Orders of the Day — Coal Industry Bill

Part of the debate – in the House of Commons at 12:00 am on 10th May 1956.

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Photo of Sir Edward Boyle Sir Edward Boyle , Birmingham Handsworth 12:00 am, 10th May 1956

Saving of all kinds. As my hon. Friends will agree, my right hon. Friend has done all he can to encourage voluntary saving. Our whole object is to ensure that we have sufficient savings to balance the total amount of investment in the community in any one year.

My hon. Friend the Member for Ealing, South raised one technical point to which I should now like to refer. He expressed some suspicion about the fact that the annual limit on advances to the Board is now not only set at a higher figure—which in itself, of course, does no more than reflect the increase in the total borrowing powers—but is also to be expressed on a different formula. I can give the House an absolutely unreserved assurance that this change of formula, which is put forward because it has certain technical advantages, is not meant to, and in my honest opinion does not, render the limit in any way less effective or diminish the Parliamentary control which it implies.

To indicate briefly the technical significance of the new formula, it will enable the Coal Board to use funds in hand to make repayments to the Exchequer, instead of lending these sums to the Treasury, as is the present practice, in the form of Ways and Means advances. I hope that, in view of this assurance, I need not tonight embark on any more detailed discussion of what is admittedly a technical point.

I come now to the principal considerations which arise from the Bill and which will be in the minds of many people, not only in this House but outside also. First, what is the issue before the House tonight? It is whether we should empower the Government to advance to the National Coal Board, up to a maximum of £350 million, further capital towards investment in the mines and other capital expenditure of the Board, whose total fixed investment in mines and in ancillary activities, including sums to be provided from the Coal Board's own resources, is forecast to amount to some £600 million over the next five years. That is the issue before us tonight.

The Government are satisfied—it will be the object of my speech to re-state the case for this view—that the Coal Board must be put in a position to aim at making this forecast effective, and that my right hon. Friend the Minister of Fuel and Power should himself be put in a position to make advances up to this maximum figure, if that proves necessary, for the achievement of this planned investment.

The first question arising out of that general issue is whether the forecast of expenditure is realistic. In helping the House to make up its mind, I shall quote one or two figures—they will be very few indeed. In the calendar year 1955, the Coal Board spent £93 million on capital account compared with £85 million in 1954. For 1956, the approved figure for fixed investment by the Board is £107 million, after the deferment of the capital expenditure of £5 million which my right hon. Friend the Chancellor of the Exchequer announced as part of his February measures.

Hon. Members will see from those figures that there is already an upward trend in the Coal Board's investment, and in the light of those figures I do not believe that an annual rate of investment of £120 million a year is either an impossible or unreasonable objective to aim at.

Having asked whether this forecast of expenditure is realistic, the next question which hon. Members will wish to consider is the even more important one of whether it is worth while. Let us consider, first, what would happen if the Coal Board did not carry out this investment. Presumably, all hon. Members are fully conscious that coal is an extractive industry, carrying the special problems that this implies. Furthermore—this bears on the point made this afternoon by the hon. Member for Cardiff, South-East—everyone realises that a great deal of capital expenditure is required to avoid a loss of capacity and output.

I expect that many hon. Members, on both sides, will have read the very interesting article by Mr. Bowman, the Chairman of the National Coal Board, in the last issue of the Sunday Times, in which he said: We estimate the inevitable loss of capacity to be replaced (before total output can increase) at 4 to 5 million tons a year, at present levels of production. This in itself is one of the main reasons for our investment programme. There is no reason to doubt that that is a fair estimate. Therefore, so far as the Board's programme is concerned with capacity, there would over the next five years be a loss of capacity reducing potential output, on this estimate, by 20 to 25 million tons a year if there were no capital expenditure on replacing capacity. As against this, given the achievement of the full programme which it proposes, the Coal Board estimates that output from the mines will be increased by 8 million tons a year in five years' time. So much for capacity.

What about demand for coal? We know that we are at a period when the whole trend of industrial activity and consequently of fuel requirements is steadily moving upwards. We are living in an expansionist period, which is a very good thing to do. We are living at a time when we have to make severe cuts in our exports of coal and still to import very considerable quantities. We are living at a time when the country is steadily having to make increased use of oil to fill the fuel gap, with all the obvious implications of that trend. It is hard to believe that anyone can seriously deny that we must aim at whatever increase in coal output is reasonably possible.

I know that there are some that believe that we shall soon get very great help from nuclear power, but anyone who has read the White Paper, published in February of this year, entitled "A Programme of Nuclear Power" will be aware that this provisional programme envisaged that nuclear stations, in the words of the White Paper would by 1965 be producing electricity at a rate equivalent to that produced by about 5 million to 6 million tons of coal a year". That was only a provisional programme and this is a field where we hope for very great advances of technique. But I am sure that the whole House realises that we have at least a further difficult decade to get through before nuclear power could even begin to make a significant impression on the fuel and power position.

This is such an important point that I hope the House will forgive me if I make a quotation from the Report of the O.E.E.C. Coal Committee, published only today, because it is a striking quotation. It comes at the end of the O.E.E.C. Report, on page 43. 1these words: Looking further ahead from 1956, there seems every reason to believe that, while there may be occasional periods of slack demand, energy requirements both in Europe and elsewhere will continue steadily to rise. On a conservative estimate, world needs for energy may well increase by something like two-thirds in twenty years' time and be three times as great as they are now by the end of the century. The development of all available sources of energy will be necessary to meet this vast demand. Although in the process of fitting particular forms of energy to their most appropriate uses (whether for technical or economic reasons) some displacement of one form of energy by another may occur, consumers will in general require all the energy they can obtain in the years to come. The Report ends as follows This conclusion is not invalidated by the advent of atomic energy. On present estimates atomic energy, far from displacing conventional sources of energy, will be required urgently to come to their aid in order to share the burden of ever-increasing requirements. The suggestion that the coal industry in particular, as the least tractable of the conventional fuels, may now be reduced to acting as a stop-gap until atomic energy takes over is misleading and dangerous. It is misleading because there is no evidence to support it; it is dangerous because it may encourage the producers of coal to limit or suspend their long-term investment plans, and thus provoke a more serious fuel crisis in the future than any which has so far arisen. I would like to say one word about the future, looking further forward. The figures for capital finance which 1d a few moments ago for the Coal Board are concerned with the next five years.