§ Mr. Peter Walker
I have received an initial response by the National Coal Board to the report of the Monopolies and Mergers Commission, which was published on 23 June. I am placing copies of the board's response in the Library of the House.
The commission found that the NCB is facing two central problems, which are closely related: over-capacity and the high cost of a number of pits in which coal production has become uneconomic. The commission did not attempt to define precisely the way in which the NCB should reduce excess capacity in high cost collieries, acknowledging that it is for the board to define and take the necessary action.
In its response the board fully accepts this central conclusion and says that it is aiming to achieve viability as quickly as possible.
The Government also agree with the MMC's central conclusion. The Government wish there to be a strong United Kingdom coal industry, able to give its customers secure supplies of fuel at competitive prices and its work force secure and prosperous employment. But the justification for coal production, like that for any other business, depends on the achievement of economic viability. The National Coal Board must secure those sales which are profitable on a continuing basis in competition with other fuels and should plan its marketing, production and capital investment accordingly, bringing productive capacity into line with its continuing share of the market.
The Government will support the board and its employees in carrying through the action necessary to secure their future. For example, the Government are funding capital investment in the industry at a high rate, £800 million this year. Moreover, the Government are sympathetic to the social problems arising from the closure of collieries that are deemed by the NCB after full consultation to be uneconomic, as illustrated by the further improvements in March this year to the Government's redundancy scheme for the industry.
The MMC also recommend that the board's deep mine areas should, as far as possible, be operated as separate business units. The board is to consider further, as part of a longer-term review of organisation, this recommendation and the commission's views on headquarters and area organisation.522W
The commission also makes many detailed recommendations, which the board is considering. My Department will be following up these with the board, paying particular attention to those on cost control and investment appraisal, in view of the importance of sound decision making, based on robust analysis, in the use of public funds. The commission recommended some changes in certain aspects of the NCB's contracting arrangements for opencast production, and I welcome the board's preparedness to try the changes recommended. The commission also suggested that the statutory limit on private opencast working should be raised and a system of appeals introduced for licence applications.
I am considering the commission's recommendations and expect to make a further statement in due course after receipt of the board's further reflections and report on the action taken.