Coal Industry Bill

HL Deb 13 June 1994 vol 555 cc1441-504

3.20 p.m.

Report received.

Clause 1 [Establishment of the Coal Authority]:

Lord Morris of Castle Morris moved Amendment No. 1:

Page 1, line 9, at end insert: ("( ) subject to the specific provisions of this Act, taking over the liabilities of the Corporation;").

The noble Lord said: My Lords, never far from my thoughts, from my bedside or from my briefcase is the invaluable little compendium, the Companion to the Standing Orders of your Lordships' House. It is replete with good advice; it is a perpetual fountain of fine phraseology; and it is a guide, comforter and friend to those of us charged with the conduct of business in this Chamber. Indeed, here is, infinite riches in a little room".

If noble Lords care to consult it on the question of procedure on Report stage of a public Bill, they will receive useful prompting in courteous language. We are advised and adjured at Report stage that, arguments fully deployed in Committee of the Whole House should not be repeated at length on Report".

The reason is obvious: if we did repeat them we should be here all night. However, it must be confessed that it does occasionally happen. Indeed, some might say, with Shakespeare's Hamlet, that it is, a custom more honoured in the breach than the observance".

I hope that it will not happen today. So, in conformity with the spirit of the Companion advice, I beg leave to move the group of amendments standing in my name on the Marshalled List, an unusually large group perhaps with which to begin but one which, I suggest, coheres in that all the amendments relate to the vexed and as yet unresolved question of liabilities.

Your Lordships may now expect that I shall make a long and boring speech on liabilities. Not so. I shall make a short and boring speech on liabilities, attempting no more than to renew your Lordships' acquaintance with issues we debated lengthily in Committee. The first amendment makes it clear that liabilities are dealt with in the Bill. Heretofore, that has not been placed in the very forehead of the Bill; it has emerged as we have gone along. We on these Benches believe that it should be explicit and not merely implied. Those affected by such matters should know where they stand. In particular it is not enough to deal with liability issues in draft licensing documents; there is no guarantee that the draft will survive the negotiating process, and, in any event, it is probable that the final licences will be subject to commercial confidentiality. Therefore, we wish to see this simple, unambiguous provision right at the beginning of the Bill.

The remaining amendments seek to ensure that the liabilities should be dealt with on the face of the Bill. They suggest a method which ensures that no one is in danger of being left uncompensated and also that a viable mining industry survives privatisation. Together the amendments propose a scheme for apportioning liability and ensuring continuing viability.

Amendment No. 4. is required to ensure that licences issued by the Secretary of State should be issued only after consideration by the Secretary of State of the same matters as are required to be taken into account by the authority. The Government have now published a revised explanatory note on the Coal Authority. On pages 10 and 11 it sets out the Secretary of State's power to grant licences and says: First, British Coal will require licences to continue its coal mining operations immediately the Authority begins to carry out its functions. It would not be practical for the Authority to grant those licences".

Well, that is clear and it conforms to what the Minister said in his kind letter to me of 24th May. The explanatory note continues: Second, those taking over British Coal's coal-mining operations on privatisation will likewise require licences: the grant of such licences would be an integral part of the privatisation process being undertaken by the Secretary of State".

I find nothing in the Minister's reassuring letter about that. The letter clearly implies that the Secretary of State will allow British Coal to continue operating and that the Coal Authority will deal with the rest. How can coal and coal mines vest in the Coal Authority under Clause 7(3), given the fact that the Secretary of State is intended to have the power to transfer anything he chooses at any time?

Amendment No. 5 places a duty on the authority to ensure that operators can cover liabilities or obtain insurance. It does not mean that the authority would pick up the tab but that it should ensure that there is no need for it to do so except in the most exceptional circumstances. Amendment No. 6 would ensure that consideration of financial viability is not a one-off action. Theologians among your Lordships—there are not many professional ones sitting in the Chamber at present—may recall that the Christian doctrine of atonement describes it as, once, only once, and once for all".

That may be good enough for God: but it is not good enough for the successor companies in the Bill. They must be monitored. Allied to that, Amendment No. 7 tries to ensure that the authority does not end up paying except where a risk is uninsurable. Amendment No. 9 should be considered with Amendment No. 22 as, taken together, they restrict the further passing on of both interests and pre-existing liabilities.

Amendment No. 13 deals with the non-financial aspect of the vexed subject of minewater pollution. Amendment No. 7 limits the responsibility for minewater pumping to the period when the operator is in occupation and, by making that liability more manageable, makes it more likely that the continuity of pumping will be maintained. In a most welcome change of heart, the Government have acknowledged the seriousness of the problem; that is, the problem that the amendments seek to address. I have already welcomed the statement on the subject made by the Minister of 26th April. However, on 3rd May he went even further. In the case of abandoned mines, which constitute the biggest worry, the Coal Authority will take over responsibility from British Coal. The Minister assured us: If continued pumping of rninewaters is necessary in order to prevent serious pollution, then pumping will continue".— [Official Report, 3/5/94; col. 1051.]

All that is extremely good news. However, I would be even happier if we saw some reflection of that brave new world in documentation; for example, in the Bill, in the leases and in the licences. I share the view expressed by the noble Lord, Lord Crickhowell, who, I see with great pleasure, is sitting in his place, when he said on that same date, at col. 1040, that, long experience has taught us to be cautious. One would like to see such assurances, if not written into the Bill, at the very least in the department's licensing documents. I cannot find that this is so at present".

Amendment No. 17 makes clear that the interests would include liabilities, and that is no more than the Government have been saying all along. Amendments Nos. 19 and 20 try to express the position as set out in the Minister's letter of 24th May. Obviously, they are related to Amendment No. 4.I should be grateful if the Minister could sort out for us what appears to be a conflict between the position described in his letter to me and the revised explanatory note on the Coal Authority.

Amendment No. 25 suggests the addition to Schedule 2 of a mechanism for dealing with the pre-existing liabilities in respect of industrial diseases. It looks long and complicated, but it would offer a light in the darkness, and it is intended (like all the other amendments in the group) to be helpful and to improve the Bill. We are glad that the Government conceded the principle in a Written Answer last week. However, we would still prefer to see it on the face of the Bill.

Let there be no misunderstanding. We are wholly opposed to the Bill. But the stark fact appears to be that we have a choice between a privatised mining industry or no industry at all—such is the Government's lack of commitment to what many people regard as a key part of any energy strategy. As the Bill and the draft licences stand with regard to liabilities for environment pollution, minewater and subsidence, the industry cannot possibly compete on an equal footing with other coal producing countries.

There is also the danger that many liabilities will remain uncompensated if operators find them too onerous and simply walk away from then. This is especially true of minewater. In addition, bidding is at present bound to favour only operators backed by multi-national companies, given the requirements for financial viability combined with the size of the potential liabilities. Reducing the liabilities to be passed on would open the bidding much more widely and place management and employee buy-outs—that is, the people with a real stake in keeping this industry alive —on a much more equal footing.

My speech was made in just over nine minutes. I hope everyone else will attempt to be so brief. I beg to move.

3.30 p.m.

Lord Ezra

My Lords, I support the amendments proposed so ably and in such a short time by the noble Lord, Lord Morris of Castle Morris. There is not the slightest doubt that among the many important amendments that we shall be considering today this could well be the most important. The question of liabilities has bedevilled this Bill so far.

When, in normal business practice, a company is purchased by another company the indemnification on liabilities that could arise subsequent to purchase as a result of the operations of the vendor are clearly and easily dealt with. I have been involved in such negotiations and therefore I find it difficult to understand why hitherto there has been such a lack of clarity on the whole question of the treatment of liabilities.

As was pointed out by the noble Lord, Lord Morris, since Committee the Government have moved their position and have been most helpful in many regards. In so far as they have moved, we should like to see that stated on the face of the Bill. Some of the amendments on today's Marshalled List address that very point. However, there are still areas of obscurity. I believe that it would be in the interests of the Government to seize this opportunity so that, once and for all, the issue of liabilities on the transfer of these businesses can be set out very clearly.

I regard this not only of importance as between the vendors and the purchasers of the businesses—and, as was pointed out by the noble Lord, Lord Morris, many of the purchasers who belong to multi-national firms can no doubt look after themselves—but to other people employed in the businesses who will wish to feel secure. Nothing could be less secure than a business in which liabilities could impose unforeseen charges which could make the operations unviable.

Finally, all of us, in particular Members on this side of the House, are most keen that these transactions— which we do not particularly support in principle— having been engaged upon will be successful and that the remainder of the coal industry will thrive and increase in the years ahead.

In order to achieve all that, we must have the issue of liabilities clarified. The noble Lord, Lord Morris, has been through the various detailed amendments and therefore I shall not seek to do so. I say merely that I hope that the Government will seize this opportunity to clarify a vitally important aspect of this proposed legislation.

Lord Mason of Barnsley

My Lords, I support the amendments, in particular those which deal with minewater pollution and liability.

Minewater pollution of rivers and reservoirs is the most worrying aspect of this rapid run-down of pit closures, allied to the privatisation of the remainder of British Coal's pits. If there is not a satisfactory pledge in this legislation covering the control of minewater overflows, escapes, seepages and guarantees against pollution caused through the cessation of pumping, not only shall we have a whole series of pollution incidents —for instance, poisoned waters and the killing off of fish life—but environmental damage will be spread to low-lying land, meadows and valleys, seriously damaging the flora and fauna of those areas.

Incidents have already been highlighted in Committee concerning the threatened pollution of the River Wear in County Durham, which is home to the migratory salmon and sea trout, with the closure of Easington, the area's last big colliery. It is feared that the eventual ending of pumping could result in the river becoming virtually lifeless. In view of the seriousness of this threat, the National Rivers Authority has reached an agreement with British Coal whereby it will receive at least 14 days' notice of any intention to suspend pumping. If the threat is still real, the NRA could seek legal action to prevent the pollution occurring. It should be prevention rather than prosecution in this case, otherwise it would mean bringing a prosecution case of pollution; that is, making the polluter pay, but after massive damage has been done.

Another case, which was brought to the court by the Anglers Co-operative Association, concerned the pollution of the River Rhymney following the cessation of pumping at Britannia colliery in South Wales. That case has not yet concluded. Meanwhile, emergency moves by the NRA are under way to protect thousands of pollution-threatened fish in Worsbrough Reservoir, near Barnsley.

The 1,000 members of the Barnsley & District Amalgamated Anglers Society say that the reservoir, which is a major tourist attraction and centre of Worsbrough Park, is in danger of becoming an open sewer. The problems are being caused by effluent from the Yorkshire Water sewage treatment works and especially the loss of pumped minewater from British Coal. This would keep the water clear, stop the growth of algal bloom and eventually the death of the reservoir.

The Anglers Co-operative Association has an interest in all three examples. We have 17,000 individual members and 1,100 clubs representing nearly 250,000 anglers in England and Wales. It is no mean organisation. We have lost only two cases in the past 40 years. Those three examples illustrate the extent and complexity of the environmental problems that cessation of minewater pumping can cause. The last of those examples—that is, Worsbrough Reservoir—also shows the vacuum of responsibility which exists in the current uncertain state of the law. British Coal denies any responsibility for the consequences of turning off the pumps. The sewerage undertaker in this case complains at the cost of upgrading its works in response to the reduced flow over which it has no control. The NRA shies away from incurring costs of pumping and other remedial measures in the fear that it may not be able to recover the cost of these works. The upshot of this impasse may be an environmental catastrophe.

The criminal prosecution of British Coal by the Anglers Co-operative Association last December highlighted the present uncertainty of the law. The judge's ruling in that particular case concluded that British Coal was not responsible for polluting discharges which emanated from old mineworkings. He did, however, state that the position might have been different if there had been evidence that British Coal could have foreseen the consequences of its actions.

There is, therefore, a strong argument that in the current state of affairs legal liability, both civil and criminal, may rest with British Coal for polluting discharges following the cessation of minewater pumping. It follows that if nothing is done to alter the position, under the new legislation liability may also rest with the Coal Authority and licence holders.

It is deeply unsatisfactory that the issue of liability should be left to future litigation. This will create a climate of uncertainty for those who wish to operate mines in the future, for those who regulate the water environment and for those who own rights in, or otherwise enjoy, that environment.

It is quite wrong that an issue of such importance should be left to the vagaries of litigation. While the courts can decide who is liable, they cannot state how any remedial measures can be paid for, nor how that remedial work will be undertaken. That is a matter for legislation.

I therefore support all the amendments to the Bill but particularly the ones on minewater pollution which impose on the Coal Authority responsibility for pollution and associated problems caused by discharges from mines where pumping has already ceased, or that may emerge as a result of future cessations from mines which vest in the authority under this Bill. Finally, new licence holders must of course be responsible for all pollution caused as a result of their own exploitation of mine workings vested in them.

Lord Crickhowell

My Lords, this group of amendments is, I believe, of absolutely central importance. It is of importance to anyone concerned with the protection of the environment; it is of importance for third parties who may be affected if inadequate arrangements are put in place, and it is, I believe, of central importance if we wish this privatisation Bill to be the success that I hope it will prove to be. I start therefore by emphasising that I am entirely in favour of privatisation. One of my central anxieties is that because, in my view, the Bill is not yet drafted in an appropriate manner, the success of that privatisation will be prejudiced.

When I spoke in Committee I did so largely on environmental grounds. I expressed anxieties about the possible effects, just described by the noble Lord, Lord Mason, of minewater pollution, and I raised a number of other issues which we will come to under other groupings. I greatly welcomed the important undertakings given by my noble friend Lord Strathclyde during the Committee stage, particularly as regards the continuation of pumping in mines that have been closed. There is no doubt that that is of very great importance. However, we still have a central lacuna in this Bill. Perhaps because of the otherwise welcome brevity with which these amendments were moved, the nature of that lacuna may not be understood by everyone.

The Government's intention, as I understand it, is that if you apply for a licence—I am talking about deep mines, not opencast mines; there is no significant problem with opencast mines—you take responsibility for an area of land around your mine or mines and you take responsibility for a cylinder going down into the earth underneath that area of land. You are responsible, within that cylinder, for all liabilities. That is not unfair if we are talking about the liabilities that arise from your own operations—indeed it seems to me entirely appropriate that anyone applying for a licence should be responsible for his own actions. However, you are also obliged to take on the liabilities that may have been incurred by the predecessor mining organisations, and that will primarily be British Coal. You may therefore find yourself involved in the cost of pumping, into infinity, from mines—not only the mine that you are operating but other mines connected to it.

We have a case in South Wales at the moment down on the Neath Canal, where there is heavy pollution which, I am told, comes primarily from a mine that was closed before the war. But that has become a significant problem only recently because the pumping from other connected mines has ceased. The Government have argued that it is difficult to separate old from new liabilities, and they have given this as one reason that the unfortunate licensee should be expected to take over these unquantifiable, perhaps very substantial and very old liabilities.

In Committee I argued that those difficulties had been exaggerated and the courts had considerable skills in dealing with such matters. However, I do not have to press that argument any further because at the present time a number of mines are being operated under licence. I understand that Mr. Malcolm Edwards, who is likely to apply for licences under these arrangements, is already, with his associates, responsible for two mines which are licensed under the powers granted by Clause 36(2) of the 1946 Act. I am informed that the prior liabilities are excluded in that case. They are excluded under the arrangements approved by British Coal at the present time as the licensing authority. I am quite unable to understand why, if that is the position under existing legislation which has operated, apparently quite successfully, since 1946, the Government think it is totally impossible to do it under the Bill that we are considering at the present time.

I have pressed this argument with Ministers. I suppose if I had not been around for a long time and now have a thick skin, I might be a trifle offended by the explanation that has been given to me in response to my representations; namely, that I should not take too much notice because after all these are arguments that are being advanced by potential licensees who have an interest in reducing the possible liabilities. I think I might be able to make a judgment about that point myself, but as it happens I advanced those arguments in Committee before I had had any communication with the potential bidders and I did so because I happened to form that view myself. It does seem—

3.45 p.m.

Lord Strathclyde

My Lords, I do not wish to interrupt my noble friend at length, but he raised an important issue of detail with which I wish to deal. The only reason that we should not accept his view is that of course this would be in the interests of those successor companies—the potential purchasers—and we do not want to do them any favours. That, of course, is one aspect of the argument bur. the real reason that the licensing regime is different from the one that will be created post-privatisation is that licensing was an experiment. It was started when British Coal started to license and had no idea whether there was a market willing to take on the job that had been carried out by British Coal. Therefore the licensing regime was introduced. Post-privatisation of course there will be no need for a licensing regime and that is why we believe that as many of the liabilities as possible should be acquired by the successor companies.

Lord Crickhowell

My Lords, my noble friend has not dealt with the point I made; that the separation of liabilities—which is what I was arguing about—is possible under the present arrangements and would be possible if this Bill was correctly drafted. I think it is a mistake to give way half way through an argument because I was just going on to say that we should perhaps take a certain amount of notice of the arguments put by potential bidders as it is upon those bidders that the success of this privatisation depends.

I now want to discuss the issue that concerns me almost more than the environmental concerns which I raised in Committee. I am still worried about those because if the licensees do not have adequate resources, they may not be able to take the necessary measures to protect the environment and third parties. But the point I wish to make is that there is a danger that the privatisation will fail, or at least will go through only with a bad deal for the taxpayer. I shall explain my reasons for saying that.

The Treasury, dealing with public bodies such as the one of which I am chairman, quite sensibly takes the view that one should not carry insurance because this is a risk sensibly taken by the Treasury as this is the lowest cost way of doing it. But here we appear to be in a situation where that argument will be entirely reversed. If we take the potential pumping liabilities which were referred to by the noble Lord, Lord Mason, they are impossible to quantify as we do not know when water will come out, where it will come out, and we do not know how much pumping may be necessary. However, as it costs something over £½million per annum to pump from a deep mine, clearly the costs, going on into infinity, can be very great indeed.

We have heard that in mines which are closed that liability will be accepted by the Coal Authority and therefore by the Government and the Treasury. However, if one is bidding one has to accept the fact that one may be responsible for those liabilities and will have to provide the necessary financial resources.

The Treasury can work on the assumption that the liability may never arise. Furthermore, it may arise many years into the future. The Treasury has to pay the bills only if they arise and when they arise. That must be the way to deal with the matter at the lowest possible cost. However, if one is bidding one has to provide the capital resources to enable one to meet any possible liabilities, however great. I do not believe that that would normally be a practical proposition for such companies, which will be putting together a capital structure in order to operate mines, often for a relatively short period of time. They will raise their money in the market with the need to concentrate their resources in that way.

Alternatively, it is argued that one can insure the risk or take out bonds with financial institutions. I argued at Committee stage that it was unlikely that one would be able to do so, and as a loss-making Lloyd's underwriter I hoped that it would be difficult to do so. However, letters have now been received from some of the largest insurance brokers in the world—indeed, one can claim to be the largest in the world—indicating that it may be possible but it will be extremely expensive. It will have to be based on a thorough examination of the risks and the environmental situation so far as that can be assessed.

Therefore, one's insurer will examine the possibility that substantial liabilities may arise. He will provide ample cover. He will provide for profit margins. He will also provide for the possibility that those liabilities will arise in a very short timescale. The costs will be very great indeed.

The costs will be deducted from the bid. If one bids for one of the licences one will deduct from the bid the cost of providing for such liabilities. That means that the taxpayer will receive less than would otherwise have been the case if the Treasury had borne the risk. That is on the understanding that the bids are made at all in a sensible form when the realities are faced up to.

It seems to me that while this House does not have direct responsibility for taxation matters, it has at least a duty to seek to give the other place an opportunity to think again about such matters. I am not encouraged by the fact that a leading Member of the other House of whom I inquired why the matter had not been pressed very hard in the other place said that, apart from the procedural difficulties and timetable, "We thought that you would do that rather better in the other place. You are rather good at that and will bring the issue out and refer it back to us". The person who said that to me is a former chairman of the 1992 Committee and is therefore not a rebel seeking to do the Government down. He is acutely anxious about the issues raised by the noble Lord, Lord Mason. I am acutely anxious about them.

It is very sad that the Government have not been prepared to listen on this point, as they have listened on a number of other points. In relation to some of the liabilities regarding employment matters the Government have listened and responded. That is a step forward. I am unable to understand why they have not done so in this case. I hope that my noble friend is able to give me an assurance that the Government will come back at Third Reading with suitable amendments to remove this extraordinary anomaly.

It is also a question of principle. Is it right that the considerable liabilities of the state in the form of British Coal should be passed on in this way to potential bidders? Those are not liabilities arising from their own actions but unquantifiable past liabilities which go back perhaps hundreds of years. That is not a mythical situation. The Wheal Jane tin mine, which I now have to deal with, gives rise to pollution which originated over many hundreds of years. There is a network of inter-connecting mines which causes damage.

I believe that I am right to support the amendments. In particular, I favour Amendments Nos. 17 and 22. However, such is the way of the world that I suspect that it will be important to support Amendment No. 1 at the outset. I intend to do so and I hope that a great many of my noble friends will do so for no other reason, if they do not agree with my other arguments, than if they do not we shall make a nonsense of the privatisation and we shall not have the successful privatisation that many of us on these Benches want.

Lord Prys-Davies

My Lords, I should like to speak briefly in support of the amendments. I fully support the argument so ably put by my noble friend Lord Morris of Castle Morris in speaking to the 13 amendments. It seems to me that the failure of a private mine owner can be so powerful in its effect in relation to employment, the environment and the householder that the responsibilities, the correlative rights and duties, ought to be spelt out clearly in the Bill.

I want to speak in particular on an issue on which I spoke in Committee and which has already been referred to by my noble friend Lord Mason and the noble Lord, Lord Crickhowell, namely the pollution of rivers caused by drainage from abandoned mines. In South Wales, and indeed in South Yorkshire and Durham, miles of rivers are affected by pollution.

I have a little knowledge of the prosecution brought against the Coal Board in respect of the pollution of the River Rhymney. It is my understanding that after the closure of a mine and the cessation of the pumping operation the water level will rise and will fill the mine workings. If there is iron or pyrites in the mine workings that will be picked up and deposited in the rivers, which become polluted. I understand that currently there is only one way of guaranteeing the prevention of pollution and that is to allow the pumping operation to continue after closure of the mine. That may continue for a very long time, as the noble Lord, Lord Crickhowell, mentioned.

Reference has been made to the prosecution brought against the NCB which failed in the Cardiff Crown Court last December. I appreciate that other proceedings are in train. However, it is worth pointing out that in that case British Coal had constructed a duct, which had been approved by the NRA, for the purpose of draining the water from the mine into the River Rhymney. But the water did not go where it was intended to go and ought to have gone. That gives an indication of the difficulty of predicting how water will flow when the pumping operations cease. In that particular case pyrites were picked up from old workings which had never been the responsibility of the National Coal Board. In my view the NCB was not negligent because it acted on the basis that water would be discharged into the duct and carried by the duct to the river when the mine was closed and the pumping operations were switched off.

I am advised by those who are knowledgeable in this field that currently there is only one effective preventive remedy, and that is to continue pumping. I therefore trust that Amendment No. 13 will be acceptable to the Government. I believe that that would bring reassurance to many communities. I also note that that is the sensible proposal of Durham County Council.

4 p.m.

Lord Peyton of Yeovil

My Lords, I have slight difficulties with the amendments which were so eloquently spoken to from the Opposition Front Bench by the noble Lord, Lord Morris. I do not think that he could be boring even if he tried. However, I believe that he would have had to face this difficulty: had his amendments already been in the Bill, we would have been travelling, in good company with him, further down the road which leads to longer and longer measures without achieving the clarity or certainty which is the aim. I have heard it said repeatedly that one must not leave too much for the courts to decide. But every time Parliament takes such a view the result is exactly contrary to what the proposers hope: the Bill becomes longer and raises more questions on which, in the end, the courts are invited to decide.

I wish to declare one interest. I still have some tenuous involvement with British Alcan Aluminium plc which is anxious to secure for its smelter in the North East a reliable and economic supply of coal. The company faces an important question which I had thought was fairly clearly defined in the Bill: will those who run, manage or are responsible for an on-going business—the successor companies—be liable for their own fault; for what goes wrong as a result of the way in which they conduct their operation, or for any failure to perform what was clearly their duty? I shall be grateful if my noble friend will make that point absolutely clear today from the Dispatch Box.

While referring to my noble friend, I should like to say that during the course of the proceedings I, like many others, have had a number of contacts with him. I am grateful to him for his accessibility and for the readiness and patience with which he has listened to our arguments, whether or not he has been able to accept them.

My second point is that the Government have travelled a long way in setting up the Coal Authority to take over all those liabilities, which cannot be described as current, arising from the operations of the successor companies. If the amendments are accepted, what specific difference will they make in practice to those liabilities which are already placed on the Coal Authority? I shall be grateful for my noble friend's guidance on those two points.

Lord Sanderson of Bowden

My Lords, I, too, wish to say a word of comfort to the Minister. Since the Committee stage of the Bill he has undoubtedly taken on one important aspect of the privatisation process. I declare an interest, as I have on several occasions during the course of the Bill. He has dealt effectively with on-going injury and disease liabilities. I speak only for myself and others involved with the Scottish scene. However, as my noble friend Lord Crickhowell has already said, it will be difficult to imagine bids of any consequence being submitted if that aspect of this privatisation has not been addressed. As I understand it, clearly the on-going responsibilities on claims by employees who are now to be employed by the successor companies will remain, so far as concerns previous employment, with the Government.

However, I wish to put one question to my noble friend who has been helpful in answering points raised by myself and others during the course of the Bill. I am not quite certain why it is unnecessary to have an amendment to the Bill to deal with that important aspect of the privatisation process. I leave that question with my noble friend. I hope that I shall receive: comfort from his answer.

Lord Gray of Contin

My Lords, listening to the debate today I find myself in agreement with much of what my noble friend Lord Peyton of Yeovil said. However, we must pay tribute to the speech from the Opposition Benches of the noble Lord, Lord Morris, on moving the amendment. As he stated, it is a rather large group with which to start our proceedings today, but his nimble mind managed to weave the thread of liability through all the amendments. We have to take that factor very seriously indeed.

I believe that my noble friend has some difficulties in this regard. The Bill sought to ensure that all the liabilities of British Coal were passed on to an appropriate recipient. Whether that be the authority or the new applicants who operate the industry is a matter on which he has to make some choice. However, I believe that it would be quite wrong for the Government to place upon the new participants liabilities which are the responsibility of the authority. Conversely, there are many liabilities which it would be quite wrong to place upon the authority. No one will participate in this new type of business without thinking very hard about doing so. If the bodies themselves do not think hard about it, no doubt their financial advisers will do so. All the points raised from various parts of the Chamber will form part of that consideration and discussion. It is therefore not unduly pessimistic to say that there will be many who will have considered participation but who, because of the liabilities which they will inherit, may tend to think again.

I suggest that my noble friend has to steer a careful course. He must not make it too difficult for those who participate for the first time, even if that means imposing some liabilities upon the authority which we might prefer not to be included.

Lord Northbourne

My Lords, I support the amendment. As noble Lords may have noted, I have put forward a series of amendments which, to some extent, cover similar ground. However, if the amendments put forward by the noble Lord, Lord Morris, are agreed by the House, I shall be happy to withdraw all or most of my amendments.

My specific interest relates to the freeholders of land held on lease by the corporation. There are a substantial number of such leases, including working collieries and collieries which have been abandoned, and land held with coal mining. My family holds one such piece of land. I declare that interest. My concern is with liabilities under the lease. They fall under several heads: the question of pumping, which has been discussed and is to some extent dealt with in the Bill; the question of subsidence, which is fairly fully dealt with in the Bill; the terms of the lease; and, most importantly, contamination. Unfortunately, contamination is an unknown liability. We all know that the European Community is working on a directive about contamination. We all know from experience with the health and safety regulations that the European Community has an extraordinary talent for inventing new problems and dangers. We have to suppose that at some time in the next 20 years it will decide upon a new substance, substance x, which is a contaminant. Then everyone would be required to cleanse their sites of that substance and the cost could run into millions of pounds.

The question is: will the Treasury be tempted to see the Bill as a way in which it can avoid the obligations which have been incurred by the corporation during the period when it was exploiting the nation's coal? Will the successor companies have broad enough shoulders to carry the liabilities which may be imposed upon them when the lease is transferred? That raises the important question which was brought up by the noble Lord, Lord Crickhowell: who should take the risk? I think that he argued the case clearly and I need not enlarge upon it.

We must distinguish between legitimate and illegitimate offloading—offloading to a new owner who does not have broad enough shoulders to bear whatever liabilities may arise at some future date is illegitimate offloading.

Under the Bill there are three areas where freeholders might be in danger from Clause 12: from the Secretary of State's power to make transfers prior to assets being transferred to the new authority; then after the restructuring from the rather loose wording in relation to the transfer of liabilities in regard to property liabilities; and finally —a point which no one seems to have mentioned so I can only assume that I am wrong—it seems to me that there is a potential for liabilities which do not run with the land such as liabilities for negligence or under contracts, which I have covered in my Amendment No. 39. I shall not say any more at this stage.

4.15 p.m.

Lord Strathclyde

My Lords, I join all those who have already done so in congratulating the noble Lord, Lord Morris of Castle Morris, on the way in which he has explained this substantial group of amendments. I am grateful for it but I am sorry that he did not continue quoting the Companion after the part which he read out. It states that at Report stage, each noble Lord has the opportunity of speaking only once, apart from the noble Lord who moves the amendments. Sadly, therefore, we shall not have the joy of listening to many noble Lords again.

The noble Lord, Lord Morris, said that this was a vexed and as yet unresolved issue of liabilities. The noble Lord, Lord Ezra, said that liabilities were the most important question. Naturally, I join in the anxieties of the noble Lord, Lord Mason, for those who enjoy angling so much. I appreciated the care with which my noble friend Lord Crickhowell put forward his arguments. He has great experience in the whole area as Chairman of the National Rivers Authority. I very much want to satisfy him because I do not believe that there is a lacuna in the Bill. The policy which the Government have had towards the whole matter of liabilities is absolutely correct. I also believe, with respect to my noble friend, that he is wrong in his conclusions and I hope in the course of the next few minutes to prove that he is wrong.

I was also grateful for the support from my noble friends Lord Peyton and Lord Sanderson, necessarily qualified. But I hope to give them comfort and I take to heart the advice of my noble friend Lord Gray of Contin, who said that I should steer a most careful course.

During Committee stage time and time again noble Lords expressed their concerns about British Coal's liabilities and how they were to be discharged after privatisation. I believe that I was able to go a long way towards dealing with those anxieties, but I have been told during the course of the past few weeks and again this afternoon that there are those who are nevertheless left with a lingering anxiety that the proposition is not as clear as it should be or that it is not spelt out clearly on the face of the Bill.

I have reflected on that and my department has had further discussions with legal advisers. It has also made further progress in its preparations for privatisation and I am now able to make a number of points which I think noble Lords will find helpful.

In general terms, the approach in the Bill is this. First, all liabilities that can be properly regarded as a part of the ongoing businesses which are to be privatised will go to the mining companies. That point was raised by my noble friend Lord Peyton. He was absolutely right and I believe that there should be no quarrel in the House about the correctness of that procedure. Generally speaking, the liabilities will be transferred using the scheme-making powers in Clause 12 and Schedule 2 to the Bill through the subsidence provisions that are in Part III of the Bill and through conditions that the Coal Authority will attach to coal leases or under general employment law.

Secondly, the Coal Authority will become the owner of the freehold of underground mines from whatever period they date and whether or not they have been abandoned and will automatically acquire the respon-sibilities running with that ownership. That is achieved by Clause 7(3) of the Bill.

Thirdly, liabilities of British Coal to its employees and ex-employees which are not passed on to successor companies will then be taken on directly by the Government. That will be achieved through Schedule 5 as regards pensions and through the scheme-making powers in Clause 12 and Schedule 2 for other liabilities.

I must stress that that is a very general account of the principles. The detailed arrangements are necessarily complex. That is inevitable because British Coal has a wide range of liabilities and responsibilities and many of them are subject to different statutory frameworks. Any attempt to produce a simple answer dealing with liabilities across the board would inevitably be unfair to the third parties affected, to the successor companies or to the taxpayer, or to all of us. That is why one has to consider each type of liability individually and it is also why there is no one clause that I can point to as dealing with the issue of liabilities as a whole. I believe that that is an entirely appropriate way of dealing with those kinds of liabilities.

Let me explain in more detail the position with regard to the liabilities that will be passed on to the mining companies because I know that that is the main anxiety. I have the impression from some noble Lords opposite that every single liability of British Coal should remain with the taxpayer or should be guaranteed by the taxpayer. That is as good as saying that there should be no privatisation; the operators are not really assuming the responsibilities. The noble Lord, Lord Morris, nods, but I hope that noble Lords on this side of the House will not be beguiled by siren voices in that respect. The noble Lord, Lord Morris, produced a new—at least new to me —and rather interesting argument that obliging operators to accept their responsibilities would mean that small operators—perhaps management buy-outs and so on—would be unable to take part in the privatisation process. I understand from reading newspapers that many organisations, the trade unions and various mining unions all hope to play a part in privatisation. Clearly at this stage they do not feel excluded.

The approach in the Bill is to place on successor companies those liabilities that belong to the businesses that they are taking on. It includes important safeguards for those affected, particularly in relation to subsidence, where there is a strong regime. It places a statutory obligation on the Coal Authority, or the Secretary of State if he issues the licences, to vet the financial standing of the mining companies and their ability to bear the liabilities concerned.

I am sure that that is the right approach. It would never be right to sell the assets and the earning capacity of the industry without asking the purchaser to take on any of its liabilities. In fact, I think it would be negligent for us to do anything else.

Some have suggested that the successor companies should only bear liabilities that arise exclusively from mining activity that takes place after privatisation, leaving everything else to the Government. As practical matter, it is often difficult to split liabilities up in that way. But even if that were not the case, we have to face the fact that all businesses have liabilities as well as assets on their books and that, as a general rule, you cannot expect to take on one without the other.

There is, of course, always room for argument as to precisely which liabilities should be regarded as part of the ongoing business. Noble Lords should not be surprised if, as I said to my noble friend Lord Crickhowell, they have been lobbied by some prospective purchasers who incline to a minimalist approach.

However, I am now able to tell the House of two important policy developments which I believe will do much to reassure noble Lords that the Government an not intending to over-burden successor companies with liabilities.

First, as I announced in a parliamentary Answer on 6th June to the noble Lord, Lord Morris of Castle Morris, the Government have decided that a privatisation responsibility for all health and injury claims with respect to past service with British Coal will be retained in the public sector and accepted by the Government. That includes responsibility for claims with respect to past service by employees who transfer to successor companies. Responsibility for health and injury claims with respect to future service after privatisation will, of course, rest with successor companies. I believe that that provides an important safeguard for the employees concerned and is in the best interests of all concerned, including employees, successor companies and the taxpayer. I am very glad about that after the consultations that I had, not just with the noble Lord, Lord Morris, but also with my noble friends Lord Sanderson and Lord Wade and my noble friend Lord Haslam, who had a great concern on this matter and indeed told me that this was a major stumbling block on his support for the Bill. I hope that he will be very pleased with that announcement.

Secondly, I am now able to explain in rather more detail than previously precisely how it is intended to define the areas within which successor companies will be responsible for making good subsidence damage. As I explained previously, the principle involved will be a very simple one. A line will be drawn around the area of the mine. If your property is inside the line the mining company will be liable. If it is outside the Coal Authority is liable. My noble friend Lord Crickhowell explained this as the cylindrical approach, and he was right. The Government have now decided that the lines will be drawn so as to include only those areas that are likely to be affected by mining carried out from March 1994—the end of the last full financial year in the public sector—and, furthermore, that the successor companies will be indemnified for the costs of meeting any claims relating to damage within this area where liability had been admitted by British Coal before the sale was agreed. The effect of these two measures will be to reduce to the minimum the liability of successor companies for claims arising from previous workings by British Coal. I hope that noble Lords will welcome this further measure of assurance.

Lord Peston

My Lords, perhaps I may interrupt the noble Lord. It seemed to me that what he said was significant. Will that be in the Bill at some point, or will it be just in the leases?

Lord Strathclyde

My Lords, I am glad that the noble Lord says that it is significant. Of course it is significant. These are two very important announcements by the Government to allay the concerns of this House and also to make sure that privatisation is more successful. The question—

Lord Northbourne

My Lords, before the noble Lord sits down, perhaps I may intervene on a similar point. He referred to subsidence but made no reference to contamination.

Lord Strathclyde

My Lords, as the noble Lord knows, the whole question of contamination is fraught with difficulty. That has nothing to do with the Bill, but has to do with the uncertainties that exist in the world outside about what liabilities should exist for different kinds of contamination. These questions are subject to consultations by the Government and proposals are being put forward by the European Community. They will be dealt with that way rather than in this particular Bill.

The noble Lord, Lord Peston, asks whether these matters will be put on the face of the Bill. In regard to the first announcement on industrial injury and disease, that is of course subject to general employment law. I understand that there is absolutely no requirement for it to be put on the face of the Bill. It is on that basis that the industry will be sold to the private sector. It will be made absolutely clear through the contractual arrangement as to where liabilities will lie. That is also true in relation to subsidence.

But there is a more general question. Many noble Lords have suggested that we should spell out how each liability is to be treated. The noble Lord, Lord Morris of Castle Morris, asked for a simple and unambiguous provision. That point was echoed by my noble friend: what difference would it make if we accepted some of these amendments, which are quite clearly in line with government policy? One day in the dim and distant future perhaps noble Lords opposite may well be sitting here. They will find that sometimes it is not quite so easy to make things as unambiguous and as clear as they would like.

Lord Harmar-Nicholls

I hope it will be a very long time indeed.

Lord Strathclyde

My Lords, I likewise hope that it will be a very long time indeed.

I might explain that to do what noble Lords opposite would have wished would have resulted in a document so long that it would never have been possible to digest. During the Committee stage there were a number of comments about the fact that the Bill ran to some 164 pages. It would be abnormal for legislation to be used to deal with such matters in such specific detail. It is for that reason that this Bill follows the precedent of other major privatisation Bills and provides general scheme-making powers (in Clause 12 and Schedule 2).

Also to have singled out just a few obligations, liabilities, properties and so on for inclusion on the face of the Bill, while excluding others—the approach which from time to time it has been suggested should have been adopted—would in my view have served to confuse and cause doubt in cases where there was no specific reference to a liability or property. There is also the difficulty if, for example, there is an obligation which attaches directly, by virtue of another piece of legislation, to the ownership of property. By making specific reference to one obligation, could it be construed as implying that another obligation was therefore excluded, or might it imply in some way a different obligation to that which is laid down elsewhere in law? No doubt such difficulties could have been resolved by our draftsmen, but probably only by adding further to the complexity of the provisions. I am one who believes that the simpler the legislation that we deal with in this House, the better it is for all concerned.

Lord Ezra

There is one simple solution to this matter. That would be if the noble Lord were to accept the proposition from his noble friend Lord Crickhowell, who recommended that the present system of licensing by British Coal should be adopted. The noble Lord said that this was experimental. It is not experimental. The National Coal Board and British Coal have licensed small mines and small opencast operations for nearly 50 years.

Lord Strathclyde

My Lords, licensing is of course not privatisation. We are trying to provide for the long-term viable future of the coal industry. We know from painful experience that the public sector is not the place where such industries prosper. That is why licensing is not the appropriate model. The private sector, I am glad to say, is showing a remarkable and indeed an exciting amount of anticipation at the proposed privatisation. That is why we have chosen wholesale privatisation as opposed to further licensing.

Perhaps I may go on to deal with liabilities attaching to abandoned mines. On the date when the industry is restructured under the Bill, the Coal Authority will automatically become the freehold owner of all British Coal's underground mines, including mines that have been abandoned, and regardless of how old they may be. That is clearly set out in Clause 7(3) of the Bill. That preserves the status quo in the sense that these mines will continue to belong to a responsible public body. That is an important part of the overall arrangements for ensuring that existing responsibilities do not, as it were, fall into the crack between British Coal and the privatised industry.

In the Coal Authority explanatory note the Government have set out the environmental policy aims that they envisage that the authority will set itself with regard to the management of all its property, including all mines that are not licensed to the private sector. I have given noble Lords important assurances about the responsible way in which the authority will be expected to behave, particularly with regard to mine water pumping.

The Bill also implies a new duty on the Coal Authority in Clause 3(7) to have regard to environmental factors in any works that it carries out on former coalmining land, and that is reflected in the statement of environmental policy aims, as I have explained. Where mines continue to operate, the lease will make it clear that all costs of meeting regulatory requirements, including requirements for the protection of the water environment, will fall on the operators and not on the authority. But the Coal Authority will continue to own the freehold. In the longer term, after mining has ceased and appropriate steps have been taken by the mining company, those mines will have the same status as any other abandoned mine that had never been privatised.

It is important to add that that does not mean that the Government are entirely satisfied with the existing state of the law with regard to the environmental obligations of mine owners.

As I think your Lordships are aware, the key question of the exemption which mine owners currently enjoy with regard to pollution from minewaters that are "permitted" to flow is under review by the Secretary of State for the Environment. The results of that review are due later this year. We believe that the proper place to address this issue is through the review and that it is not appropriate to use the Bill as a vehicle for hasty decisions. In Committee, I was glad to have the support of my noble friend Lord Crickhowell. I think I still have his support on that issue but I hope he now accepts that there is no gap between the Coal Authority and the coal company.

4.30 p.m.

Lord Crickhowell

My Lords, I am afraid I do not accept that. I do not think my noble friend has said anything new. He has helpfully said what I believed anyway was going to be the position; namely, that subsidence within the area directly relates to the mine's activities within that area. He made helpful remarks about health and safety. But we now have the situation where you could have, say, a dozen coal mines closed in the immediate vicinity of an operating mine. The Coal Authority will be responsible for pumping those mines if water starts appearing but if you happen to be the unfortunate licensee who is continuing to operate and water comes up your mine from all the surrounding ones, the Coal Authority avoids its responsibilities. The taxpayer avoids responsibilities. All responsibilities fall on the unfortunate licensee. That licensee will have to prepare a special Clause 1 document under the yellow book rules of the Stock Exchange and will have to explain to shareholders and potential shareholders what those potential liabilities may be. They will be unquantifiable and potentially huge.

Lord Strathclyde

My Lords, I really do not think so. There is a problem between my noble friend and myself which I regret. Under the 1991 Act mine owners are excluded from liability. So there is very little liability attaching to the owners of mines. It is easily quantifiable. It is a liability where water pollution is actually caused and not where pollution, as it is called, is permitted. It is that liability which is under review by the Secretary of State. If water that is permitted to flow were a legal liability currently, then I think I would agree with my noble friend, but because it is excluded at the moment the liability is entirely quantifiable. All the mine owner has to do is to make sure that he keeps pumping the water out of his own mine. Therefore there can be no confusion between water coming from his mine and water coming from abandoned mines, which are rightly the responsibility of the Coal Authority.

Lord Crickhowell

My Lords, my noble friend makes my point for me almost in his concluding sentence. The unfortunate licensee may be obliged to go on pumping for ever, incurring costs of perhaps £1 million or half a million pounds a year per pump in order to pump out water which may be coming from mines which are now the property of the Coal Board outside the area in which he is mining. I happen to think that that is unfair. I happen to think that it will prejudice successful privatisation and the amount of money that will come to the taxpayer. I continue to be as concerned as I was when I made my opening remarks.

Lord Strathclyde

My Lords, perhaps I may correct one small point made by my noble friend. The liability does not continue for ever. At the end of the coal mining process or when the mining company wishes to give up mining it enters into discussions with the authority and there is consultation with the NRA as to what appropriate and reasonable steps need to be taken in order to cap the liabilities. But in the end the liabilities will fall, because it becomes an abandoned mine under the control of the Coal Authority. At that stage it will be treated in the same way as any other abandoned mine.

Lord Crickhowell

My Lords, I hope that my noble friend will forgive me for intervening yet again, but he has just made a profoundly important statement. Again it leaves a very big question. He is saying that there will be a capping arrangement negotiated at the moment when one decides to close the mine and, after negotiation and with a bit of luck, one will get it capped. However, the licensee, when he applies at the outset, has no idea apparently of the terms on which that eventual capping will come. Therefore, we are still in the position that at the moment he makes his bid he has a large unquantifiable liability until a possible discussion about capping many years later when he proposes to finish his mining activities.

Lord Strathclyde

My Lords, I started with the intention of explaining why I thought my noble friend was wrong and I have conspicuously failed to do so. At least I have not explained myself to my noble friend's satisfaction. I believe it is absolutely right for the private sector mining companies to accept the liability of doing their work. I think it is absolutely right that they should be asked to continue pumping. It is also absolutely right that when they give up coal mining they should enter into arrangements to look after their liabilities, and only at the end should those liabilities fall back on to the taxpayers. I am sorry that I could not get my noble friend to agree that.

Amendment No. 1 is a very wide amendment. It has provoked a very full and useful debate. I shall touch upon one or two of the linked amendments if that would be helpful. Amendment No. 4 seeks to impose the Coal Authority's duty under Clause 2(1) (b) on the Secretary of State in respect of any licences granted in accordance with the provisions of Clause 26(6). That clause is drafted in terms of the Secretary of State issuing licences in exercise of the Coal Authority's power 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 Clause 2(1) (b)—and the other duties imposed by Clause 2. The actions of the Coal Authority and the Secretary of State will be equally open to challenge in the courts.

Amendment No. 5 would require the Coal Authority to look at the licensees' health-related liabilities. I believe that my parliamentary Answer to the noble Lord should meet those concerns.

Amendment No. 6 is concerned with the Coal Authority's important duty in Clause 2(1) (b) of the Bill to secure, so far as practicable, that licensees are able to finance their liabilities. I think noble Lords may find it helpful if I explain how we see this duty working. What we have in mind is to conduct a careful assessment of would-be licensees and the liabilities as part of the licensing process. No purchaser will obtain a licence until the Secretary of State is properly satisfied about these matters from the perspective of Clause 2(1) (b).

The Bill leaves the Coal Authority and, where he grants licences, the Secretary of State free to decide how to discharge the duty, which it will do in the light of its other duties as well. But this is not freedom not to discharge the duty. It is freedom to decide in the circumstances what is the best way to achieve the objective. Of course, particular circumstances, operators and mines may vary enormously and so may the appropriate discharge of the duty.

On the other hand, the amendment seeks to give the authority a duty to assess the financial strength of licensees both before granting a licence and as often as it thinks necessary during the term of the licence, but at least every two years. In other words, the authority would be obliged to take a course which might not lead to what it considers the best discharge of the duty at Clause 2(1) (b), and other duties. In some circumstances it could simply lead to a needless bureaucratic interference with operators.

This is an amendment for pulling the industry up by the roots every two years to see if it is growing. It would create a situation of continuing uncertainty which would be bound to deter mining companies with a long-term future from entering the industry. The amendment is misconceived because it would not alter the authority's duty but would constrain its freedom to select the best means of performing it. It is therefore neither necessary nor desirable.

Turning to Amendment No. 7, I appreciate that potential purchasers would very much like the Government to retain or underwrite every liability. But, just as the proposition that mining companies should have to provide security for or otherwise insure all their environmental liabilities would be extraordinarily onerous, so this would be of extraordinary assistance. Many other industries have environmental impacts. We have only to look at the oil and gas industries, the pharmaceutical and chemical industries and other mining and quarrying industries and their liabilities to see that they are perfectly acceptable either for pooling arrangements, commercial arrangements or other kinds of arrangements.

Amendment No. 9 seeks to prevent the Coal Authority from disposing of coal and coal mines freehold unless it is satisfied that to do so would not increase the risk of loss to any person as a result of coal-mining operations, and the Secretary of State has approved that means of disposal. I made very clear in previous debates that we envisage that the Coal Authority will only dispose of the coal and the mine freehold in exceptional circumstances. Both the revised explanatory note, which I recently sent to the noble Lord, Lord Morris, and the preliminary memorandum issued on 13th April in relation to the proposed privatisation of British Coal make clear that the authority will normally retain ownership of coal and coal mines. That is because we want to minimise the risk of the coal resource becoming fragmented over the longer term. But it would not be prudent totally to rule out the possibility of freehold sale; for instance, if the coal concerned were in an isolated area of opencast there could be advantage (and it is not obvious that there would be disadvantage) in so doing.

Amendment No. 13 would place a very specific statutory duty on the Coal Authority to maintain pumping in all circumstances for so long as the National Rivers Authority deems it necessary. I deem that the amendment is unnecessary. In the short term, I have set out proposals which will lead to a working relationship between the Coal Authority and the relevant water regulatory authorities with which all sides are happy. I see nothing to be gained by placing this in a statutory framework. In the longer term we will have completed the review and concluded, in the light of all relevant considerations, whether additional obligations with regard to water pollution should be placed on owners of abandoned mines. I fear that the amendment is seeking a hasty legal solution to a problem that needs more careful consideration.

Amendment No. 14 relates to the authority's arrangements for dealing with water pollution from abandoned mines, as set out in my statement of 26th April. The argument behind the amendment is that, when mining ceases, the responsibilities of the operator with regard to preventing water pollution should also cease. As I set out in my statement, we do not envisage that an operator should have a continuing operational responsibility for dealing with any water discharges. That will fall to the Coal Authority as the owner of the mine. But we will expect the operator to leave the mine in a satisfactory condition, just as any lessee would be expected to leave property in a satisfactory condition when it reverts to the freeholder. That may include an appropriate payment in respect of any continuing costs.

Amendment No. 17 would add reference to liabilities in Clause 7(3). Clause 7 does not, and is not in any way intended to, change the existing position with regard to the legal responsibilities falling on underground mine owners. It is simply about the transfer of ownership and in that respect it is, I believe, very clear and comprehensive and to extend it would create unfortunate confusion.

The effect of Amendments Nos. 19 and 20, as drafted, would be to prevent the privatisation of British Coal.

Amendment No. 22 is aimed at limiting the liabilities that may be transferred to British Coal's successors. For the reasons which I have already stated, I think that we have got the balance right.

Finally, Amendment No. 25 would require the Secretary of State to indemnify an operator against any liabilities in respect of the health and safety of his workers. I believe that I have adequately dealt with that point.

I bow again to the advice of my noble friend Lord Gray, who suggested that I should steer a careful course. I sense that I have not satisfied my noble friend Lord Crickhowell. I sincerely hope that I have satisfied the rest of my noble friends and perhaps even some noble Lords opposite that we understand the anxieties expressed. I apologise for speaking at some length. As the House recognises, this is an extremely important issue.

The Earl of Harrowby

My Lords, before my noble friend sits down, perhaps I may refer back to his remarks regarding the liabilities of other industries, such as the chemical industry. Does my noble friend accept that the analogy is entirely false? The other industries started de novo and had to accept the liabilities. This is a swap of liabilities; it is a swap from the public to the private sector. I want the Bill to succeed but fear that the substance and potential size of the liabilities will put off applicants for licences and purchase. I trust that that will not be the case. Lastly, has the Minister forgotten what happened in this field in the long-tail liability at Lloyd's?

Lord Strathclyde

My Lords, by leave of the House perhaps I may say to my noble friend that I would not have made the analogy if I had felt it was a false one. There are an enormous number of industries in the United Kingdom which accept substantial potential liabilities. Already there are private mining companies which accept large liabilities and they have not made this point to us. There is no reason, therefore, why they should not also accept these liabilities.

4.45 p.m.

Lord Morris of Castle Morris

My Lords, I am grateful to the Minister for the silver-tongued eloquence with which he attempted to persuade your Lordships on all sides of the House that all is well and that nothing needs to be done. I listened with consummate care and infinite attention to his necessarily extensive speech. I have been with him on the question of what we could call the "Crickhowell cylinder", which I take to be rather like the device that one uses in the kitchen for removing the core from an apple. I understand better than I did before.

Unfortunately, the small concessions offered by Minister come too little and too late. I deeply regret I must tell him that I and my noble friends, despite strenuous efforts to do so, are unable to accept persuasive reassurances and I must ask the House to express an opinion.

4.46 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 111; Not- Contents, 115.

Division No.1
CONTENTS
Addington, L.	Irvine of Lairg, L.
Airedale, L.	Jay, L.
Ardwick, L.	Jeger, B.
Ashley of Stoke, L.	Jenkins of Putney, L.
Barnard, L.	Judd, L.
Beaumont of Whitley, L.	Kennet, L.
Belhaven and Stenton, L.	Kilbracken, L.
Blackstone, B.	Kinloss, Ly.
Bonham-Carter, L.	Leigh, L.
Boston of Faversham, L.	Lester of Herne Hill, L.
Brooks of Tremorfa, L.	Listowel, E.
Bruce of Donington, L.	Llewelyn-Davies of Hastoe, B.
Carmichael of Kelvingrove, L.	Lloyd-George of Dwyfor, E.
Carter, L.	Lockwood, B.
Castle of Blackburn, B.	Lovell-Davis, L.
Cledwyn of Penrhos, L.	Mallalieu, B.
Clinton-Davis, L.	Masham of Ilton, B.
Cocks of Hartcliffe, L.	Mason of Barnsley, L.
Crickhowell, L.	Mayhew, L.
David, B.	McIntosh of Haringey, L.
Dean of Beswick, L.	McNair, L.
Dean of Thornton-le-Fylde, B.	Merlyn-Rees, L.
Desai, L.	Monkswell, L.
Donaldson of Kingsbridge, L.	Morris of Castle Morris, L.
Donoughue, L.	Mulley, L.
Dormand of Easington, L.	Nelson, E.
Eatwell, L.	Nicol, B.
Ezra, L. [Teller]	Northbourne, L.
Falkender, B.	Ogmore, L.
Falkland, V.	Peston, L.
Feversham, L.	Prys-Davies, L.
Fitt, L.	Rea, L.
Forester, L.	Richard, L.
Gallacher, L.	Rodgers of Quarry Bank, L.
Gladwyn, L.	Saint Oswald, L.
Gould of Potternewton, B.	Saltoun of Abernethy, Ly.
Graham of Edmonton, L.	Savile, L.
[Teller.]	Scarbrough, E.
Gregson, L.	Seear, B.
Grey, E.	Sefton of Garston, L.
Halifax, E.	Shannon, E.
Halsbury, E.	Sheffield, Bp.
Hamwee, B.	Shrewsbury, E.
Hanworth, V.	Stanley of Alderley, L.
Harris of Greenwich, L.	Stedman, B.
Harrowby, E.	Stoddart of Swindon, L.
Haskel, L.	Strabolgi, L.
Haslam, L.	Taylor of Blackburn, L.
Hayter, L.	Taylor of Gryfe, L.
Healey, L.	Tenby, V.
Hollick, L.	Turner of Camden, B.
Hollis of Heigham, B.	Wallace of Coslany, L.
Holme of Cheltenham, L.	White, B.
Howie of Troon, L.	Wigoder, L.
Hughes, L.	Williams of Elvel, L.
Iddesleigh, E.	Williams of Mostyn, L.

NOT-CONTENTS
Addison, V.	Kimball, L.
Alexander of Tunis, E.	Lauderdale, E.
Allenby of Megiddo, V.	Liverpool, E.
Annaly, L.	Long, V.[Teller.]
Arran, E.	Lucas, L.
Ashbourne, L.	Mackay of Ardbrecknish, L.
Astor of Hever, L.	Mackay of Clashfern, L. [Lord
Astor, V.	Chancellor.]
Balfour, E.	MacLehose of Beoch, L.
Birdwood, L.	Macleod of Borve, B.
Blyth, L.	Manton, L.
Boardman, L.	Merrivale, L.
Borthwick, L.	Mersey, V.
Boyd-Carpenter, L.	Milverton, L.
Brabazon of Tara, L.	Monteagle of Brandon, L.
Brougham and Vaux, L.	Morris, L.
Butterworth, L.	Munster, E.
Cadman, L.	Murton of Lindisfame, L.
Caithness, E.	O'Brien of Lothbury, L.
Campbell of Alloway, L.	Oppenheim-Bames, B.
Campbell of Cray, L.[Teller.]	Orkney, E.
Carnock, L.	Orr-Ewing, L.
Chalker of Wallasey, B.	Oxfuird, V.
Charteris of Amisfield, L.	Perry of Southwark, B.
Chelmsford, V.	Peyton of Yeovil, L.
Clanwilliam, E.	Reay, L.
Colwyn, L.	Renton, L.
Courtown, E.	Renwick, L.
Craigmyle, L.	Rippon of Hexham, L.
Cranborne, V.	Rodger of Earlsferry, L.
Cumberlege, B.	Romney, E.
Davidson, V.	Sanderson of Bowden, L.
Dean of Harptree, L.	Seccombe, B.
Denham, L.	Sempill, Ly.
Dixon-Smith, L.	St. Davids, V.
Donegall, M.	Stevens of Ludgate, L.
Downshire, M.	Strange, B.
Eden of Winton, L.	Strathcarron, L.
Elles, B.	Strathclyde, L.
Elliott of Morpeth, L.	Strathmore and Kinghome, E.
Flather, B.	[Teller]
Fraser of Carmyllie, L.	Sudeley, L.
Fraser of Kilmorack, L.	Swansea, L.
Gainford, L.	Swinfen, L.
Gilmour of Craigmillar, L.	Terrington, L.
Goschen, V.	Teviot, L.
Gray of Contin, L.	Thomas of Gwydir, L.
Greenhill of Harrow, L.	Torrington, V.
Gridley, L.	Trumpington, B.
Hamilton of Dalzell, L.	Vaux of Harrowden, L.
Harding of Petherton, L.	Vivian, L.
Harmar-Nicholls, L.	Wade of Chorlton, L.
Hayhoe, L.	Wakeham, L. [Lord Privy Seal.]
Henley, L.	Westbury, L.
Hesketh, L.	Whitelaw, V.
Hood, V.	Wise, L.
Howe, E.	Wynford, L.
Hylton-Foster, B.	Zouche of Haryngworth, L.
Johnston of Rockport, L.

4.55 p.m.

Lord Ezra moved Amendment No. 2:

After Clause 1, insert the following new clause: ("Establishment of Authority: effect on health and safety law . The establishment of the Authority shall not, except as explicitly stated otherwise in this Act, have any effect upon the existing law with regard to health and safety in coal-mines.").

The noble Lord said: My Lords, Amendment No. 2 raises the question of safety. As your Lordships will recall, this issue gave rise to a substantial amount of discussion at the Committee stage. It has been made clear by the Government that they wish the standards of safety so far obtained in the mining industry to be continued and that they consider that the proper way for that to be done is through the Health and Safety Executive. We have no objection to the Health and Safety Executive taking on that responsibility. Where we are concerned, however, is that this attention to safety—the culture of safety to which the noble Lord, Lord Haslam, so emphatically referred at the Committee stage —is not sufficiently recognised on the face of the Bill.

During the course of the debate at the Committee stage the noble Baroness, Lady White, among others from our ranks, raised this issue and received an assurance from the Minister that he would reflect on the matter and try to come up with a form of words which would satisfy us; namely, which would put on the face of the Bill the commitment to safety. However, he has since written to the noble Baroness —he was kind enough to send copies of letters to others who participated—saying that he has, in spite of the exertion of all his undoubted drafting skills, been unable to come forward with a proposition. No doubt the noble Baroness will in due course give her opinion of the response. However, as the noble Lord has not been able to come up with a form of words, we thought we would try to help. We have put forward a form of words which I very much hope he will be prepared to accept. We do not see that the words suggested in the amendment would in any way detract from the role which we agree should be exercised by the Health and Safety Commission and Executive but it would achieve the objective we have in mind; namely, that on the face of the Bill this major issue of safety should be referred to. Therefore, I beg to move.

Lord Morris of Castle Morris

My Lords, we on these Benches naturally wish to support the amendment of the noble Lord, Lord Ezra, which arises from, and relates to, a concern expressed by my noble friend Lady White at an earlier stage of the Bill. The Minister was so kind as to write to her on 20th May setting out his concerns very clearly. He said that he, with his officials, in consultation with the Health and Safety Executive, had to bear in mind the very clear advice of the Health and Safety Commission that there should be no duplication of the role of the Coal Authority as a licensing body and that of the commission as regulator of the health and safety regime in the coal industry. I have looked very carefully at the wording of the amendment and it does not seem to me to create any duplication of any roles.

The letter from the Minister went on to say that he had looked carefully at all the options for meeting our concerns by adding a reference in the Bill. However, the insurmountable problem with that approach is that it points towards a provision which would have no real effect in law". But the amendment proposed by the noble Lord, Lord Ezra, announces that the Act will change the existing law by the very use of that word, "except". The second page of the Minister's letter to my noble friend Lady White lists the changes and explains them, so the amendment does have a real effect in law. If the authority acted improperly, it could be sued and the new clause could be cited. The letter points out, the need to ensure the greatest possible clarity in the drafting so that the legislation is not misunderstood". The amendment makes the position as clear as crystal, a phrase we shall hear again this evening I do not doubt. The legislation will not be misunderstood; it will be better understood. The Minister with his officials, in consultation with the Health and Safety Executive, was unable to come up with a solution. It seems to me that the noble Lord, Lord Ezra, has been able to do so. The Government should be extremely grateful to him, thank him warmly and accept his amendment.

5 p.m.

Lord Renton

My Lords, it is exceedingly important that Parliament should make sure that at least as good standards of health and safety are maintained in coal mines as before. Like several other noble Lords, I speak with experience. As a junior Minister I was responsible for two most interesting years for health and safety in coal mines. We have to remember that no two coal mines are quite the same. They vary tremendously in the incidence of poisonous gases, explosive gases, the way in which coal dust can be formed, and they are endlessly variable insofar as the danger from falling overheads are concerned.

Therefore, it is very important that we should get this right. I am not in any way departing from the validity of the amendments. It is as well that we include them. However, I am bound to make this comment. At first sight and if one is not a little shrewd, Amendment No. 2 might be considered unnecessary from a strictly drafting point of view. It is better that we make sure, especially if we are going to do what Amendment No. 43 attempts to do—that is, to ensure that perhaps even higher standards are maintained than exist under the present law and practice. Therefore, I very much hope that my noble friend Lord Strathclyde will give a sympathetic reception to these two amendments.

Baroness White

My Lords, before the Minister replies, he should listen to his very experienced noble friend on the Back Bench here. I should like to say how grateful I am to the two noble Lords on this side of the House who have taken up the point which has been made. They quoted from correspondence so adequately that I shall refrain from reading out further passages from the very courteous letter, unsatisfactory though it was in every other possible respect.

Lord Mason of Barnsley

My Lords, I particularly support the amendment moved by the noble Lord, Lord Ezra; namely, that every licence shall include an obligation to maintain standards of safety to at least the same level as that maintained by the Corporation immediately before the restructuring date". I refer specifically to the Mines Rescue Service. They have not yet received full assurances from the Minister that the safety standards prior to privatisation will be maintained thereafter.

In 1936 I was 12 years of age. One of the two pits in my village blew up. It happened during the night shift. There were no survivors. Seventy-four bodies (or their remains) had to be brought to the surface. My school was nearby; it was closed and the main hall used as a morgue. There were no monies in those days for the relatives of the deceased. We are talking about privatised coal mining, of course. I remember that George Formby came to Barnsley and performed free at the Alhambra Theatre to raise monies for the bereaved.

I was at the pit head that morning, as was almost the whole village, including pit men in pit togs, flat caps and clogs; they had been preparing to go down for the day shift. There were many women present, their heads covered in shawls. They were huddled in groups and anxiously waiting and watching every stretcher coming up the shaft. The rescuers were volunteers. Some were pit ambulancemen from the service. They were brave men descending into the unknown—a blasted mine full of gas and blasted bodies. In those days, due to secondary explosions and inadequate breathing apparatus, some of those volunteers were killed in those acts of bravery.

Since 1947 and nationalisation, we have developed a highly trained and well-equipped, full-time professional Mines Rescue Service—

Lord Strathclyde

My Lords, I know that the noble Lord, Lord Mason, is talking about the Mines Rescue Service. I understand that it is a very valuable concern and a health and safety matter. However, I understand that Amendment No. 67 deals with that matter later. The noble Lord may wish to hold back his comments until then. I did not want him to think that he was perhaps speaking to the wrong amendment. I may have interrupted him unduly.

Lord Mason of Barnsley

My Lords, every licence shall include an obligation to maintain standards of safety at least as good as those prior to privatisation. I particularly refer to the Mines Rescue Service, which is covered by this.

Since 1947 and nationalisation, we have developed a highly-trained, well-equipped, full-time professional Mines Rescue Service, with British Coal having a statutory duty to maintain this specialised mine rescue facility. We really should have a positive assurance that this service will be funded by the Coal Authority and that it will maintain an adequate full-time rescue service. The Mines Rescue Service has a number of central rescue stations manned by full-time rescue brigadesmen. They provide 24-hours-a-day cover. These full-time brigadesmen are highly skilled and trained in underground mines rescue. They have to combat gas-filled mines, overcome rock falls in a blasted mine; contact and rescue injured men; and bring out broken bodies from underground explosions. It takes not only highly-trained, well-equipped men, but men taught and prepared to combat the horrors of gas and fire and be able to face the task of bringing out the shattered remains of colleagues. They are a special breed. They are full-time, on standby, fit and ready for all underground emergencies.

The service fears a privatised part-time service, and the Government have not removed those fears. The Government have said that there will be a service, either full-time or part-time. The full-timers should be the core of the service. Under the proposed regulations contributions will be expected from the small mine owners. In the meantime, British Coal will provide a service for 12 months after the new regulations have been approved. I do not believe that that is good enough. There is a 12-months only guarantee for some service; there is no mention of what size and then it is only for one year.

In its report on the safety consequences of privatisation the Health and Safety Executive stated that rescue at coal mines is a specialist function requiring workers who are specifically trained and equipped for this work. The HSE would like to have arrangements that maintain existing standards of provision and ensure the preservation of a national rescue capability. The Mines Rescue Service asks that there be a guarantee that the level of funding necessary to maintain existing levels of rescue cover be assured by the Government and British Coal should not withdraw from responsibility after 12 months. It still fears an underfunded, part-time rescue service. If that happens the Government and the Coal Authority will be placing miners' lives at risk. Despite the fact that the Minister intervened, thinking that I was speaking to the wrong amendment, I hope that I explained that I am speaking to the correct amendment. I hope that I shall receive a reply.

Lord Haslam

My Lords, the Government constantly stress that they regard safety as paramount, but as the noble Lord, Lord Ezra, has said, that may still not be adequately reflected in the Bill. The whole emphasis is on regulation, but regulation, is only part of the story. Those of us who have worked in the coal industry know that excellent safety performance is more a matter of sound management systems and the safety culture within the industry, than regulation itself.

Drawing an analogy with the crime problem in the UK, it is not the lack of regulation or policemen that give rise to increased crime so much as the loss of an overall cultural cohesion which itself outlaws criminal activities. I believe therefore that the successors of British Coal will need to recognise and continue to pursue the following disciplines, and the Coal Authority must ensure that potential licensees are willing to do so.

First, British Coal has always established its own safety instructions, which often go well beyond the demands of legal regulations. Those instructions frequently set standards of safe practice when new technology has been introduced or an accident investigation has identified shortcomings in existing practices. Those procedures have obviated the need for further legislation. I understand, however, that on privatisation only a tiny fraction of those current safety instructions are to be given legal status.

Secondly, British Coal has commendably developed a safety culture which permeates both management and the whole workforce. This safety momentum will obviously carry over into the private sector, but it will prove fragile if the successor companies are not prepared to devote the time and effort to maintain it.

Finally, to enhance safety standards often involves significant capital investment which has no immediate benefits or impact in relation to improving operational costs. This is always a difficult discipline to live with but it will have to be recognised and pursued.

British Coal is currently standing at the top of the deep-mine world safety league, and the foregoing factors will need to be sustained if this position is not to be gradually eroded. I strongly support Amendment No. 43, and if the Government's clarion call about safety is not a hollow one, it is difficult to see how this amendment can lightly be rejected as that would imply an uncertainty about maintaining current standards.

Lord Prys-Davies

My Lords, I support the amendment which has been moved by the noble Lord, Lord Ezra. In Committee we were repeatedly told by the Minister that safety was a matter for the regulatory body, the Health and Safety Commission. We appreciate that it is the primary job of the Health and Safety Commission and of the executive to enforce the health and safety regulations which are contained in delegated legislation, but the implementation of the regulations is the primary job of the mining companies. When we are dealing with the question of safety in the mining industry, we would prefer the importance of safety in the industry to be enshrined in this Coal Industry Bill. It seems to me that the amendment does precisely that. If its provisions were to be enshrined in the Bill, we believe that it would inform the Bill and all those who are responsible for the management of the industry. It would be a valuable supplement to the many pieces of delegated legislation that are in place.

Since Committee, the noble Lord, Lord Strathclyde, has been good enough to send me—and, I am sure, other noble Lords —a copy of the report The Framework for Health and Safety in Britain's Coal Mines. He also sent a summary of the correspondence between the Minister and the chairman of the commission. Can the Minister tell the House whether the robust legal framework which the chairman thought ought to be in place before the new mining operators commence operations will be in place?

I now refer to paragraph 8.30 and to a point that was raised by my noble friend Lord Mason of Barnsley. The paragraph states: 'The Commission intends to submit draft regulations on rescue to the Secretary of State as soon as possible, bearing in mind that the task of producing such regulations will require careful formulation and involve extensive and extended consultation". That was written in October of last year. Have those regulations been agreed? When will they be issued? Will the Minister also confirm that all of the recommendations from the chairman of the commission as set out in the report have been accepted by the department?

5.15 p.m.

Lord Gray of Contin

My Lords, it seems to me that when there are privatisations, particularly of an industry as complex as the coal industry which has been in public ownership for more than 40 years, it is inevitable that we must give considerable consideration to where the dividing line should be drawn when we talk about liabilities for health.

I should like to say a word or two about health, as opposed to mining safety, with which other noble Lords have dealt. My understanding is that related claims will be accepted as the responsibility of the Government and that after privatisation they will be the responsibility of the successor companies. That being the case, I cannot see why it is necessary to amend the Bill. Various suggestions have been put forward and reasons given, but I am not convinced that amending the Bill is necessary for that purpose.

However, in this case my understanding is that, on privatisation, the responsibility for health and injury claims with respect to past service with British Coal will be retained in the public sector and accepted by the Government, and that that includes responsibility for claims by employees who transfer to successor companies. Responsibility for future claims will rest with the successor companies and normal procedures will apply to the settlement of claims for apportionment where there have been periods of service with both British Coal and successor companies. As far as health is concerned, that seems a reasonable arrangement, and for that reason I am afraid that I am not convinced that it is necessary to amend the Bill in this way.

Lord Strathclyde

My Lords, I am grateful for the intervention of my noble friend, who has clearly understood the regime that we are trying to impose on the privatised coal mining industry. He also understands —I hope that the rest of the House understands—that we entirely share the concern behind the two amendments. The Government fully share the view that has been expressed on all sides of the House about the vital importance of safety in the coal-mining industry. It is entirely appropriate that we debated the issue at some length and on several occasions in Committee and that we do so again now. I hope that we shall come to the same conclusion as in Committee, which was that we should not amend the Bill. I believe that it is important that we get the regime absolutely right.

Amendment No. 2 would put a provision on the face of the Bill which apparently would have no effect. This is one of the problems which my noble friend Lord Renton drew out about the drafting of such amendments. In Committee I said why I believed that there would be little point in pursuing this particular course. It was on that basis that I wrote a letter to the noble Baroness, Lady White, on 20th May outlining the Government's position on this matter in full and explaining why nothing more should be added to the Bill on health and safety matters and, indeed, that nothing more could be added to the Bill that would improve the health and safety of people who work down the mines. That is our intention. I placed a copy of that letter in the Library.

I think it would be helpful if I recount the reasons as to why I do not feel it is appropriate to place such a provision on the face of the Bill. I can assure noble Lords that I have considered the matter very carefully and have consulted the Health and Safety Executive in my deliberations. In doing so I had to bear in mind the very clear advice of the HSC that there should be no duplication of the role of the Coal Authority as licensing body and that of the commission as regulator of the health and safety regime in the coal industry.

As the noble Lord, Lord Prys-Davies, made plain, it appears that the House does not dispute the commission's advice on this important point, and the thrust of noble Lords' concern was that there should be something on the face of the Bill to flag up the importance of safety but which did not contradict the commission's advice.

I have looked at all the options for meeting the House's concern in this area. However, the insurmountable problem with this approach is that it points towards a provision which will have no real effect in law. I hope that in this I shall be supported by my noble friend Lord Renton, who is better at these issues than I.I am advised that it is undesirable to attempt to include such provisions on the face of legislation, not least because it is not practicable to draft provisions which, in fact, have no practical effect, and also because of the need to ensure the greatest possible clarity in the drafting so that the legislation is not misunderstood. I am sure that noble Lords will understand that that would make for unsatisfactory legislation and would be wrong coming from this Chamber, which is full of specialists in legislation.

I fully understand the anxieties voiced in this matter. However, I believe that there is a very important point here which should not be overlooked; that is, that there are already in the Bill several important references to safety. Indeed, in recognition of the importance of health and safety in the industry, Clause 4 of the Bill is solely concerned with a duty placed on the Coal Authority to ensure that it agrees a document in conjunction with the Health and Safety Executive, which sets out the arrangements for securing co-operation and the exchange of information between them. This clause is designed to ensure that both bodies can carry out their respective roles most effectively. This is a very important clause.

A draft of the proposed memorandum of agreement to be drawn up under Clause 4 has been made available as part of the Coal Authority Explanatory Note. The draft memorandum has been approved by the Health and Safety Commission. It is worth stressing that both the Health and Safety Executive and the Coal Authority would be obliged to conduct themselves in accordance with the contents of the memorandum.

This and other provisions have all been made in the light of the Health and Safety Commission's advice. The commission's report to the Government makes clear that the powers of the Health and Safety Commission and its executive to regulate and to enforce the health and safety regime in the coal mining industry are comprehensive. The commission's report has been, and continues to be, made widely and freely available by the Government. The Government have made very clear the value that they place on the commission's advice, which they have accepted in full.

The noble Lord, Lord Prys-Davies, asked me a number of questions. I can assure him that most of the new regulations that the HSC regards as necessary for the privatisation are already in place and that the remainder will be in place in good time before privatisation. The new rescue regulation will be in place as soon as possible following the forthcoming consultation and in any case before British Coal ceases to have an operational responsibility.

Without pre-empting the possibility of a debate on Amendment No. 67, I can say to the noble Lord, Lord Mason of Barnsley, that Clause 55, together with the existing powers of the HSC, will ensure that existing standards of rescue, including a national rescue capability, must be maintained.

I turn to Amendment No. 43. The problem is that it flies directly in the face of a key element of the considered advice that we have received from the Health and Safety Commission. The effect of the amendment would be that the authority would have to oversee the safety performance of its licensees through the licensing process. That is exactly what the commission does not want. On page 5 of the commission's report, it states that the processes of licensing by the authority, and the compliance by licensees with health and safety law, must not be muddled. It states: It is important that these processes should remain separate and distinct". It further states: That principle must not be blurred in any way—to do so would be to risk confusion which can only jeopardise safety". That spells it out in some detail.

I apologise if I weary the House by repeating this point in so much detail. However, I find it hard to believe that noble Lords really intend to challenge the commission's advice. This is a valuable opportunity for the Government yet again to confirm the fact that health and safety is central to the process of privatisation. If noble Lords look carefully at the advice that we have received from the HSC I am sure they will conclude, as I and the Government have done, that it makes good sense and that it would be wrong to depart from it. I hope that on that basis the noble Lord will withdraw his amendment.

Lord Ezra

My Lords, I am sorry that we have not found a drafting solution to the problem that worries many of us. I listened with great care to what was said by the noble Lord, Lord Renton. While he did not believe that the wording of the amendments was adequate, he felt that there might be room for an amendment which was adequately and properly drafted.

We are still most concerned about this issue. We would like the legislation to contain more than it does, explicitly about the issue of health and safety. If it be necessary to mention the role of the Health and Safety Commission therein, so be it. We should be perfectly content with that; it would set our fears at rest.

As there is some doubt about the wording of these two amendments, I shall beg leave to withdraw them. However, I believe that we should return to the matter on Third Reading.

Amendment, by leave, withdrawn.

Clause 2 (Duties of the Authority with respect to licensing):

Lord Northbourne moved Amendment No. 3:

Page 2, line 33, after ("damage") insert (", contamination and other liabilities").

The noble Lord said: My Lords, I rise to speak to Amendment No. 3. The Minister did not convince me that there is such a substantial difference between subsidence and contamination. Of course, I agree that we are all waiting to see what we can negotiate in Brussels, but at the end of the day the liability must fall somewhere. It will fall either on the current operator or on the perpetrator of the contamination. I envisage that we are talking about contamination which arises from acts which have already taken place. In that case, it will be British Coal. Failing that, the liability might fall on the landowner and it is that which I am most anxious to avoid.

This matter is no joke. I am informed that all pits which have had on them a coking operation or a gas works are deemed to be contaminated. I am also told that Brussels is trying to persuade itself that coal is a contaminant. Therefore, we are faced with the possibility that, if Brussels has a mind, someone will be faced with a liability for a clean-up job which will cost £2 million or £3 million.

The noble Lord, Lord Crickhowell, drew attention to the problems which will arise out of uncertainty if the new operators do not know what they are bidding for. Furthermore, how will the authority assess its liability under Clause 2(1)(b) if an uncertain amount—£2 million or £3 million—might fall as a liability on the new operator?

If when the information comes out of Brussels the liability falls on the current licensee under the arrangements that he has with the authority and he cannot pay, or if Brussels lays the liability strictly on the landowner, the landowner in a few years time will not be able to claim against the Coal Board because the Coal Board will no longer exist. Under those circumstances, the landowner would have to pick up the bill and that would be extraordinarily unjust on him.

My amendment simply requires the authority, in considering how to carry out its functions, to include contamination and other liabilities as well as subsidence. Under the terms of the Bill, it is required to do so only "as far as practicable". I suggest that this is a modest amendment and I beg to move.

Lord Peston

My Lords, I wish to inquire whether the noble Lord, Lord Northbourne, was speaking to the whole group of amendments or just to Amendment No. 3.

Lord Northbourne

My Lords, I was speaking to one amendment.

Lord Peston

My Lords, that does not count as my speech for the Report stage!

Lord Strathclyde

My Lords, perhaps I may help the noble Lord, Lord Northbourne. He need not stick to the list of groupings, but it includes Amendments Nos. 3, 8, 10, 15, 16, 21, 23, 24 and 39, which are interconnected. If the noble Lord speaks to all of them I shall be able to reply to them and so no doubt will the noble Lord, Lord Peston.

5.30 p.m.

Lord Northbourne

My Lords, I had not intended to speak to all the amendments in the grouping at this time because it seems to me that it is extremely complex to talk about different issues which we then have to return to when we move the amendments.

Amendments Nos. 3 and 10 relate to situations which would arise when licences had been granted and the way in which the authority should behave in granting those licences so as to protect the interests of third parties and particularly the owners of land from whom parts of the operation may be leased.

Similarly, Amendments Nos. 15 and 16 relate to the passing of interests and liabilities to the authority. Amendments Nos. 21, 23 and 24 are rather different. They relate to Clause 12 and the Secretary of State's power to make schemes and to transfer property prior to restructuring date. I believe that I heard the noble Lord say that in some way the Secretary of State would be under the same obligations as the authority in respect of the way in which he behaves before restructuring date. I shall read Hansard, but I should be grateful for some clarification on that point. Clearly, if that is the case, we need not be alarmed by the prospect of the Secretary of State putting a fast one across before the authority comes into being.

Finally, Amendment No. 39 relates to non-property liabilities. For example, I am concerned that if liability for clearing up contamination were to fall on a landowner, he would, as matters stand at present, probably have a claim in damages against the coal board. If the coal board no longer exists, he does not have any claim in damages and it is not a claim which passes with the land. Therefore, his claim evaporates. That must be manifestly unfair.

Lord Peston

My Lords, this is an important group of amendments. I wish to support them and underline three or four points. First, we should be indebted to the noble Lord, Lord Northbourne, for Amendment No. 3. Essentially, he is adding the point that, at this stage of the Bill, liabilities should be about contamination and other liabilities and not simply about subsidence. In my judgment it is important that that should be written on to the face of the Bill.

The main contribution of such amendments is to take us on from the position that we were at when we debated the first group of amendments. In the end, we have to agree to differ with regard to those amendments. At long last, I believe that I have a glimmering of what the Government think that they are doing. In the end I suppose that one should take a completely ruthless view and say that if those who are willing to bid for leases are willing to bid for them on the terms outlined by the noble Lord, Lord Strathclyde, which your Lordships, albeit by a small majority, supported, then so be it. If they wish to throw away tens or hundreds of millions of pounds, that is up to them. If any of them wish to hire me as a consultant, for quite a small fee I am quite willing to advise them not to do it. But in the end, the whole point of a free market system is that if you wish to throw away a few hundred million pounds, by all means go and do it.

However, the point which the noble Lord, Lord Northbourne, makes with these amendments is different. They are to do with the innocent bystander. Let us assume that those entrepreneurs incur liabilities which, in the end, they will not be able to meet. The innocent bystander may be a large landowner, but the word "landowner" includes also ordinary owners of properties, including owners of gardens and so on. If those people who have taken on the leases have not made proper provision, then at best the innocent bystander can try to pursue the coal authority but at worst, he will suffer damage to his property for which he will receive no compensation.

Therefore, I support the amendments warmly because I do not believe that that should be allowed to happen. It should not be allowed to happen a priori; in other words, it should be written onto the Bill that leases should not be granted to people who are not able to meet all possible liabilities to the innocent bystander.

I do not believe that your Lordships have yet addressed that in the Bill either in detail or with the responsibility to those people which they deserve. That is quite separate from the earlier discussion. I simply do not believe that the innocent bystander should, as a result of the Bill, end up incurring any risks The point of the amendments is to see that they do not do so. My reading of the many useful contributions by the noble Lord, Lord Strathclyde, on this Bill is that in the end, those people will end up by incurring those risks., and I do not believe that they should do so. Therefore, I warmly support the noble Lord, Lord Northbourne, and I hope that other noble Lords will also support him.

Lord Stanley of Alderley

My Lords, I too am worried about the anxieties behind the amendment and I support it unless my noble friend on the Front Bench can give me some assurances in relation to it. Contamination certainly worries me. Perhaps, as a farmer, I may give a very simple example of something that has happened in the past. I believe that on the last amendment my noble friend said that we have had contamination and that we have always seemed to sort it out. We have done so but at a price.

I give the simple example of silage contamination. Until 15 years ago, none of us thought that we were doing any harm by contaminating the water with silage. We now know that it is extremely polluting, in particular to fish. That was put right, but it was put right at great expense. I am pleased that my industry has put that right, but that was done at vast expense and we did not know that that would happen. The point which the noble Lord makes is that something similar could happen with regard to mining, particularly if the European Community takes the line which it may well do.

I am sure that my noble friend will refer again, when he replies, to that little red book, the revised Coal Authority Explanatory Note. Will he explain what statutory power that book has? For example, in connection with liabilities, it contains the phrases: to secure as far as is practicable", and, "it is envisaged". I fear that they have no statutory power and I wonder what weight the courts would give to such phrases. I am worried about contamination and I support the amendment.

Lord Sanderson of Bowden

My Lords, I am rather confused by the speeches on this aspect of privatisation. As I understood our earlier discussions, we talked about the Coal Authority being the freehold owner of the mine or area concerned. Surely if you are the freehold owner, environmental liabilities go along with that ownership. The noble Lord, Lord Northbourne, asked to whom he should apply. I should have thought it obvious that he should apply to the Coal Authority.

Lord Northbourne

My Lords, before the noble Lord sits down, perhaps he did not hear me say that a substantial number of coal operations operate partially on leased land.

Lord Renton

My Lords, as we are not allowed to speak after my noble friend has replied to the debate, perhaps I may say a few words now.

I am rather surprised at the grouping of the amendments because, to my mind, they raise four quite distinct issues. They overlap a bit but they are distinct issues: first, the very important issue of contamination, and I shall return to that in a moment; secondly, the continuity of present liabilities; thirdly, provision for meeting fresh liabilities which may arise and would arise; and, fourthly, the responsibilities of the National Rivers Authority as mentioned in Amendment No. 13. Those are quite separate matters, although the amendments are all grouped together.

Incidentally, there are one or two fairly subsidiary points which arise within the grouping. However, perhaps I may return to the question of contamination. As the noble Lord, Lord Northbourne, said, it really is quite separate from subsidence damage as mentioned in Clause 2. It is something which must be specifically dealt with. I believe that Amendment No. 3 is worthy of very serious consideration by the Government.

As to the continuity of present obligations, in Committee and when discussing the first group of amendments today my noble friend the Minister made it quite clear that the Bill does deal specifically and widely with present obligations and their continuance. He also hopes that we are making provision for meeting fresh obligations, but the omission of contamination from the clause makes we wonder.

Then there is the question of the responsibility of the National Rivers Authority, which is really quite separate from the matters with which we are mainly concerned in this grouping. I should have been interested to hear the view of my noble friend Lord Crickhowell on the matter. When we are placing a definite obligation upon the Coal Authority, and people who are licensed by it to operate mines, I rather doubt whether it is right to place an overlapping authority on the NRA.

Lord Crickhowell

My Lords, I am sorry to intervene but the amendment to which my noble friend is speaking is not in fact included in the group that we are now debating.

Lord Renton

My Lords, I am grateful for my noble friend's correction. I apologise to the House for getting it wrong. Noble Lords can therefore ignore what I said in that respect. However, my other three points remain unchanged. As I said at the beginning of my remarks, we are somewhat inclined to have thrust upon us the discussion of too many amendments at once. In those circumstances, we do not give them enough attention.

5.45 p.m.

Lord Strathclyde

My Lords, we should not be confused at this point with the debate that took place earlier. The amendments deal with somewhat different issues. However, they are no less important. In moving the amendment, the noble Lord, Lord Northbourne, said that it was no joking matter. I entirely agree with him.

I believe that my noble friend Lord Stanley accused me, in any case by implication, of being slightly flippant with my remarks on contamination. I believe that contamination is very important, but, where a legal liability exists, there is no doubt as to where the liability should lie. It is a principle of law—and, indeed, of government policy—that the polluter should pay. In all cases, the polluter must pay. I believe that the fact that land has been used consistently by British Coal should give some comfort to future owners because, presumably, the liability will fall upon those who produced the pollution in the first place; namely, British Coal.

Amendment No. 3 deals with the protection of the interests of third parties by placing on the Coal Authority a duty to ensure that no person suffers loss as a result of the failure of a licensed operator to make appropriate provision for financial security in respect of all of the liabilities attaching to his operations. That, as I believe my noble friend Lord Renton rightly pointed out—although, if he did not, I apologise—is potentially a very onerous duty. When drafting the legislation, we concluded that it was necessary in respect of subsidence liabilities to provide for a very firm duty, but not for other liabilities. That is because subsidence liabilities are unique; they are created due to the unique nature of the right to withdraw support which coal mining provides.

However, the statutory right to withdraw support is an exceptional right which justifies special measures to protect third parties. Withdrawal of support, and subsidence damage to private property, is a more or less unavoidable consequence of modern mining. It is because lawful mining will result in damage to people's homes that we have proposed the strongly worded duty in Clause 2(1) (c). That is why the Coal Authority has a duty to ensure that the person bidding has the necessary finance. The clause means that security will have to be provided by the operator if required by the Coal Authority. I am not at all sure—indeed, I believe it to be wrong—that that duty should be continued for potential liabilities which may or may not occur.

In the draft licensing documentation, the duty in the clause will entail continuing close monitoring of the licensee's subsidence liabilities by the authority. That, in itself, unavoidably involves some cost both in resourcing the authority and for operators in complying with regulatory requirements. Amendment No. 8 would require other liabilities to be treated in similar fashion. I believe that I have explained why that is unnecessary. Further, the amendment would give the Coal Authority detailed involvement of a quite unnecessary and unhelpful sort in monitoring all kinds of matters from payment of suppliers to the payment of corporation tax, and a whole range of other liabilities.

Amendment No. 10 seeks to avoid a situation where the Coal Authority disposes of land or property for non-coal-mining use simply because that will secure a higher price. That is not how the Bill works. The Coal Authority will need to take decisions on the disposal of land and property in the context of all its relevant duties. For example, if it has to choose whether to make land available for coal mining operations or to sell it for other use, it must do so in the light of its duty in relation to the industry under Clause 2(1) (a).

That raises the question of why Clause 3(4) is made subject to Clause 3(6). We have taken the view that when making coal-bed methane and coal strata available to coal-bed methane operators for exploitation, the state should secure value through payment for licences granted under Section 2 of the Petroleum (Production) Act 1934. Because that consideration falls outside the Bill and, therefore, outside the Coal Authority's duties, it is necessary to make clear in the Bill that qualification to the authority's duties in that context. In other words, that is an area in which we envisage overriding the general operation of the authority's duties. I hope, therefore, that the noble Lord will see that his concern is unfounded since it is met by the general structure of the Bill.

In response to the earlier debate, I discussed the reference to liabilities in Clause 7(3) which the noble Lord raises in Amendment No. 15. We consulted legal advisers on the matter. I cannot accept it because Clause 7 does not—and, indeed, is not in any way intended to —change the existing position with regard to the legal responsibilities falling on underground mine owners. It is simply about the transfer of ownership. In that respect, I believe that it is very clear and comprehensive. Responsibilities running with the ownership of coal mines will automatically transfer with them by reason of Clause 7(3). As regards any changes in the obligations that go with ownership, I have explained that the key issue of minewaters "permitted" is currently under consultation.

Amendment No. 16 seeks to vest in the Coal Authority on the restructuring date all of the corporation's land which is or has been occupied for the purposes of coal-mining operations. Clause 7(3) already provides for British Coal's interests in unworked coal and coal mines to be vested in the Coal Authority. There is general agreement that the freehold interest should remain in the public sector. But I see no compelling reason to seek to retain in the public sector the freehold of land that is, or has been, associated with coal mining. I also see no reason why mine operators should not own the freehold of the surface land and, in due course, dispose of it as they judge best. If that is so, there is no merit in transferring title from British Coal to the Coal Authority, the authority leasing that land back to British Coal for the period that it continues to operate the mine and then transferring the lease and the freehold interests to the successor operators at the time of sale.

Much of the land associated with past coal mining is unlikely to be of use for future coal mining. If that passed to the Coal Authority, it would then be under a duty to dispose of it. Again, it may be possible to short-circuit that process: if so, that would clearly be preferable. This is a complicated situation with a number of options. That is why it is appropriate to deal with it, as the Bill envisages, through the flexible instrument of restructuring schemes under Clause 12.

Turning to Amendment No. 21, the Bill contains a general provision for a restructuring scheme under Clause 12(2) to be made before the Coal Authority is established. It is not intended that this power will be used to transfer coal or coal mines before the Coal Authority comes properly into being. Until that time British Coal will continue to be the statutory owner of coal and coal mines in Great Britain by virtue of the Coal Industry Nationalisation Act 1946. So the only scope for the ownership of coal mines to pass to the private sector would be by way of a lease granted by British Coal, just as is the case today. I hope the noble Lord will be satisfied as to the Government's intention.

In responding to Amendments Nos. 23 and 24 I hope I may briefly make a general point. When the Secretary of State issues operating licences to British Coal's successors, the Bill provides that he will be issuing the licences on behalf of the Coal Authority. As such, my advice is that he will be bound by all of the duties contained in Clause 2 of the Bill. The noble Lord's amendment deals specifically with the duties relating to safety and the financial soundness of licensed operators.

Lord Peston

My Lords, I hope I may interrupt the noble Lord who seems to have fallen below his usual standard of clarity. Amendment No. 24—as does Amendment No. 8—deals with what I call the innocent bystander question, in this case the landowner. Is the noble Lord saying that the innocent bystander problem cannot arise, or is he saying that it can arise, that that is too bad and one has to take the risk? If it is the former, I cannot see remotely that he has yet cogently argued that the problem cannot arise.

Lord Strathclyde

My Lords, I am sorry if I have not been able to do that. It is my understanding that the innocent bystander is exactly that—an innocent bystander. If a liability has been created by someone else, then it is on the other person that the liability falls, whether that is British Coal, the National Coal Board or anyone else.

Lord Northbourne

My Lords, I am grateful to the noble Lord for giving way. I probably should have asked this question earlier when he said in discussing Amendment No. 3—I think the point applies here also —that in the case of land which has been occupied by British Coal and where British Coal has caused contamination, the liability will fall on British Coal. However, British Coal will not be there any more. So on whom will the liability fall?

Lord Strathclyde

My Lords, Clause 7(3) deals with these problems. It states: On the restructuring date the Corporation's interests in unworked coal and coal mines, including its interests in any coal … shall vest without further assurance in the Authority". Before the noble Lord rises again, I should say that I understand that that covers everything that is of concern to the noble Lord.

Lord Northbourne

My Lords, before the noble Lord sits down, does that cover coal tips and other land held with a pit which might be, and in many cases is, polluted or contaminated?

Lord Strathclyde

My Lords, any pollution or other negligence created by British Coal will then vest in the Coal Authority and the Coal Authority should be liable and ultimately the taxpayer will pay. Other liabilities are of course transferred to the private sector through the leasing arrangement but anything that has been created by British Coal will fall to be paid for by British Coal. That is absolutely right. When the noble Lord spoke to these amendments he said that if that was not the case it would be a manifest injustice. I entirely agree. That is why I believe that these issues have been dealt with.

I was replying briefly to the noble Lord on Amendments Nos. 23 and 24.I believe that I have dealt with those issues in replying to Amendment No. 15. I turn briefly to Amendment No. 39. The amendment to Clause 23 seeks to ensure that British Coal's liabilities are managed properly both before and after the dissolution of the corporation. I entirely share the aims of the noble Lord. The business of coal mining gives rise to a considerable number of liabilities and it is important that these are properly handled and managed on privatisation.

All British Coal's liabilities—this is the point which, I think, goes to the heart of the noble Lord's concern —will be transferred to another person or body before the dissolution of the corporation. No liabilities, either present or future, will be left with the corporation to wither on dissolution. That is an important commitment. I believe that it deals with the question of the innocent bystander raised by the noble Lord, Lord Peston. Before making the order dissolving British Coal, the Secretary of State will be required under Clause 23(4) of the Bill to consult the corporation. This will compel him to ascertain whether, at that stage, the corporation still has liabilities which will need to be discharged. I can assure the House that the Government's intention is that provision will be made for any such liabilities before the corporation is dissolved. I hope that is the kind of assurance that the noble Lord, Lord Northbourne, is looking for. If the noble Lord did not perhaps listen to those final sentences, I hope he will be able to read them in Hansard.

Lord Northbourne

My Lords, I apologise for my inattention. I am totally confused. While I naturally accept what the noble Lord says —the assurance he has given us on the face of the Bill is extremely satisfactory —I believe we are all agreed that the wording of the Bill is so abstruse and complex that it will not be clear, certainly not to the innocent bystander and possibly not even to the courts, as to what is intended. I should therefore like to test the opinion of the House on my Amendment No. 3.

5.56 p.m.

On Question, Whether the said amendment (No. 3) shall be agreed to?

Their Lordships divided: Contents, 86; Not-Contents, 110.

NOT-CONTENTS
Addison, V.	Chelmsford, V.
Annaly, L.	Clark of Kempston, L.
Arran, E.	Colnbrook, L.
Astor, V.	Colwyn, L.
Balfour, E.	Courtown, E.
Blyth, L.	Craigmyle, L.
Boardman, L.	Cranbome, V.
Borthwick, L.	Crickhowell, L.
Boyd-Carpenter, L.	Davidson, V.
Brabazon of Tara, L.	Dean of Harptree, L.
Brougham and Vaux, L.	Denham, L.
Butterworth, L.	Denton of Wakefield, B.
Cadman, L.	Dixon-Smith, L.
Caithness, E.	Donegall, M.
Campbell of Alloway, L.	Downshire, M.
Campbell of Croy, L.	Eden of Winton, L.
Carnegy of Lour, B.	Elles, B.
Carnock, L.	Elliott of Morpeth, L.
Chalker of Wallasey, B.	Ferrers, E.
Charteris of Amisneld, L.	Rather, B.

Fraser of Carmyllie, L.	Monteagle of Brandon, L.
Gardner of Parkes, B.	Mottistone, L.
Gilrnour of Craigmillar, L.	Munster, E.
Glenarthur, L.	Murton of Lindisfarne, L.
Goschen, V.	Napier and Ettrick, L.
Gray of Contin, L.	Norrie, L.
Gridley, L.	Orkney, E.
Hanson, L.	Orr-Ewing, L.
Harmar-Nicholls, L.	Perry of Southwark, B.
Haslam, L.	Peyton of Yeovil, L.
Hemphill, L.	Rankeillour, L.
Henley, L.	Rippon of Hexham, L.
Hertford, M.	Rodger of Earlsferry, L.
HolmPatrick, L.	Romney, E.
Hood, V.	Saltoun of Abernethy, Ly.
Howe, E.	Sanderson of Bowden, L.
Hylton-Foster, B.	Savile, L.
Johnston of Rockport, L.	Scarbrough, E.
Keyes, L.	Seccombe, B.
Kimball, L.	Shrewsbury, E.
Kinnoull, E.	St. Davids, V.
Lauderdale, E.	Strange, B.
Liverpool, E.	Strathclyde, L.
Long, V.	Strathmore and Kinghome, E.
Lucas of Chilworth, L.	[Teller.]
Lucas, L.	Sudeley, L.
Lyell, L.	Swansea, L.
Mackay of Ardbrecknish, L.	Thomas of Gwydir, L.
Mackay of Clashfem, L. [Lord	Trumpington, B.
Chancellor]	Ullswater, V. [Teller.]
Macleod of Borve, B.	Wade of Chorlton, L.
Marlesford, L.	Wakeham, L. (Lord Privy Seal]
McColl of Dulwich, L.	Westbury, L.
Merrivale, L.	Whitelaw, V.
Mersey, V.	Wynford, L.
Milverton, L.	Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.

6.4 p.m.

[Amendments Nos. 4 to 10 not moved.]

The Lord Bishop of Sheffield moved Amendment No. 11:

Page 3, line 35, at end insert ("except where the land or other property is capable of development in accordance with the local Development Plan for the regeneration of the local economy, in which case it shall be transferred to an appropriate local authority or to English Partnership, Scottish Enterprise or the Welsh Development Agency for disposal or use.").

The right reverend Prelate said: My Lords, the amendment has the rare distinction of being simple, easily understood by all and adding nothing to the burdens on the new Coal Authority but rather reducing them. I even dare to hope that it may be acceptable to the noble Lord, Lord Strathclyde, who spoke encouragingly on a similar amendment at the Committee stage. I am a little disappointed that his words of encouragement are not reflected on the face of the Bill. I remain anxious about the words in the Bill: to secure the best terms reasonable", which may prove a stumbling block to the regeneration and renewal of those communities which have been most affected by the recent dramatic changes in the coal industry.

In the communities which have been so deeply affected I notice a marked distinction between those which seem to be surviving the changes and preparing with a certain determination for a new life, and those which, alas, seem to be sinking into a somewhat melancholic past, unable to cope with the future. I find myself wondering why there is that marked distinction between communities. The answer has everything to do with development and in particular with the speed of development.

I share with the noble Lord, Lord Morris of Castle Morris, and the Book of Common Prayer a dislike of vain repetition, so I shall not weary the House again with the hardship caused to those communities by the loss of the coal industry. However, I shall stress the significance of speedy development. Not only does that bring jobs and a vision of hope; it attracts other developments.

The Moynihan agreement seemed to undertake that when a mine closed there would be speedy regeneration of the site. Sometimes there is. However, as I drive around the diocese of Sheffield I find that often there is not. There is something curiously depressing about a derelict site and a community, with its boarded up shops, out of which the life has gone.

It is fairly clear to me, and I suspect to others, that just as British Coal has not proved to be the best organisation for dealing with the situation—the delays can appear to be endless and are sometimes caused by British Coal's desire to obtain the best price and sometimes by its focus on other issues, not least perhaps the measure which is before us today—it seems unlikely that the Coal Authority, with so much to do, will be the right body.

There is evidence that where the local authority has a plan for the development of such communities and there is land which can be used for such developments, astonishing, almost miraculous, changes can occur. I note with interest that when the Government set up the English Partnership for the promotion and regeneration of areas of need through the reclamation, development or redevelopment of land and buildings, the defined areas of need sum up almost precisely the circumstances of some of these mining communities: Areas of urban deprivation or areas of localised high unemployment where bringing vacant, unused or derelict land into use can contribute significantly to regeneration; and: Derelict land in both urban and rural areas which should be reclaimed for health and safety reasons or because it is blighting the area".

In his earlier response at Committee stage, the noble Lord, Lord Strathclyde, told us that the Government were considering allocating properties which would be beneficial to the regeneration process to local authorities or the development agents directly. That would be an excellent way to deal with the matter.

The purpose of the amendment is to make it easy and quick for that to happen. I ask for a fast-track response to the need of those communities. I believe that the amendment makes that possible. I beg to move.

Lord Ezra

My Lords, I support the amendment moved so effectively by the right reverend Prelate. I believe that it is an amendment which the Government should have no difficulty in accepting. As I understand it, it follows precisely the wording used by the noble Lord, Lord Strathclyde, at col. 566 of the Official Report of 26th April. He stated: The Government have in mind the possibility that, as part of the process of allocating the property and land of the corporation itself, those properties which should be beneficial to the regeneration process in coalfield areas should go direct to the local authorities or development agencies rather than to the coal authorities". The wording of the amendment appears almost precisely identical with what the noble Lord stated. That is why I surmised that he would have no difficulty in accepting the amendment.

The amendment is thoroughly justified because of the circumstances in which the mining industry finds itself after this massive contraction. The right reverend Prelate was quite right to point out that attempting to dispose of land not required for mining purposes at the best possible price has led in many cases to long delay. I have instances of delays which have lasted almost 10 years before a purchaser could be found and a deal done. But if those lands were passed in appropriate cases to the local authority or the development agencies, they could be made use of much more quickly.

I very much hope that in the light of what the noble Lord, Lord Strathclyde, said to us on 26th April, he will now be prepared to accept the amendment.

6.15 p.m.

Lord Morris of Castle Morris

My Lords, I am delighted that the right reverend Prelate has chosen to bring back the subject on Report. We were all rather taken aback by the Minister's response to the amendment at Committee stage. We needed time to absorb it.

The noble Lord, Lord Ezra, quoted from col. 566 of the Official Report of 26th April. The Minister's words appear to be exactly what was required and what is now put forward in the amendment, with the added bonus that local authorities are now included with the development agencies as ideal recipients to which sites with job creation potential should be transferred.

The Minister must now be totally satisfied. I await with great interest his endorsement of the amendment. However, I hope that he will forgive me if I question some of the points made by the Minister about the role of the authority in disposing of this land and property.

The Minister is correct that the Coal Authority's duty in disposing of British Coal's surplus land and property is flexible. There is really only one proviso, but it is a proviso that is at the root of the problem as we see it, and I suspect that it is the motive behind the right reverend Prelate's amendment too. That proviso is that in disposing of land and property, Clause 3(4) provides that the authority must "secure the best terms". So in effect in all its actions, however flexibly carried out, it will be tied by that basic rule to obtain the best financial return. As he said, the land will be released for beneficial use. That is no generous gesture because, let us face it, anything would be more beneficial than a derelict site. He said that there is no question of the authority simply hoarding land. But where in the Bill is there any time limit on the disposal of this land or any guarantee that the authority will not hang on to a prime site in the hope of a better deal five or 10 years down the line?

"Hope value" is a common term and one all too familiar to British Coal Property, that arm of British Coal which currently deals with the disposal of surplus land. In its nice glossy handbook BCP states quite clearly: We are keen to encourage the redevelopment of part or totally derelict areas, very often in prime locations. This policy is energetically pursued with various local authorities, to have land zoned for development in emerging Development Plans. In this way value is added to British Coal's portfolio". That is exactly the ploy which British Coal Property adopts —I shall hereafter refer to it as BCP; I hope that the right reverend Prelate will not confuse it with what he and I normally think of BCP as standing for, videlicet, The Book of Common Prayer—but more often than not when the development plan is already in place and BCP tries to add value to its portfolio by seeking departures from it. That is what causes the inordinate delay in developing those sites. BCP, in its drive to maximise site value, usually wants to sell the site for shops or some other lucrative use. If that is contrary to the development plan, there will follow lengthy haggling with the planners, the appeal to the Secretary of State, then the wait for his decision, and, if he turns down the appeal, which is often the case, everything is back to square one. Meanwhile the months and years pass by, the site in question remains derelict and the unemployed stay unemployed.

To illustrate this point, I have come across a most amazing coincidence. In that same glossy brochure to which I have just referred, prime place is given to a piece entitled the "Rebirth of Babbington". The beginnings of the redevelopment of that pit site in Nottinghamshire is referred to, as living proof of the determination of the coal industry to bring inward investment to coalfield communities". That is irony at its most delicious, for Babbington is that self-same pit that was referred to at Second Reading in another place by Mr. Paddy Tipping MP and Mr. Richard Alexander MP to illustrate the exact opposite and the reason why it is essential to remove sites with job creation potential away from British Coal to the development agencies. Those Members from both sides of another place agreed that, since Babbington closed nearly 10 years ago, it has been the victim of British Coal's mishandled, over-ambitious development schemes that have repeatedly failed for the very reasons that I have just described.

It is a prime site, in a prime location, which could and should have been developed in the boom of the eighties and could have been up and running for many years, providing the source of hundreds of much needed jobs. If the Minister is in any doubt and would welcome a second opinion on the woes and miseries of Babbington, he need go no further than Nottinghamshire County Council or Broxtowe District Council which have faced years of frustration as a result of BCP's obduracy and desire to maximise the land value at a high cost to the economic well-being of the local community.

The purpose of the right reverend Prelate's amendment—and my pleasure in supporting it—is to make sure that the Babbingtons of the past (because there are other examples) do not continue into the future. As the Bill stands, if the Coal Authority is to fulfil its duty to "secure the best terms", it must adopt similar tactics. This is perfectly acceptable for the vast bulk of British Coal's 250,000-acre land holding, but not for the handful of sites that would make a real and lasting contribution to the economic recovery of coalfield communities—and that is what I care about.

That is why it was so pleasing to hear the Minister agree that British Coal's land and property that would be beneficial to the regeneration process should go direct to the local authorities and development agencies rather than the Coal Authority. So I trust that the Minister will back this amendment, will immediately direct British Coal to get together with the local authorities and the development agencies to identify these sites, and make the appropriate transfer arrangements so that the sites will be on—as the right reverend Prelate said—the fast track to providing the jobs which are so desperately needed in those areas.

Lord Strathclyde

My Lords, yet again I can well understand the noble Lord's concern on the matter of the regeneration of coalfield areas, the purpose behind the amendment proposed by the right reverend Prelate, and the failure that the noble Lord, Lord Morris, explained has been British Coal's over the course of the past few years. That is why we are in the business of changing the culture in the course of this Bill. It is important that local authorities and the development agencies should be able to contribute to the regeneration programmes in the areas affected by colliery closures.

The House will be aware of the work which is already being carried out by these development agencies. They have put a co-ordinated framework of regeneration measures in place in all areas and have major projects under way. My noble friend Lord Walker has played a crucial role in co-ordinating this effort.

Coming to the matter of disposing of British Coal's land, the Government have very much in mind the possibility that as part of the process of allocating the property and land of the corporation, there should be the option of transferring those properties which would be beneficial to the regeneration process in coalfield areas direct to the local authorities or development agencies, rather than to the Coal Authority. That was explained most ably by the noble Lord, Lord Ezra. It seems to be the best way to approach the issue.

However, great care needs to be taken when considering which assets fall into the category of those which should be transferred to local authorities or development agencies. For example, I am not sure that they would be greatly interested in land that is capable of development but only at inordinate cost. We must, of course, ensure that we pay proper regard at all times to the interests of the taxpayer.

On that note about the interests of the taxpayer, the noble Lord, Lord Morris, said that the Coal Authority must secure the best terms. That is in the Bill. However, what it does not mean is that the authority must go for an immediate profit, if a better one can be found which might arise in the future. The best terms reasonably available", is a fairly broad expression. There is no time limit but there is a duty in Clause 3(2) that would make land available for sale when it is not needed for mining. I think that that is quite consistent. Of course it must be right that the interests of the taxpayer should be considered.

Baroness White

My Lords, will the Minister consider the interests of the taxpayer? Where there can be a rapid and viable development of the land, the taxpayer will avoid having to sustain people who would otherwise be unemployed. The Minister seems to be taking a narrow view of the interests of the taxpayer.

Lord Strathclyde

My Lords, I was making the broad point. I believe that in general the noble Baroness is absolutely right. To the Coal Authority, in these difficult times an honest offer made at this stage is better than waiting for a few years to see whether a better offer will be made. I expect that a reasonable offer would be accepted.

Lord Peston

My Lords, perhaps I may interrupt the Minister in order to ask a question which may help to clarify the noble Baroness's question. What intrigues me about Clause 3(4) is the appearance of the word "reasonably". I have heard no explanation of why it is there and why the clause does not simply say: to secure the best terms available for the disposal". The word "reasonably" must have a meaning. Am I right, after listening to the Minister, that: its meaning has to do with timing rather than anything else? The Minister said that it would take the best offer now rather than wait until later. Does "reasonably" have a specific meaning? Presumably, it must have, otherwise it would not be there.

Lord Strathclyde

My Lords, "reasonably" means "reasonably". In this context and in many others, we desire the Coal Authority to have the ability to sell off its land for development or other purposes, as appropriately as possible. We do not want it to be bound up merely with obtaining the best terms, but it should do it in a reasonable time scale, as the noble Lord said and as I explained earlier on, and accept a reasonable price to be paid for the property.

Lord Peston

My Lords, perhaps I may put my question a little more clearly. Believe it or not, the noble Lord should know that I was trying to be helpful to him. What intrigued me was whether "reasonably" meant what the right reverend Prelate included in his amendment. In other words, one could reasonably argue that what the right reverend Prelate has brought before us could be a reasonable consideration in deciding how to dispose of the land. I asked my question in the hope that the Minister would say something like, "Yes, that is so". Therefore, "reasonably" encompasses what the right reverend Prelate wishes anyway. I put it to the Minister in case he did not quite understand what I was asking.

Lord Strathclyde

My Lords, it is always nice when the noble Lord, Lord Peston, rises to be helpful. Naturally, I did not think he was being anything other than helpful. I must say that it passed me by that the right reverend Prelate was talking about a different meaning of "reasonably" from the one I had envisaged. Perhaps the best way of dealing with the issue — because I do not believe I shall be able to offer any comfort in terms of an explanation of the word "reasonably" at this stage—is to return to it in a few moments.

More generally, the Coal Authority's duties are designed to lead it to take a constructive and flexible approach to the disposal of such land and property as is vested in it. First, Clause 3(2) places a duty on the Coal Authority to dispose of such of its land and property as, broadly, is not required for coal mining. The clear intention is that land and property should be released for beneficial use. This will in itself be helpful to regeneration as the authority makes land available for new housing, industrial or leisure developments.

Secondly, there is no need for the land to be transferred before it is developed. The Coal Authority itself has the power to develop land under Clause 5(3). Thirdly, there is no need to transfer the land to develop it in partnership. The Coal Authority again has the power to do that with either the private or the public sector. I think that that is absolutely right.

Lastly, planning permission is of course required for any new use of land or new development. There is now a presumption that planning applications will be determined in accordance with any relevant provisions of the local development plans. That applies just as much to any development on or using Coal Authority land; the authority has no privileged position. Again, that is entirely appropriate, it should not have a privileged position.

In answer to the right reverend Prelate, the Coal Authority has a basic duty to dispose of land not needed for coal mining purposes. It has flexibility as to how it does so. It will be governed by the planning law, like anyone else, and will need to take account of local development plans in formulating proposals or collaborating with others.

When it comes to the definition of "reasonably", I am advised that in this context it means that the authority must not go to inordinate lengths to obtain the best price. In other words, if an offer is reasonably made, then that is the one that should be accepted and no other. I hope that I have cleared up that important detail.

Again, I hope that I have given some comfort to the noble Lord, Lord Ezra, and to the right reverend Prelate. I have not gone as far as their amendment. The amendment says, shall be transferred to an appropriate local authority", and so on. I do not believe that the duty should be so great. But I join with the noble Lords entirely in the idea that the land that is available for development should be developed.

6.30 p.m

The Lord Bishop of Sheffield

My Lords, I welcome the Minister's encouraging response. I would have been happier if there were more evidence as to exactly how it will all happen. I have a slight vision of the matter drifting on into the future and of nothing very much happening. Nonetheless, I should like permission to withdraw my amendment.

Amendment, by leave, withdrawn.

Lord Morris of Castle Morris moved Amendment No. 12:

Page 4, line 12, at end insert ("and (c) to have regard to the desirability of protecting the environment and controlled waters and to take into account the effect of the proposals on the environment and controlled waters.").

The noble Lord said: My Lords, I beg to move Amendment No. 12 and to speak also to Amendments Nos. 63, 64 and 65.

I think that the amendments are largely self-explanatory. Under subsection (7) of Clause 3 the Coal Authority has specific conservation duties in relation to former mining land. No mention is made, however, of the need for the authority to have proper regard to problems associated with minewater and the great potential that it can have for polluting water courses once mining operations and the associated pumping have ceased. The Clause 3 amendment, we think, puts that right.

The amendments to Clause 53 are designed to build in similar "have regard" duties for planning authorities and mining operators. So under subsection (3) mining operators would be obliged to formulate proposals for mitigating any adverse effects of the development on environment and controlled waters, and the amendment to subsection (2) would ensure that planning authorities would have to take specific account of that aspect in considering applications. I can see no respectable government argument against those propositions.

To take the matter a little further, it is widely acknowledged that opencast coal-mining can have a very severe negative impact on the environment and on local communities. Following privatisation, opencast coal-mining appears likely to take an increasing slice of that diminishing market for coal. That would have serious environmental implications. So we are concerned that the Bill will not now bring the environmental safeguards governing mining activities up to standards which are now required by modern environmental policy. We should like to see the Coal Authority operate under a clear environmental duty covering the full range of its actions and responsibilities and consistent with current policy commitments to sustainable development. That is why we liked and supported the amendments tabled by the noble Viscount, Lord Addison, at Committee stage which sought to place a duty on the Coal Authority to further the objective of environmentally sustainable development. It is a pity that they were withdrawn after the debate.

We believe that the environmental duties governing the activities of the Coal Authority need to be brought up to modern day environmental standards. That is the whole purpose and thrust of these rather simple and modest amendments. I beg to move.

Lord Crickhowell

My Lords, I made remarks at Committee stage that were very similar to those just made by the noble Lord in moving his amendment. It struck me then, as it does now, that the present definition of "the environment" contained in this Bill is extraordinarily narrow and curiously defined. It is narrower and more curiously defined than it is in other legislation. It seems to me that there is everything to be gained by widening those environmental responsibilities. I certainly welcome the fact that the amendment would make clear that they are extended to cover controlled waters, which are defined in the Water Resources Act 1991; and I therefore firmly support it.

Lord Strathclyde

My Lords, this group of amendments takes us back to the issue of water pollution that we discussed at Committee stage and again today. I shall not detain the House by going over in detail the assurances that I gave on 26th April during the Committee stage. But some of the points are worth restating.

The Coal Authority will become the owner of all abandoned mines and will take on the responsibilities that go with the ownership of that property. That is not, as has been suggested, a vague assurance that needs to be written into the Bill if it is to have any effect. It is a factual statement of what will happen by means of Clause 7(3) of the Bill.

The Government accept that these responsibilities may not go far enough, and have set in train a comprehensive review looking at the specific question of abandoned mines and also at the broader issues of contaminated land and liabilities. In the interim I have set out a comprehensive set of proposals on how the Coal Authority, as a responsible public body, will act. We will expect to go beyond the minimum standards of environmental responsibility which are set by its legal duties in these areas and seek the best environmental result which can be secured from the use of the resources that are available to it. It will have to set priorities for the use of those resources, and we expect it to do so in discussion with the regulatory authorities. We expect it to give a high priority to preventing serious new pollution problems—arising, not least, in Durham. It will have a sufficient budget to enable it to carry forward the role that is currently played by British Coal.

Amendments Nos. 63 to 65 deal with environmental duties on operators and planning authorities. This group of amendments deals with the environmental duties in Clause 53 of the Bill. Perhaps I may explain briefly the origins of that duty. An environmental duty in respect of opencast operations covering such matters as the preservation of natural beauty and the protection of flora and fauna was first placed on the National Coal Board in 1958. That duty evolved over the years. It can be seen in its latest form in the version of the Opencast Coal Act 1958 which was supplied to your Lordships. As we undertook to do some time ago, in this Bill the Government extend the duty to cover proposals for new deep mining operations. The effect of Amendment No. 63 would be to add to that duty an obligation on the planning authority to have regard when considering a planning application to the desirability of protecting the environment and controlled waters.

Amendments Nos. 64 and 65 would place a further obligation on the operator to propose any measure that is reasonably practicable for mitigating any adverse effect of his proposed development on the environment or controlled waters.

These amendments are unnecessary I am confident that the protection of the environment in general, and controlled waters in particular, is already covered in the process that coal operators must go through to secure planning permission. We dealt with that area in some considerable detail when we debated these issues in Committee.

Planning authorities must take account of all material considerations when determining whether to give approval for a new development. The acceptability of the development in environmental terms is central to that. The Government's Policy and Planning Guidance Note 1, which lays down guidelines for all planning authorities in dealing with all applications, states clearly that the sum total of today's planning decisions should not deprive future generations of the benefits of their environment. I have mentioned that passage because it shows the importance of environmental considerations within the planning system and why I believe that the amendments about which we are talking are unnecessary. The principle can be seen in more detail in the draft planning guidelines on coal-mining and colliery spoil disposal, known as Mineral Policy Guidance Note 3 (MPG 3), that were issued recently by the Department of the Environment.

The proposed planning guidelines impose a strong test of environmental acceptability on planning applications. They provide that a mineral planning authority must take into account the full range of economic and environmental factors when considering an opencast planning application. The guidelines also state that there will be cases where the impact of a particular site on the environment would be so great that planning permission should not be given unless overriding benefits result from the development.

Furthermore, under regulations introduced by the Government in 1988, all but the smallest opencast sites require an environmental impact assessment before they can proceed. Within the overall framework of environmental issues, the protection of the water environment is dealt with specifically by MPG 3. Annex D of MPG 3 stresses the need for mineral planning authorities to consult the NRA and to consider imposing relevant planning conditions. Such planning conditions might, for example, relate to the protection of aquifers, the siting of reservoirs and lagoons, or the provision of monitoring.

The main point of Amendment No. 12 is that the Coal Authority already has a wide-ranging environmental duty in Clause 3(7), which must be read in conjunction with the environmental code set out in the explanatory note that I have made available. Perhaps I can read out parts of it. In its management of its property the Authority would take over British Coal's environmental and other responsibilities relating to that property, including those relating to land that is no longer used for mining. It is envisaged that the Authority will set itself the following broad policy aims: in respect of land for which it is responsible, to seek where reasonably practicable to protect and enhance the environment; in respect of any works which it may conduct, to seek to minimise the environmental impact; to minimise its consumption of scarce resources through programmes of waste minimisation and, where appropriate, the reuse and recycling of materials; and to work with suppliers, contractors and local communities in pursuing these goals. It is envisaged that, in respect of mines operating under 'Section 36' licences granted since the Coal Review White Paper, mines where there is an outstanding commitment by British Coal to restore the site and 'General Development Order' mines which close with no obligation on the operator to restore the site, the Authority will put into practice the principles of the agreement reached between British Coal and the Department of the Environment in 1990 relating to the restoration of colliery sites. It is envisaged that the Authority will nominate one of its members as having overall responsibility for its environmental policies. All employees of the Authority will need to have regard to these policy aims, and to follow them to the best of their ability while carrying out their day-to-day tasks. More specifically, it is envisaged that the Authority will comply with all statutory obligations relating to the protection of the environment and the use of land, establish a system for managing its land according to the best principles of estate management, establish, in consultation with the National Rivers Authority and the Scottish river purification boards, priorities for action by the Authority to prevent or treat outbreaks of water pollution from abandoned coal mines". There are a number of other duties. The point is that the environmental duties and how they should be carried out are clearly stated. I believe that this group of amendments, important though those amendments may be, adds nothing of substance to the Government's proposals.

6.45 p.m.

Lord Crickhowell

My Lords, before my noble friend sits down, he has made a very compelling case as to why we should not have Clause 3(7) in the Bill at all. However, as we have Clause 3(7) in the Bill I wonder if he can explain why on earth there is any problem about adding the helpful and innocuous words proposed in the amendment.

Lord Strathclyde

My Lords, the point about Clause 3(7) is that its genesis is in previous legislation. I explained why I believe that we do not need to go further, and in fact I am hugely gratified —I think for the first time—because my noble friend has actually said that we have got something right this afternoon and that I have made a compelling case. If I have been able to convince my noble friend Lord Crickhowell, there is absolutely no reason why I should not be able to convince noble Lords opposite either.

Lord Morris of Castle Morris

My Lords, in the words of the well-known East Ender, "Not a hope, sunshine!" The noble Lord once again seems to be almost congenially unable or unwilling to put things on to the face of the Bill no matter how much he likes them or does not like them. We are told once more that everything hangs on this review that is going to take place. It is a case of, "Don't worry. When the review takes place everything will be all right. Seek ye first the Kingdom of God and then everything will be added unto you. Hope deferred maketh the heart sad."

As the noble Lord, Lord Crickhowell, said, we must decide what the sense of environment means. We must press these concerns because, once the Bill leaves your Lordships' House, we lose all control over these vital environmental matters and it sails along with only the department to be responsible to. It is not enough to rely on planning permission or MPG 3, or "son of MPG 3" as the revised version may now be. Ask the farmers of this land whether they are happy to rely on such things. They want it in the law, on the face of the Bill. If there were enough of my noble friends sitting behind and around me I would ask the House to express an opinion on this matter, so strongly do I feel. I would, but there are not, and so I will not. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 13 to 17 not moved.]

Lord Elliott of Morpeth moved Amendment No. 18:

After Clause 9, insert the following new clause: ("Transfer of property

1. .—(1) Any scheme transferring property under section 12(2) above shall provide for imposing and transferring to the person or persons to whom the transfer is made, and his or their successors in title ("the transferee") of civil, criminal and statutory liability under section 161 of the Water Resources Act 1991 for any polluting matter which enters any ground waters or inland fresh waters from that property.
2. (2) Civil and statutory liability under subsection (1) above shall extend to damage arising from such pollution occurring at any time (whether before or after the passing of this Act), and to such damage caused or which occurred before or after the time when the transferee became liable for the pollution under the scheme.
3. (3) When the transferee consists of more than one person, the liability of those persons shall be joint and several.").

The noble Lord said: My Lords, at the Committee stage of the Bill, the amendment I then proposed sought to place liability for the possible pollution of rivers and water courses firmly and rightly upon the new proposed authority. At that time the statement of my noble friend, which indicated first of all a full inquiry between British Coal and the NRA, was very welcome indeed. In particular, the continuation of pumping from disused mines all over the country but particularly in the area with which I am concerned, County Durham, was also much welcomed and especially by undertakings such as North East Water. That is a company with which I have had a long association. The threat to this company, which extracts water from the Wear in County Durham was and, I am afraid, remains a matter of maximum concern. The further guarantees given today by my noble friend will again be very well received in the north east of England.

The noble Lord, Lord Morris of Castle Morris, talked of my noble friend's "silver tongue". My noble friend certainly speaks with a silver tongue, and so does the noble Lord, Lord Morris. However, I do find the further assurances that have been given today most pleasing, and I am very grateful to my noble friend for the most helpful letter he wrote to me.

The purpose of my new clause has already been emphasised by the noble Lords, Lord Morris and Lord Mason—the need for a strong expression of liability. The purpose therefore is that any liability for pollution should immediately—and I stress immediately—rest upon the new authority and should not be a continual worry and a financial threat to a water company currently extracting and purifying water from rivers such as the Wear. I know that the Coal Board's responsibilities will be taken over by the authority—we have been given that assurance—but will the authority's responsibilities under the 1991 Act be enough? As I know the situation at the moment, a mine owner does not commit an offence if he knowingly permits water to flow from an abandoned mine. That is not a very satisfactory situation and it is one which I hope my noble friend will address either during the course of this Report stage or at a later stage of the Bill. The review is important and its recommendations are anxiously awaited.

I seek the opportunity in moving this amendment to stress to my noble friend the concern felt by water authorities and, in particular, North East Water, with whom I am constantly in touch. At the Lumley works on the River Wear—a very modern works which I should like my noble friend to visit whenever he is in the area —North East Water treats 5 million gallons per day. But Lumley is of the utmost importance and is central to the future strategy of the company. The plan is for 10 million gallons of water to be treated every day at Lumley. Unfortunately, at the moment the central plan of North East Water is frozen because of the uncertainty of what could happen to the River Wear. Immediate liability is also important in that research being undertaken at the present time by British Coal and the National Rivers Authority is inclusive of an experimental reduction in pumping associated with the sinking of bore holes. The company is concerned that the experimentation could in itself lead to pollution of the river.

There are other minor worries. British Coal originally suggested—the rivers authority did not agree—that water would find its way from the disused mines of West Durham through natural workings of previous mines to the sea. One hopes that the eventual report will not make that suggestion again, but it is possible and is a further worry to the company.

Another minor concern is that the company understands at this time that pumping has been subcontracted. Experts who are in charge of it have been, in the natural interim reorganisation of British Coal, moved to other parts of the country. There is a certain anxiety in that regard. The main argument to my new clause arises in the second section, that the new authority shall have subsequent responsibility which shall include polluted water and that that responsibility shall begin before and continue after the passing of the Act. That is extremely important. With others who have spoken in the debates today I stress to my noble friend that we need a strong assurance on liability. I beg to move.

Lord Crickhowell

My Lords, I rise briefly to speak on the amendment. I argued earlier in the evening against transferring old liabilities to future operators and feel that I am bound therefore to voice my unhappiness about an amendment that appears to impose historic liability on future operators. I share with my noble friend the desire to obtain future clarification of the law. I hope that the review taking place at the present time will lead to that clarification later in the year. However, I am not sure that in the interim it is helpful to impose these unquantifiable liabilities—as they are at present —on to future operators for the reasons I expressed when debating the first group of amendments.

Lord Peston

My Lords, this is an extremely interesting amendment. Perhaps I can begin with one request for clarification which may indicate my lack of legislative skills. In the first line the amendment refers, to "section 12(2) above". As the clause is after Clause 9 it should presumably say, "section 12(2) below", unless "above" and "below ' are interchangeable words in Acts of Parliament. Subject to assuming that the amendment means Clause 12(2) below, then we are discussing the nature of restructuring schemes.

The noble Lord indicates that that is right. To go on from that, my immediate reaction to the concerns of the clause was that the problem was impossible. If there is a restructuring scheme the liabilities referred to must clearly be dealt with under that scheme. Having listened to the noble Lord, Lord Elliott of Morpeth, and then the noble Lord, Lord Crickhowell, I end up extremely worried. It looks as though in principle there could be a restructuring scheme that did not transfer the liabilities and so forth under the Water Resources Act 1991. The question that intrigues me is: if that is legally possible, where do the liabilities end up. Do they end up with the Secretary of State who had not transferred them, or something like that? I am therefore greatly intrigued by the amendment.

Perhaps I may comment on the intervention by the noble Lord, Lord Crickhowell. I argued all along that old liabilities should stay where they are and should not be transferred. But if your Lordships will forgive the unintended pun, that is now water under the bridge. Your Lordships pronounced on that on several occasions and those of us who have taken that view must accept that we have been beaten. I accept that I am currently on a hiding to nothing on this one and can now speak on the basis of what your Lordships decided.

It seems to me that what must follow, given the nature of the Bill, is that the liability under the Water Resources Act 1991 certainly must exist somewhere; it must be placed somewhere. We require the Minister to tell us a little about the scheme for transferring property. The simplest thing would be to take for granted that what the noble Lord, Lord Elliott, wants, would definitely happen; in other words, the amendment is not needed. That is one answer the noble Lord, Lord Strathclyde, may give in order to satisfy us. But if there is any danger that the question could remain in an obscure form then an amendment such as Amendment No. 18 will be required either in this form or in a form chosen by the Government's lawyers. Something like this cannot hang in mid-air to be decided later by courts of law. Apart from anything else—to go back to earlier arguments—various of my favourite innocent bys-tanders will be suffering in the meantime while courts of law decide at great length and very expensively where such a liability lies. I hope therefore that the noble Lord, Lord Strathclyde, can give us some assurance on that.

Lord Strathclyde

My Lords, of course I always want to be as helpful as possible. From the way in which my noble friend moved his amendment I took it that he was seeking that kind of assurance and was probing the Government's view of these issues. I entirely agree with him about the real anxieties that exist in the North East in relation to pollution on the Wear and so forth. I am a regular visitor to the North East and perhaps at some point I shall visit the waterworks to which my noble friend referred to see how it is done there.

The amendment places an obligation on the Secretary of State to ensure that all criminal, civil and statutory liabilities under the Water Resources Act 1991 are transferred under any restructuring scheme. I studied carefully the points made by my noble friend at Committee stage and I hope that the comments I made earlier on the previous group of amendments reassured him, particularly the point in regard to what I meant about the assurances I gave on 26th April, that the Coal Authority will become the owner of all abandoned mines.

The Government accept that those responsibilities do not go far enough, which is why we have set in train a comprehensive review. As an aside, that is one of the problems we encountered in discussing the whole issue of liabilities. I am glad that the noble Lord, Lord Peston, for one at least, accepts that the House pronounced on that issue, rightly or wrongly—perhaps wrongly in the view of noble Lords opposite but rightly in my view. There is also the problem of how we shall deal with the situation in the interim. We set out a comprehensive set of proposals on how the Coal Authority as a responsible public authority will act. We expect it to go well beyond the minimum standards of environmental responsibility.

The responsibilities of British Coal on which my noble friend's anxieties focus will transfer to the Coal Authority automatically as a result of the transfer of property under Clause 7(3). In so far as there may be any need to address liabilities already incurred by British Coal, that can be done under the restructuring schemes and therefore there is no black hole into which liabilities can fall. I understand that there is one exception to that. It would not be appropriate in any case to transfer criminal liabilities in respect of acts committed by British Coal in the past to another body; they would have to be dealt with by British Coal before a restructuring scheme took place. I hope that that gives my noble friend the assurance that he desires. I understand his concerns and I trust that he can withdraw his amendment.

7 p.m.

Lord Elliott of Morpeth

My Lords, I am most grateful to my noble friend. I hope he will have taken full note of the current concerns of water companies in this interim period. Following the assurances he has given in answer to this and to previous debates, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12 [Restructuring schemes in relation to property etc.]:

[Amendments Nos. 19 to 24 not moved.]

Schedule 2 [Restructuring schemes]:

[Amendment No. 25 not moved.]

The Lord Bishop of Sheffield moved Amendment No. 26: After Clause 18, insert the following new clause: ("British Coal Enterprise .—The Secretary of State shall, out of money provided by Parliament, make arrangements to maintain until 31st December 2004 financial support to British Coal Enterprise to an amount equivalent to that provided by the Corporation before restructuring.").

The right reverend Prelate said: My Lords, this new clause is intended to give some security, some permanence, at least for the next decade, to the work of British Coal Enterprise. Despite your Lordships' hunger, I hope you will forgive me a slight detour which will explain a little why I see this matter as so important.

I am struck by the curious parallels between this legislation and that which was before your Lordships' House in 1539. That was the measure for the dissolution of the greater monasteries. The curious thing about that measure was that there were no greater monasteries left to dissolve. They had already been quietly done away with and the measure that was then before the House was to tighten up the matter. I recognise that there is a future for the coal industry and I recognise the significance of the Bill for providing a framework for that future. In my more optimistic moments I hope that it is a growing and strong future. But, none the less, for those of us who belong to Northumberland, were born in County Durham and who now live in South Yorkshire and can look over the frontiers to Scotland and Wales, there is no getting away from the fact that there is a valedictory quality to this Bill. It feels a little like the last act of a rather long and sad drama.

The parallels are surprisingly close to those events of 1539. If one had gone back to 1529, or at least 20 years before, that the monasteries which had been so integral a part of the life of the country for 400 years should ever vanish would have seemed unthinkable. And to many of us of my age and older, and even some younger, that there would be an British Isles in which the coal industry was a very minor player in the industrial league would have seemed unthinkable. But circumstances have brought it about. We have to recognise the fact that just as the accession to the throne of Queen Mary with a new religion and a new faith brought nothing at all of significance in the restoration of the monasteries, so there is not going to be a restoration of the coal industry to the part it once played in the life of our nation. So we must be concerned by the consequences of what has happened.

It was a recognition of that which led a decade ago to the foundation of British Coal Enterprise, and we have come to see that it has played a very important part in helping our communities to adapt to the new circumstances, to help individuals to find new work and to train for new work, and to bring new industry and to make possible new life where to our individuals and our communities the future still seems very dark.

One of the astonishing things about the turnout of events in the British Isles has been the suddenness with which the industry has been closed down. We remember —some of us only too well—that many were given only 72 hours' notice of the closure of their pits. There is a contrast here with what has happened on the continent of Europe where, faced with the same problems, there has been a much longer period of planning and a much longer commitment to the process of regeneration to bring some healing, some renewal, to those communities—those parts of Holland, Belgium and France —which were once coal communities. The existence of British Coal Enterprise recognises the need for such but the silence of the Bill on the subject of British Coal Enterprise makes one wonder what the future will bring.

We have had an undertaking from the Government to finance it until the end of this year. We are assured by the Minister that there is a continuation for British Coal Enterprise in the transitional period, but there is no guarantee as to how it will be financed. It was made clear in Committee that it will not be part of the Coal Authority's responsibilities and we must accept that. This amendment asks that the Government set aside money—no great sum is needed—to ensure that the work of British Coal Enterprise can continue for at least the next decade. If the splendid work that is being done at present is to go forward, we need some assurance about how it will be financed. British Coal Enterprise cannot plan without that. I very much hope that either this or some similar way of ensuring that the needs of the communities to be helped in the way they are being helped—so modestly and, alas, almost uniquely at present by British Coal Enterprise—can continue. I beg to move.

Lord Mason of Barnsley

My Lords, I rise to support the amendment. I believe that the Coal Authority and the Government should accept full responsibility for the continuation of British Coal Enterprise in its present form and size, recognising the tremendous amount of work that has been done in the British coalfields and the communities, its creation of thousands of jobs and of numerous enterprises and business parks and its partnerships in business and innovation centres.

The regeneration of our dying coalfield communities is possible with the continuing aid, enterprise and specialist knowledge of the British Coal Enterprise coalfield teams, but the Government are stalling on its future role. They have said that British Coal is at present considering the matter. The Government have indicated that after privatisation it will be appropriate to examine how BCE might function in co-operation with other local and national agencies. The Minister said on 26th April: we do not know what is its long-term future". He went on to say: I do not believe that the Coal Authority should be responsible for BCE".—[Official Report, 26/4/94; cols. 565-67.] He might look at it, he said, but his words were not very promising.

British Coal Enterprise is too big and experienced as a national organisation to be kept in suspense about its future. It has established a well-known role. It has worked with local authorities, it has co-operated with the Coalfields Community Campaign and it has gained the respect of all those organisations which are desperately working hard to bring new life and hope to our mining areas. It has also worked with the European Development Fund for ERDF schemes in our regions. There is no doubt that Europe is committed to assisting our regions and in assigning money as part of its structural programme to the end of the century. It seems to be entering into a greater commitment than the Government. In the meantime, British Coal Enterprise is in suspense, while the ERDF is committed.

I should like to see that strength of commitment from the Government to the future of British Coal Enterprise and our run-down coalfields. Our concern is that if British Coal Enterprise is not around to carry the flag for the coalfields, assisting the local authorities and the coalfield campaign committee, the heart will be knocked out of all their endeavours.

British Coal Enterprise is now a bulwark in creating new enterprises and jobs. I guess that that concern goes for others such as English Partnership and the Rural Development Commission. So will not the Government give consideration to the development of a partnership between Europe and British Coal Enterprise, matching pound for pound moneys from Europe, establishing British Coal Enterprise as a major partner in the regeneration of the coalfields, working with and alongside the local authorities where cooperation and good relations have been established? If that can be considered it would certainly be a great encouragement to our objectives in our mining communities and a stabilising boost to British Coal Enterprise.

Lord Ezra

My Lords, I too would like to support this amendment so ably moved by the right reverend Prelate and supported by the noble Lord, Lord Mason of Barnsley. In the 10 years of its existence British Coal Enterprise has created no fewer than 105,000 jobs and job opportunities; and this is at a time when all the countries of Western Europe, as evidenced in recent reports produced by the OECD and others, are grappling with unemployment. Here is a body which is creating new jobs out of what might be termed "old" jobs and doing it very successfully.

Its counterpart in the steel industry is still operating very successfully after 20 years. The reason why the steel industry counterpart has been able to operate is that it was privatised as a single entity and therefore could carry on doing what it was doing before. It has chosen to continue to support this way in which ex-steel workers can be found other jobs. Because the coal industry is being privatised in a way in which some of us feel is not correct, that method is not possible in this case and therefore some other way has to be found for funding this very important contribution to new employment after the end of this year, which I gather is the date to which the Government have guaranteed that there will be financial provision.

I am glad that the noble Lord, Lord Mason of Barnsley, referred to Europe. I understand that the European Union has offered a very substantial fund over a long period, as long as it can be matched. The European Union is impressed with the work of British Coal Enterprise. I wish I could feel that the Government were equally impressed. There is now an opportunity for long-term funding, partly based here and partly based on European Union sources, which can make a substantial contribution to job creation.

Therefore, I very much hope that in response to this amendment the noble Lord, Lord Strathclyde, will say that the Government have thought beyond the end of this year for this important organisation. It will not be good enough for them to say that they will look at it in due course. A large number of people are employed and they have to know where they stand. They will start drifting away at a rate of knots if the position is not clarified. Therefore, I hope that we shall get positive guidance this evening.

Lord Haslam

My Lords, British Coal Enterprise, I believe, has been the most successful industrially-based job creator in the UK. I can now update the noble Lord, Lord Ezra. It has participated in the creation of 107,000 jobs since its inception in 1984. The corresponding loss of mining jobs during that period has been about 180,000.

If BCE were to be merged with other agencies, it would quickly lose its focus and momentum. I have no doubt, too, the morale of the staff would plummet. There is great pride in that organisation, and understandably so. Moreover, BCE is operating at a level of funding of £2,000 per job created. That I believe is considerably less expensive than other comparable government agencies. Also, as the noble Lord, Lord Ezra, said, its counterpart in steel areas, British Steel Industries, is still effectively operating nearly 20 years after its formation and more than a decade after the major run-down of the industry.

I strongly support the view of those who have already spoken that BCE should be preserved in its present form. I would, however, propose an alternative route for the way ahead which is a modification of the one I outlined at the Committee stage. This would involve maintaining BCE in its present form for, say, two to three years to see how its relations with the new coal industry develop. Then I would like to see its debt of probably £30 million written off. A single cash injection of £50 million should then be sufficient for it to operate as a stand-alone organisation for the foreseeable future. That was much the same tactic as we adopted in the case of British Steel Industries during the time I was chairman. I therefore support Amendment No. 26 but would prefer my suggested way of moving ahead.

7.15 p.m.

Lord Peston

My Lords, my name is attached to this amendment and I would like to say a few words in support of it.

I slightly take issue with the right reverend Prelate on one of his remarks right at the beginning. I am not as gloomy as he is about the future of the coal industry. One reason why I have gone to some trouble to take part as much as I possibly can in the debates on the Bill is that, although I would certainly not have gone down the route of privatisation, it has been my concern that if we are to have a privatised coal industry, it should be one which is viable and produces a great deal of coal. My main criticism of the Government because of their approach to risk is that they have placed that in peril. I shall not go over that ground again. I am not suggesting for one moment that we can get back to the position of 1911 and employ quite as many people as the coal industry did then or produce as much output. But I am convinced that in the right circumstances we can have a viable industry. I say that even though I know that we are asking our own miners to compete with low-paid exploited labour—sometimes even slave labour— abroad. I add that as a point.

That does not detract from the importance of the amendment which I support or the importance of British Coal Enterprise. One thing which has startled many of us and which was pointed out when noble Lords debated this matter at Second Reading and in Committee is that there seems to be no room in the Bill to mention British Coal Enterprise in the first place. That puzzled many of us. The case is not specific but is to do with policy generally in different parts of the country in endeavouring to create new employment when one industry declines. We are discussing it as regards BCE because we are dealing with the Coal Industry Bill, although it is of much more general application.

There is one part of the case at least which is worth bearing in mind—that is to say, that if we do anything to keep men and women in work we also improve public finances. We should not forget that when we are discussing the costs involved. If we keep men and women in work they will not be a burden on the social security system and they will pay taxes. My judgment is that, if we do the analysis of BCE correctly, it will show that, even though it costs money to keep it going, far from being a burden, it will almost certainly be a net generator of funds to the Treasury. That does not mean that the Treasury necessarily believes that.

That leads me to my last point in supporting this amendment. I believe that the Government should support this amendment. I cannot for one moment believe that deep down the Department of Trade and Industry does not favour the continuation of British Coal Enterprise and is not sympathetic to this amendment. I equally cannot believe that the Department of Employment would not be in favour of an amendment of this kind. However, what lies behind this is the current disastrous state of the nation's finances, and the Treasury is grappling, scrabbling and searching for every penny it can get its hands on in the short term, no matter what damage it does to the nation's economy in the long term. We shall hear from the noble Lord, Lord Strathclyde, or the noble Viscount, Lord Goschen, who will no doubt say that is why they cannot commit the Government for a decade. In a way that does not matter because of what will happen in a couple of years, let alone a decade. This matter will then have nothing to do with them. I thought that we should have a teeny bit of politics today, just before dinner. So in a sense others of us will be stuck with this responsibility.

Without pulling the noble Lord's leg too much, what we want is a stronger statement. I believe that is what the right reverend Prelate wants, and it is certainly what I want. We want a stronger statement of support that all is not lost with British Coal Enterprise. Whether we go via the route chosen by the noble Lord, Lord Haslam, which has a lot of sense, or the other route of finding direct public moneys, we must make sure that an enterprise of this kind, which is doing such useful things in the areas of economics and industry, continues to survive.

Viscount Goschen

My Lords, the right reverend Prelate took the House back to 1539 and the rule of Henry VIII, a monarch whose name is constantly being taken in vain in relation to the Deregulation and Contracting Out Bill. I certainly did not expect his name to crop up with regard to coal.

The Government have previous indicated that British Coal Enterprise will be retained in its current form throughout the transitional and immediate post-privatisation period. We have received, and are considering, British Coal's suggestions about BCE's future. DTI officials are in discussion with British Coal and BCE on what in future should be the focus of their activities.

Clearly there will be a need (for a time) to settle and retrain former employees of British Coal—essential work which BCE has pursued successfully and single-mindedly. This cannot come to an abrupt end. BCE statistics show that, while some former employees quickly find new jobs, others may take from between 12 and 18 months to settle into new employment. But that is a diminishing and time-limited task. It also illustrates why we believe that the beguilingly straightforward approach embodied in the amendment is in fact misconceived.

BCE's business funding and managed workshops play an important role in that regeneration of coalfield areas. This work has complemented other regeneration activities undertaken by the Government and others; and those measures are themselves continually evolving. I would refer, for example, to the establishment of English Partnerships and to the creation of the single regeneration budget.

In looking at the longer-term future we need to examine how BCE's work might best continue to complement such programmes. For example, in recent years BCE has undertaken a substantial programme of building workshops. It is not self-evident that that level of building would be appropriate for another decade. We would clearly not want to spend taxpayers' money on workshops that are likely to stand empty.

Beyond that, there are a series of issues flowing from the question of whether BCE's future lies in the public sector or the private sector. These are complex matters. It would be wrong to leap to hasty and premature conclusions before all the options have been carefully examined.

I fully understand the reasons why this amendment has been moved. I join all noble Lords in commending the work of BCE. It has made a substantial contribution to the regeneration of the coalfield areas, helping to create over 100,000 job opportunities over the past 10 years, as the noble Lord, Lord Ezra, mentioned.

Turning to the point raised by the noble Lord, Lord Mason of Barnsley, BCE attracts European funding through British Coal. It has received, for example, ERDF funding which has helped to support workspace development. This must be taken into account in reviewing all the options for the future. Clearly, we shall want to make the best possible use of any available European resources. Indeed, we are willing to take into account the interesting suggestion of my noble friend Lord Haslam in the review that we shall be conducting into the future of BCE.

Noble Lords in all parts if the House have stressed the importance of continuing to take advantage of BCE's experience and expertise. The Government share that desire. I assure the noble Lord, Lord Ezra, that the Government are considering the long-term future. That is precisely why we should take the time necessary to reach considered conclusions. Those who will suffer from hasty and ill-judged decisions are the coalfield communities we are all concerned to help. In the light of that explanation, I therefore ask that this amendment should be withdrawn.

The Lord Bishop of Sheffield

My Lords, in the light of the noble Viscount's words "hasty" and "premature", can he give us some idea of when some actual decisions are likely to be made? This has been on going throughout all stages of the Bill's progress and long before that, yet the noble Viscount speaks as; though it has just been thought of and that the negotiations and so forth are now just beginning. The end of the year is not very far away, so may we have: some hint as to the timescale?

Viscount Goschen

My Lords, with the leave of the House, I must advise the right reverend Prelate that until all the options have been carefully considered, we are not able to say precisely when decisions will be taken about BCE's future. However, we aim to have agreed firm plans with British Coal by the early autumn.

The Lord Bishop of Sheffield

My Lords, although I am happy to withdraw the amendment, I would do so with more confidence if I felt that decisions were going to be taken with a view to the significance of the long-term regeneration of these communities and the long-term futures of these men and women, and that that was a more central concern. Nonetheless, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Goschen

My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion I suggest that the Report stage begins again at 8.25 p.m.

Moved accordingly, and, on Question, Motion agreed to.