ASSISTANCE TO THE COAL INDUSTRY
Motion made, and Question proposed,
That a Supplementary sum, not exceeding £3,750,000, be granted to Her Majesty out of the Consolidated Fund, to defray the charge which will come in course of payment during the year ending on the 31st day of March 1968, for the expenditure of the Ministry of Power for assistance to the coal industry.—[Mr. Marsh.]
Mrs. Margaret Thatcher (Finchley)
Mr. Deputy-Speaker, I am not quite sure what the procedure is. As one of my hon. Friends said earlier, it is such an unusual occurrence to probe the winter Supplementary Estimates closely, and we are not sure about the exact procedure to be followed.
In the Estimate now under discussion we are concerned with a Supplementary Estimate for assistance to the coal industry. The background to this particular Estimate stems from the Coal Industry Bill, which we were discussing shortly before Christmas, which depended upon the Fuel White Paper which was allegedly undergoing further examination with regard to revised figures following upon devaluation and the worsening balance of payments position.
Therefore, it will be necessary to ask Richard Marshthe Minister how his revisions of that White Paper are faring and what new conclusions he has reached, because it directly affects the Estimates which are before the House. I should be grateful if he could tell us what has happened to the White Paper and whether any of the figures in it have been altered. After all, if the Treasury could have a close examination of public expenditure figures and produce its calculations, I imagine that the Ministry of Power will also have had time to produce some conclusions as it was not badly affected by the cuts. That is one of the first questions arising out of the Supplementary Estimates I should like to ask him.
The second question, to which I will refer briefly, concerns prices. The present Government have constantly talked about the need to keep prices down, but in one of these Estimates we are talking [column 111]about electricity where the price is artificially higher than it need be because of Government action. One has there a commodity which is supplied to the public at a higher price because of action which the Government have taken. Therefore, they are not wishing to keep down electricity prices. On the contrary, they are raising them. I refer not merely to the recent rise, but to the policy behind the supply of coal to the Central Electricity Generating Board and the Scottish Boards. We pay on the present Estimate in taxpayer's money as well.
The third background matter is that we have had an allegedly very searching review of public expenditure. If I may put it this way, the mining industry seems to be a sacred cow, because the greatly increased expenditure on the Coal Industry Bill of £133 million does not seem to have been touched; it has come through that public expenditure review virtually unscathed. Some of the expenditure which we approved in that Bill, and which is now the subject of Supplementary Estimates, is exactly the same as it was before the economic crisis.
The Minister of Power (Mr. Richard Marsh)
I apologise for interrupting the hon. Lady so early in the proceedings, but she and her colleagues, approved the figures in the Supplementary Estimates, which in fact were the figures in the Coal Industry Bill after devaluation. What has happened since then that has changed the position?
The Minister will remember that we raised the Fuel White Paper matter during the debate. We were constantly asking him what had happened to his revised Estimates, and he was not in a position to give us a reply. He has now had a number of weeks more to find out what he thinks about it. I hope that he has now come to some conclusions and will tell us during the course of the debate. However, he will be the first to agree that he did not then know the answers about the revisions in the White Paper. Also, if he looks carefully at these Estimates, he will see that they do not give very much detail about the money which is to be spent. I will go into that in a little more detail in discussing each one of them. [column 112]
I put my remarks primarily on the Estimates under two heads. The first concerns pit closures, which is one of the subjects of this particular Supplementary Estimate. The first part of the Supplementary Estimate says:
“Grants under the Coal Industry Act, 1965, as amended” —
by the 1967 Act, of course—
“to National Coal Board in connection with pit closures.”
We are today voting an extra £3,750,000 to the National Coal Board in connection with pit closures. That is virtually all that it says, except that in a later subhead it refers to supplementary payments for certain redundant workers in the coal industry which will also be connected with pit closures.
The Minister will remember that we did not quarrel in any way with payments to redundant workers in connection with pit closures; but we would like to know a bit more by having some kind of report from the Minister about the direction in which this money is going. He will remember that, in so far as it relates to Section 3 of the Coal Industry Act, 1965, money could be spent under a number of different heads. It could be used where a person from one pit which had closed down was going to work in another; it could be used for travel allowances; it could be used for housing; and it could be used by way of payment to super-annuation funds, because a person having to retire early would not have had time to get the maximum number of contributions to qualify for his full pension.
We are asking—and it is our duty to probe these Estimates—how much has gone on each and how is the whole scheme going? The Supplementary Estimate merely says, “Please we want £3,750,000.” How did the Minister arrive at that figure? I hope that he knows or that he has someone in the Box who knows.
The second head under pit closures concerns payments to certain redundant workers in the coal industry. The Minister will remember that when we had the debate on the Bill the redundant workers' scheme for coal miners had not then been published. He was consulting with the National Union of Mineworkers about its exact shape. It may now have been published, in which case I have not seen it, [column 113]but I assume again that it is very nearly ready, because there is a token amount for it in this Supplementary Estimate. But does the Minister yet know the shape of that scheme for which we are today voting a token amount, and presumably in the future will be voting rather larger amounts? We are voting blind. Surely the scheme has been fashioned. Ultimately I suppose it will come before the House, but we should have more news about it. The Minister should be kept up to scratch by keeping the House informed about matters which concern this important industry.
The third matter under the head of pit closures—and perhaps the Minister will be able to tell me—is how much of this Supplementary Estimate is due to the 16 pits being reprieved. Does any of it come under this one?
None of it does. Some of it must indirectly, because some of the pits that were reprieved will now be closed, and some of the pits now closed will have had redundant workers who will come under other heads anyway. Perhaps the right hon. Gentleman can give us some idea of the indirect amount from the 16 pits which have been reprieved which comes in either the first or third heads of this Supplementary Estimate.
So much for pit closures. I hope that the Minister will be able to give some of the details for which I have asked about the £3,750,000 extra that he is demanding. I do not want it in general terms. This is a kind of accounting to the House and I hope we shall have the details. We cannot be asked to vote large sums like this without having the right to ask for details. We are agreed in principle, as he says, but we now want to know exactly, not in general terms, some of the answers which the Minister could not give us at the time of the debate.
The other broad head under this Estimate concerns coal for electricity and gas generation. The Minister will be the first to remember that the Bill consequent on the White Paper provided that the C.E.G.B. and the gas boards should be asked to burn up to an extra 6 million tons of coal per year. I suggest to the [column 114]Minister that the statements with regard to the use of coal for electricity and gas generation are in a contradictory state. The fuel White Paper which I have mentioned based the 6 million tons of coal on the broad general background that without this artificial boost the demand for coal by 1970 would be only 146 million tons in that year, plus a possible 3 million tons for export, bringing the demand to 149 million tons. As against that, production was expected to be 155 million tons, and therefore it was said that the difference of 6 million tons should be used by paying the electricity and gas boards to burn an extra 6 million tons of coal which they really would not choose to burn for commercial reasons.
That is the broad background, and what we are concerned with is not only the amount, but the price, because this is important. Certainly there was a total sum, 6 million tons, and there was a global amount in the Bill for which the House voted, and of which this Supplementary Estimate takes a part, but the White Paper said that how much was taken of the 6 million tons would depend on the trends in supply and demand for coal.
We are more than half way through the financial year, and we should like to know the present trends in the demand and supply of coal. From some newspaper reports it looks as though they have been falling as a result of devaluation, and in so far as one can gather the Coal Board seems to have been successful in exporting more coal. May we be told what contracts have been fulfilled, and how much extra has been bought in that way? I ask that because this also has an effect on the 6 million tons which the C.E.G.B. is being asked to take.
We would also like some information about the price of this coal to the C.E.G.B. It is here that we seem to be in rather a contradictory state about what prices are offered, and what prices can or could be offered to various different concerns, of which one is the C.E.G.B., and another the Scottish boards.
The Annual Report of the C.E.G.B. for 1966–67, the latest one available, says in paragraph 39:
“The Board continued to assist the coal industry by holding coal in stock in excess of normal requirements; by burning higher cost coals where lower cost coals would have been preferred; by accepting price differentials on [column 115]carbonisation coals between the Board and other users; by reducing their burn of fuel oil at a cost of between £2 million and £3 million a year …”
Here is one of the sources of what I said, that the prices of electricity are deliberately being kept up because the board are deliberately being asked to burn higher cost coal while other people take the lower cost coal.
The National Coal Board's Report for the same year says in paragraph 22:
“Thus the Board have stressed that coal can continue to be made available in quantity at a price which is fully competitive with other fuels …”
On the face of it, that seems to be rather against what the C.E.G.B. was saying, or at any rate it does not get any coal which is produced at a competitive price.
One then goes to the Report of the Select Committee on Science and Technology and reads the evidence of Lord Robens, which is extremely interesting, and is very much tied up with this question of the price at which these 6 million tons are to be supplied to the C.E.G.B., and the price at which other coals are supplied to this Board and the Scottish Boards.
In paragraph 1311 of that Report Lord Robens says:
“We have 120 million tons of coal produced at 4d. but we cannot sell it at that price because there is too much coal produced at higher prices and the reason why you cannot get rid of pits is because the social consequences are too great.”
There it seems that the Board has 120 million tons produced at 4d. a therm, but in the fuel White Paper one sees that the average price of coal supplied to the C.E.G.B. is 5d. a therm.
We have recently had even more quotations, and I refer to one from the Prime Minister on 14th November, 1967, at col. 213 of the Official Report, when the right hon. Gentleman invited the National Coal Board to see if it could produce fuel at comparable prices with what would be possible from a nuclear-powered station to enable a coal-fired aluminium smelter to be built.
There we have a number of contradictions. It has always been the policy of the National Coal Board to have what is known colloquially as postalisation of [column 116]prices. Lord Robens said in his evidence:
“We cannot quote for cheap coal because it has to be averaged out with more expensive coal.”
Harold WilsonThe Prime Minister said that the Board might quote for cheap coal for a particular project, but taxpayers' money is to pay for the extra 6 million tons used by the C.E.G.B. Can the C.E.G.B. have the benefit of coal supplied as cheaply as is at present apparently being quoted for other projects in the United Kingdom, or are the C.E.G.B. and the tax-payers to have to pay expensive prices for coal so that other consumers can have subsidised prices for coal? We are voting money for an extra 6 million tons of coal. Why cannot the National Coal Board have a commercial contract with the C.E.G.B. at a specific price which will compare favourably with the prices now being quoted for other contracts? What will be the position if there is an emergent deficit in the National Coal Board as a result of these contracts? I think that it is right to mention a possible deficit, because, if we are voting taxpayers' money, we want to know the price.
There is, of course, another factor. Normally by this time of the year the interim report of the National Coal Board has been published. These are usually the worst six months for the Board, because it has the winter to come, and the year is roughly the same as the financial year. I have not been able to get the interim accounts. I understand that they have not been published, and we therefore have to fall back and rely on an estimate of this year's deficit of the Coal Board, given during the debate in Committee on the Coal Industry Bill.
R. FreesonThe Parliamentary Secretary rather shattered us by saying that the expected deficit was £10 million this year. He was cross-examined, because we were surprised, and he confirmed that that was the expected deficit. From reports in the Press it seems that coal sales have been going rather better than expected, possibly as a result of devaluation. We have also had two cold spells, and I notice that stocks are down. What is the position about this? If the position is good, we shall not need to have this 6 million tons extra burn, but this is being paid for, in part, by taxpayers' money. [column 117]
I should also be glad if the Minister would make clear the position with regard to the postalisation of coal prices. Is the National Coal Board free to negotiate fixed price contracts over a long period of years, as it would appear it is going to do in future in connection with the aluminium smelter project? I think that we are entitled to know before we vote this amount.
In the Supplementary Estimate on the extra burn-up of coal we have a curious estimate, and I think that the Minister must give us some figures. The Supplementary Estimate says that the amount will be certified by the auditors, and so on. The last Estimate mentioned the figure of 3¾ million tons—a nice round figure. It was almost a suspiciously round figure. But the one we are dealing with for the burn-up of extra coal is a particularly suspicious figure—£1,449,990. what happened to the extra £10 which would have made the figure £1½ million? We have this very particular figure. Why? We should have some interesting arithmetical exercises about it. I understand that it is not known how much will be needed, so a specific fraction has been used based on the daily amount of the total voted.
One of my jobs is to see that the Minister knows his job and has all the answers ready before we vote this money. I am looking forward to his reply, and shall have paper and pencil out when I listen to him. I hope that he will go into some of the fundamental questions which lie behind the Coal Industry Bill, and this Estimate which arises from it.
Mr. James Griffiths (Llanelly)
The hon. Lady the Member for Finchley (Mrs. Thatcher) has asked many questions, and I am sure that my right hon. Friend will do his best to provide her with the answers. She began by asking whether the coal industry was a sacred cow. That term is very familiar to us now. She will recognise that for generations it has been a very precious cow to this country. In these days we all argue about our balance of payments. There was a time when coal provided our balance of payments. We would be a very happy country if that situation existed today.
This Supplementary Estimate makes provision for the run-down of the [column 118]industry. This is a test for the Government, for the House and for the country. We must see how we can manage this rundown with due regard to the human and social consequences.
The hon. Lady referred to the provision under which, in cases where other industries take coal at more than its market value, the Government will make up the loss. I remind her that in the long period when the party opposite was in power and provided the Minister of Fuel and Power, and then the Minister of Power, it held down the price of coal below its market value. So it, too, has used the instrument of changing prices in the national interest, as it thought at the time. It was provided that the price of coal could not be increased without the consent of the Minister. It is on record that applications by the Coal Board for price increases were refused by the Conservative Minister of Power.
Had the Coal Board in the late 1940s and 1950s been allowed to charge market prices it could have built up a big surplus to help it through this transition period. No new principle is involved in what the Minister is now doing, as outlined in his fuel policy. For a period the nationalised industries will take a certain amount of coal, and where they can prove that it has been purchased at more than market costs they will be reimbursed by the Government. In some small way this will help the mining industry through its difficult position and help to do one of the things that it is imperative to do, namely, to run down the industry in a civilised way and not one which brings calamitous consequences for men and communities.
I want now to turn to the question of the provision for pit closures. I shall not argue the question of the figures in the White Paper. I understood that the White Paper was being re-examined in the light of the existing circumstances, taking into account devaluation. Has the Board any prospects of finding new export markets, particularly in Europe, as a result of devaluation? If it is possible to do this it will be a very desirable thing, not only for the Board and the industry but for the whole country.
In those circumstances I should like to know what steps the Board is taking to promote and expand the export trade. [column 119]I come from South Wales which at one time, at the peak of the industry, exported 36 million tons of coal. I wish that we could do that today. Our problems would be easily solved. We are geographically suited for this, and if it is possible for us to develop an export trade it will ease the situation in South Wales and in the industry, and this will help the nation.
A certain sum is provided to meet specific costs connected with pit closures. I presume that part of this money is provided so that the cost of transferring miners from one pit to another can be met, as can the cost of rehousing, and similar problems. These problems will become aggravated as more and more pits are closed, with the consequence that when miners are rendered redundant in a certain mine, with fewer and fewer mines available for them to be transferred to they will have to travel further and further to their place of work.
Miners are not compelled to take work in another colliery, and we must bear in mind the need for a viable coal industry for a generation or more. If the industry collapsed it would be calamitous. It is essential for us to handle these problems in such a way as to be able to persuade men to take work in another coal mine when they are offered it.
I am an old coal miner, as are some of my hon. Friends. Transport can be difficult even when a pit is only two, three or four miles from a man's home, but when the distance is 10, 15 or 20 miles it means that men are spending a great amount of time each day first in getting from their homes to the pithead and then from the pithead to the places where they work. This problem must be looked at. I should like to know whether the present arrangements for the transport of men from their homes to the pits are the best possible.
When consideration is being given to the improvement in road communications we must bear in mind the desirability of improving transport facilities in areas where men have to travel from their homes to their pits. I should like to know on what estimate of closures the present figures are based.
The secretary of my union, the National Union of Mineworkers, William [column 120]Paynter, said on Saturday at a conference in the Swansea valley, where a pit is under threat of closure, that the union had already been told closing dates for 30 collieries and that an additional 40 were in danger. What is the Minister's estimate of the number of closures and the number of men who can be given work at collieries within a reasonable distance and of the extent to which it is possible to slow this down?
My right hon. Friend knows my view. I think that we have reached the point, with these closures and 5,000 redundancies a year, at which it is beyond our ability to provide alternative work. I hope, therefore, that he will carefully consider that, unless this rundown is accomplished reasonably satisfactorily, with the full co-operation of the Coal Board and the National Union of Mineworkers, we may in the end not have the basic mining industry which will be essential anyway.
My hon. Friends tell me that, in every coalfield, it is becoming more and more difficult to get men to go in and to get those who are in to accept another transfer. The men's attitude is understandable. If I were 35 or 40 and learned that my pit was to be closed and I was offered a job in another 15 or 20 miles away, only to be faced in five years with another redundancy, I would consider, if I could get any kind of security in outside industry that it was better to start a new career.
When we come to vote sums of this kind, unless we handle this problem in a civilised way and care for these men, even if it costs us subsidies, we shall be in a serious position as a country, lacking even the basic tonnage laid down in the White Paper, which many of my hon. Friends think should be higher. But what if we cannot achieve even that? The country will be starved of essential fuel. I hope that the hon. Lady the Member for Finchley and her party will understand that, unless it is done in this way, it will be serious for the country—
I do not disagree with the right hon. Gentleman on human grounds. I was only probing the expenditure. I want the details and I think that he would want them too.
I agree. I am probing also, but I want hon. Members opposite to realise that, if they complain about [column 121]this, they may have to pay much more, especially if they allow the industry to run down too fast or in the wrong way, with consequences stretching far beyond the industry itself. I heard a reference to this last week.
The White Paper, I think, said that there would be further consideration, in the light of the existing and developing situation, of the subject of opencast mining. Is there not a strong case now for refusing any more licences for opencast mining and keeping it in reserve? It was put to me at a meeting outside South Wales last week that something which affects the morale in the pits is the fact that the men think that they are closing to provide a market for the opencast mining. Some of my hon. Friends heard this with me last week.
The Minister appreciates what the men in the coal mines and their communities think about this, if pits are closed and, shortly afterwards, the earth is torn up by enormous machines for opencast mining. My right hon. Friend should seriously consider whether we should not for the moment leave the coal where it is and keep it as a reserve. Once a pit is closed, it is very difficult to reopen it. We have heard about the cost of doing so. The coal in these open casts has been there for ages and it could be left there. That would be a very good reserve for the generations which will succeed us.
A token—it could not be anything else—of £10 is included in the Estimates to provide for the payments, under the Act which we passed recently, for redundant miners. Under these Estimates an Order will be laid and we can discuss it then. When I went over this matter earlier, I made a suggestion which I will not develop further now since I would be out of order. The provision for miners of 55 and over who are made redundant by pit closures is financially very generous, but the more I think about it, against the background of my experience, the more I consider that this is not the right way to approach the problem.
The proposal would provide men of this age with certain payments for three years, at the end of which, under our present insurance system, they would not be entitled to unemployment benefit. Their earnings will certainly go down [column 122]from what they are. Let us assume that they get £15 a week for three years. That is on the assumption that they will not get a job, and the chances of their doing so are not very rosy. At the end of that time, when such a man would be 58, he would have exhausted his unemployment benefit, and all that would be left to him would be National Assistance. He will have many years to go before being entitled to the National Insurance pension at 65.
We are creating a very serious position for ourselves in three or four years. I have put forward this suggestion and I do so again. I do not know whether anyone supports me in this. I do not speak officially for my union but for myself. The right way is to use this money, plus whatever is required in addition, to retire the men at 60. I beg my right hon. Friend, the Government, the National Coal Board and my own union to think seriously about this. I am not without some experience in these matters and, looking ahead, I can see great dangers.
We may argue and have great differences. I am sure that my hon. Friends will explain what the target output should be and the future basic for the coal-mining industry. But we all recognise that there will be a rundown. We shall argue about how much and how fast, but one thing is certain: it must be controlled, as otherwise it will create human and social problems far beyond our capacity to solve in the time. The least which these men, who have given great service to the country, can ask of us it that we handle their industry's rundown so as to do least harm to them and their communities, and also that, while my right hon. Friend presides over the industry, his colleagues in the Government will rapidly speed up the provision of alternative employment for the men and the communities who have rendered good service to the country in the past.
Mr. Nicholas Ridley (Cirencester and Tewkesbury)
The right hon. Member for Llanelly (Mr. James Griffiths) made, as always, a most attractive speech, but it contained two rather curious points. First, he suggested that as the coal industry did not exact the maximum prices which it could have exacted in the years of a sellers' market, it was now entitled [column 123]to the largesse of the taxpayer. I ask him whether that applies to all industries. For instance, as publicans have not exacted the maximum prices from the sale of alcoholic liquors over the years, should they be entitled to redundancy schemes and help now that they have fallen on hard times as a result of the breathaliser? Would he apply the same criterion to the oil industry? All industries, which go up and down in their prosperity, must take the rough with the smooth. The right hon. Gentleman slightly exaggerated his claims for the coal industry.
The second point was his suggestion that all opencast coal mining should be stopped. I ask him to reflect upon this, because it is well known that opencast coal is cheaper to mine than deep-mined coal. Does it make sense to prohibit the cheapest way of producing a commodity in order to encourage an expansion of the most expensive way of producing it? That may make good sense to him, but it would not make good sense to those whom we are asking to lend us money and those who are our international creditors. It is this sort of woolly economic thinking which has resulted in the evaporation of confidence—
Mr. Alex Eadie (Midlothian)
The hon. Member made an important point. Would he say that an opencast site on good agricultural land was a feasible economic proposition?
Yes. I have some personal experience of land which has been worked where I lived. Present techniques—it was not originally so—are such that they can even improve land. Provided that the work is done properly, as nowadays it is, there is little ground for complaint except during the time when the work is being done. The subsequent result is not too bad.
I should like to follow my hon. Friend the Member for Finchley (Mrs. Thatcher) in her comments about the extra coal burned in power stations. We have had the report that the National Coal Board has offered to supply coal at 3¼d. a therm to the new power station at Hartlepools, that is Seaton Carew. We have heard of the offer by the Coal Board, [column 124]which has been accepted, for a large supply of coal on a 25-year basis for the new aluminium smelter in Invergordon. The price per therm in this case has not as yet been made public, but to be competitive with oil and nuclear energy it must have been between 3d. and 3½d. a therm. At first sight one welcomes this and agrees that it is a tremendous achievement by the coal industry. One welcomes the jobs which it may save in the North-East. But can it be true that the Coal Board has lowered the average cost of production to 3d., 3¼d. or 3½d. a therm? We know that the Coal Board is currently producing coal at about 5d. a therm on average and that the C.E.G.B. is buying coal on average at that price. It is surprising if there has been such an improvement in productivity that the average price of coal has fallen to 3¼d. or 3½d. a therm. It would be surprising, too, if this improvement could be maintained for the next 25 years so that the contracts for which the Board has tendered will be economic and viable.
Mr. J. D. Concannon (Mansfield)
Is the hon. Member aware that 20 million tons of coal is supplied to the C.E.G.B. at roughly the price which he is quoting? Does he know that that price has not been increased to the C.E.G.B. for over seven years, which means that in real terms there has been a reduction?
I am coming to that. The Coal Board's Report for the coming year states that the Board is producing 62 million tons of coal at 4d. a therm, 11 million tons of it at 3d. a therm, which means that about 100 million tons is being produced at much more than 4d. a therm. If the Board is to sell a large amount of coal at 3d.–3½d. a therm, it will have to sell coal at 7d.–7½d. a therm to balance the loss. The Coal Board is charged by the House with the duty of balancing its accounts taking one year with another and with not making a loss. But if the Board maintains an expensive capacity, that is bound to result in a loss to the taxpaper as a result of these cheap tenders.
Nobody could complain if the Board were somehow capturing markets in which it could sell dear coal at dear prices in order to compensate for the [column 125]cheap coal which it is offering on tender. But I have not heard it said that that is happening. To me it is clear that what the Board is doing is picking out selected power stations in order to make an extremely cheap tender when it has no chance whatever of covering the cost of the dearer coal which is being sold at a loss. In the future there may be increases in the price of coal. Anything may happen in 25 years. I very much doubt whether a price of 3d.–3½d. a therm will be economic for the 25 years of the tender.
In the sub-head J(2) there appears the phrase,
“when the appropriate certificates of relevant expenditure have been given by the Board's auditors …” .
I understand that this increased burning of coal will be certified by the auditors as having taken place. Presumably money will then be paid to the electricity or gas board which has burned coal instead of burning another fuel which might have been cheaper. If it is the policy of the House—as it is in the Coal Industry Act, 1967—to subsidise the burning of coal in power stations, then the money should be paid not to the Coal Board but to the electricity or gas board which burns the coal. It is not for the Coal Board to put in a tender which is known to be below cost, because if it does that, then it will be the Coal Board which needs to recoup the money and not the electricity or gas board. I may be wrong, and I shall be grateful if the Minister will tell me whether I am right in stating that the money will go to the electricity board. The phrase reads,
“Payments will be made from time to time in respect of additional expenditure by the electricity and gas boards” .
If it is those boards which are to recoup the money, then the Coal Board has no right to put in cheap tenders at prices below the cost of production.
I am trying to follow the hon. Member's argument. The Coal Board concludes contracts at many different prices with many different customers. The purpose of this provision is not to affect the finances of the Coal Board but to get additional coal burned. I cannot follow the hon. Member's argument.[column 126]
I do not think that the right hon. Gentleman understood the point. If the additional sum in this Estimate—nearly £1½ million—is to be paid to increase the amount of coal burned, then it is presumably to be paid to an electricity or a gas board, probably an electricity board, which agrees to take coal when coal is not the cheapest fuel available. That is something which we accepted in the recent Act.
However, the Coal Board is tendering below its average cost of production. Thus, in addition to whatever the Electricity Board might receive by way of public funds, the Coal Board will be able to say, “We have made a deficit” —and then this House will be asked to make up that deficit in the years to come, simply because it cannot be possible for the Coal Board to secure high-priced contracts for coal at, say, 6d., 7d. or 8d. a therm when it is making offers in the region of 3d. a therm.
The principle is quite wrong and the scale of the loss—I have done my best to work out the figures—against the average cost of production for the tender to Alcan could be as much as £25 million over the 25 years, or £1 million a year. It cannot be right for the Coal Board to make a loss of this nature.
What is there to stop the Coal Board from making tenders to supply 10 million tons of coal here or there at 1d. or 2d. a therm? There is no ultimate discipline to force the Coal Board to tender economically. After all, one way of keeping the Coal Board afloat—and perhaps of returning to 200 million tons of annual production again—would be to allow the Board to put in cheap tenders all over the world, making a loss in the process, and at the end of the day merely asking for enormous sums to clear up its annual deficits.
I hope that this policy will not be pursued because to do so should be a political decision of this House. Perhaps we want to sell cheap coal to power stations here and all over the world, but if that is so, it is for the Government to suggest that as a policy and not for the Coal Board to do it. There should be an investigation into the Coal Board at the end of each year—I would apply this to all nationalised industries—to ensure that [column 127]this sort of thing is not being done. Otherwise this House has no control over the money it can be asked to fork out.
Mr. James Griffiths
Is the hon. Gentleman suggesting that the Coal Board should not enter into contracts which commit it for the future without seeking the consent of the Minister, who must in turn seek the consent of Parliament? Is he therefore suggesting that the Coal Boards should be debarred from entering into contracts of any sort without the Minister's consent.
I am merely suggesting that we take note of the fact that the Coal Board is enjoined by Statute not to make a loss. The Board should be held to that and, if it makes a loss as a result of reckless tendering, its membership should be changed. It should not be a good enough excuse for the Board merely to say to Parliament in two or three years' time, “We have made a loss because we are not making a profit on the tenders at Seaton Carew, Alcan and so on” . Parliament must discover some sort of discipline to ensure that the Board will not, in a fit of enthusiasm, incur deficits over which we will have no control.
We have just written off £415 million to the Coal Board. A further £133 million has been provided under the Coal Industry Measure. I support the expenditure of both sums because they are devoted towards reshaping the coal industry, towards helping it to become efficient and competitive and towards helping the miners to adjust to the painful and difficult change that is taking place in the industry. That is the right way to proceed. The wrong way to proceed is to have reckless tendering, with large losses being incurred for the tax payer to make good, remembering that those losses will not escape the notice of our international creditors.
Mr. Thomas Swain (Derbyshire, North-East)
I have been interested in the debate so far. Looking at the Order Paper, I thought that this would be a rather narrow discussion. Instead, we have had an excellent Second Reading speech, delivered from the heart, from my right hon. Friend the Member for [column 128]Llanelly (Mr. James Griffiths), an exercise in elementary questioning by the hon. Lady the Member for Finchley (Mrs. Thatcher), and from the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) we have just received a detailed speech on an annual report of the National Coal Board which is not yet in existence.
I come to the Estimate which is before us and my first remarks must be about the decided increase which is shown for oil storage. Does this increase arise because of my right hon. Friend's policy for the rundown of the coal industry, inevitably meaning further increases in the import of oil? If so, I contend that it is the economy of the madhouse. Why does not my right hon. Friend discuss with the oil industry—and, if necessary, if that industry is hard up, provide it with a Supplementary Estimate—the conducting of further scientific research into the breakdown of crude oil? I am told that the Americans are cracking down crude oil and are getting almost 100 per cent. of the refined product. However, the average yield of fuel oil from crude oil is only 15 per cent., compared with our 40 per cent.
I think that my hon. Friend will find that the subject to which he is now referring comes under a different heading than that on assistance to the coal industry.
I thought that I would follow the pattern of the debate so far. I have heard very little about the actual Estimate before us, so I thought that I would open my remarks by getting on the record something which we in the miners' group have been discussing for a considerable time.
Certain figures have been presented by the Minister—he quoted them in Committee and on Second Reading—which I would like broken down. An important one concerns the benefits to be paid to redundant miners. How is the total sum arrived at, what are the benefits—I want them broken down in detail—to be paid to each miner who becomes redundant, how will the nine-tenths be compiled and what is the original figure before the nine-tenths figure is broken down? The estimates in this matter are vague. Do they contain any element of the allowances to be paid to redundant miners over the [column 129]age of 55? Miners over that age who become redundant and who are compelled to seek further employment or go on the dole receive no further benefits under concessionary coal schemes.
I am pleased to say that in parts of the country we have county court schemes under which able young miners may forfeit three to four cwt. per load of concessionary coal to provide coal for old-age pensioners who retire at 65. However, I have been unable to find any comments of the Minister, either inside or outside the House, to the effect that concessionary coal is a benefit that will be continued to men who are made redundant if they are aged 55. Concessionary coal is an important issue to the miners and I hope that my right hon. Friend will give an indication of whether his Department has seriously considered this vital point and what answers have been arrived at.
Section 5 of the Coal Industry Act provides a certain amount of money for pit closures. If my memory serves me aright, 22 pits of considerable size, employing roughly 11,000 men, are to close by the end of February, and notice has been given for 69 pits to be closed by 31st December. In the meantime, anything can happen in the demand for coal or in the form of geological disturbances underground at any given moment in any given pit which can result in its going from the black to considerably in the red. The long-term, and even the short-term prospects of that pit would be seriously affected.
We know of 69 pits, but the number that could suffer in the circumstances I have outlined is unknown. In the whole history of the industry we now have the greatest number of pits ever given notice to close in one year. That being so, does the Minister consider the Supplementary Estimate is sufficient?
My right hon. Friend will no doubt remember that in Committee we asked for the date of April, 1971, to be taken out of the Bill because we feared—I think, rightly—that Clause 3 would not provide sufficient money to pay the very welcome benefits to individuals or Clause 5 help the Coal Board's closure programme. Because of the terrific closure programme envisaged in the next year, neither Section of the Act appears to [column 130]provide a great deal of money. I am afraid that before very long, perhaps even before the year is out, there will not be sufficient to provide the benefits necessary to make the men happy and to relieve the Board of the danger of falling into deficit. I believe that the Minister will have to come back for more in the not too distant future.
One very important function of the Board is to see that after a pit has been closed, after the last ton of coal has been mined from it, the safety regulations are obeyed to the letter. Those regulations must be obeyed until the very last salvage worker is taken from the pit, however long that may be after closure. That means a considerable expense to the Board, because all those on the surface, the deputies and everyone concerned with observance of the regulations must be employed full-time.
In addition, a considerable number of men must be employed on salvage work. Although the Board receives some benefit from salvage, it incurs a considerable loss on the salvage work that has to be carried out. Will compensation be paid to the Board for the very great amount of money required for salvage work and the maintenance of safety regulations at the 69 pits scheduled for closure in 1968?
The Minister, in his statement on 18th July last, on Second Reading, and in Committee said, “Give us the Bill. We want to make the payments by Christmas.” I do not know whether the Minister yet knows what payments will be made to the individual. If he does, I apologise to him for my doubts, and I look forward to his answer. Hon. Members on both sides co-operated on the understanding that benefits would start being paid by about Christmas, but many of these people were made redundant soon after 18th July. I hope that my right hon. Friend will expedite the system by which they are to be paid, and let us know the amounts and the categories. If that is done, I am convinced that the lot of those of us in the mining areas will be a good deal easier.
Mr. Hector Monro (Dumfries)
It is an interesting coincidence that this is the fourth occasion on which I have followed the hon. Member for Derbyshire, North-East (Mr. Swain) in our coal debates. On [column 131]each occasion I have agreed with his sentiments on the problems of the rundown of the industry, and particularly on the care and consideration we must give to the men who may lose their jobs.
In part, the money about which we are talking is required to offset the hardships involved in the running down of the pits before other jobs are available. It is economic commonsense to say that, balanced against the payment of unemployment benefit, supplementary benefit or redundancy pay—not to mention the effects on local authority housing or other developments where pits are being closed—there is a strong case for postponement so that, in the meantime, industry can be attracted to the area.
Like my hon. Friend the Member for Finchley (Mrs. Thatcher), I am concerned about the administration of the money we are voting, particularly in relation to pit closures. I, too, would like to know where the money is to go. There seem to be far too many irons in the fire in making the decisions, as I know because I have been intimately involved in this matter recently. The Ministry of Power, the Treasury, the Board of Trade, the Ministry of Labour, the Department of Economic Affairs—if it is in Scotland, the Scottish Office—the appropriate planning council—and a sub-committee of the planning council in Scotland—the divisional chairmen of the Coal Board, possibly the Chairman of the Board himself and, very properly the N.U.M., are all people involved, and we are taking an incredible time to get the answer from them.
If at all possible, a decision on the future of a pit should be arrived at by the time we come to the jeopardy meeting, and not have the problem considered afterwards. At this stage the National Coal Board has a very clear idea of their intentions. So have the N.U.M. and the Board of Trade. They know the possibilities of industry coming to a district, but there seems to be a very misty area in which no Minister is quite clear about what advice should be tendered to arrive at a final conclusion for a closure date.
While agreeing to this money for which the Minister is asking, I ask what steps are being taken before the final decision is arrived at and what is the time-scale in relation to the normal [column 132]procedure for closing a pit. I want this money to be paid out in appropriate cases, but my experience referring to the pit in which I am particularly interested, Fauldhead, does not encourage me to believe that the Ministers and the Departments are in a position to give the right advice at the right moment. We have discussed the closure of this pit for three years, and with mounting concern over the last 12 months. It was due to close on 3rd February but, as the miners have not been given a month's notice, that is not a possibility.
I have paid visits to Ministers, I have had phone calls and letters and there have been meetings of the planning council, of the N.C.B. and the N.U.M. in the last few weeks, but it is impossible to find what the position is. This uncertainty—Fauldhead is not alone in this respect—is intolerable for the miners whose livelihood is concerned. At the beginning of this month the Parliamentary Secretary to the Ministry of Power wrote to me saying that the pit was being closed for economic reasons. Yet in the last few months it has been running at a substantial profit. There seems to be a great degree of misguided thinking somewhere in the Ministry. I appreciate that there may not be development there, but it appears that the pit could run for some months. There is a strong case for postponing under Clause 5, which is covered by the money we are talking about tonight, because the men will be put out of work.
I think the hon. Member will find on reflection that we are not in fact discussing Clause 5 under these Estimates.
That may be a matter of opinion. I have taken advice which was otherwise.
I am sorry to interrupt the hon. Member again, but there are three issues here. The first deals with Clause 2 of the Bill, the second with Clause 6 and the third with Clause 3, but Clause 5 is not dealt with in these Estimates.
We hope that the Minister will answer the debate and will cover some of the points which have been made by hon. Members. Wherever the money comes from, there is a case for postponement of this pit closure. [column 133]
Our attitude in Scotland to the money we are talking about is affected to some extent by the most interesting developments over the weekend in relation to the Alcan project and Invergordon. There is no doubt that this has received a most warm welcome in Scotland. The whole country is behind the efforts being made by Alcan to bring development in an area which desperately needs it. To everyone's surprise it was decided that it should be a coal-fired electricity generating station to provide the electricity for smelting. It requires 500,000 tons of coal in the early days and 1 million tons a year later. This must have an effect on the money we are talking about. If the coal can be provided by Scottish pits the closures should be postponed. It might be economic to reopen the Michael Pit in Fife. The Government have already earmarked Longannet, so there must be coal for this station.
We noted over the weekend at a planning inquiry in Renfrewshire talk of three more electricity generating stations required in Scotland. This suggests that there is a chance of more coal being required. Therefore there should be postponement of the further closures which we in Scotland are worried about at the moment. I support my hon. Friends on the question of differentials. The differential is a big handicap in Scotland. We hope that it may be reduced following the developments of the weekend.
I ask the Minister to be certain that under Clause 6 it is made clear to the House and the public that when coal is subsidised to electricity and gas boards it will be audited and shown that the public are paying the right price. There is concern that some inaccuracies and discrepancies could occur in the global figure and that in the end the public would be paying more through taxation than it should.
I hope that the Minister, at a time when pit closures are giving such grave concern to many areas, will try tonight to set out some of the answers for which we are calling and indicate that not only is 3rd February an impossible date but also that 31st March is not a sacrosanct date, and that the 16 pits that are presently under sentence of death may have a postponement to the summer. I believe that this would be justified in view of the [column 134]present high rate of unemployment in the country, and so I ask the Minister to say something about it.
Mr. Alex Eadie (Midlothian)
It is with great pleasure that I follow the hon. Member for Dumfries (Mr. Monro). I wish that the sentiments that he uttered had been echoed a little more among hon. Members opposite. The hon. Gentleman spoke about the problem with knowledge and some compassion and understanding.
It is very important, as the hon. Lady the Member for Finchley (Mrs. Thatcher) said, that we should be very careful how we vote taxpayers' money and should be very searching in our examination. All of us in the House have a certain responsibility when looking at Estimates, but I do not think that we must all the time have the philosophy of the accountant. We should, indeed, take note of some of the expressions of opinion made during the debate. But we are not just discussing the question of approving a certain amount of money. We are deciding to some extent the lives of men, women and children in the localities where pit closures occur.
This is why I could not understand at one stage during the debate—it has now been cleared up—that there appeared to be a lack of enthusiasm for the announcement at the weekend that there would be an aluminium smelter plant in Invergordon fired by coal. We ought not to be too sensitive about money for subsidy. It should be remembered that Governments of both complexions sold coal below the cost of production as deliberate policy. We may have a different philosophy now. We want to see profitability to some extent dictate our approach now to the fuel and energy market, but we ought not to be mealy-mouthed about it and suggest that the propositions which may be involved in relation to the losses of the National Coal Board, if there be any losses, mean that we are putting into being an entirely new policy. That would be hypocritical on both sides of the House.
Therefore, the Invergordon project, however much it may be related to the Estimate, can only be welcome. Deputation after deputation has gone to the Ministry in relation to the closure of [column 135]the Michael Colliery. I plead a vested interest. Some of my family are signing on for the dole as a consequence of that closure. The fact that the aluminium smelter plant is going to Invergordon is welcome because we have a railway and a sea port which can be used to run the coal to Invergordon.
I hope that my right hon. Friend will make some comment about this matter if it is relevant to our present discussion. I am perturbed when I look at the Estimates. Reports are coming to me that in certain parts of the United Kingdom men over 55 have been refused employment by the Coal Board as a consequence of pit closures. When this House debated the issue, it was told that very careful consideration would be given to providing sustenance to men over 55 who, as a result of pit closures, had no other alternative employment prospects. It was never envisaged that there should be a deliberate act of policy whereby men over 55 should not be employed.
My right hon. Friend the Member for Llanelly (Mr. James Griffiths) referred to this. I said that it was a very depressing policy to write off men over 55. We accepted this as part of a difficult situation, when there was no industry in the area, and hardship would be caused. This was in some way to help and assist the situation. I hope that my right hon. Friend will have something to say on this. Is it a deliberate act of policy to refuse fit and able men over the age of 55 work in a particular area? He should tell the House this. If this is happening, then the House was misled to some extent when we debated this aspect last.
Questions have been asked about the effect of devaluation on the economic prospects of the mining industry. The hon. Member for Finchley said that she had a shrewd suspicion that things were perhaps going better for the industry now than when we previously debated it. I think that her argument was that if this was so we ought to examine the use to which the money we are voting tonight would be put. My right hon. Friend has a responsibility to tell the House if this is so. I know it is irresponsible to some extent, but I am not so much concerned about the money as about my right hon. [column 136]Friend making a statement about the effect on the prospects of the coalmining industry. Morale in the industry at present is very low and if the industry's fortunes have improved to some extent this will help to improve morale.
As I said, we are concerned about the employment prospects of men, women and children. Would he care to comment about this? Have the fortunes of the coalmining industry improved to such an extent as I have read? The New Scientist said in November that experiments were taking place at coal-fired power stations to do with the extraction of sulphur. If hon. Members have been watching they will know that the costs of sulphur coming into the country have increased astronomically. It is important that if the fortunes of the mining industry have improved as a result of devaluation and we are able to get more from coal and its by-products, we should know. If it is true, the whole question of profitability in using coal must be looked at afresh.
I shall not say more now. I intended to make a rather shorter speech, but I wanted to put those points to my right hon. Friend. I hope that he will answer some of the questions which I put and allay the anxieties which I have expressed.
Mr. David Lane (Cambridge)
I apologise for not being present at the start of the debate, and I wish now to make only a short intervention, putting one or two questions in support of what my hon. Friends have said. These questions relate to the special assistance under Section 6 of the 1967 Act to the electricity board and also, perhaps, to the gas boards. First, I should make clear that I entirely support the principle enshrined in Section 6 that assistance of this kind should be given under a general subsidy from the taxpayer and should not be a burden on the users of electricity or gas, provided always that the assistance is subject to the closest scrutiny by the House.
My first question is about the volume of extra coal-burn which the Minister envisages for next year. I was interested to read his Written Answer the other day, when, in reply to his hon. Friend the [column 137]Member for The Hartlepools (Mr. Leadbitter), he said:
“I have asked the C.E.G.B. to use as much extra coal as practicable in the current financial year, and I am discussing with them how much extra they will use next year.” —[Official Report, 17th January, 1968; Vol. 756, c. 624.]
I hope that the Minister will tell us tonight rather more about how he envisages the application of practicability in this context. Although we accept the principle regarding this type of subsidy, as I have said, it is important to minimise the extra cost involved for the taxpayer. Further, within the total, can the Minister say any more than his officials were able to tell the Estimates Sub-Committee about the likelihood of extra coal-burn by the gas industry as well as the electricity industry?
My other questions come under the heading of the average cost of this assistance. The figure for a full year was estimated by his officials last months as about £10 million. Is the right hon. Gentleman able to give a more precise figure than that? Second, have the negotiations with the Central Electricity Generating Board about which we were told last month yet been finalised? To what extent does the Minister see any possible rise in the long-term cost of oil affecting the annual total of estimates in respect of assistance under this Section? If the negotiations have not yet been concluded, what relevance does the right hon. Gentleman see for them in the announcement at the weekend about a possible long-term contract for the supply of coal to the Invergordon smelter, if it goes ahead?
My last point is a rather wider one relating to the total cost of energy to industry. Since devaluation, we have heard about the extra burdens which will be laid upon industry, particularly the exporting industries, as a result of the removal of the export rebate and, alas, in a few months, the extra costs which will result from the passage of the Transport Bill. Depending on the Minister's estimates of the long-term trend in oil costs, there may be an opportunity here to offer some hope of compensation to exporting industries in an eventual lowering of their average cost of energy through a review of the present fuel oil tax. I know what he has said about it in the White Paper, but can he say [column 138]anything more encouraging to industry now about lowering the fuel oil tax as soon as possible, if not removing it?
Mr. Eric Ogden (Liverpool, West Derby)
I will endeavour to follow the example of the hon. Member for Cambridge (Mr. Lane) in trying to keep to the points under discussion. This is difficult, however, after listening to the speech on the hon. Lady the Member for Finchley (Mrs. Thatcher). There is a theory that all hon. Members are equal. Each time that the hon. Lady comes to the Dispatch Box, she demolishes what is left of the theory. I wish that for equality of debate the hon. Lady would move back to social security, foreign affairs or some such subject. It is an unequal contest.
The question of coal consumption comes within Parts I and II of the Supplementary Estimate. Time and time again, my right hon. Friend the Minister, either in the House or at private meetings, has asked us to tell him where he could burn more coal. During the Recess, I visited my old Bradford Colliery, in Manchester, and found a place close by where my right hon. Friend could burn a little extra coal.
I refer to Stewart Street power station, where 18 months ago the consumption of coal was approximately 1,500 tons a week. The power station is now on part time and is used only at peak periods. The Central Electricity Generating Board may have good reason for this, but the result has been that the coal consumed from Bradford Colliery, Manchester—brought up from below the ground and over the conveyors to Stewart Street power station—has been halved during the past six or 12 months. This is one place where, I am certain, my right hon. Friend will make inquiries to see whether we could burn a little extra coal.
I remember the meeting in question and I am grateful for any additional holes which my hon. Friend has found for another 1,000 tons or so. He will recall that I was asking for another 5 million tons.
I once said,
“Mony a mickle maks a muckle.”
Everywhere I went at home, I got that phrase. Every little helps. Whether it [column 139]is 1,000 tons or 700 tons, it is not to be sneezed at.
I make a point in support of my right hon. Friend the Member for Llanelly (Mr. James Griffiths) when he drew attention to the doubts which some of us had about the wisdom of carrying on with an expanded opencast production at this time. The comment is made in the Fuel White Paper at paragraph 65 that
“The case for continued opencast working, taken by itself, is quite strong, but it has to be related to the circumstances of the industry as a whole. At a time of coal surplus, account has to be taken of the effects on total production and on the level of employment in deep mines.”
While we are on opencast mining, is my hon. Friend aware that of a total opencast production of 7 million tons, over half is already on the floor?
I was not directly aware of that, but I am now and I am grateful for my hon. Friend's comment.
I accept that often the price of opencast coal production is less than the average price, but we should add to it the capital cost which may be incurred by the closure of a pit near where opencast coal is being worked. In the past week we have had an example from Warwickshire, where there is a distinct threat of closure to two collieries on economic grounds—not geological grounds, reasons of danger or because of loss of manpower—and where, within a mile or two proposals are being actively canvassed that 12 million tons of coal should be taken by opencast working over the next three, four or five years. When my right hon. Friend the Minister considers whether to grant permission for the extraction of 12 million tons from that area at this time, part of the sum involved in such a calculation which should be added to the bill is the cost of the inevitable closure of collieries in the area, which would follow.
A token provision is made in the Estimate for redundancy. It is not often considered that a great deal of hidden redundancy is involved in the operations of the National Coal Board. It is not possible, as it is in many private industries, for a pit simply to be closed down. When a pit closes, it is regarded as being one of a large organisation and people [column 140]are transferred from one part of that organisation to another. If a cotton mill or factory ceases to operate, however, the redundancy is clean-cut.
Often there is hidden redundancy because the Coal Board, rightly, tries to offer employment elsewhere. Travelling becomes too difficult and the distances are too great, with the result that a job which is offered at a new pit is in many ways not satisfactory and a man therefore has to give up the job; he cannot work in the new pit. He is not then redundant. He goes voluntarily, and there is hidden redundancy.
I thank my right hon. Friend the Minister for the interest he took concerning a point which I raised about redundancy on Second Reading of the Coal Industry Bill, when I asked him to use his good offices to ensure that no one class or grade of staff of the Coal Board should be treated less generously than any other class or grade. I was referring particularly to non-industrial clerical workers, and officials of the Coal Board. I understand that negotiations have been taking place, and that the point of view which was expressed in this House has been taken note of by the Coal Board, and I am grateful for the help given in this by my right hon. Friend.
Mr. Peter Emery (Honiton)
The new procedure, which the Opposition have taken, for examining the winter Supplementary Estimates is obviously proving a considerable success in that it has allowed us to have a debate this afternoon and evening on some specific extra expenditure. I think perhaps we have been able to have a debate which has gone somewhat wide of the items in the Estimate, but some of those wider matters have been quickly related back to these items as soon as possible. Therefore, I think that any criticism which has been made of my hon. Friend the Member for Finchley (Mrs. Thatcher) is really quite unfair, because there can be no doubt that she stayed in order much more nearly than any other person who has spoken. Moreover, I would suggest that in her probing of some of the Estimates and by the questions she has asked she has made a very real and definite contribution to trying to get some information on how this money is being spent. After all, that is not a matter of dispute between the [column 141]two sides of the House; we all want to know how the money is being spent, and we want to make sure it is being spent wisely.
I believe a different situation has arisen since the passage of the borrowing powers under the Coal Industry Bill, which is now an Act, because we have now had, in only the last seven days, a major review of Government spending, and, therefore, on this Estimate certain questions arise in a somewhat different light from that in which they might have arisen a matter of only months ago, and in considering them I want to ask one or two questions about whether there were not some savings which might have been made which could have been offset against the total Supplementary Estimate.
My first major, direct question really sums up many of the points which have been made on this side of the House. Will the Minister say whether there has been any change of policy at all on closing inefficient pits since the review of Government expenditure? After all, it could be argued—I am not saying that I shall do so now—that the economic situation should demand that pit closures should be increased and that we ought not to afford some of this money. I want to ensure that the Minister will state quite plainly whether there has been any alteration. I will take up a point of the hon. Member for Derbyshire, North-East (Mr. Swain) and I should like to know whether the figure which he gave to the House, of 69 pit closures scheduled for the next year, is the number of those which the Minister will be considering approving in conjunction with the decision of the National Coal Board. May I then ask him, if that is not the figure, whether he can announce the figure, because it is all tied up with this Vote? Will he also give me an assurance that, if this matter has been decided as a matter of management between the Coal Board and himself, he will try to stop the Prime Minister from interfering in certain of these decisions, as he has done in the past?
Let me return for a moment to something which has obviously created great interest and concern, and that is the announcement about the possibility of an aluminium smelter, coal-fired, being placed at Invergordon. I can understand why my hon. Friend the Member [column 142]for Dumfries (Mr. Monro) and others have welcomed this, but it has considerable relevance because of the possibility of stopping pit closures.
There are three questions which I want to put to the Minister. So much of this at the moment is supposition, although there have been a number of thorough reports in the Scottish Press recently. First, I want to ask him about the suggestion made by Sir Sidney Ford and the hon. Member for Midlothian (Mr. Eadie) that it would immediately allow for consideration of the reopening of the Michael Colliery. It has aroused considerable interest in Scotland and has been the source of Press comment. At one time, it was implied that somewhere in the Coal Board a study of it was to be initiated immediately. Perhaps the Minister could comment.
The second matter which is causing great concern is the thermal price of coal. It has been said by one of the Sunday newspapers in a fairly thorough article to be approximately 3¼d. per therm, and it is suggested that that is about £1 per ton below the average price quoted by the National Coal Board. If that is the case, I can understand why so many hon. Members representing Scottish constituencies are particularly incensed and wondering about the future of the Scottish coalfields, when it is suggested that the coal is coming not from Scotland but from the North-East. This is an important factor in terms of pit closures.
Another point about it which is of interest to a businessman is that that price per therm appears to have been a contant one. If that is true about a 25-year contract, it is an amazing financial bargain for anyone to strike. In defending the rights of the coal industry, whatever the bargain is, I hope that there is some sort of price review carried on in such a contract.
I want to draw to the Minister's notice a comment by Sir Stanley Brown, the Chairman of the Central Electricity Generating Board, which appeared in yesterday's Sunday Times:
“I find it difficult to understand how the situation can be economic if in fact the coal offered is the same price as that offered to us, still more so as the smelter is to be in the North of Scotland.”
It is obvious from that statement that the Chairman of the Generating Board is concerned about the possibility that the [column 143]National Coal Board is making a direct contract at a price which the Central Electricity Generating Board would itself like to pay. This is the point made so ably by my hon. Friend the Member for Finchley in stressing that a strange situation exists when we are voting public money to pay for an extra coal-burn by the electricity industry, yet the industry would be happy not to receive that subsidy if it could contract to buy coal at the price rumoured in the deal between the National Coal Board and the Alcan Company. Perhaps the Minister will comment on whether such contracts will be openly available to other industries than smelting. I can think of one or two instances where the availability of such cheap power might well give the right hon. Gentleman some of the coal-burn that he wants.
I turn now to one aspect in the speech of the right hon. Member for Llanelly (Mr. James Griffiths). We are always pleased to listen to him. However, there was one point where I had some slight disagreement with him. He suggested that stopping price rises in the past or having a policy of keeping prices artificially high at the moment was really the same principle, because Governments had interfered with the pricing mechanism. Whilst that might be true in one sense if carried to a conclusion, there are two major differences. The first was attempting to hold to a cheap fuel policy and ensuring a high level of consumption, whilst keeping prices artificially high does not hold to a cheap fuel policy and ensuring a high level of consumption, whilst keeping prices artificially high does not hold to a cheap fuel policy by definition. Secondly, in the long run, it has the effect of ensuring that the high level of consumption is not maintained.
Mr. James Griffiths
If I understood correctly the speech of the hon. Member for Finchley (Mrs. Thatcher), she was querying, as is the hon. Gentleman, the fact that money is provided to enable the Government to help the electricity industry and others who are now buying an extra amount of coal up to 1970, or whatever it is, at more than they would pay for other fuels and, therefore, that the Coal Board is being subsidised. What I said was that in principle the position was the reverse in the 1950s, because other coal consuming industries were getting coal at less than the market price [column 144]and coal was subsidising, for example, steel.
I thank the right hon. Gentleman for again stating his position. We are not in disagreement about it. This seems to reinforce the point I made that keeping an artificially high price for coal, whatever it may do in the short run, does not ensure a cheap fuel policy and a high level of demand or consumption in the long run.
I will try to bring together all the points on subhead II by asking just three direct questions.
How much of this extra Estimate is being applied to the gas industry and how much to the electricity industry? Surely we ought to be allowed to have that figure. How much of the proposed 6 million tons per year will be consumed in the full year? The Estimate is for 75 per cent. of the year. How much of the 6 million tons will be consumed in the full year. Is the Minister able to say in this Vote how many pits have been or are being kept open because of this expenditure?
I turn now to one other point which has not been raised. When considering the closing of pits, one must be concerned with the total overall expenditure. I am concerned, particularly in the economic position which exists today, at the immense level of stockpiling which we have. Can the Minister say whether there has been or is to be any re-examination of this high level of stock piling? It has gone down in the last few weeks to below 27 million tons. I see the hon. Member for Derbyshire, North-East referring to the statistics. I have done my homework. The last figure I have shows that it is down to 26.9 million tons. If one works that out on a capital cost basis at ordinary Bank Rate, one sees that servicing the capital tied up there accounts for £2.152 million. This is larger than one of these Supplementary Estimates will be in a full year. I suggest that this is a factor which the Minister will have to reconsider. This sort of money can be saved if there is a change in stockpiling policy. If the Minister is able to say anything about this, I think that it will be of assistance to the House.
I conclude by agreeing with what the hon. Member for Midlothian said, that [column 145]if during this debate we can do something to raise the morale of the men in the coal industry it will be a worthwhile and proper thing to do. There is one way in which I think this can be done. I hope that the Minister will comment on the estimate put forward by his hon. Friend the Parliamentary Secretary during the Committee stage of the Coal Industry Bill, when he talked of a possible deficit for the N.C.B. last year of £10 million. We have not had the interim figures. There has been some play about whether this is important, and although the figures have not been published, I am sure that the Minister must be au fait with them, and he may be able to announce some goods news for the coal industry. He may be able to tell us that the deficit suggested by his hon. Friend will not be anything like that figure. If he were able to give that sort of information to the coal industry I think it would help the morale of coal miners throughout the country. I am sure that they will be glad to hear that the industry is not running into a large-scale deficit.
The Minister of Power (Mr. Richard Marsh)
Far be it for me to speak at any great length and hold up the next and final instalment in this evening's saga of Supplementary Estimates, but a number of important points have been raised, and, as the hon. Lady the Member for Finchley (Mrs. Thatcher) said, large sums of money are involved.
The House should not lose sight of the fact that these large sums of money were approved by hon. Members on both sides of the House.
The hon. Lady cannot get away with saying “Oh” about that. There is not much point in approving things in principle if one does not have a fairly clear idea of the extent of the legislation being agreed to. I am not criticising the Opposition for agreeing to the legislation. It is one of the few things which they have done with which I wholeheartedly agree. The 1967 Coal Act was agreed to in this House only a few weeks ago, and under this procedure we have Supplementary Estimates which flow wholly, solely, and directly from [column 146]the three sections of that Measure which call for additional expenditure.
I hope that hon. Members will forgive me if I deal a little disjointedly with the debate, but a number of points have been raised from both sides of the House at various times.
The hon. Member for Honiton (Mr. Emery) asked some specific questions, which I shall answer, and raised a number of points which had been raised by other speakers. He asked whether there was any change of policy in the closing of uneconomic pits as a result of our present economic difficulties. Though this is a highly emotive subject, he said quite fairly that an argument could be advanced that, faced with economic difficulties, it would be logical and justifiable to speed up the rate of closures because this would make available resources which otherwise would be denied to the nation. There is no change of policy here. I believe that the present closure programme and the policy outlined in the White Paper are designed to produce a rate of rundown which involves enormous social and human problems, but which I genuinely believe is the maximum that can be imposed in these circumstances. That is why these figures occur in the winter Supplementary Estimates—to enable us to pay for the cost not of running down the industry, as is occasionally said, but of preventing its running down as rapidly as it otherwise would. Without these large sums of money the industry would run down much faster. I do not believe that any civilised society could tolerate that, in terms of the human difficulties it would cause, or that it would be in the national interest, since there is a long future for the coal industry through the existence of many coal-fired power stations.
The hon. Member also raised the question of the effect of the extra coal burned, as juxtaposed with Alcan, and we have had all sorts of other expressions of interest—I will not say doubts—about the Coal Board's accounting as shown in some of the figures quoted for the sale of coal. It must be made absolutely clear that in this Section of the Act the revenue of the C.E.G.B. is irrelevant to this protection. What we are trying to do is to get the C.E.G.B. to burn coal at the national expense. This is why [column 147]it will not have any effect on electricity consumers.
It is only 6 million tons a year, but it is designed to be 6 million tons above the trend in 1970. We are spending this to get that additional amount burned, and the extent to which we can obtain additional orders—I shall deal with the question of devaluation and increased export potential as a result—reduces the load upon the Exchequer.
The hon. Lady and the hon. Member for Honiton also raised the question of the interim statement. I have statutory responsibility for the form in which the Board's accounts are presented and I am still in the process of discussing the interim statement. I hope that it will be available in the very near future.
Will the right hon. Gentleman tell us how he proposes to assess payments under subhead J(2) for burning extra coal? Will the payments be made to the C.E.G.B. or the Coal Board? It is the mechanics of the thing about which the House is in doubt.
Perhaps the hon. Member will forgive me on that point. The hon. Lady began her remarks by referring to the degree to which the general policy is affected by devaluation. This is fundamental, because it is a big thing. The 1967 Coal Act was passed in the full light of devaluation. I have always said that I did not believe that devaluation would have a fundamental effect upon the figures in the White Paper; indeed, had one believed that the figures would be radically changed after devaluation it would have been nonsense to go through with the 1967 Act.
If the White Paper on Fuel Policy represents the policy of the Government, will my right hon. Friend tell us when it was ratified by the House? He seems to be making great play about the White Paper. When did the House ratify it?
I am trying not to be controversial, if only because it spoils my digestion and prolongs the debate; I want to come on to that point. I am not making great play of the White Paper, but these figures come from three Sections of the 1967 Act and they are justified only [column 148]by those Sections. That Act cannot be justified except in so far as it is to provide for the slowing down of the rundown and the social provision which arises out of the policies in the White Paper. I assure my hon. Friend that I do not want to bring the White Paper into every debate; I should like to get through one in which it did not arise. But the hon. Lady raised it and I am under some obligation to reply to her and others.
She asked how it was affected by these factors and how it came about that these nationalised industries appeared to have come unscathed through the icy blasts which had blown through the Treasury in the last few weeks—
I am well aware that the nationalised industries had some of their capital expenditure reduced, but I said, if the right hon Gentleman will forgive the expression, that mining was becoming a sacred cow.
It is a sacred cow which has provided a pretty good yield for this nation over a long period. Without becoming too emotional, I must say that the figures involved are basically concerned with miners. Under straight economics, we would not have the over-55s scheme and would not be spending money on increased coal-burn or the social benefits under Section 2. All this money is concerned basically with miners. Before the hon. Lady led me astray, I was about to say that the National Coal Board has contributed its cuts, as have all the others, of £4 million.
I have been asked about the effect of devaluation upon the White Paper. We have looked at this carefully. Clearly, it changes the relative prices of some fuels but it never seemed to me likely to make big changes, which is why I thought it unwise to give the impression that it would. The figures are as follows. The scheduled price of fuel oil—the big problem is the relationship between fuel oil and coal—has increased by about 0.75d. per gallon. This has to be compared, of course, with the Schedule to the White Paper in which we took as an example the doubling of the fuel oil tax of 2d. The effect of that, I think—speaking from memory—was to increase non-power station coal-burn by about 4 million tons, at a cost to industry of £90 million. [column 149]Clearly, therefore, if this 2d. a gallon extra, which was postulated as a statistical exercise, does not affect it very much, then the 0.75d. per gallon is within those margins of error.
But then there is the position in the export market. Undoubtedly, the Coal Board is in a better position here than previously. I said this in our previous debate. The nationalised industries generally get more brickbats than bouquets, and I think that the Board is to be congratulated in this instance on the speed with which it moved in to maximise its export opportunities. This is not easy, because the Continental industries have long-term contracts in many cases, and, of course, the Continent has much larger coal stocks than we have.
However, the N.C.B. estimate is that it will be able, as a result of devaluation, to increase its exports by about 2 or 3 million tons per annum. There are therefore changes here. The potential change by 1975 is estimated, so far as this is possible, to be about five million tons of coal-burn—deep-mined coal—for inland demand.
As I have explained many times, the figures in the White Paper are not production targets. The kind of figures which we are discussing are well within the margin of error of forecasts as far ahead as that. The effect of devaluation, therefore, is to improve the outlook for the coal industry, but the extent to which it does so is within the limits of the additional coalburn about which we are talking, and to that extent it is rather more, perhaps, of a net gain to the Exchequer.
This is an important point. My right hon. Friend appears to say that the 3 million tons of extra coal which the N.C.B. is exporting will be taken off the 6 million tons of extra coalburn. If that is so, it is unfortunate, because by the pricing of the coal system, we have the point in the industry about the 9s. a ton taken off the price of coal fetching it down to East Midlands prices. This 3 million tons is East Midlands and South Yorkshire coal. If that is taken off, it will have the unfortunate effect of speeding up the closures in other areas.
I appreciate that it is an important point, but it is not one into which I can go into great detail on these winter Estimates. I am seeking to [column 150]justify these figures which are being challenged. The White Paper is Government policy, and if it is argued that the White Paper is not valid, then these figures do not stand up. As for the future of the industry, a production of 155 million tons of coal represents a very big coal mining industry indeed. The extent to which the industry is able to be more viable makes it so much less open to pressures from outside. But from the point of view of this exercise, the figures confirm the basic policy of the White Paper. The coal mining industry is made to look a little more attractive than it was before.
The hon. Lady the Member for Finchley asked how we had arrived at the figure of £1,499,990 in item (2). I was tempted to say that it was because I had seen the original estimate and had pointed out that it was arithmetically wrong. In fact, it is merely that we have a token provision in relation to benefits for miners, and we have taken £10 for that, as is the normal practice, and assumed that no one would notice it. Indeed, no one but the hon. Lady would have noticed it.
The main point made by the hon. Lady concerned the grants under the Coal Industry Act as amended by the 1967 Act. This is a simple arithmetical projection of the change from the previous basis of provision by which the Exchequer contribution under Section 3 of the 1965 Act would have been £3 million of the then gross expenditure estimate of £10 million—the formula being 50 per cent. of the expenditure over the first £3.8 million. In the 1967 Act we changed that to a straight two-thirds of the expenditure incurred. That is estimated at £9 million, two-thirds of which would be the Exchequer contribution of £6 million. Allowing for the delay in the submission of the final audited claims within the year, the provision has been made for an interim grant of £5.25 million.
The hon. Lady wondered to what extent one could give precise figures about how this money could be spent in the course of colliery closures and so on. It is impossible to be so precise, because many unknown factors enter into this. These expenditures are dependent on, for example, the number of men who transfer to other collieries, the number of [column 151]men over 60 and the number of men who will resign voluntarily. They are also dependent on the number of exhaustions in considering the number of pit closures. In other words, this must be based on a projection of the previous Estimates, with the changed formula which has been applied.
My right hon. Friend the Member for Llanelly (Mr. James Griffiths) pointed out that the rundown had to be controlled because of the size of this enormous problem. I entirely agree with him. However, he will accept that this has been the basic problem which we have discussed time and again in the last six months. It is desperately important that this industry should reach a plateau of stability, with men being able to work in the knowledge that they have a future. Until such time as we can get the industry in a viable condition, we shall stagger from Estimate to Estimate, with each year the men finding that the figures have been changed again. That is why it is justifiable for us to ask the House to deal with the rate of contraction in this way.
If we were to keep in being many of the pits which are uneconomic, some of them grossly uneconomic, the effect would be to make the coal industry less economic and force it to face a crisis in the '70s, at the very period when its productivity should be at its peak. I have no doubt whatever that in the '70s this industry will have a level of productivity which will enable it to compete and remain viable. However, to reach that position it must shed some of its uneconomic sections—sections which it has been forced to carry for so long. For this reason we are trying to make this sort of contraction reasonable, if not completely acceptable. After all, measures which may be necessary may not always be completely acceptable. Nevertheless, we will have a better chance of meeting these problems if we take these measures.
There were 16 postponed colliery closures last year and 14 more closures have been notified to the unions for this quarter. This is subject to deferment under the procedures which have now been embarked on, in addition to closures through exhaustion, although we cannot [column 152]forecast this with precision. These things can happen quickly.
The hon. Member for Dumfries (Mr. Monro) asked whether there were not a great many people involved in the question of colliery closures. The answer is that there are and that it is right that that should be the case. It is vital, when considering this matter, to get some sort of co-ordination in the provision of the necessary social services, such as alternative industries and Board of Trade measures. There must be co-ordination between the overall planning of economic activities and the N.C.B's programme.
We have devised a system whereby the Coal Board presents its closure programme to the miners and unions—that is important because they are greatly involved; they have representations and provisions to make—and, at the same time, presents its views to the regional economic councils. The idea is not that these councils will act as pressure groups to stop all colliery closures. In a particular valley it may be perfectly logical for a council to say, “We accept both of these two closures, but we think it wrong that the first closure should take place before the second. The second should be closed before the first.” It might be best to proceed in that way. Often a closure can be delayed while an alternative closure takes place, perhaps enabling another industry to come into the area. Matters of this sort can make a big difference to the area concerned.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) started with a comparison between miners and brewers which, on reflection, he will probably regret. He will read it in the morning and find it hung round his neck for many years. There are quite significant differences between them, not least the wage packets.
The hon. Member also referred to Alcan. I read the newspapers—there might be a lot less trouble in Parliament, perhaps, if people stopped doing that. The Board of Trade wrote to the companies in December saying that the Government would be glad to consider any proposals for a smelter linked to coal—a perfectly legitimate thing to do. Alcan has made it clear that it is very interested in a coal-based smelter. No details are available, and no contract has [column 153]been signed. It is a question of straight, commercial negotiations between the two parties, and it would be quite wrong for me to disclose details of commercial negotiations.
Nevertheless, the price is very competitive—it reflects the Board's judgment of future production costs, and the need for additional outlets in this part of the country—but I must make it quite clear that the Board is expected to pay its way in the '70s, when the smelter will be available. In these prices, whatever they may be, one has to take into account the very high level of stocks in Scotland and, to a less extent, in the North of England. In December, N.C.B. undistributed stocks in Scotland amounted to 2.7 million tons as compared with 0.9 million tons, and in the North of England, 2.5 million tons compared with 0.7 million tons at the same time last year. In those circumstances, it is obviously sensible and right for the Board to get what business it can, provided it stands up to close and constant examination.
Some hon. Members opposite referred to the Michael Colliery. The choice of supplying collieries for the smelter, as for any other consumers, is a matter for the Board, but I do not think that the Invergordon smelter, whatever other arguments there may be, has any direct effect on the future of the Michael Colliery, given the size of the stocks available generally. I do not say that there may not be other factors.
A statutory duty of the N.C.B. is the
“… making supplies of coal available … at such prices, as may seem to them” —
I did not write the Statute:
“best calculated to further the public interest in all respects, including the avoidance of any undue or unreasonable preference or advantage.”
As the C.E.G.B. takes some 60 million tons of coal a year, over one-third of the output, it seems that the price of coal for any individual industrial contract clearly can have virtually no effect on the prices charged to other consumers for 150 million tons of coal, or even [column 154]on the average price for electricity coals. In that respect, this is a perfectly legitimate matter for the Board, and it is to be commended for having tried to take an initiative.
My hon. Friend the Member for Derbyshire, North-East (Mr. Swain) moved us a little further into the winter Estimates on the question of oil storage. He asked whether the amount involved was due to a rundown of the coal industry. I can tell him that there is no connection between the two. The increase in the provision for oil storage is explained by the fact that essential renewals of pipelines were greater than were expected, and by the increased use of the facilities. The increase in expenditure on oil storage is largely balanced by the increased receipts from the increased use of those facilities.
The hon. Member for Honiton asked what could be done about stock-piling. In my view, there is nothing we can do about it at the moment if we start from the basic proposition that we cannot run down the industry faster than is at present envisaged. This means that we have to carry coal stocks at the moment. I hope that with increased export opportunities and with increased commercial possibilities we shall get rid of some of these. There is some deterioration, but it will last for a long time.
I have been under a great deal of attack for running down the coal mining industry too fast. I do not think hon. Members always realise the size of the argument which hon. Members opposite have raised in terms of stocks and these additional prices. These are very big sums. We are holding very big stocks of coal and they are costing the nation a great deal of money. It is a price which we are entitled to expect the nation to pay for people who have done a great deal in the service of the nation and who now find themselves in difficulties through no fault of their own.
Mr. Charles Morris (Vice-Chamberlain of Her Majesty's Household)
I beg to ask leave to withdraw the Motion.
Motion, by leave, withdrawn.