Coal Imports and Exports: Statistics (Hansard, 29 January 1996)

§ The Minister of State, Department of Trade and Industry (Lord Fraser of Carmyllie)
My Lords, firm figures for 1995 are not yet available. Provisional figures for the first 11 months of 1995 show imports of coal as 13.2 million tonnes and coal exports as 698,000 tonnes. The future prospects for coal imports and exports are matters for coal consumers and coal producers respectively.

§ Lord Ezra
My Lords, is the Minister aware that about half the tonnage of imports to which he referred, 1229 and an additional 2 million tonnes of exports, could have been provided from coal, of which ample reserves exist in this country but for which the capacity is lacking? Is he aware that had that capacity been available and had those actions been taken, it would have benefited the balance of payments by some £220 million last year, and have provided employment for an extra 2,500 mine workers? In those circumstances, is it not regrettable that in the run-up to privatisation the capacity of the coal industry between 1993 and 1994 was run down to such an extent? Had an extra 10 million tonnes of capacity been retained, the benefits to which I have referred would have been achieved.

§ Lord Fraser of Carmyllie
My Lords, no, I cannot accept that, unless what was to be provided within the UK was going to be achieved at an unacceptable level of subsidy. What is important in the UK is coal which, as the noble Lord well knows, is particularly important in the production or generation of electricity. If that were to be the case and prices were to go up or there was subsidy, there would be, directly or indirectly, a significant effect on consumers. What I do welcome is that, while clearly a number of adjustments have had to be made, the provisional figures for deep-mined production for 1995 show that there has been a 10 per cent. increase compared to 1994. Total coal production is expected to have increased by over some 7 per cent. in the same period.

§ Lord Stoddart of Swindon
My Lords, is the Minister aware that there is considerable concern, particularly among old people, at the statement made today by the National Grid that it could not guarantee to meet maximum demand this evening and in future cold weather? Is he further aware that one of the reasons for that is the closing down of coal-powered stations and their replacement with gas-fired stations which have interruptible supply contracts? Will the Government do something about that? Will they insist that the regulator ensures that the electricity authorities do the job which the Government said they would do when they were privatised, instead of doing a far worse job than was done when the industry was nationalised?

§ Lord Fraser of Carmyllie
My Lords, I congratulate the noble Lord on his ingenuity in moving from a Question on the import and export of coal to the generation of electricity. Neither the regulator nor the Government can do anything about the present particularly cold weather. It is reasonable for those who are responsible to give some indication of the levels of difficulty that might be experienced were the cold snap to continue. It is worthy of note that there has been no cut off of power in this recent cold snap, or the previous one, attributable to the lack of generating capacity.

§ Lord Stoddart of Swindon
My Lords, is the Minister aware that I was not asking him to play God. I know that God decrees what the weather will be. I ask the Minister to ensure that the electricity authorities 1230 have sufficient supplies to guarantee production when the weather is cold. That is all I am asking him to do—to meet demand.

§ Lord Fraser of Carmyllie
My Lords, it did seem that the noble Lord was asking the Government to play God. Difficult issues of balance between the total amount of generating capacity that is required and demand have to be set in the context of the weather, which is unpredictable. As I have said, there are difficult questions of balance to be achieved unless consumers, both domestic and industrial, pay for a large amount of generating capacity against an eventuality that may occur only infrequently. It is for those responsible to determine whether they have achieved the right balance. Notwithstanding the present exceptionally cold weather, it would appear that they have achieved the right balance.

§ Lord Monkswell
My Lords, bearing in mind that those who import coal as opposed to using indigenous coal receive a cost benefit, and bearing in mind that the mineworkers who would otherwise produce the coal fall as a charge on the public revenue as a result of unemployment benefits and loss of tax receipts, will the Government provide us with figures for the savings to the private companies on importing coal and the cost to the Exchequer of paying people to be unemployed?

§ Lord Fraser of Carmyllie
My Lords, no. In a roundabout way the noble Lord says that he wishes to see the reintroduction of massive subsidies. I venture to suggest that he stands somewhat alone in that position. If coal imports were revealed to he massively subsidised, there might be cause for concern. So far as we are aware, there is no convincing evidence that the imports from the main exporting market economies—that is the United States, Australia and parts of South America—are heavily subsidised.

§ Lord Dubs
My Lords, is not the problem that the decline in the British coal industry has meant that British electricity generation has become increasingly dependent on gas? Will the Minister confirm that Transco, the distribution company of British Gas, has announced that it may not be able to meet all the needs of the power stations, which has led to concerns that there might be power cuts in parts of the country today? Have we not reached the situation in which our energy policy is in a bit of a mess?

§ Lord Fraser of Carmyllie
My Lords, no. The noble Lord is at risk of getting cause and effect tangled up. There has been a move to gas because it is an extremely efficient fuel; it is environmentally friendly; and it allows for electricity to be generated at a lower price to the consumer. I would have thought that that was to be welcomed. I have already indicated my view on the balance that must be struck by those responsible for generating during these exceptionally cold snaps.

§ Lord Marsh
My Lords, does the Minister accept that we have had more than 30 years' experience of seeking to change the market for coal by keeping pits 1231 open with massive subsidies and that the net result has been no recognisable economic or social benefit whatever?

§ Lord Fraser of Carmyllie
My Lords, the noble Lord made the point better than I could.

§ Lord Ezra
My Lords, the Minister misconstrued the purpose of my Question. It is implied that, had extra capacity been retained in 1993–94, that would have had to be subsidised. Is the Minister aware that I have had detailed discussions with the Confederation of United Kingdom Coal Producers? Is he further aware that they are confident that prices of world coal have risen while the price of UK coal has come down and that, had there been more capacity, they could have bitten deeply into the imports? That was the point that I was making. I was in no way suggesting the reintroduction of subsidy.

§ Lord Fraser of Carmyllie
My Lords, the noble Lord includes in his further supplementary question the assumption that world coal prices will increase. He will be aware of the independent report that was provided in 1993 at the time of our coal review. It indicated that if world prices for coal increased there might be a greater opportunity for greater production in the United Kingdom. As the noble Lord is well aware, since 1993, sadly, that has not been the case.