at present under the Bill, there are two dangers. The first is that the present training schemes could easily become fragmented if each company had to be responsible for its own provisions and standards. Secondly, the trainers themselves could be dispersed and less easily available for training purposes.
§ Under Clause 4 of the Bill we are concerned with the responsibilities of the Coal Authority in respect of health and safety. Under this clause we need also to place specifically on the Coal Authority the responsibility for ensuring that a comprehensive and adequate national training scheme continues to be in place. I beg to move.
§ 11 p.m.
§ Baroness Turner of Camden
I rise to support the amendment so ably moved by my noble friend. She is absolutely right. This is also a health and safety issue. As we all know, in the coal industry there is continuous hazardous operation. Quite obviously, if properly trained personnel are lacking, the hazards will be that much greater. I am advised that there have been accidents, including fatal ones, where training, or lack of training, has been involved. As my noble friend rightly says, there are already training programmes operated within the United Kingdom coal mining industry of consistent quality and very high standards. I have in my hand here the British Coal scheme of training for working in long wall faces and narrow workings. It is very comprehensive. It is a scheme which has been approved by the Health and Safety Executive. It is standards-based training. There is training, supervision and assessment, selection, operative training, foundation training and the scheme provides for certification as well. It is obviously a very comprehensive scheme. One has to ask: will the new operators, the successor companies, be capable of operating such arrangements unless overall responsibility is vested in the Coal Authority?
As I said earlier, this is a health and safety question. In other industries in which there is a high level of hazard, the Government have been willing to accept that special arrangements have to be made. I am thinking particularly of the construction industry, which also has a high accident rate because hazardous operations are involved, and in which the Construction Industry Training Board has been permitted to continue despite the Government's attitude to industry training boards in other sectors.
I therefore hope that we shall have a sympathetic response from the Minister. As my noble friend rightly says, there is no reference in the Bill, so far as we can see, to the necessity of maintaining training programmes. Of course, it is important that training records are 642 kept, otherwise there could be cases of untrained personnel operating in mines, particularly on private contracts. This is a very important issue and I hope that the Minister will respond sympathetically. I support the amendment.
I beg my noble friend, if he will be so kind, to consider carefully what the noble Baroness has said. I am involved in a dangerous industry, forestry, and I know that mining is much more dangerous but it has, I believe, an unparalleled safety record, given the number of people involved. It will be a tragedy if, whatever else the Bill does, it denigrates the safety arrangements that have been made by the Coal Board over a number of years. I hope the Minister will give an assurance that the Bill will not damage that record.
§ Lord Strathclyde
Of course I can give that assurance. My noble friend is absolutely right in saying how important this issue is. Perhaps I may draw a parallel with the industry in which he is a great expert, the forestry industry, which deals with complicated and dangerous machinery and in which he personally has a responsibility to his workers under law. If the law is broken and if he does not provide the right training or qualifications, he can be prosecuted. It is under exactly the same regime that we want the coal industry to perform. As I said on Second Reading, there are no concessions on the issue of safety or the importance of training. What is important is where it is done and who is responsible for it, and it is with that that I wish to deal.
In its report to the Government, the Health and Safety Commission stressed the importance of training and recognised the value of British Coal's computerised database of contractors and of the training records of employees of contractors. The commission has also suggested that the safety-related training material produced by British Coal's Learning Resource Unit should continue to be available to new owners.
Having said that, it is important to note that the commission also stressed that there is already an extensive framework of legislation relating to training and instruction. On this basis, the commission advised that it is for employers to decide on the precise methods, in their particular circumstances, of identifying and meeting their particular training requirements.
British Coal is managing the arrangements for the sale of the ancillary parts of its current business and is considering the options for the future of, among others, the management of training records and material. The corporation is fully aware of the advice which the Health and Safety Commission has given to the Government and shares the Government's determination that safety should be the first priority.
The corporation has assured my department that its proposals will be fully consistent with the commission's advice. That provides substantial reassurance on the concerns underlying this amendment. I welcome the opportunity to give those reassurances and hope that the noble Baroness will withdraw her amendment.
§ Baroness Lockwood
I thank my noble friend and the noble Earl for their support. I also thank the Minister for stating that he regards this issue as a very important 643 one and that the advice of the Health and Safety Commission has been sought. However, I was not very reassured when the Minister said that, although he hoped that there will be extensive provisions, it will be for each employer to decide on the precise methods of training. That is one of the difficulties that we face under the Bill. If it is for each employer to determine what methods of training he will follow, then there will be no national standards, and that is something that has been an essential part of the training of British Coal.
I am not terribly satisfied with what the Minister said, although I must say that he spoke at such great speed that it was sometimes difficult to keep pace with him. I shall look at what he has said, but I must warn him that I do not feel particularly satisfied and I am sure that we shall be back on this issue. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 4 agreed to.
Lord Morris of Castle Morris moved Amendment No. 24:
After Clause 4, insert the following new clause:
§ ("Duty of the Authority with respect to other functions of the Corporation
§ .—(1) It shall be the duty of the Authority to ensure the continuation of functions previously carried out by the Corporation but not conferred on any other person.
§ (2) In particular, the Authority shall ensure the continuation of—
- (a) a Mines Medical Service including an occupational health service;
- (b) consultation on and drafting of codes of practice; and
- (c) educational bursaries.").
§ The noble Lord said: The purpose of this amendment is to place an obligation on the Government to maintain existing medical and other services currently provided by British Coal. Medicine, medical services and medical research do not stand still. New methods of treatment constantly emerge, and the mining industry deserves richly in this respect not to be left behind. So this amendment recognises the need for specialised research and on-going specialised medical services for the mining industry.
§ The service currently provided covers a wide area, from a network of area medical officers, through consultations with employees on occupational health, right through to X-ray schemes. That medical service is part of British Coal's operations. It has played a major part in reducing levels of occupational disease and injury, particularly in the field of pneumoconiosis. It provides advice to miners and to management, and it conducts at the same time on-going specialist research. The special hazards faced by miners require a specialist service. This will not be provided by private operators unless they are forced to do so - it is not necessarily in their interests to do so—or it could be provided by Government. In this instance, if perhaps in few others, we on these Benches would prefer to trust the Government.
§ If the Government are serious about their intentions to retain the longest possible deep-mined coal industry, then an industrial medical service with dedicated skills and a service record that has served the greater social good surely must be retained. Due to the technical complexities of coal mining and the extent of the 644 statutory conditions which have regulated the industry throughout this century, the coal industry in the United Kingdom has developed considerable proficiency in consultation and in the drafting of codes of practice; and that too should not be abandoned.
§ With nationalisation, the National Coal Board, as it then was, and since 1986 British. Coal, was the custodian of such procedures. With its passing, the Coal Industry Bill does not inform us where any such duties will lie, and we should like to know. If the industry is to avoid the market anarchy and the deep-rooted social bitterness of the pre-nationalisation era, civilised procedures to obtain mutual agreement through consultative procedures must be preserved. So we regard it as essential that the proposed Coal Authority should be given the statutory means by which private coal operators are required jointly to undertake consultative duties and contribute to codes of practice that ensure the continuation of the highest standards.
§ On the question of educational bursaries and in-service scholarships, until now British Coal has been able to replicate its managerial and technical expertise through the funding of bursaries and in-service scholarships. The result, I think I can say, has been the most technically concentrated and safest coal industry in the world. It has also contributed to Britain having the most economic and the only unsubsidised deep-mine industry in Europe.
§ Another outcome until recently was an extremely high standard of union branch officials who, through attending part-time courses in economic industrial relations and safety, have also been able to make a major contribution to the professionalism of the industry's managerial environment. So it is important that for the future of the industry, if it is to survive, a climate of trust based on the continued pursuit of technical, managerial and operational excellence is actively encouraged. This amendment would provide for it. Nothing else in the Bill would. I beg to move.
§ 11.15 p.m.
§ Lord Ezra
I support the amendment moved by the noble Lord, Lord Morris of Castle Morris. I wish in particular to refer to the Mines Medical Service, which was established over many years. As the noble Lord rightly said, it made remarkable and indeed world shattering progress in particular with regard to the dreaded disease, pneumoconiosis. It led the way. I remember visits from our American mining colleagues who were most concerned about what they called "black lung disease". They came to us to find out how we dealt with it. It could only have been dealt with on the basis of a concerted, integrated Mines Medical Service, supported by an occupational medical centre.
It is of great social importance to the industry that an integrated medical service, with its accumulated knowledge of dealing with mining diseases and problems, should be preserved one way or another. I look forward to hearing what the Minister has to say.
We have a thin Committee this evening. After listening to an expert such as the noble Lord, Lord Ezra, I rise to support what was said by the 645 noble Lord, Lord Morris, who is also an expert. I am not an expert but I know that many people in the mining counties have suffered terribly from mining subsidence and other troubles as a result of mining operations. I hope that my noble friend the Minister will see to it that the Bill will ensure that they will not be disadvantaged by its progress. I hope that the Government will take into consideration all that was said by the noble Lord, Lord Morris. We are a thin Committee, but many people throughout the country, not only in mining areas, are most interested in this difficult problem which arose long ago.
§ Viscount Goschen
The intention of the Bill is that the Coal Authority's prime focus should be on facilitating coal mining operations. The Coal Authority would take over British Coal's interests in unworked coal and coal mines as well as other land and property. The authority would therefore also take over British Coal's responsibility for dealing with landslips, water discharges, gas emissions and the like arising out of ownership of that property. We believe that it would therefore be inappropriate to pass on other functions of British Coal to the Coal Authority other than those that I have mentioned.
The amendment draws attention to three particular areas where British Coal currently plays a role. The Health and Safety Commission has advised that there is already a sufficient framework of law requiring employers to carry out all necessary health surveillance and to maintain the necessary medical records. The commission's advice was that it must be for employers to determine how they meet established standards and who they choose to carry out medical examinations.
I can reassure the noble Lord, Lord Morris, and my noble friend that the Government have nevertheless noted the commission's view that British Coal's medical service provides a valuable centre of expertise and that employers in the privatised industry may well wish to continue to have the opportunity to purchase its services.
British Coal is managing the arrangements for the sale of the ancillary parts of its current business and is considering the options for the future of, among others, the medical service. The corporation is fully aware of the advice which the Health and Safety Commission has given to the Government and shares the Government's determination that safety should be the first priority. The corporation has assured my department that its proposals will be fully consistent with the commission's advice.
On codes of practice, British Coal and the Health and Safety Executive are working to codify the great majority of existing British Coal safety codes, rules and instructions which will not otherwise be given legal status. That work is almost complete, and when it is, the material will be issued to the privatised industry by the Health and Safety Executive as formal industry guidance.
With regard to the point raised by the noble Lord, Lord Morris, about educational bursaries, British Coal has provided funds to enable selected school leavers and 646 employees to attend college and university courses which have a bearing on the coal industry; for example, mining engineering and business management. In the past, that has ensured that sufficient numbers of suitably qualified people were available for employment by British Coal.
In future it will be the responsibility of the successor companies to gauge the numbers of those within the labour market who are suitably qualified or are likely to become so. It will then be for them to determine the further education needs of their prospective and existing employees and to fund them accordingly.
In the light of that explanation, I hope that the noble Lord will feel able to withdraw his amendment.
§ Lord Morris of Castle Morris
I have heard what the noble Viscount has said and I do not much like it. I do not believe that it would be inappropriate to maintain the standards of the Mines Medical Service. I believe that it would be extremely appropriate for the Government to do just that, and not to kick it into the air and hope that there will be somebody underneath to catch it.
I am not reassured that the Government have taken note of the excellence of the service. I have taken note of the time, but that will not stop or accelerate the clock. The Government's response to this amendment is, in my view, distinctly unhelpful. We shall return to it at a later stage when I hope that they may be in a more giving mood. Meanwhile, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 25 not moved.]
§ Clause 5 [General powers of the Authority]:
§ [Amendments Nos. 26 to 29 not moved.]
§ Clause 5 agreed to.
§ Clause 6 agreed to.
§ Clause 7 [Exploitation rights: general]:
Lord Morris of Castle Morris moved Amendment No. 30:
Page 6, line 42, leave out (" and (c)").
§ The noble Lord said: In moving this amendment, I shall speak also to Amendment No. 31. The object of the amendments is to defer the lifting of the 250,000 tonne opencast ceiling until the restructuring date. I say again that it is to postpone the lifting of that ceiling and not to do away with it altogether.
§ In our view, it is important to defer until the restructuring date in order to avoid an unholy rush of opencast licence applications which would have to be dealt with by British Coal. British Coal remains the licensing authority until the restructuring date, when the Coal Authority takes on that role.
§ British Coal has already made substantial cuts in its staff and cannot really be expected to be in a position to deal with a flood of applications so close to its own winding-up time. There is also the question of whether British Coal would be able to maintain its standards of scrutiny, given the likely number of applications and the much-reduced workforce near the end of its employment.647
§ That anxiety was put forward with some force and power in Committee in another place and, if I have read the record correctly, it was not then addressed in the Minister' s response.
§ From recent statements it appears that the Minister plans to have the coal industry under private operation "more or less", "give or take a few days here or there" and "taking one thing with another" by the end of the year. That suggests that the transfer of responsibilities from British Coal to the Coal Authority will take place very quickly. At the most, we are looking at a few months. Therefore, there is no threat that the amendments will hold up the issuing of licences to opencast operators by any substantial time.
The thrust of the Minister's response in Committee in another place was that Article 4(b) of the European Coal and Steel Community Treaty forbids measures that discriminate against producers, and that these amendments would prejudice opencast operators. Well, we were not convinced about that. Article 4(b) refers to,
measures or practices which discriminate between producers, between purchasers or between consumers, especially in prices and delivery terms or the purchaser's free choice of supplier".
I do not see that the proposed 250,000-tonne limit falls within the special terms highlighted by Article 4(b), and so it cannot be regarded as an issue of particular concern within the treaty.
Using the Minister's argument regarding the ECSC, Amendments Nos. 30 and 31 propose to bring the UK into line with its treaty obligations. Since 1973, when it joined the European Community, the UK has been discriminating against its private operators by imposing limits on production and the numbers of men working in private pits. Bearing in mind the pressures on British Coal and the likely rush of applications, the amendments would serve only to,
promote the orderly expansion and modernisation of production
as specified in Article 3(g) of the ECSC Treaty. I am trying to be helpful and, at the same time, a good European. It seems unnecessary to push ahead lifting this ceiling when the licensing authority may not be able to deal with the applications thoroughly and when there is much more to be gained by having the new conditions applying from the restructuring date under the control of the Coal Authority. It is much tidier. I beg to move.
§ Lord Strathclyde
I must say that I find myself increasing surprised by the noble Lord, Lord Morris of Castle Morris, because what Clause 7(1) does is to reflect the commitment made in the Government's coal review White Paper to bring an end to British Coal's effective monopoly. At present, British Coal is able to license private sector coal producers only at collieries which employ fewer than 150 men underground or at opencast sites where the total output of the site will be less than 250,000 tonnes.
British Coal has over the past year adopted a policy of offering to the private sector those pits it no longer wishes to operate. Five collieries have already passed to new owners in the private sector. Detailed negotiations continue over the lease and licence of four more collieries.
648 With the rapidly changing structure of the coal mining industry in the run-up to privatisation, it is important that private sector mining operators are given the same opportunities as British Coal. That should include allowing the private sector to benefit from economies of scale. The purpose behind the amendment is to postpone opencast mining but all it achieves is to prolong British Coal's effective monopoly in large-scale opencast coal mining until the Coal Authority can be established.
The Government support a competitive market for fuel in the UK. Competition between deep-mined and opencast coal must, to some extent at any rate, be good for the industry. Competition between producers within those sectors is also potentially beneficial. It is for that reason that the Government made the commitment in the coal review to remove the restrictions on British Coal powers to license private sector producers under the Coal Industry Nationalisation Act 1946.
What the noble Lord proposes is a blatantly discriminatory measure which would allow private sector deep-mine operators to compete on an equal footing with British Coal and yet deny private sector opencast operators such opportunities. It is blatantly discriminatory. I do not believe that the noble Lord has made a case for it. I hope therefore that he will withdraw the amendment.
§ 11.30 p.m.
§ Lord Morris of Castle Morris
I find myself less and less surprised by the Minister's replies to our amendments. He seems wedded indissolubly to the grinding processes of this Bill, even when we point out the disadvantages to him. I thought that we were being helpful with this amendment. We were not causing difficulties. We were trying to ease the progress through time of this wretched process that he is concerned to bring about. What we were suggesting would have eased the considerable problems which will accrue to British Coal in this particular period. If he wants British Coal to have it the hard way, then so be it.
We shall read what the Minister had to say and may very well come back to the issue in defence of British Coal, not all of whose activities we have been the highest praisers of. In this case we felt that there was something that could be done for it usefully. I am only sorry that the Minister does not agree. At this late hour, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 31 not moved.]
§ Clause 7 agreed to.
§ Clause 8 agreed to.
§ Clause 9 [Exploitation rights: oil and gas]:
Lord Morris of Castle Morris moved Amendment No. 32:
Page 8, line 32, at end insert ("except that the Authority shall not have power to require any fee to be paid in addition to the sums payable under the Petroleum (Production) Act 1934.").
§ The noble Lord said: I wonder how the Minister and the Government feel about coal bed methane, because that is what this amendment is really about. Coal bed methane may very well become a very significant 649 energy source. It was referred to earlier today. It is not a subject which the nation as a whole knows very much about because the whole industry is new.
§ The coal bed methane industry is currently licensed by the oil and gas division of the DTI, to which the industry pays a significant fee. Due to the low profit margins in the industry, the operators will find it very difficult indeed to sustain any additional fees. As I said, the industry is new; it is speculative. So, to secure long-term investment in coal bed methane extraction, the Government must assure the industry that it will not be subject to any additional potentially prohibitive expenses in the form of additional licence fees required by the Coal Authority.
§ It is in the interests of the Government, surely, to ensure that they do not cause the premature death of an emerging industry through what I could only describe as over-regulation and excessive financial levies. The right climate must be established to ensure the development of this additional means of exploiting the nation's coal reserves, which incidentally can be done without endangering the lives of anything like so many people as the old deep-mining business used to do. I beg to move.
§ Viscount Torrington
I should have thought that the amendment belongs more appropriately at the end of line 9 on page 9. I have sympathy with the amendment. I have already spoken on the subject of coal bed methane. My noble friend made it clear that the operator of any well drilled to extract gas from a coal seam, whether it is one inch thick and wherever it is, would have to deal with the authority.
The Bill states that the authority shall be entitled to grant such rights. That has the negative consequence that it need not necessarily grant rights. I seek from my noble friend an assurance that that entitlement will be used more from a safety point of view, because it is important that there should be liaison between the gas industry and the coal industry to make sure that someone does not drill into an existing coal working or, equally, that someone does not try to mine through a gas well underground. There is concern on the part of the industry that, as the noble Lord, Lord Morris, said, this will be used as a revenue-raising tool. I should like an assurance that that will not be the case.
§ Viscount Goschen
The Government attach great importance to the successful development of the coal bed methane industry. That is why Clause 9 of the Bill makes the position clear about the ownership of the methane in coal seams and Clause 3 gives the Coal Authority specific duties in respect of the development of the coal bed methane industry.
The purpose of the amendment appears to be to prevent the Coal Authority from charging coal bed methane companies holding petroleum licences any fees for granting access to the coal seams. However, Clause 9 is concerned with the ownership of the methane, which it makes clear will not vest in the Coal Authority.
I believe that I can give the noble Lord, Lord Morris, the reassurance that he seeks from the Government. The Government accept the concern of the coal bed methane companies on this issue. We, too, believe that the 650 industry should be subject to only one rental charge by the public sector for extracting coal bed methane and that the charge should be made under the petroleum licensing regime.
We have therefore made the Coal Authority's general duty to obtain the best value for its assets under Clause 3(4) subject to its duty in respect of the coal bed methane industry in Clause 3(6) of the Bill. Under that subsection the arrangements and principles adopted by the Coal Authority towards holders of petroleum licences must be approved by the Secretary of State.
In line with this approach, I can assure the Committee that the Government do not intend to approve any arrangements which involve the Coal Authority charging a rental for access to the coal.
I hope that the Committee will nevertheless agree that it would be wrong for the Coal Authority not to be able to charge any fees for dealing with the coal bed methane industry. As is common practice for non-departmental public bodies, the Coal Authority will seek to recover the full administrative costs of its licensing functions, including the granting of rights of access to coal bed methane operators. I am sure that the Committee will agree that this cost, which should by its nature be modest, should be met by the industry rather than by the taxpayer.
Under the framework provided by the Bill, we intend that the authority should work closely with the Department of Trade and Industry to ensure the effective development of the coal bed methane industry. We fully recognise the importance to that industry of not being asked to pay twice for the same activity. In the light of the reassurance that I have given on that point, I hope that the noble Lord will be happier and will feel able to withdraw his amendment in a contented fashion.
§ Lord Morris of Castle Morris
Is the noble Viscount aware that he has made my day? I am grateful to him for his reply. There is light at the end of the tunnel. The Government's heart is not made totally and utterly of stone. They are prepared to move just occasionally in tiny movements in forward directions. I thank the noble Viscount for his reply and beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 9 agreed to.
§ Clause 10 agreed to.
§ Clause 11 [Restructuring of the Corporation's functions]:
Lord Morris of Castle Morris moved Amendment No. 33:
Page 10, line 38, leave out from ("as") to ("is") in line 39.
§ The noble Lord said: I shall be brief because I shall be unable to be terribly brief about a later amendment.
In the amendment I ask the Government to delete the words,
having regard to what is economically viable, it considers".
The purpose of the amendment is to exclude the notion of economic viability. I wish to do so with a probing amendment to find out whose definition of economically viable the Government are accepting, how long term it is and what consultation they have gone through in order to arrive at it. I beg to move.
§ Lord Strathclyde
The noble Lord was quick in his introduction; I understand why. I hope that I can give him some satisfaction.
Following the enactment of the Bill, British Coal's main objective must be the transfer of its undertaking and property out of its ownership and control. The Bill must give British Coal the powers necessary to bring this about, but it must also put in place certain safeguards to ensure that the corporation runs its affairs in an economically responsible way.
Subsection (1) of Clause 11 amends the functions of British Coal on and after the restructuring date. It provides for British Coal to carry on its undertaking and to manage and deal with its property in the way that it considers is best calculated to further certain specific purposes. These purposes are consistent with privatisation and relate to the use and transfer of the corporation's property.
I have already explained at length the Government's objectives, so I shall not go over that again. But it is worth remembering that there are important public finance questions here. Since 1979 the Government have put nearly £20 billion into the coal industry. While it remains in the public sector, it will continue to be a drain on the public purse. I think that the taxpayer has a right to expect British Coal to run its affairs in an economically viable way.
British Coal will continue to operate at arm's length from the Government, but Ministers are accountable to Parliament for the conduct and success of privatisation. The Secretary of State needs to be in a position to ensure that he can discharge this responsibility properly. To do so, he needs to be able to exercise control over those aspects of the corporation's affairs which affect the proceeds arising from privatisation and the use of public funds.
The second amendment removes the obligation on British Coal to accept the opinion of the Secretary of State as to the economic viability of any matter relating to the conduct of the continuing business. Of course, this would hinder the Secretary of State in discharging his responsibilities for the use of public funds and could hinder his wish to secure value for money.
The coal industry's best hope of a successful future lies in the private sector. The noble Lord and I disagree on that point, but I hope that at least I have given him some satisfaction in answering his amendment.
§ Lord Morris of Castle Morris
I disagree entirely and profoundly. I am grateful to the Minister for putting his side of the argument so clearly and concisely. He will not expect me to agree with it, but he has laid out his stall in an extremely helpful way. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 34 not moved.]
§ Clause 11 agreed to.
§ Clause 12 [Restructuring schemes in relation to property etc.]
§ [Amendment No. 35 not moved.]652
§ 11.45 p.m.
Lord Morris of Castle Morris moved Amendment No. 36:
Page 13, line 18, at end insert:
("() In making any scheme under this section, the Secretary of State shall have regard to those matters which constitute the purposes and duties of the Authority under this Act.").
§ The noble Lord said: This amendment will take a little longer because it is about justice. Its aim is to ensure that any scheme made by the Secretary of State conforms with the purposes and safeguards contained in the Act and ensures uniform and fair treatment of all persons involved in such transactions under the Act.
§ The Bill is careful to set out in great detail the duties of the proposed Coal Authority—even if it is only two people —the matters about which it must consider carefully what it is to do and the procedures that it must follow in granting a licence to mine coal. The authority has objectives to secure a viable coal mining industry, to see that its licensees are financially sound and to consider the interests of those who might suffer subsidence as a result of its licensees' actions. It is to ensure that its licensees are experienced and expert and that competition is promoted. The terms on which it shall dispose of its property are prescribed and it must pay regard to the environmental effects of any proposals for after-use of former mining land. All those are matters which we would wish to be considered in connection with mining licences and with disposal of substantial parcels of land which have been in public sector ownership.
It would be amusing and interesting, not to say informative if someone could inform us at some point exactly how much land the Coal Authority owns. A quarter of a million acres has been suggested; someone has likened the area to the isle of Anglesey in its extent, though not in its location nor in its beauty. But no one seems to be absolutely certain as to the extent of its land, though it can be well imaged as a parcel of land in various parts of the United Kingdom which happens to have a few holes in it. Those holes are, or were, coal mines; and part of the Coal Authority's duty is to act as a purveyor of land for a wide variety of possible purposes so long as they be consistent with planning permissions. That fact is perhaps one that has not really gone home to many of the readers of the Bill, and perhaps to many of your Lordships here tonight. But the question has to be asked: how many of these licences will be granted and how much of this land will be disposed of before the Coal Authority even sees the light of day, before it comes into existence—or at any rate, before the restructuring date?
From my reading of the Bill, Clause 12 gives the Secretary of State powers to transfer anything he likes to whomsoever he likes without paying the slightest regard to these matters.
The Government have said that they plan to offer the industry for sale in five lots, which may be bidden for jointly. One scheme put forward by the Secretary of State could, it seems to me, dispose of the entire industry without any of those duties or obligations which have been the subject of so much detailed scrutiny ever becoming relevant. The Secretary of State 653 does not have to advertise any sale or disposal. The only person to whom he must give notice under Schedule 2 is someone to whom it seems likely to the Secretary of State that compensation may be payable. Although Schedule 2 sets out in considerable detail what may be included in a scheme, it is, apart from the notice provision, entirely permissive. It places no limitation on the Secretary of State's powers.
The Coal Authority can dispose only of assets not required for the mining of coal. As I see it, no such limitation is placed on the Secretary of State who can, if he wishes, dispose of the freehold ownership of coal to private interests despite the underlying philosophy of the Bill, which is to retain the freehold ownership of coal in public ownership. All this the Secretary of State may do with no scrutiny by either House of Parliament. We have become used over the years to ever more sweeping powers being acquired by the Executive. But the powers given in this clause seem to us unusually excessive by any standard.
Our amendment is probing. It is modest in its aims. It seeks only to secure that the Secretary of State shall have regard to the same objectives, the same considerations and abide by the same duties as are prescribed for the authority in the carrying out of its functions. Will that, or will that not, be the case? I beg to move.
The noble Lord, Lord Morris, perhaps to the surprise of a very thin Chamber, mentioned the amount of land that is involved, and therefore, I presume, landowners.
I should like to make a plea to the noble Lord who is in charge of this Bill. Will he think of the numbers of people, either in respect of the land concerned, or its many other facets, who are affected by the Bill? I hope that he will see some way in which the points that the noble Lord, Lord Morris, and his friends have put forward can be met or at least not be adversely affected, as I fear they will be, by the Bill. I support the noble Lord opposite.
§ Lord Strathclyde
I am sure that the noble Lord, Lord Morris of Castle Morris, is delighted to have the support of my noble friend. I can, however, assure my noble friend that there is nothing untoward proposed, and indeed I can assure the noble Lord, Lord Morris, of the same thing. The noble Lord has probably got it wrong. I shall explain the matter and then we shall see whether we can agree.
Clause 26(6) is drafted in terms of the Secretary of State issuing licences in exercise of the Coal Authority's powers to grant a licence. It follows that the Secretary of State in so doing will be subject to the authority's licensing duties. That is the key aspect and it means that he cannot act in any other way.
The actions of the Coal Authority and the Secretary of State will also be equally open to challenge in the courts. When making any scheme to transfer British Coal property, rights and liabilities to the authority, the Secretary of State will have to have regard to the duties and functions of the Coal Authority. However, the Secretary of State and the Treasury, which has to give its 654 consent to the making of any scheme, also have responsibility for much wider matters which will be relevant at the time that this scheme is made. Such matters include the responsibility for the use of public funds and for competition law and policy.
I am sure that the Committee will recognise that the duties of the authority have been carefully framed to address the functions which it is intended to perform. However, we should not forget that British Coal is a large organisation with a wide range of business and other interests. Restructuring schemes may, therefore, be concerned in whole or in part with matters outside the scope of the Coal Authority's functions. For example, a number of British Coal's responsibilities in relation to its past employees, such as the provision of concessionary fuel, will transfer to government by means of a restructuring scheme. The duties of the authority could not appropriately be applied in such cases.
In other cases, applying the authority's duties could, in addition, be unnecessarily restrictive. In a number of contexts my colleagues and I have indicated that we fully understand the need to take proper account of the current use of the land when disposing of the property of British Coal which would not be relevant to future coal mining operations. That included land currently used for recreational purposes by the Coal Industry Social Welfare Organisation (CISWO) and tenanted agricultural land. The restriction which could be imposed by this amendment would require the Secretary of State, when disposing of the property, to secure the best terms reasonably available.
In short, while I understand the concern to ensure that the Secretary of State acts in a manner which reflects the duties of the Coal Authority when making a restructuring scheme, the amendment is inappropriate. It would narrow the range of factors which the Secretary of State can and must take into account in reaching decisions on the transfer of British Coal's assets and liabilities.
There is nothing untoward in this provision. There is no abuse of power. I understand very well why the noble Lord should raise the issue, but I hope that I have offered him some comfort.
§ Lord Morris of Castle Morris
I do not feel particularly comforted. I do not feel especially reassured. I do not feel that the questions that I raised have been answered to my complete satisfaction. I do not feel that inward glow of certainty that a complete defence has been given to what we see as a very unexplained and murky area of the Bill even yet.
However, the noble Lord and I have gone at each other fairly fast. Our responses to each other have been carefully taken down and no doubt will appear tomorrow morning at our breakfast tables, when we can read them at greater leisure and slower speed. Having aired the situation across the Dispatch Boxes tonight, we have gone so far as we can go on this point. Each of us must read what the other has said, and perhaps we may be able to settle this matter outside, as it were. If not, we 655 can come back into the ring and do a further three rounds. Until then I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 12 agreed to.
§ [Amendment No. 37 not moved.]
§ Schedule 2 agreed to.
§ Clauses 13 to 15 agreed to.
§ Schedule 3 agreed to.
§ Clauses 16 to 18 agreed to.
§ Clause 19 [concessionary coal]:
Baroness Turner of Camden moved Amendment No. 38:
Page 17, line 17, leave out subsection (1) and insert:
("(1) The Secretary of State shall, out of money provided by Parliament, ensure—
§ The noble Baroness said: I rise to move, in the absence of my noble friend and with the leave of the Committee, Amendment No. 38 and also to speak to Amendment No. 39. The Government have said that all employees are entitled to concessionary coal and that payments in lieu thereof will continue. They will continue to benefit from those arrangements. But the Bill does not guarantee the continuation of those provisions. There is a belief on the part of the unions that the Government have in any event underestimated the cost, which they believe to be around £70 million. Indeed, it is said that the DTI's consultation document puts the cost at around £150 million.
§ The Government may claim that the existence of the TUPE '81 regulations guarantee the continuation of that entitlement. TUPE makes its appearance yet again in the context of a privatisation Bill, as it did in the recent railway legislation. However, it is by no means certain that TUPE provides the necessary guarantee. Employers will be able to get round TUPE by giving notice to alter existing contracts. Employees who transfer into private ownership, having built up an entitlement, can be protected only by forcing employers to provide fuel under the same terms as the existing agreement. Indeed, our amendment goes a hit further and says that the administration of concessionary coal and cash in lieu should be undertaken under the auspices of the Coal Authority.
§ The Government appear also to be planning to privatise administration of the National Concessionary Fuel Office. It is believed that that could well have an adverse effect on the level of service. The intention of 656 Amendment No. 39 is to take the Treasury's sticky fingers off the allocation of funds. The whole idea is to remove Treasury control over the allocation.
I suggest to the Committee and to the Minister that these are reasonable amendments in the context of the assurances that the Government have already given in regard to concessionary coal. Certainly if something of this order were to be written on the face of the Bill it would set at rest a number of the fears expressed to us by past and present employees in the industry. I beg to move.
§ Lord Strathclyde
Amendment No. 38 contains a number of elements and I should like to deal with those in turn and then deal with Amendment No. 39, whose effect is to remove the requirement for Treasury consent to the making of payments in respect of concessionary fuel.
The first point is that Clause 19 provides for the Secretary of State to be able to make payments in respect of concessionary fuel out of money provided by Parliament. It does not deal with transfers of responsibility. As the Committee will be aware, we propose that responsibility for the entitlement of ex-employees and their dependants, or "beneficiaries", will be transferred to the Secretary of State. Responsibility for the entitlements of continuing employees will be transferred to successor companies.
The amendment to Clause 19(1) (a) essentially seems to be keeping the terms of existing entitlements. But that is unnecessary. The reference to "such supplies" in the clause as drafted already achieves that. Moreover, the entitlements of most beneficiaries and all current employees are derived from the concessionary fuel agreements and have been incorporated in contracts of employment. As such they are considered legally enforceable by or on behalf of the employee, ex-employee or dependant. Paragraph (b) of the amendment is therefore also unnecessary. It purports to transfer responsibility in respect of continuing employees to the Secretary of State. As I explained, that responsibility will pass to successor companies with the contracts of employment of continuing employees.
The next element of the amendment looks to involve the Coal Authority in the administration of concessionary fuel. We propose that the National Concessionary Fuel Office should continue its current work within the Pensions and Insurance Centre on the day-to-day administration of the entitlements of beneficiaries, and it will be open to successor companies to use the NCFO to administer the entitlements of British Coal employees who transfer to its employ. It is not entirely clear to me what involvement is in mind in the term "under the auspices". But I am clear that involving the Coal Authority would be at a tangent to its main role and responsibilities and would not improve anything.
The final element relates to conciliation arrangements. Again I do not think the amendment is necessary. As noted in the consultation paper, we propose, so far as beneficiaries are concerned, arrangements similar to the existing joint working parties with the trade unions as the vehicle for dealing with concessionary fuel issues. As far as continuing employees are concerned, the 657 concessionary fuel agreements will remain conciliable as between the employer and employee. The precise procedures will be a matter for the employers and employees concerned.
I can understand why the noble Baroness has raised the issue. It is an important one to explain and to clarify. I hope I have done that.
§ Baroness Turner of Camden
I thank the Minister for that response and for the number of assurances he has given. He says that it is unnecessary to write this into the Bill. It may perhaps be unnecessary to write into the Bill an amendment of this length and possible complexity. However, I should like to read very carefully what he has said because he said it at a considerable speed. I understand why, because we are really rather late in the evening's proceedings. In fact, it is nearly the next day. However, it means that we shall have to take a little time to consider what he said and it may possibly be that, if we are not satisfied, we shall come back with a different form of wording at Report stage. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 39 not moved.]
§ Clause 19 agreed to.
§ Clause 20 [Extinguishment of loans to the Corporation]:
§ On Question, Whether Clause 20 shall stand part of the Bill?
§ Lord Morris of Castle Morris
It has gone midnight and on behalf of my noble friend Lord Peston I wish to present his case, which is that this opposition to Clause 20 is essentially a question about the writing off of British Coal's debts to the nation in preparation for privatisation.
The Government's privatisation programme has already cost the nation more than £13 billion in written-off debts since 1979. This sorry story was fully related by a previous Chancellor of the Exchequer in a Written Answer of 3rd March 1992 which set out the debts written off prior to privatisation as follows: British Aerospace, £60 million; National Freight Corporation, £100 million; British Transport Docks 658 Board, £81,293,616; British Telecommunications, £2,789,865,772; British Airways, £160 million; BAA, £43,503,340; British Steel, £500 million; British Steel again, for borrowing under the Iron and Steel Act 1982, £3,480 million; water holding companies, £4,973,332,672; water holding companies again, £55,013,916; Scottish electricity companies, £1,043,573,600. That is his count. It adds up to—a very large amount indeed. In my noble friend's view, it would be unfortunate therefore if the public were to incur further losses by the writing off of British Coal's debts. How much do the Government propose to write off this time?
§ Lord Strathclyde
I suspect that this is one of the insincere Motions of the noble Lord, Lord Peston. The clause provides that the Secretary of State may, subject to the consent of the Treasury, extinguish outstanding loans to the corporation out of money provided by Parliament. It also provides that British Coal's tax losses are not altered by the extinguishment of loans.
As the noble Lord realises, there is nothing extraordinary about this. In most privatisations we have tidied up the financial provisions. As regards debt extinguishment, at the end of British Coal's 1992–93 financial year its total debt was £1,071 million. That comprised borrowings as follows: Exchequer borrowings, £711 million; loans from the National Loans Fund, £180 million; from the European Coal and Steel Community, £110 million; and commercial borrowings, £70 million. As no doubt will be very well known by the noble Lord, it is impractical to transfer outstanding Exchequer loans to successors, so provision is made in this clause to extinguish the Exchequer debt privatisation.
As regards the specific question which the noble Lord asked me, it is too early at this stage to give him a final figure, but I certainly hope that that does not stop him agreeing that the clause should go forward.
§ Clause 20 agreed to.
§ Clause 21 agreed to.
§ Viscount Goschen
I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.
§ House adjourned at six minutes past midnight.