Speeches, Interviews & Other Statements

Complete list of 8,000+ Thatcher statements & texts of many of them

1967 Dec 5 Tu
Margaret Thatcher

HC Committee [Coal Industry Bill] (Peyton Amendment)

Document type: Speeches, interviews, etc.
Document kind: House of Commons Committee
Venue: House of Commons
Source: Hansard HC [755/1283-1300]
Journalist: -
Editorial comments: c2300-2343. MT spoke at c1294.
Importance ranking: Minor
Word count: 6084
Themes: -
[column 1283]

Mr. Peyton

I beg to move Amendment No. 4, in page 1, line 12, leave out subsection (2).

As is my custom, I think that I can do this with great brevity. It would be possible, subject to any guidance which you, Sir Eric, might see fit to give to the Committee, for the same arguments as were appropriate to the first Amendment to be repeated on this one.

The Chairman

Since the hon. Member asks for my guidance, it might be convenient if I indicate to the Committee that that is not the case. This Amendment is very much narrower, and the debate on it will be much more restricted.

Mr. Peyton

Sir Eric, I think that you misunderstood me. I did not ask for your guidance. I said that the opinion which I was expressing was subject to any guidance which you might see fit to offer. That is quite different. As all hon. Gentlemen opposite know, asking for guidance is something which I would never be foolish enough to do, unless I was in great straits.

The point here is really explained by the wording in the Explanatory and Financial Memorandum, which says in paragraph 2:

“It also raises from £30 million to £50 million the limit imposed by section 1 (4)(b) of the 1965 Act on the amount of accumulated deficit which may be financed by temporary borrowings.”

It is true that the Committee now comes down from the level at which it has lately been considering figures. On the last Amendment we were dealing with £900 million, so it is quite a relief to come down to the small change of £30 million or £50 million. Nevertheless, I think that we are entitled to ask the Minister for some explanation. I am sure that the hon. Member for Derbyshire, North-East (Mr. Swain) who takes such an interest in these matters will wish to pay attention to this most important debate.

Mr. Swain

I am listening, very seriously. I merely smiled not at the content of the hon. Member's speech, but at a fourth-rate comic trying to play Hamlet.

Mr. Peyton

I am not quite sure how long the hon. Member is seeking to pro[column 1284]long the discussion on the Bill he is so anxious to support, but it is nice to hear these civil interjections, which I realise are done with all that polished courtesy for which the hon. Gentleman is well known.

If I can now get back to the subject of the contents of the Bill, I would just say that I think we are entitled to some reasonable answer telling us why the Coal Board needs this extra £20 million on its borrowing powers for temporary purchases. I hope that the brevity of my remarks will not lead the Parliamentary Secretary to think that he can avoid this issue with some vague generalities.

Sir G. Nabarro

The issues here are much wider than denoted by the hon. Member for Yeovil (Mr. Peyton), and I rise therefore to support him a little more powerfully than I have done on earlier occasions. [Interruption.] The hon. Member for Feltham (Mr. Russell Kerr) who has just joined our debates for the first time today——

Mr. Russell Kerr (Felham)

No.

Sir G. Nabarro

The hon. Gentleman shouts at me “another comic turn” . Perhaps he will give me a few minutes to talk about the finances of the Coal Board and judge then how comic I am in my attribution of deficits to mismanagement by the Board.

Mr. Kerr

That shows how comic you were a long time ago.

Sir G. Nabarro

Sir Eric, I heard the hon. Member refer to you as being a comic. I hope that if I resume my seat you will put him into good order.

The Chairman

Order. If the hon. Gentleman did make that remark and address it to me I hope he will withdraw it.

Mr. Kerr

I do so unreservedly, Sir Eric. As you will gather it was directed at another hon. Member of this House.

Mr. Stephen Hastings (Mid-Bedfordshire)

On a point of order, Sir Eric. Is it in order for the hon. Gentleman to refer to my hon. Friend as a comic turn?

[column 1285]

The Chairman

Order. I have heard similar expressions used in the House before.

Sir G. Nabarro

These ribald and irrelevant interjections from sedentary hon. Members opposite are, of course, merely protracting our proceedings. I can make speeches of very great length on deficit financing if I am called upon to do so. I will, however, be relatively brief this evening as long as I am given a continuously quiet hearing without sedentary interruptions from hon. Gentlemen opposite.

I shall powerfully reinforce what the hon. Member for Yeovil has said. There is an extraordinary contradistinction in the financial fortunes of the Board, comparing last year with the projected deficit during the next two years.

I said in the immediately preceding debate that the Coal Board had almost broken even in the last couple of years on its current account, and in this subsection (2) it is providing for a deficit of £50 million over the length of life of operations which will flow from this Bill.

That length of life, in the immediately preceding Amendment, I put at 16 months. The Minister thinks it is a bit longer. He muttered “1971” on one occasion. But it will not be 1971 or anything like it; it is much more likely to be 1969. Hon. Members representing mining constituencies will agree here. If it is 1969, that is two years ahead. We are budgeting, in effect, for a deficit of £50 million over two years, which represents a loss of about £25 million per annum on current account.

But the Coal Board has been almost breaking even. To quote from paragraph I of the Board's Report and Accounts for 1966–67, that is the last chargeable period ended 31st May last:

“Operating profit on the Board's activities in 1966–67 amounted to £28.5 million. Interest paid was £28.2 million and the surplus on the Board's accounts was £0.3 million.”

of £300,000 profit on a year's operations.

How is it then that subsection (2) now talks about an annual deficit of £20 million or £25 million in each of the two years of the duration of the operations flowing from the Bill, whereas, in the last full year, the Board made a small profit? What has caused this dramatic change in [column 1286]its financial operations? To quote from paragraph 2 of the Report and Accounts:

“The improvement in the industry's results was largely due to a surge in output and productivity in the latter part of the year. In their Report for 1965–66, the Board said (see paragraph 24) that too rapid a rundown in manpower might prevent the industry from realising its full potential.”

But a purpose of the Bill is to prevent any acceleration in the rundown of manpower, and one would therefore suppose that the financial achievements of the Board in each of the next two years should be not less favourable than that in the year ended 31st March, 1966.

Effectively and shortly, how does the Parliamentary Secretary account for the fact that, in this short period of 12 to 18 months, there should be a turnover from a small profit to a large deficit of possibly £20 million to £25 million, with a rundown of manpower in the coming two years which is said to be at a rate not larger than the rundown in the last full year?

My second question flows from the intervention of the hon. Member for Derbyshire, North-East (Mr. Swain) in the Minister's speech on the previous Amendment, about opencast coal. It is notorious financially that opencast operations are extremely profitable. The Report and Account says:

“The Board's opencast production made an operating profit of £7.5 million, or 22s. 2d. a ton. The average cost of production was 80s. 7d. a ton.”

That last price for opencast coal compares with 100s. 7d. a ton, average pit-head price, for deep-mined coal, so opencast coal is reported £1 a ton cheaper, and, on a very limited output of only a few million tons, the Board made the huge profit of £7.5 million on opencast operations last year.

It follows from that that if the deficit budgeting for each of the two forthcoming years is about £25 million a year, and if there is to be a profit on opencast mining of £7.5 million a year, the real loss envisaged on deep-mined coal is £32.5 million a year in each of the two years ahead covered by the Bill.

Mr. J. D. Concannon (Mansfield)

The profit on opencast mining mentioned by the hon. Gentleman is before interest has been paid, and, of course, 25 per cent. [column 1287]of the total amount of deep-mined coal is produced at 77s. 9d. a ton, which is below the opencast sum.

Sir G. Nabarro

I do not dispute that and I will not conduct an analytical survey of mining figures. I repeat that the average pithead price of deep-mined coal in Britain is 100s. 7d. a ton, based on last year's activities, while the average price of opencast coal, based on last year's activities, was 80s. 7d. a ton. The two are strictly comparable figures.

What has caused this dramatic change in the financial fortunes of the Board? Whereas in 1966–67, after meeting all charges and after paying a very heavy interest charge, the Board still turned in a tiny profit of £300,000. In this Measure we are talking about a deficit of a maximum of £50 million at the end of any chargeable accounting period flowing from the Bill's operations. That is much too big a change-over from profit to loss to pass unnoticed and unchallenged. I therefore warmly support my hon. Friend the Member for Yeovil and congratulate him, as always, on his Parliamentary perspicacity in tabling the Amendment.

Mr. Russell Kerr

Now lick him all over.

Sir G. Nabarro

The hon. Gentleman is both indelicate and vulgar. As a protest against his continued sedentary interventions in what was intended to be an important financial contribution to our deliberations, I resume my seat.

The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson)

I will reply to some of the points raised by the two hon. Gentlemen opposite. I will deal with the questions asked by the hon. Member for Worcestershire, South (Sir G. Nabarro) first and, in doing so, I will confine my remarks to the matters in question and try to avoid elaboration by adjective.

The hon. Member for Worcestershire, South asked for reasons for the change in the Board's financial position from a £0.3 million surplus last year to a position in which we shall have to budget or allow for continuing deficits over the next few years. The hon. Gentleman quoted at some length from the Board's last Annual Report. Had he continued [column 1288]to quote from the same series of paragraphs he would have been able to indicate in some detail the answer to his own question.

He quoted from paragraphs 1 and 2. Paragraph 3 refers to the effects on the industry's finances of the recession in the economy and an exceptionally mild winter. It goes on to refer to increased expenditure on materials, stores, power supplies, local rates and so on.

It also refers to the additional expenditure in which the Board was involved as a result of the National Union of Seamen's strike last year in putting to stock and later picking up over 1½ million tons of coal and coke. These were some of a whole series of factors which were forecast last year in the Board's Annual Report as affecting the Board's finances.

Mr. Edwin Wainwright

When the hon. Gentleman refers to increases in prices, was he quoting an increased amount of materials obtained from private enterprise, or did the price go up for the machinery being sold?

Mr. Freeson

I understand that the Board was referring to increased costs, and not the increased quantities, as such. Those are the reasons specified, and they are reasons which one has to repeat in explaining the changing situation.

A question was then put about deep mining, as compared with opencasting, and the Annual Report to which reference has been made gives just the information for which the hon. Member was, in fact, asking. If he would look at the paragraph preceding that from which he quoted about opencast mining, he will see that on page 2 it is stated:

“The operating profit at the Board's collieries was £17.7 millions or 2s. 2d. a ton. The average cost of production was 98s. 5d. a ton.”

Then there is a table of figures showing costs.

I should like to go back to the first point which was made by the hon. Member who moved the Amendment who asked in general terms for an explanation of the increased figure which he sought to reduce by the Amendment. The object of the increase is to make provision for covering possible deficits in the current year and up to 1970–71. After the capital reconstruction authorised under the 1965 Act, the Board aimed to [column 1289]earn each year a revenue surplus of £10 millions. This would have been used to bridge the gap, and in 1966–67—the first year—the surplus amounted to £300,000. On present trends, however, there may be a deficit of £10 millions this year, although the revenue earned up to 1970–71 will depend upon coal price policy, policies about uneconomic pits, and matters which cannot be calculated accurately in advance.

Mr. Lubbock

Why is there this worsening position from a profit of £300,000 last year to a deficit of £10 millions this year?

Mr. Freeson

The Board was indicating the worsening position in which it was and—

Mr. Lubbock

The hon. Gentleman said that certain factors had affected the Board adversely, but paragraph 3 of the Report states quite clearly that

“Other factors contributed to the improved finances of the industry” .

Sir G. Nabarro

I do not wish to weary the Committee by giving lengthy quotations from the Report, but the hon. Gentleman opposite might have put matters into better balance—into correct balance—by quoting from the first page of the Report,

“The financial position of the industry was, however, strengthened by the continuing effects of the capital reconstruction announced in November, 1965” .

I would remind the Committee what that capital reconstruction was. It was the writing off of many millions of accumulated losses and it was that which enabled the Board to go into the “black” in a normal operating year rather than to stay in the “red” . I must say that this is a most curious time to announce a deficit of £10 million, post-devaluation, after a profit last year.

11.15 p.m.

Mr. Freeson

A series of non sequiturs is being put by the hon. Gentleman—[Hon. Members: “No.” ] I repeat—it is a non sequitur. Unfortunately, the hon. Member will keep quoting just little bits and pieces from paragraphs when he should deal with the full context. The financial strengthening to which he referred when speaking of the last Annual Report of the Board was connected with internal financial arrangements, as the rest of the paragraph from which he [column 1290]quoted makes quite clear. However, I do not intend to pursue this matter in any great detail, as it is not particularly germane to the question before us—

Sir Harmar Nicholls

rose

Mr. Freeson

No. I was saying in answer to the first point raised by the hon. Member for Yeovil that in view of the difficulty—

Sir Harmar Nicholls

On a point of order, Sir Eric. Are we not in Committee, and is not the whole object of the Committee stage to allow these things to be examined in detail? Is it right for the Parliamentary Secretary to resist our convention, and not allow himself to be cross-examined?

The Chairman

The Minister decides in his own discretion when he will give way and when he will not.

Mr. Freeson

Perhaps I might be allowed to answer the points put to me by the hon. Member for Yeovil. I was saying that in view of the difficulties facing the Board in the next few years, it is necessary to provide for a possible deficit of the kind to which I have referred—[Interruption.]

The Chairman

Order. We really cannot go on if we have sedentary interruptions on both sides. Mr. Freeson.

Mr. Freeson

rose

Mr. G. Elfed Davies

Will my hon. Friend give way for a moment? If he were a collier, he would suggest to the hon. Member for Peterborough (Sir Harmar Nicholls), that he should get in the manhole out of the way.

Mr. Freeson

As a matter of fact, if the hon. Gentleman would contain himself, I was about, at the end of the sentence, to resume my seat.

Sir Harmar Nicholls

If the Parliamentary Secretary accuses my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) of muddying the waters by not explaining the position clearly, he is in a position to straighten it out. Can he explain—whether or not his hon. Friends want the information, I do not know—why we have this acceleration of the deficit from £0.3 million to £10 million? It should be on the record, so that we can know.

[column 1291]

Mr. Freeson

I am accusing no one of muddying the waters, but I would refer the hon. Member to the latest Report of the Board—[Hon. Members: “He has not read it.” ]

To return to the original general point put to me by the hon. Member for Yeovil, I would say that in view of the difficulties we are expecting the N.C.B. to face over the next few years we must provide for the possible deficit that may arise. The sum included must be related in our minds, as well as in practice, to a turnover that will be more than £800 million a year. Over the four years in question, the £50 million laid down in the Bill represents less than 1½ per cent. of turnover.

I have tried as best I can to give the reasons for the changing position. Without going into an accountancy exercise which it would not be my responsibility to undertake this evening, I have tried to give some of the general reasons for which the hon. Member for Yeovil asked.

Mr. W. Baxter

Cannot my hon. Friend give a better explanation why we should permit to be written into the Bill a proposition that there will be a deficit in an undertaking which should be showing a profit and which, if it were run on a businesslike basis, would show a substantial one?

Mr. Freeson

I refer my hon. Friend to the Annual Report, where he will see stated at some length the reasons for the changing position. I have referred to these. This Bill deals with the situation facing the industry. I ask the Committee to resist the Amendment.

Sir Harmar Nicholls

I had not intended to speak—[Hon. Members: “Oh.” ]—and I do not want to speak on the detailed terms of the Amendment.

Mr. J. J. Mendelson (Penistone)

The hon. Member knows nothing about it.

Sir Harmar Nicholls

I know enough about it to know that we are being fobbed off by a very inept Parliamentary performance. It is not just a matter of criticising the Parliamentary Secretary; there are certain rights which Parliament must insist upon.

Mr. Swain

rose

[column 1292]

Sir Harmar Nicholls

I will give way to the hon. Member for Derbyshire, North-East (Mr. Swain) in a moment because he does know what he is talking about. When the Parliamentary Secretary has questions put to him to explain the deficit, which is of some importance to this nation, he should not try to put us off by asking us to read the Report. The whole object is for him to explain the Report as he sees it. Whether we have read the Report or not is irrelevant. Parliament does not insist that hon. Members must read all the reports placed before them, but when a Minister is responsible he is asked for a summary of reports and Members of Parliament are entitled to an answer. We have not had that.

Mr. Swain

I thank the hon. Member for giving way. I remind him that if he did not consume so much natural gas produced by his hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) he might be able to understand these things better.

Sir Harmar Nicholls

The hon. Member referred to natural gas, but his hon. Friend accused my hon. Friend of using unnatural gas.

The Parliamentary Secretary is entitled to speak again without leave being given. He should give his version of how this deficit has come about.

Mr. Edwin Wainwright

I wish to say a few words because it seems that the hon. Member for Peterborough (Sir Harmar Nicholls) spoke in temper and was not rational in his approach to this problem.

Whether the Coal Board made a profit this year, last year or the year before, can be checked by the Accounts. In the Accounts we find that the income of the Board fluctuates each year. In 1966–67 it was up by £40 million on the year before and in the year before that it was up by £46 million on the previous year. Obviously the Board and the Government expect that this next year there will be a drop in the income of the Board. If we sell less coal the income is bound to go down. If we increase capital investments to make sure that the industry is more efficient, that will cost more. If the amount of coal produced is less, the average burden per ton is greater. [column 1293]

If the Opposition want to restrict the amount of money allocated to the Board to make it more difficult for it to carry on, the Opposition must remember that the industry is going along a tortuous path. We are dealing with human beings. If the Opposition want pit closures to come more rapidly so that less coal is produced, that will make it more difficult to cater for the men who will be displaced. Those men have to be looked after. When the demand for coal was greater than the supply the nation's industries had cheap coal, and the Coal Board was not allowed by the Tory Government to put up its prices, and it could not build up its reserves. Now that there is an excessive amount of coal it is up to the Government and the Opposition to try to help the industry and the men in it, to make certain that there is no great hardship to individuals. I hope that the Opposition will treat the matter more humanely and not with tongue in cheek as they are treating it at present.

Mr. Paul Hawkins (Norfolk, South-West)

I want only to make two small points. I did not intend to intervene. I know that it is strange for an hon. Member for an agricultural constituency to start talking about coal, but my constituents have to pay towards the deficit. We should have a better explanation than we have had. I do not see why every back-bencher is expected to read Reports of the Coal Board, the Ministry of Agriculture, and so on, on every subject.

Mr. Swain

rose

Mr. Ogden

rose

Mr. Hawkins

I do not intend to give way.

East Anglia suffers from receiving nothing but bad coal. If we are to have to pay towards the deficit, we should receive decent coal.

Mr. G. Elfed Davies

rose

Mr. Hawkins

The industry is going through a very difficult period. The miners must be treated properly, and I recognise that there will be a big deficit for some years. But back-benchers are entitled to a proper explanation for the loss.

[column 1294]

Mrs. Thatcher

I shall be brief. I had intended to intervene, and I have read the relevant Reports.

In the 1965 Act we wrote off an accumulated revenue deficit of £91 million, in order that the Coal Board might start with a clean slate, and there was also provision for a £30 million deficit to last the rest of the lifetime of the Act. After that, the National Board for Prices and Incomes granted a price increase in the following terms:

“The National Coal Board have proposed increases in the pithead price of coal in order to recover an estimated deficit of £80 million in 1966–67 and to meet the prospect of greater deficits thereafter.”

The accumulated deficit was written off and a price increase was given to meet all prospective deficits, in spite of which there was still a saving clause of a permissible deficit of £30 million. No reasoning that we have yet heard has been sufficient to increase that amount of deficit in the face of the price increase given, and I hope that my hon. Friend will press the Amendment to a Division.

Mr. G. Elfed Davies

I should not have intervened but for the remarks of the hon. Member for Norfolk, South-West (Mr. Hawkins). It was highly impertinent of him to say, “I am from an agricultural constituency and my people pay their price for coal” . Miners have paid subsidies to agriculturists for many years. It is an insult to the House and to the miners for a remark of that kind to come from the hon. Member opposite. It would have been far better had he not come into the Chamber at the last moment to listen to the debate.

We must realise that we are dealing with a grave problem for the industry. The Amendment would leave out a subsection which deals with many matters which are important for the industry and I recommend hon. Members to vote against it.

11.30 p.m.

Mr. Peyton

May I say a few words? I was surprised that the Amendment brought out from the Parliamentary Secretary, almost as a chance aside, that it was too bad but there might be a loss of £10,500,000 this year. He said that there had been difficulties, and even the strike of the National Union of Seamen [column 1295]was trotted out, with one or two other things like that.

This microcosm of a discussion on this question is abundant justification for the attitude of the Opposition to these matters. I profoundly believe that this country will never come to its senses or have any chance of getting out of its present mess while it is prepared to continue in this, the central form of Government, the attitude of levity towards many millions of pounds which have to be hard earned by someone else.

I do not wish to be too rough with the Parliamentary Secretary, but he must stand condemned for what appeared to be, at least from this side, a very flippant answer to a serious question. I have no difficulty or diffidence whatever in echoing everything which was said by my hon. Friend the Member for Finchley (Mrs. Thatcher) and I echo her advice that we should divide the Committee in protest.

Sir G. Nabarro

I spoke before my hon. Friend the Member for Yeovil (Mr. Peyton) and at a good deal greater length. I had no idea, in supporting this Amendment, that it would wring from the reluctant lips of the Parliamentary Secretary a confession that the Board has lost nearly £11 million this year. I say unhesitatingly that the characteristics of the Coal Board finances today are profligate, casual, cavalier, and flippant. In the present economic troubles of the country the reply of the Parliamentary Secretary ought to be stigmatised for what it is—utterly disgraceful. Never shall I walk through the Lobbies with greater joy in my heart than tonight.

Mr. Ogden

The Parliamentary Secretary has come in for some extremely unfair criticism from the Opposition benches. When he is under fire from the Opposition at least he is sure of our support, although there may be differences between hon. Members on this side. These personal attacks were made upon him for refusing at 11.30 at night to give answers to questions which have already been answered since the debate started at 6.45 p.m. The questions were asked by hon. Members who rolled in late to ask questions to which they ought to know the answers.

Mr. Freeson

I was accused by the hon. Member for Yeovil (Mr. Peyton) of [column 1296]being flippant. There is a good deal more flippancy from hon. Members opposite in their asides than there is from this side of the Committee, either from me or from my hon. Friends. It has been suggested that I gave no reasons for the changing financial position of the industry. Not only was I not offhand in my remarks but if hon. Members did not hear some of the reasons I gave they should read Hansard tomorrow, because they will see that I referred to the source of information that is available to all hon. Members who wish to take part in a debate of this kind. [Hon. Members: “It has nothing to do with it.” ] I wish hon. Members would not keep interrupting. “It has nothing to do with it.” There have been many personal remarks about me and some unnecessary adjectives used by an hon. Member who has now left the Chamber.

Sir G. Nabarro

I have not left the Chamber. I am sitting here watching.

Mr. Freeson

I know that it is getting late and that the hon. Member for Worcestershire, South (Sir G. Nabarro) likes to entertain us from time to time but do not let us have too many shocks like his sitting on this side of the Committee.

Sir G. Nabarro

I was not. I was talking to an hon. Member.

Mr. Freeson

I want to refer back to some of the reasons I gave. It has been suggested that I am treating the matter in an offhand fashion. It has been stated clearly by the Coal Board—and I presume that hon. Members will accept these reasons—that the change in the financial position is because the industry had less results than expected from the increased prices; because of the recession in the economy; because of the exceptionally mild winter which affected coal sales last year; because of rising costs under a wide range of headings to which I referred and because of additional expenditure on stocking arising directly from the seamen's strike.

I referred in my speech to the general position of the industry. I was surprised at the rather over-intensive manner in which the hon. Lady was so quick to support the Amendment. She knows as well as we do, even if some of her hon. Friends do not—although she does not want to play it up too much—that the industry is in a serious transitional phase. [column 1297]

It is rightly important for the industry that costs in terms of productivity or efficiency, or whatever heading one chooses, should come into balance with sales, and with price levels in relation to other fuels. That is the difficulty the industry is facing. It is making tremendous efforts, successful and effective efforts, to increase productivity. There are, again, examples in the Report, which hon. Members should read—and I am not directing this advice to the hon. Lady but to some of the more vociferous interventionists.

There is abundant evidence in the Report of the effective action being taken by the industry to increase productivity and efficiency, which is going to make for sensible, sound and competitive price levels in future. We are catering in this Bill for a transitional period of years. That is what all this is about. That is the issue. Therefore, we have to accept that the industry is financially going to be out of balance during this transitional period. The hon. Lady herself said so. She said that even following the 1965 Act, before it was known about the increased prices, it was expected that there would be a £30 million deficit.

We are expecting to move into a more transitional period soon. [Laughter.] It is not a joke. I say to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) that this is a serious situation. The industry is moving into a serious situation. We are aware of it and that is what the major debate is about. We have to assist the industry to get into a sound technical and economic position so that it can be competitive. That is why it is important to provide for the deficits which are bound to arise against the background I have described earlier and which I have now recapitulated.

Mr. Peter Emery (Honiton)

Will the Parliamentary Secretary answer one short question which I tried to suggest that he might answer before he concluded? He referred to a possible deficit during the current year of about £10 million. This is not in the Annual Report or in any information that we could previously have had. It is entirely new. Therefore, I want to make certain that we understood the hon. Gentleman clearly. Can he tell us how the £10 million is made up?

[column 1298]

Mr. Freeson

As I indicated earlier, I am not in a position to give any make-up of the figure by any kind of accountancy exercise. If I did not make it clear before, I do so now. It is expected that this will be the range in the intervening years between now and 1971.

Mr. Edward M. Taylor

I was amazed at the Parliamentary Secretary's reply. He referred us to the Annual Report. He should appreciate that hon. Members on this side have read the Annual Report, in which we see the reasons why there was a profit of only just under £½ million last year.

Among the reasons given by the hon. Gentleman, he mentioned the recession in the economy, but that was in respect of 1966–67, a year in which a small profit was made. He referred to the mild winter. That was last year, not this year, when the hon. Gentleman expects a £10 million deficit. He referred to the effect of the seamen's strike. That was last year, not this year, when he is talking about a deficit. He referred to expenditure on the social cost of an accelerated colliery closure programme, but we are not to have an accelerated colliery closure programme.

Every one of the reasons given in the Annual Report explained why we had a profit of only £300,000. All those factors should result not in a loss this year, but in an improvement of the situation. The simple question asked by my hon. Friends the Members for Yeovil (Mr. Peyton) and Worcestershire, South (Sir G. Nabarro) and others was why there is a loss this year. All that the Parliamentary Secretary has done is to give a series of reasons, as outlined in the Annual Report, why we did not make a £10 million profit last year.

When we are being asked to approve a loss of £10 million, we should know the reason for it. That is the question which the hon. Gentleman has not answered. Every one of the reasons which he has given does not explain a loss of £10 million but explains why the result should be better. We will not have a seamen's strike this year, we may not have a mild winter and we may have an improvement in the economy. All these things should improve the position and [column 1299]not worsen it. The least that we are entitled to from the Minister is a proper explanation. [column 1300]

Question put, That the Amendment be made:—

The Committee divided: Ayes 96, Noes 154.