I beg to move,
That this House takes note of the Report from the Select Committee on Nationalised Industries (Reports and Accounts) and of the Annual Report and Statement of Accounts of the National Coal Board for 1957.
The Report of the Select Committee on Nationalised Industries, in form, at any rate, deals with the year 1956 and the most recent Report of the National Coal Board with the year 1957. We are now, of course, half-way through 1958 and a good deal of what I shall have to say to the House, and how I think I can best assist hon. Members, will be largely in bringing the situation up-to-date and with commenting upon the situation in which we now find ourselves.
I believe that when the history of the coal industry in the years since the war and since vesting day comes to be written, it may well be that this year, 1958, will have proved to have been a turning point. It has pin-pointed many of the fundamental problems which are always there and I think that it is not too much to say that the livelihood of all those concerned in the industry and much of the future of British industry, to which, of course, the coal industry must for many years to come provide the principal sources of power, will depend on the way in which the industry as a whole reacts.
I hope to show the House that the position is by no means so discouraging as might be imagined. Indeed, paradoxical as it may sound, I think that in some ways the position of the industry is more hopeful today and that it is in a healthier condition than in some recent years. However that may be, there is no doubt as to the immediate challenge which faces it.
Coal was last debated in this House about eighteen months ago, in February last year. I shall have to give the House quite a number of figures with which I fortified myself in preparing for this debate, but I hope that they will be helpful, and I will make them as few as possible. When we were discussing the industry last, the most recent figures for inland consumption were 218 million tons a year and to that had to be added about 10 million tons exported or for bunkers. That was the highest figure of home consumption, I am advised, on record. It was nearly 40 million tons greater than the consumption of 1945, just before vesting day, and, perhaps even more significant, 30 million tons higher than the peak level of consumption in the interwar years.
In those ten years up to the beginning of this period which we are discussing this afternoon, we have a period in which coal consumption increased every year, with two brief interruptions. The increase has varied. It is true that it has been as low as 1 million tons and as much as 10 million tons increase in one year. In 1957, last year, the home consumption fell by 5 million tons, and when we include exports and bunkers it fell by 7 million tons. That is not the end of it.
In the first half of this year, inland consumption is already down by 1 million tons compared with the first half of last year. I do not want to weary the House with some adjustments. Those more expert in the matter than I—I see several of those among hon. Members opposite—will know that temperature and such things play a very large part. The fall in demand between the first half of last year and this, making adjustments, is equivalent to about 3 million tons and exports have also fallen very seriously.
What is the reason? It is an illusion sometimes held and it should be dissipated at once that it is due to a fall in industrial production. That is not true. Industrial production has not fallen. Both industrial production and total energy consumption, comparing 1956 with 1958, are approximately the same. What has happened is that the consumption of oil over those two periods has greatly increased and has been roughly equivalent to the fall in the demand for coal.
Actually, the use of black oils has increased by over 40 per cent. Why? There are a number of reasons which we all know, such as convenience, and so on, but the fundamental reason, or, at any rate, a fundamental reason, is this. Between 1951 and 1957 the average pithead price of coal went up by 60 per cent., roughly twice the increase in the cost of living. The average delivered price of fuel oil is today only one-fith more than it was in 1951. In other words, if we compare the price of coal and the price of oil when we are deciding which is the appropriate fuel to use in industry, coal has gone up by about one-third in comparison with its great competitor in this very short period of about six years.
That is a fact; and I shall be dealing much with facts, some pleasant, some unpleasant, today; but that is a fact which all concerned must bear in mind in considering the prospects of their industry.
Faced with that rapidly rising competition and that fall in the demand for coal it is, unfortunately, true that the industry did not begin this year in a good situation. Absence rates were high; output per manshift was nearly 2½ per cent. lower than a year earlier. With a colliery manpower as much as 712,000, 3,000 more than a year previously, and with Saturday working still continuing, it was estimated that deep-mine production would be not more than 205 million tons a year.
In that situation the National Coal Board, which had already incurred a loss of £5 million the year before, would have faced a further loss, if nothing had been done, which could well have reached quite intolerable proportions of well up to or more than £30 million in the current year. That was the situation in January and February of this year, against the background which I have already given to the House.
Fortunately, the Coal Board reacted with great decision to that situation, and—what I am sure Sir James Bowman would agree with me is even more important—the steps it took were taken with very substantial co-operation from within the industry. Three main steps were taken. First, plans were worked out in consultation with the National Union of Mineworkers for the premature closing of some collieries, about 15 in 1958. I must make it plain that this is in addition to those which are being steadily closed over a period of years. Those 15 collieries, I am informed, produced just under 1 million tons of coal last year at a loss of slightly under £2 million.
The next step was the discontinuance of Saturday working. Saturday working is unpopular with everybody in the industry, unpopular with the men, unpopular with the Board, and if it is never started again I think that most people will be pleased. However that may be, the discontinuance of Saturday working assists very substantially in dealing with the reduction in demand.
The third step was much the most important, and I want to direct a few moments to considering it with the House. The Board decided to stop recruitment to the industry. There are exceptions—for instance, at certain pits where men must be taken on to exploit exceptional opportunities, and, more important, of course, juvenile recruitment was always excepted, because without that the industry's long-term future would become grave.
The importance of this step is so great that I want to say one or two things about it to avoid misconception, and I am sure that I shall have, at this point at least, both sides of the House with me. We must remember that the industry's loss by ordinary wastage is about 60,000 men a year, which is a very large number, and it is so substantial that a ban on recruitment can quickly secure a big reduction in the level of colliery manpower, without—and this is the point—any threat to the jobs of the men already in the industry.
There may, of course, be from time to time local difficulties and exceptions which we all know, but the essential point is that any desirable level of lower manpower can be obtained without redundancy, without the slightest fear that a man, by co-operating in making the industry more productive, may be working himself out of a job. I am sure that it is of vital importance to make that absolutely clear.
Secondly, I think it is essential that parents, schoolmasters, all concerned, should be quite clear that there will still be every opportunity for the right kind of youngster to enter this industry, which is now still one of the very highest paid industries in the country. It would be absolutely disastrous if there were any kind of feeling in the colliery districts that to go into this industry could be going into a dead end, and that after a year or two we might get back to the bad old days when there would be no work.
Any man in the industry who is doing well has not the slightest fear that, as a result of this cutting down by the Board of the total of manpower in search for higher productivity, any man's job is at stake, and none thinking of entering the industry should be put off by any fear that he may be entering a dead end. There are, of course—I shall not go into them—quite apart from the high level of wages many other advantages: great improvements in standards of safety, pithead baths, canteens, and so on, and so forth, which I could enlarge upon if necessary.
These measures have been so far substantially effective. They have achieved considerable results. Output has been adjusted downwards and there has been a valuable increase of output per manshift. I have the June figures. With the number of men employed substantially less than a year before, deep-mine output was 6 per cent. less; but the reduced output was accompanied—and this is the important point—by a 3½ per cent. higher output per manshift overall. Ultimately, the prices of coal are more affected by output per manshift than anything else.
This is the most encouraging of recent developments. If it can be maintained, and, better still, of course, improved, and no new demands are made on the finances of the industry, the worst fears for the year's out-turn will certainly not be realised. It is too soon to make any reliable new forecast of what the outcome may be. In the early months of this year, up to date, the Coal Board has made a small profit, but, of course, it made a profit last year, and we know by sad experience that we cannot judge a whole year by these early months. We are running into some months which, for reasons I need not go into, are bad ones financially.
I must also remind the House, in fairness to all concerned, that with a turnover of £900 million a year, with which the Coal Board is dealing, a 1 per cent. variation either way can produce £10 million loss or £10 million profit, and no man can possibly estimate halfway through the year anything like as accurately as that. I am giving the best picture that I can, but I must safeguard myself. The point that I am putting is that, as a result of these measures and the co-operation with which they have been carried out and the resulting improvement in output per man shift, so far the year is progressing substantially better than appeared in January and February, when we were facing a really catastrophic situation.
The Parliamentary Secretary used some such words as "provided there were no changes in the finances of the Board". Can he give an assurance that if the mining industry wants capital it will still be made available? Secondly, are any of the slight improvements the fruits of developments by the Coal Board over the past few years in winning new seams?
I shall be dealing with investments but, broadly speaking, this improvement between this year and last year has nothing to do with developments of that kind. One cannot have an improvement so substantial over such a short period other than by people just doing better.
Before I leave the immediate financial position, I must remind the House that the Board started the year with an accumulated deficit of nearly £30 million, and that that has to be repaid. As is pointed out in the Reports which are now before us, it is highly desirable that there should be more self-financing as soon as possible. Therefore, there are, many claims on any improvement in the financial position. But it all comes down to the over-riding question of how far, by pulling together, the industry can improve its productivity. If it cannot do that, it can never "get out of the red", improve the price of coal, or stop the everlasting inroads into its markets by other competing forms of energy.
I ought to make one observation to avoid any possible misunderstanding. It is that the Coal Board is not relying—it would not be fair or reasonable that it should rely—upon increased productivity alone for improving its financial position. I am able to tell the House that several months ago the Board launched an economy campaign throughout the country, with quite specific targets for each division. I have made it my business to inquire periodically how these are going. I am glad to say that, broadly speaking, with improved co-operation, very substantial economies are being made in a mass of small ways which, added together, are achieving very considerable results.
I notice that the Parliamentary Secretary drew at least a small cheer from the benches opposite when he referred to the £30 million deficit last year [HON. MEMBERS: "No."] Will the hon. Gentleman be good enough to break up that £30 million and say how the deficit was accumulated?
I have quite enough to say to the House and I had better not be diverted into the question of who cheered what. I am hoping to get a few cheers from all parts of the House.
One could say much more about the overall financial position, but I ought to deal now with three specific suggestions which have come along from various quarters at various times. They are all possible additional ways, which ought to be considered, to assist the industry in a position in which, for the first time for many years, the demand for its product is falling.
I do not want to say a great deal about opencast coal, because I have had so much to say about it already. I see present several hon. Members who waded through the Opencast Coal Bill in Committee and they will not be anxious that I should say too much about it now. It has been asked why the Coal Board has not cut back on its production of opencast coal in the situation which I have described. The only point I would put to the House is that we are dealing with a situation in which the Coal Board, facing a very serious financial loss, having to make economies, having to try to reduce its cost of producing coal to meet competition, is asked to do without its cheapest and most profitable source of coal.
The cost of producing opencast coal is less than three-quarters of the average cost of producing deep-mined coal. The profits from opencast coal, about £9 million a year, mean that every miner's weekly wage packet contains 5s. to 6s. out of the profits of opencast mining. In this situation it is difficult to see how the Board can easily give up both its most profitable and its cheapest coal.
I do not quite see what that has to do with the position now. We are dealing with what the unfortunate Coal Board is to do in a situation in which it might lose its markets because its coal is too dear and, if it is not careful, might make a huge loss, following on accumulated losses, when its statutory obligation is, taking one year with another, to make ends meet.
I am not saying that this is a final, conclusive argument for all eternity, but people ask the Board to do without opencast coal, which makes a £9 million profit that goes into the same "kitty" as that out of which wages are paid. I will not touch the wages question. It is a dangerous and inappropriate subject, but the Coal Board is being asked to find more and if it is asked to give up its cheapest source of profit and its cheapest coal—[HON. MEMBERS: "Part of the answer."] That something is only part of the answer can be said of almost any matter.
This is an important factor. Can the hon. Gentleman say whether there is not an alternative argument for the support of opencast coal production? Does it not depend entirely on the expectations which the Coal Board and the Ministry of Power have about the future consumption of coal?
I would not say entirely. That is certainly a consideration and I find myself, not for the first time, in agreement with the right hon. Gentleman.
I shall have to deal at some length with the problem of how to combine getting through 1958 with a loss of demand in a situation when, in a year or so, we shall have a higher demand. But, while I am dealing with the finances of this year, that is the main reason why I think that the Coal Board has been unfairly criticised by those who say there is an easy way out—cut out opencast coal production.
The next point concerns another suggestion, namely, why have not the Government placed restrictions on imports of oil? The simple answer is that British industry as a whole must be as efficient as possible or we all go under. It is impossible for any Government lightly to tell any industry which, in the exercise of its commercial discretion, thinks that the right thing to do is to use one kind of fuel, that it must use another at a time when our competitive position is becoming difficult especially in the export market.
I am accepting what the hon. Gentleman is saying about the need for British industry generally to make itself ever more efficient. We all accept that as a policy for the nation, but does not the Minister see the contradiction in his own policy? He is saying, by all means let us have alternative fuel if it leads to greater efficiency; but he has just left an aspect of the subject where we are using labour and capital to extract the least efficient kind of coal from the surface. It is all very well to say at that Box that it is costing only three-quarters as much as deep-mined coal, but will the hon. Gentleman say that it is three-quarters as efficient as deep-mined coal?
It is the same coal. [HON. MEMBERS: "No."] It is exactly the same seam, very often. The idea that because men dig it up in a different way it is essentially a different kind of coal, is simply not true.
Now I revert to the question of oil. I have given way a great deal and I must be allowed to pursue a connected argument. I was saying that it is not wise on the part of any Government to lay down in times as competitive as these which fuel any industry should use. The Government must make that decision and stand or fall by it. Further, there is a considerable amount of misunderstanding by some of those who ask for this kind of restriction, about its effect on our balance of payments. It is often claimed—I have seen it claimed recently—that our oil imports constitute a drain on our balance of payments. That is not so. The great bulk of the oil we use in this country is refined here or in the sterling area, and our participation in the international oil industry brings other substantial trade advantages.
I had intended to give a few further figures on that point, but it would keep the House too long in view of the number of times I have given way, so I will leave it at that. However, the House may take it as definite as any figures can be that the Department can give me that net oil imports do not constitute any strain on our balance of payments, and, therefore, the two fuels must be allowed to compete, purely on their merits. That is the Government's firm conviction.
We are often asked: why have not the Government got a fuel policy? Let us consider this. What we are now asked to do, apparently, is to stop the British housewife having the cheap, labour-saving fuel she wants, to compel British industry to burn a fuel it does not want, to blockade ourselves against our own oil to make it easier to blockade ourselves against our own coal. That does not seem to me to be a very attractive proposition.
Now I turn to some facts about the exports and imports of coal. We are frequently told, I think in all good faith, that the Coal Board has had a burden put upon it in relation to imports of coal.
I am not sure that the hon. Gentleman the Member for Stoke-on-Trent, South (Mr. Ellis Smith) will like what is coming now, but it happens to be true. In the facts I am giving the House I am not wanting to be controversial. I am trying to give the picture as I see it. Taking the ten years since vesting day, taking the profits that the Coal Board have made from its exports and the loss which has been made from imports of coal, so far from making a loss, it has made a profit of £50 million. So it is wrong to concentrate entirely on one side of the balance sheet.
Let me at least finish what I am saying on this point.
It has been suggested that of recent years the Coal Board has, as it were, thrown away the export market because it has not exported more and has allowed the Americans to come in. It is indisputable that the Board, in the last two or three years, could not, out of the production of coal, have exported more without producing a coal famine at home, because we just had not got the coal. Yet, in spite of this, it has been suggested that the Board should have gone on doing it at the expense of further imports of coal. I submit to the House that criticism along those lines is, once again, unfair and unrealistic. The only source from which the Board could have got that coal in those days was dollar coal.
In 1955, the Board imported rather over 11 million tons of coal and, as a result, in that year, taking its imports and exports together, it lost over £20 million. I ask the House to consider what would have happened if it had imported still more to export still more. Its loss would have been completely unmanageable. Therefore, it is unfair and unrealistic to criticise the Board for not exporting more coal in recent years. The consequences may, no doubt, be sad. It would have been nice if we had had more coal to export, but we had not got it.
Now I turn from those three suggestions, made as criticisms of the Coal Board, namely, that it ought to cut opencast, that the Minister ought to try to refuse imports of oil, and that we have neglected exports. I turn from those subjects, on which undoubtedly more can and will be said in the course of the debate, to the main drift of what I have to put to the House. In the light of this falling-off of demand, the best estimate—if you like, guess—of what is the probable demand this year, is about 212 million tons.
Including exports and bunkers.
It may well be impossible to continue the fall in colliery manpower as at fast a rate as in the past few months, because in some parts of the country—not by any means all—any further fall would lead to a decrease in efficiency rather than an increase in it. Therefore, the thing has to be looked at in a practical way, but a further fall in the present level of manpower, which is about 697,000, towards the planned level given in "Investing in Coal" of 682,000, is almost certainly to be anticipated.
This brings me to the point made by the right hon. Member for Easington (Mr. Shinwell). It may be said, "We may not be satisfied with the answers you have given to these criticisms, but there they are. It may be that the Coal Board and the Minister are working along the lines you have put to us, and are dealing with the situation this year in the only way which is going to lead to some hope of breaking even and meeting the reduced demand. Accepting all that, are you not putting the country in a position that, when demand increases again, it will be completely impossible to meet it?"
I think that that was the point which was in the mind of the right hon. Gentleman, and I can assure him and the House that it is very much in the minds of the Minister and the Coal Board. I can almost put a figure to it, a figure I have already given—that for 1958 it is about 16 million tons less than the 1956 level. Suppose we have to find that? How are we to do it?
This brings me at once to the very little which I shall have time to say to the House on the subject of stocks. These stocks appear very frightening at first sight, because it is so many years since there have been stocks of coal, but, of course, we must avoid losing a sense of proportion. They are only two or three weeks' production, and, in comparison with a great many industries, two or three weeks' production would not be considered either very much or exceptional, but might be considered a desirable supply. Therefore, I would deprecate any suggestion of panic interference with the investment programme or policy arising out of these present stocks, all of which would certainly vanish very quickly as soon as industry revives, as indeed it will.
I should like to put to the House two much more important considerations, because, while the coal industry, of its nature, tends to be rather inflexible, there are substantial elements of flexibility within the control of the industry itself. I do not pretend that they are the only ones, but, first, there is this one. In the present conditions of demand, it may sound very unrealistic to talk about absenteeism, as it is called, but, when demand does revive, it becomes a very real issue. In fairness to everybody, I must ask the House—and I hope the House will believe that I am trying, in giving these figures, to be fair—to be careful about making comparisons between voluntary absenteeism and total absenteeism. There are a number of statistical pitfalls in these figures, but the best estimate we have been able to obtain, is that, possibly, about 5 per cent. of the present absence figure is avoidable. That 5 per cent. is the equivalent of about 10 million tons of coal.
I can put it in another way. If all the divisions did as well as the best, which is Durham, that would be the equivalent of about 8 million extra tons of coal. The point I am putting to the House is not that, at this time, these figures are really very relevant to our present situation, because we are, as we all know and as I have already described, cutting production to meet the falling off of demand. There is, however, a very relevant point which the right hon. Gentleman raised, and with which I am now dealing. It is whether we could find more coal if and when demand rises, with the smaller manpower which the Board has set to work to achieve in its search for higher productivity.
I can put this aspect of the difference between the best and the average in losses due to absence by an illustration of the different results or perhaps the different atmosphere found in different parts of the country, and this can be found in another statement on page 48 of the Report of the Board. Considerable losses of coal occur from stoppages of various kinds. More stoppages occur and more coal is lost in three divisions—Scotland, North-Eastern and South-Western—than in all the others together. They produce about 40 per cent. of the output, but they account for 87 per cent. of the unofficial strikes and restrictions and 83 per cent. of the total saleable output lost.
Finally, a further improvement in output per manshift would be even more important, because this would not only provide the coal, but, as I have already pointed out, it greatly improves the financial situation of the Board, out of which, whether it is the financing of development, wages or anything else, has to be paid. I am chary of giving this figure, and I must ask the House to treat it with reserve, but I think it is helpful. I have found it helpful myself in learning something about this industry, and I think it may be helpful to the House, bearing in mind what I keep on saying about output per manshift.
If everything else remains the same, and, of course, it never does remain the same, every 1 per cent. improvement in output per manshift will mean about £5 million extra a year to the Coal Board. When we think that output per manshift has increased in a year by as much as 3 per cent. or more, the House can see at once how important this matter of productivity is to all concerned, and how encouraging it is that a substantial improvement in output per manshift has taken place during the last year. The best figures, which are just before Whit-sun, have not yet been heard, but, nevertheless, the improvement is there.
Now I come to the second element of elasticity, and this is relevant to the point about investment which was put to me by the right hon. Member for Easington. It is essential for all of us, in considering this great industry, to have clearly in our minds that it is an illusion to think that investment by itself necessarily produces either greater output or greater productivity. I can illustrate that to the House by the following comparison, which can be obtained, though it is not stated, from the figures in the Reports.
In the first five years of nationalisation, investment in real terms in the coal industry was not very much higher than before the war. It was higher, but not very much, and it was quite insufficient. I am not going into why it was, but merely making a statement of fact. Nevertheless, output and productivity rose rapidly. In the years since 1951, investment has gone up from about £30 million a year to about £100 million a year. Those are much higher figures than have ever been seen in the known history of the industry.
Nevertheless, the improvement one might have expected has been masked. Therefore, I am merely making the point that investment by itself does not necessarily increase either productivity or production. In "Investing in Coal" among the basic figures for 1960 was given the expected output per man year which was 319 tons. In fact, in the main part of the period we are considering, the last few years up to last year, it was falling to under 300 million tons a year and was falling—[HON. MEMBERS: "Three hundred million tons?"] Three hundred tons. I do not think that anyone expects a miner to produce 300 million tons a year. The figure given was 319 tons, but we were getting 300 tons and it was falling.
The point I want to put to the House brings out the significance of that shortfall. The difference between those two figures is the equivalent of 16 million tons of coal a year and that is the equivalent of the coal we were expecting to attain, in fact more, from the whole of the nuclear power programme. I think it extremely important.
I should like the House to bear in mind that there is still, as it were, in the pipeline a very substantial amount of investment which could be coming to fruition in the next few years. If that is no longer masked by other influences, if only those new and improved approaches towards productivity can be added to the improvement which we might hope will come from the investment which has been put in and is annually being put into the industry, I believe that the prospects are by no means so unfavourable as might be expected.
It all depends upon co-operation in improving productivity. No amount of investment in this industry can achieve the results without co-operation by all concerned to improve productivity, to give the increased productivity on which a favourable start has been made. Six months is far too short a period to be sure, but if only what we have done in the last few months can be extended, consolidated and, above all, not thrown away as soon as demand recovers, I think that, for the reasons I have given, the answer to the right hon. Gentleman is that there is every reason to believe that the Coal Board could deliver the goods when demand recovers.
I can sum up what I have been saying on this general aspect of the coal industry in this way. In this year there has been a complete change of climate from a desperate search for coal at any price. We have got to what I think is a much more healthy outlook, and the only outlook which holds out any future for the industry. The industry has had a salutary shock and is reacting in a by no means unpromising way. I am sure that we all hope it will go further and do even better.
I turn from problems of overall production and productivity to a specific point which has occupied the Select Committee and Coal Board Reports a great deal. That is the problem of large and small coal. The problem there is that for various reasons, mostly good but some perhaps not so good, the proportion of large coal has been falling steadily year by year. That is a process which has had to be reversed. It is vital that it should be reversed for two reasons. First, decontrol of house coal was impossible without it. No balance could be made of demand and supply of coal while the percentage of large coal was falling year by year.
Secondly, especially at this time, it is to the great financial advantage of all in the coal industry that we should have the basic proportion of large coal because large coal is still more saleable at a good price and small coal is often unsaleable at any price. Therefore, it is to everyone's advantage to have more large coal. The House will be glad to know that the measures, which I need not go into in detail, taken by the Board—changes in deployment, with more careful use of explosives, and so on—have been substantially successful. Not only has the fall been stopped, but there are even some signs that it might—slightly, at any rate—go up. If it can be kept at the present figure of 24 per cent., and certainly if there is not a fall below that, the effect on finances and on the position of sales to the housewife will be secured.
This question of small coal is one which is well understood. We understand that the financial position of the Coal Board would be vastly improved if it could get a more reasonable balance between large and small coal. Will the Ministry take heed of the fact that so long as the Board continues to stock vast quantities of opencast coal, as it is doing, that coal will rapidly disintegrate because of its low quality and the Board will be landed with large quantities of small coal?
I took up this matter with the Coal Board. I do not invent these things out of my head. This is a technical matter on which I must take advice and I am advised that in the proportion of large to small coal as between opencast and deep-mined coal there is nothing in the suggestion. There is really nothing in the theory that if opencast coal is stocked it deteriorates, but other coal does not.
Many hon. Members on this side of the House are ex-miners and know about this problem. Is the hon. Gentleman not aware that in most of the seams worked by the opencast method there is a higher percentage of hydrocarbon in the content of the coal and that that disintegrates—evaporates as it were—when subjected to continuous rain and bad weather?
I can only give hon. Members the advice I have received on this matter. I am assured by the Coal Board about it and the Board knows its own business. It seems rather odd that hon. Members opposite should take it for granted that the Coal Board does not know the elements of its own business. It may be wrong. My personal view on this matter is valueless and do not put it forward, but the Board must be expected to know its own job. The Board assures me that it is not being so stupid as to try to sell something which will not deteriorate and leave on the ground something which will get worse and worse. I must leave it at that.
So much for the proportions of large and small coal and the successful efforts to prevent any further reduction in large coal production. The Coal Board has also taken another step, and I am glad to say that it has been successful—and I hope that that will not cause any irritation among hon. Members opposite. The Board has used the price system. As the House may recall, some months ago price changes were made to encourage the industry where possible to use less large coal and doubles and more smalls, so as to release large coal for the domestic market and assist the Board in getting rid of some of the smalls.
I am glad to be able to tell the House that large coal users have already substituted other coals at the rate of about ½ million tons of coal a year, while for users of doubles the figure is ¾ million tons of coal a year. What is interesting and encouraging to the industry is that most of the users who have changed have not transferred to other fuels, but have found that they can use small coal.
Here again, the Board has taken practical steps to deal with the situation in which it found itself, and on that basis it has been found possible to achieve some balance in the demand and supply of large coal, and hence to decontrol domestic supplies. At this stage, I must thank the merchants and the local authorities for their co-operation during the period of control.
I am able to inform the House that we can take a slight further step in decontrol. As the House knows, for many years industrial coal has been supplied on an allocation basis. Strictly speaking, that has not been done by Order, although powers under Defence Regulations have been held in reserve. The present allocation runs to the early months of next year, and Her Majesty's Government have decided that no further allocation will be made. Industrial fuel will be decontrolled.
Without going into details, ordinary contracts will be negotiated by the Board on a commercial basis and there will be incentives to users to stock up during the summer and thus assist the Board. This is one small further step in clearing up the clutter and I hope that it will be generally acceptable. I am sure that it will be acceptable to my hon. Friends.
I have kept the House a long time, but I have given way very frequently. I hope that some of what I have said will be helpful. However, before concluding I must refer to some specific recommendations of the Select Committee. We can all agree that the Select Committee is to be congratulated on a fair and objective Report.
It has been suggested that the Coal Board should lay before the House its reply to the Report of the Select Committee. This is a matter upon which it is too early to be dogmatic, and Her Majesty's Government are still considering it. However, as at present advised, they think that that would be a mistake. After all, the Minister of Power is responsible to Parliament for the industry and it is felt that the proper thing to do is for the Government to inform the House of their views and of the views of the Board. It is an arguable proposition, but that is the Government's present view.
With that as a preliminary, I come to some of the main recommendations of the Committee, first, with reference to the "gentlemen's agreement", as it is called. The Select Committee endorsed the Government's view that there is a continuing need for the Board to consult the Government about prices. The only question is that of procedure. The Select Committee felt that it would be better if a specific formal direction about prices were issued to the Board when agreement was not easily obtainable. The Board has told the Minister that although it hopes for eventual freedom from any ministerial control in this matter it favours the Select Committee's proposal.
The Government do not share that view. The Government do not believe that it is possible to conduct great industries like the coal industry except on the basis of constant and confidential consultation between the Board and the Minister. There is a joint responsibility, especially for prices. It is not realistic to suppose that any Government could completely dissociate themselves from the general level of coal prices. It is equally a statutory obligation on the Board so to arrange its affairs that, taking one year with another, it makes ends meet. The Government therefore feel that it is inescapable in this matter that responsibility should be shared, and they feel that to introduce a formal direction would be a very grave step and would hinder the proper relations between the two.
It would have another serious effect. So far in the coal industry, except on certain entirely non-controversial and technical matters, we have avoided all directions. I am advised that throughout the whole range of the nationalised industries there are only two general directions, perhaps not altogether encouraging precedents, one of them being that to the Transport Commission on fares. The House well knows that not a Monday goes by when we do not have a whole stream of suggestions from both sides of the House that the Ministry should issue general directions to a Board on this, that, or the other.
I know that that is a technical device to get the Question past the Table. Nevertheless, we must carefully consider whether we should not be starting on a very slippery slope if we once started to issue directions. In our opinion, that should be avoided at all costs. This is a matter which can be argued, and responsible people take opposite views, but the Government feel that the present arrangement, whereby the Board has the right—which it has exercised on this occasion by putting it in its Annual Report—to ask for a letter which it can publish in a case of disagreement, is the best and that it would be unwise to interfere with it.
The Committee also recommended that the price of coal should be increased to cover the full cost of depreciation on a replacement basis. That is in keeping with the general view of the Board and the Government, but I am sure that the whole House agrees, in the light of what I have said, that any substantial rise in the cost of coal for this purpose would be most ill-advised. Whether we could move in the least for an increase in the depreciation allowed, this is not the time to do it, and it certainly should not be given high priority.
We did not make any such clear recommendation that the price of coal should be increased at once. We had the point which my hon. Friend has just made very much in mind. What we said was that we believed that the aim should be to achieve that in due course. We hoped that the Government would agree with that, and I understand from my hon. Friend that they do. We ought to have the record clear.
That is precisely what I said. It is very desirable when it can be done, but it should not be attempted now.
The Committee next suggested that the limit given to divisional authorities for capital expenditure should be increased. The Board points out that this is already as high as £250,000 for a single scheme—much higher than in most private industry—and while it is considering the point made by the Committee it has doubts about it at present.
The Committee also recommended that the Board's annual reports should include comparisons of results achieved from its investment with the estimates made. This recommendation is acceptable to the Board. Finally, and perhaps most important, the Committee considered that the Minister of Power should make a greater financial check upon the Board's investment schemes, particularly the marginal ones. The Government feel that the information furnished by the Board is a sufficient check, but they accept the Committee's recommendation and are making arrangements with the Board for action along these lines.
I have covered a great deal of ground. In conclusion, I want to return to some of the more general considerations. I hope that the House will feel that there is hope for the future of this industry, provided we can obtain co-operation in increasing productivity. We have to struggle with facts, and not with one another, and I hope that what I have been able to say will be taken in the spirit that we all wish this industry well. The future of the whole of British industry depends upon the health of the coal industry, and I hope that the debate will at least do something to help and nothing to hinder its development.
When the Parliamentary Secretary rose over an hour ago to address the House he said that he would keep very largely to factual statements. At that stage he probably hoped that he would not have to venture into very many controversial issues. I am afraid, however, that that is precisely what he did. It is not that it matters very much to have controversy in a debate, but if it was his intention to get through that long speech without much controversy, I think that he was disappointed. I am certain that some of my hon. Friends, who gave some indications of impatience as they tried unsuccessfully several times to intervene, will have an opportunity to deal in greater detail with what they intended to deal with by way of a short intervention.
I shall not delay the House for too long, because many other hon. Members are anxious to speak. Before turning to my own theme, however, I should like to say that the Parliamentary Secretary is taking far too much for granted on the facts as they are given to him by his Department. It is true that we can take certain statistics and facts and bend them as we want to, but in the light of my long experience in this industry, as a layman and a politician, I should hesitate to draw the conclusions that the hon. Member has drawn from many of the facts, the accuracy of which I would not doubt for one moment.
In respect of opencast coal, for instance, the Parliamentary Secretary should know that in years when there has been a tremendous problem of recruitment into the mining industry—especially in periods of full and sometimes over-full employment—it has been said that the miners' job is always secure, because we have a very big opencast programme which can be reduced if there is depression in the mines, and that is another way of helping to maintain full employment in the mines. It is not a bit of use producing an argument which has never before been used in regard to opencast coal—and which would not have been accepted by the House if it ever had been put forward.
It is not the cost of opencast coal that has been the argument for carrying out these operations; it is not a case of its being cheaper than deep-mined coal. Many hon. Members would say that the devastation, nuisance, annoyance and loss of agricultural land involved in opencast coal mining far outweigh its cheapness, as compared with deep-mined coal. It is only in comparatively recent years that opencast coal has become cheaper than deep-mined coal, in any event. It has never been argued before that we are carrying on with opencast coal mining merely because it is cheaper. We are doing so merely because the country's need for coal is so great.
There is no virtue in ripping out all the easily obtained coal at a time when it is not wanted. It should be kept in reserve until the time comes when it is needed. I would continue opencast coal mining only in order to run out the present contracts. I should like the contracts to thin out a bit in this situation. There is no doubt that within the Parliamentary Secretary's Department there are some highly-skilled people who can be of great assistance in creating increased production together with the minimum delay, inconvenience and capital loss. I therefore say no more about opencast coal mining. I am sure that some of my hon. Friends will want to develop this theme. I would merely repeat that the Parliamentary Secretary's approach is a wrong one, and is not borne out by the facts.
The same consideration applies to oil. It is no use suggesting that the increase in the amount of oil used in this country came about because oil has proved to be cheaper and more efficient or better than coal. This sudden increase in the consumption of oil has been largely due to the tremendous pressure which successive Governments have exerted for the greater use of oil and a lesser use of coal.
The Paymaster-General shakes his head, but I will give him the facts in a moment.
The estimates of demand for the future energy requirements of this nation have always shown that there never would be sufficient deep-mined coal. Not only has there been Governmental pressure for the use of oil; the Paymaster-General will no doubt remember that seventeen power stations were, by Government pressure, changed over from coal-burning to oil-burning, or were built to burn both oil and coal. By 1965 it was hoped that the seventeen power stations would take the oil equivalent of about 9 million tons of coal. If that is not pressure to swing from coal to oil, what is? Successive Governments have pressed the industry in this way.
As the right hon. Gentleman knows, in recent months our efforts have been to reduce the amount of oil consumed by power stations, subject to limitations of contract. Despite that, consumption of black oil has risen very fast indeed in recent months.
Certainly; that is the point. I am not concerned with the last few months. I have said that for years it has been the policy of the Government, the Ministry of Fuel and Power as it then was, and the Ministry of Power now, to push everyone on to oil. That pressure was put on because we never believed that we could get enough deep-mined and opencast coal for our requirements.
If we had maintained the increased industrial production of 3 per cent. per annum we should not have large coal stocks at present; we should be wanting more coal, and probably more oil. I was surprised when the Parliamentary Secretary said that stagnant production had nothing whatever to do with stocks of coal on the ground. It has everything to do with them. In 1955 the index was 137, and in 1956 it was 136. It was down. The following year, 1957, it went to 138. But those figures should have been 137, 140 and 143, if in fact we had been increasing production at the rate of 3 per cent. per annum, which is what the Government, through the Leader of the House, suggested was their policy. Then there would not have been stacks of coal on the ground.
I do not want to make this a plain black and white argument. I do not think that problems are solved by suggesting that one is right and the other wrong. I am saying that there is a variety of reasons for the stacks of coal on the ground. Increased use of oil has something to do with the economics of it, but in many cases it is due to convenience. Stagnant production is another reason. The truth is that if British industrial production can begin to make a surge—it may well be, as a result of recent Government action over investment and so on, that such a surge will begin—these stacks of coal will disappear.
I agree with the Parliamentary Secretary that they are nothing to worry about unduly. It is a pity that it is costing such a lot of money for the Coal Board to have to stack this coal, but it is the best way to do it. Perhaps it is a good job that the industry is under public ownership. Otherwise, many miners would be working short-time, because no private owner—and this is not a complaint against private owners—could afford to stack the millions of tons of coal which are being stacked at present and bear that as a cost. Public ownership can and should do it, and the social consequences of mining must always be borne in mind by the Minister when he is dealing with such matters.
The right hon. Gentleman has given reasons for the large stacks of coal but surely he has left out the most important reason—the fact that in every year during the last ten years we have saved increasing tonnages of coal by much greater efficiency in industry, notably the electricity industry. That is the principal reason today for these mounting stacks of coal.
I would not say that it was the principal reason. It is another reason. I did not go through the whole list of reasons because I want to deal with other matters; but one could not let the speech of the Parliamentary Secretary pass without drawing attention to some of the fairly obvious inaccuracies in it when the hon. Gentleman was referring to the future of the industry. I am not as happy about it as is the hon. Gentleman.
Coke ovens are likely to use 2 million tons less this year than last year. Railway modernisation will probably result in a reduced consumption by the railways of 1 million tons; and there are other industries, including the brick industry, the cement industry and the paper and similar industries which will use less coal than last year, to the extent, perhaps, of 3 million tons. Therefore, it is no use presenting a rosy picture of the whole industry for the next year. Were I Parliamentary Secretary, I would not dream of doing it. I think that we shall want 7 million fewer tons of coal, or its equivalent, in view of the present economic situation.
It is a good thing that we should face these facts, and it is nothing to worry about. This is not a tremendous percentage of the total coal output, and, by proper management and arrangements, we must be prepared to meet the ebb and flow of fuel requirements. As to the competition between oil and coal, I say that where coal is the natural and economic fuel, it should be used. Where oil is the more natural or economic fuel to use, then that should be used. But I should be against pressing the merits of one or the other on grounds of expediency and I should, of course, be biassed in favour of an indigenous material which we have in large quantities.
I wish to voice my appreciation of the efforts of the Select Committee. It has done a first-class job of work. This is the first time we have had a Select Committee's Report on a nationalised industry, and I am bound to say that when the idea of such a Committee was first mooted in this House I was not happy about it. I thought that it might be used as a brake upon the initiative and effectiveness of the nationalised industries; that if the industries felt that at some time they had to answer to a Select Committee for every single day-to-day administrative act which they might perform, they might become disposed to look twice at something when they should take the initiative and be prepared to make a lot of mistakes in order to achieve a great many successes. But, having read the whole of the Select Committee's Report with great care, my views are entirely changed. I was a member of it for a short time, but I asked to be relieved when I realised that the amount of work the members would have to do was far in excess of the time I had available.
Congratulations are due to the right hon. Member for Blackpool, North (Sir T. Low) for his work as Chairman of the Select Committee. So wisely did he guide the Committee that it produced from the Chairman and the Deputy-Chairman of the Coal Board what is the best evidence I have ever seen in relation to the coal industry of this country, and I am thinking of all the Reports which have been issued before. Certainly, that evidence is well worth reading over and over again. I am attracted by a suggestion that it would be well worth while if there were a sort of chairman's report in all our Annual Reports on the lines of this evidence so successfully elucidated by careful questioning and the expert chairmanship of the right hon. Member for Blackpool, North.
I am also interested in the Report which the Committee makes about itself, when it says that this was the first time a Select Committee had had the opportunity of making a major inquiry into a nationalised industry. This Committee had not the advantages of the older Committees of this House. It had no staff. It may well be—I am paraphrasing the words of the Committee—that at some stage it may want to give a
report to this House about how to improve its efficiency either by the provision of staff or something of that kind. The Committee states:
Recommendations to the House on how the Committee's work may be made more effective—whether by the use of special staff, or of different terms of reference or of different powers—would require a special report.
It is to the credit of the Committee, bearing in mind that such bodies usually try to increase their size, that it adds:
It is too early in the Committee's life to consider such a report.
Nevertheless, I hope that at some stage, when it has had sufficient experience, the Committee will give a special report to this House about the way in which it should operate, and invite this House to give it additional powers, or to make changes which, in the light of this Report, it is felt would make the work of the Committee more effective and of more help to the House.
I remember that when the Paymaster-General told us that the Government had agreed to relieve distributors of all control and that retail distributors would be free, I asked whether that would apply to the Coal Board and the right hon. Gentleman said, "No." He said that the "gentleman's agreement" would still operate. In answer to a further Question from me the right hon. Gentleman said that the reason for that was, as perhaps I had forgotten, that coal was a monopoly. I had not forgotten it, but Question Time in the House of Commons is no occasion to argue these matters.
I would only comment now that perhaps the Paymaster-General has learnt a little from the speech of the Parliamentary Secretary and that this monopoly is debatable in the House. We could not have had such Questions put about I.C.I. or Unilever, or other big companies which are virtually monopolies, and in any case have many things in common with the people in the same business. It is no use the Parliamentary Secretary sitting smug with a smile on his face and pretending that he does not know how big business operates in this country. If the hon. Gentleman does not know, one day we will stage a debate and help to explain it all to him.
I am sorry that the Government have not been prepared to accept the price
recommendations. The Committee has done an excellent job in explaining to us all how the "gentlemen's agreement" came about, but I think that what it proposes is healthier for the industry and for the nation. After all, its proposals do not cut the Government out of this matter of public interest. Of course, statutory obligations to safeguard public interest must be shared by the Government of the day. No one would want to contradict that, particularly on questions of price, but in my view this is a healthier way of doing it. In paragraph 89 the Committee states:
When proposing alterations in coal prices, the Board should consult the Minister of Power as to the public interest but, having done so, should take full responsibility for their price determinations. The Minister should have a statutory power in the national interest to give the Board specific directions in relation to prices. Such a direction should be laid before Parliament and published, so that Parliament and the public would be fully informed about the respective responsibilities of the Minister and the Board in a particular case.
I heard nothing from the Parliamentary Secretary this afternoon dealing with that point on the basis of argument in the public interest. I think it absolutely sound. Let the National Coal Board be free to fix its prices subject to consultation, and if the Board wants to fix prices which, in the Government's view, are higher than they ought to be, or lower than they ought to be, then let the Government give the Board a direction and place the Statutory Instrument on the Table of the House. They have their automatic majority, and their decision is bound to be accepted. By so doing, it would give the House the opportunity then and there to discuss the price of coal in relation to the national economy, and, indeed, to see whether the public interest was being served.
It does not seem reasonable to say to the National Coal Board "You must, taking one year with another, make your books balance." The very factor that enables the Board to make its books balance, that is, the price at which it sells the only commodity which it has to sell, is not something that we can control in any way. We in this House and the public outside do not know exactly what fight is going on between the Government and the National Coal Board. We do not know whom to blame for what takes place. When, as a consequence, we examine the accounts and are critical about the losses made—the Parliamentary Secretary referred to the £30 million deficit whom are we to blame? Should we blame the Government for preventing the Board obtaining proper prices or should we blame the Board for its inefficiency in not having its prices properly attuned?
I believe that the Select Committee has done a service, and I ask the Parliamentary Secretary and the Paymaster-General not to close the door completely but to look at the matter once again in the light of what I hope the Chairman of the Select Committee will be able to say today on some of the recommendations made and in the light of what I have just said. It is an important recommendation and one that the House would, on the whole, welcome.
What we have to determine, because we are, in a way, shareholders in this large enterprise, is whether the Board has done a good or a bad job. We are entitled to criticise the Board or, indeed, to praise it if praise is due. Because it is a State monopoly it is a little difficult to make comparisons, and, of course, it is impossible to make any comparisons within the country.
I think that two things stand out as redounding to the credit of the coal industry. The first is that British industry generally receives supplies of coal cheaper than its European competitors receive theirs from the European minefields. That is something that might be offset against the £30 million deficit of the National Coal Board. British industry, which is very largely dependent on coal, has, in fact, had an advantage over industry on the Continent in this respect. It is an advantage about which I am delighted. I always want to see British coal cheaper than the coal produced by other countries. I want to see nationalisation succeed in that direction. British industry, as I say, has had this advantage, and the National Coal Board has had the disadvantage of being criticised because of the £30 million deficit.
The second thing which is to the credit of the nationalised coal industry is that the output per man shift overall—and the Parliamentary Secretary had something to say about this today—is the highest in Europe. Those two comparisons show that the British coal industry is not as inefficient as many of its critics tend to make out. Those two factors alone are worth recording on the credit side of the balance sheet.
The third factor, which is one that we all accept and want to see improved, is that we have, perhaps, made British mines the safest in the world. That is something which cannot be put into a balance sheet but about which we are very pleased and proud.
I had intended to say something about prices in relation to the national economy, but I think that I must leave that and many other similar things to others. I should have liked very much to deal at some length with the matter of prices in order to show that the allegations that are frequently made to the effect that coal prices are the beginning of the upward spiral in our economy are completely ill-founded and are not borne out by the facts. Perhaps there will be an opportunity at some other time to deal with that.
One of the things, however, that I feel I must deal with is the growing apprehension within the industry of all those who work in it. Indeed, something which the Parliamentary Secretary said today heightens that apprehension. The main apprehension, of course, is caused by the miners themselves seeing stocks of coal on the ground. They see their colliery yards full of railway wagons filled with coal. They see coal having to be taken out of the wagons—a most uneconomic procedure—and dumped in the yard or in a stacking ground nearby in order to provide empty wagons to keep the pit moving. Indeed, if those wagons were not emptied the pits would have to stop production.
This sort of thing, unfortunately, leaves a bitter taste in the mouths of the miners because they remember that whenever coal piled up like that before the war the inevitable result was short-time working or unemployment, or both, and, of course, low wage levels. It is most important that the National Coal Board should make absolutely certain that its channels of information to the men it employs are so effective as to remove misapprehensions.
I have attended a number of miners' galas in the last few weeks and have seen crowds of 10,000, 20,000, 30,000 and 40,000 men being addressed by their leaders. I have spoken at many of them, and there is no doubt that the simple fact that it has been made known that some uneconomic pits are to be closed has given rise to much misapprehension. Nevertheless, there are some real fears. I believe that if only the channels of information were efficient those fears would be seen to be groundless.
I heard the Secretary of the National Union of Mineworkers say that in the whole of the United Kingdom there are only fifteen pits so affected. No one need get worried about fifteen uneconomic pits being closed down under the circumstances of public ownership.
Yes, they are indeed small pits. The Parliamentary Secretary said that they produced only 1 million tons of coal a year.
Under public ownership there is a method by which one can close down a pit. One looks at the social circumstances affected by the closing of the pit. Arrangements can be made for alternative work at other pits and for proper travelling arrangements to be made. No pits are closed down without the closest consultation with the men working in them and with their leaders. Therefore, it is far better to be perfectly plain about it and to say that some pits are to be closed, which ones they are, and what steps are being taken to deal with the problems arising from their closure.
Not sufficient information of this kind is passed down to the men who work in the industry. When one speaks of closing down a pit it may well be that the men in that pit know that it is their pit which will be affected, but it is important that all other miners should also know, because unless they are told they are left wondering whether they will be affected. I am perfectly certain that the sight of large stocks of coal on the ground and apprehensions about pits closing are the main reasons for absenteeism and small attendance on Mondays in the pits. I suggest, therefore, that the National Coal Board should look once again at its system of passing on information to the men whom it employs.
Another factor causing concern is the increased use of oil. The information that we had some time ago showed that by 1965 the fuel requirements will be equivalent to about 310 million tons of coal. Obviously that position will not be reached yet. We shall not reach that position until the latter part of 1969 or 1970. Let us assume that the figure is reached not in 1965 but four or five years later. What are our coal requirements likely to be?
If we take atomic energy as equivalent to 18 million tons of coal, and we double the present oil supply—no mean feat in that short time—to the equivalent of about 78 million tons of coal, the coal requirements, even on that basis, will be 214 million tons. Therefore, the necessity for the coal industry to be the basis upon which our fuel and energy programme exists will remain firm. These facts ought to be known to everybody in the coal industry.
My hon. Friend at one time took a good deal of interest in oil; he is perfectly correct. Would anybody in this House seriously consider placing the whole of the fuel and energy programme upon the basis of oil from the Middle East either now or in the future? Is it wise or clever?
I am not concerning myself with current problems but with the fact that supplies of oil can be interfered with very quickly and far more quickly than coal. The oil supplies that can be kept in this country are very small. Let there be an interruption of oil supplies for a few weeks and the section of British industry which is dependent upon oil would slowly come to a standstill. I am not sure whether the Government would not like to take another look at the expansion of the oil-fuel programme, in view of the fact that in the next decade there will be uncertainty in the Middle East with a consequent possibility of interruption of our oil supplies.
In that case, and if the oil supply is not doubled within the period that I have mentioned, the demand for coal will be even greater than it is now. The present situation is just a passing phase. The State-owned industry will take care of the difficulty through which we are passing. We should go on recruiting young people, putting our investment into mining and making British mines technically the most efficient in the world. We should go on improving our management and should always try firmly to convince people that the industrial prosperity of the country still rests on coal. We should make coal the basis of our fuel and energy programme.
Another very important question is that of exports. I am not happy about what the Parliamentary Secretary said today upon the subject or what he said previously in answer to a Question. I am most unhappy at the reply he gave when the hon. Member for Sheffield, Heeley (Sir P. Roberts) raised the question of exports in the Adjournment debate the other night. The Government are far too complacent about it. It is a great mistake to be so, and I want to give a couple of illustrations to show what is in my mind.
Several months ago I asked the Government to give a further assurance to our prospective customers abroad that we would reserve for them at least 10 million tons a year in exports from this country. That is little enough. It would be a terrible mistake for the British coal market abroad to be lost to us for the sake only of reserving 10 million tons per year. It may be that we shall need to import and export coal at the same time, but it is worth it. Coal is not a uniform commodity. There are 100 different varieties. It may be that we have to import large coal in order to export other qualities of coal. We might be very glad if we had 10 million tons tied up in this manner. Let us not worry about it; the thing is quite justifiable. We import plenty of steel while we make plenty of steel. We import plenty of other commodities which we manufacture. I would not make coal an exception but I would make certain that I got back some of those exports to a minimum of 10 million tons of coal per year.
I want to give two illustrations which I think are important. Take the European Coal and Steel Community, with which this country has a special treaty of association. The Community has its own funds, but there is a comparatively dead market for the Community's producers. I should not be a bit surprised, watching what is happening there, if in a comparatively short period some central control were exercised to ensure that the High Authority sets the whole atmosphere for import purchases by the six countries in the Community from the outside sources, America, Poland, and the United Kingdom.
This is a very important matter. There are six customers who are likely to become one customer on behalf of the six. The pattern of investment will change in accordance with the policy that the Community cares to adopt. If the Community turns to the United Kingdom for supplies to Europe, it will have to remember that coal exports and imports to Europe can go in small parcels to a variety of small ports. If the Community decides to take large quantities from the United States, it will have very big cargoes in large parcels which will have to come into a limited number of large ports.
There will have to be a new network for the import of large quantities of American coal, and it will want a good deal of investment. Smaller ports, which are no longer taking British supplies, are going out, and the larger ports will be on a permanent basis, with increased import facilities. Before that investment is undertaken, it is highly important that we get our customers back in Europe and that we maintain a network of distribution such as we have at the present time. Once the European Community has in its mind that the United Kingdom is no longer a source of imports of coal in anything like substantial quantity, we shall have very great difficulty indeed in keeping our customers on the other side of the Channel.
It will not be a question of a three, five or ten-year contract, once the Community invests in those directions. The Community will want permanent arrangements under which it will be able to see that it can get coal from the United Kingdom in the quantity and the qualities that it wants. We must seek to give it the assurance before any changes are made, and before the big change is made to take continued imports of American coal, to the detriment of the British coal industry.
My other illustration is Denmark. The association between this country and Denmark is of the closest and has been for very many years. The Danish electricity works, which are traditionally very large customers of British coal—they are not getting it now, but their minimum potential requirements are about 2 million tons a year and probably more— find that our steam-raising smalls are the kind of coal they want. Not having been able to get them, they have turned—this is a big Danish investment—to mining, by opencast methods in many cases, Danish brown coal.
I suppose that the mining of brown coal in Denmark is as distasteful as opencast mining in this country for the people in the area. The Danes do not like it. Nevertheless, these operations—this happened very largely after Suez because the Danes were apprehensive about their fuel supplies—have received a good deal of investment. If we are to get the Danes to give up that investment in brown coal, and I think they will be prepared to do so because they do not particularly like it, British coal will for a period of time have to be sold at a price which will enable the Danes to do that.
I would not suggest that normally coal should be sold under production costs. I would not for a moment suggest that we should try to compete with the Polish dumped coal which can be obtained all over Europe at well below the cost of production. However, when we consider that we are paying 13s. 6d. a ton for putting coal into stock and picking it out again, it would not be a bad thing to sell ii at 10s. a ton less than the cost of production and thus save ourselves 3s. 6d. a ton, thereby getting back the market in Denmark so that our coal takes the place of Danish brown coal.
These are illustrative of what I have in mind when I am talking about exports. I believe that I carry the whole of this side of the House and probably many hon. Members opposite with me when I say that coal exports are very important not only to this country but to the coal industry as well. We must make an effort to get back some of our traditional markets so that we have a guarantee that there is an outlet for British coals.
I end as I began by saying that the splendid Report of the Select Committee has been very helpful. All of us who have read it have appreciated the wealth of information in it. It will make the debate on the Report of the National Coal Board much more attractive than it would have been.
The right hon. Member for Blyth (Mr. Robens) made considerable references to the problem of the export market. I think he will find that he has a considerable body of hon. Members on this side of the House on his side in this matter. I shall deal with that later, but meanwhile I should like to refer to his very generous remarks about the Select Committee on which I had the honour to serve. I echo the congratulations offered to my right hon. Friend the Member for Blackpool, North (Sir T. Low) upon the excellent chairmanship which he displayed during the Committee's work.
I offer a word of congratulation also to my hon. Friend the Parliamentary Secretary upon what must have been his first major speech from the Dispatch Box. Whether or not we agreed with everything he said, it will be agreed that he spoke lucidly and factually on what is a very large and, inevitably, a very controversial subject. He ended by saying that our struggle is with facts and not with each other. We must, however, state facts, for only if we state things clearly and objectively can we find the answer to so many of the problems with which the industry is confronted.
Ever since 1951, which was the high-water mark year in deep-mine production, there has been a steady, if gradual, decline of slightly over 4 million tons. During that period there have been ups and downs in the number of men employed, but by 1957 we were back at a figure of 710,000 men against the 715,000 in 1951. We now know that during that period there had been a net saving of 18,000–20,000 men on the surface, very much to the credit of the National Coal Board, whose various schemes of improvement in surface lay-out had materialised. But that gave a net gain underground. Although we must set off against that net gain the extra week's holiday, the higher age of boy entrants and the additional number of technicians required, I do not think a very strong case can be made out for a shortage of underground manpower.
If the Select Committee did nothing else—and I think it did a great deal—it swept away many misconceptions which have bedevilled a great many of our debates in recent years. We are mining coal at exactly the same depth as a generation ago. It is about the same distance from the pit bottom, taking one year with another, and within a framework of 52 in. we have lost only 2 in. in the thickness of the coal seams that we are mining. That means that something is wrong with the coal industry. We have reached virtual stagnation in our production despite an immense expenditure of money and very real advances in technology. I shall deal with that later, but it must be the background to our thoughts when we are considering the problems of the industry.
I turn to one or two things said by the Parliamentary Secretary about the present situation, about which he spoke with some restrained optimism. In 1957 we were going through a transitional period of change-over from a sellers' market to a buyers' market. For seventeen years we had enjoyed a sellers' market where production was paramount. Then we came, inevitably, to a very difficult period, that of change-over from the paramountcy of production to the necessity to recognise that costs must be paramount and that in the last resort the customer will decide the ultimate issue. It throws a great strain on the National Coal Board and on management. It is easy enough to boost production but it is extremely difficult to level out costs or to make improvements within them.
That brings me to the question of small coal and the stocks, about which we have heard a lot today. I know that we have no occasion to be unduly worried about the size of our stocks, although they are larger than we wish to see, but I think we should be unwise if we did not recognise that the process of degradation and oxidation means that these stocks, after a period of twelve months—and a great many of them have been there for twelve months—fall sharply in calorific value and that there will come a time when the National Coal Board will have to write down their value in its books.
I also believe that, keen as we always are on seeing an expansion of our export market, we must be realistic in the value of these stocks. We may say that we do not wish to see coal sold below the cost of production and at the cost of sweat and toil, but that will not sell the coal for us. We may well have to accept quite drastic writing down, both in the value of these stocks and in the value at which they may break their way into our traditional European market.
As to the small coals themselves, I think it was inevitable that, with the advance of power loading, which now represents about 50 million tons a year, and with the intensification of mechanization, there was bound to be a greater proportion of small coals than hitherto. It is not unreasonable to be a little critical of the fact that perhaps not enough foresight was given to that situation.
These small coals are being produced, and although we have spent considerable sums of money on experimenting with briquetting and other methods, we have not made very large advances, and hardly anything has been done about low temperature carbonisation, which is another means of dealing with the problem. We must hurry up our researches into both those processes as well as recognising that considerable effort must be made, as the right hon. Member for Blyth said, to re-enter our traditional European markets. The power station section of them, on the European seaboard, were the traditional markets for these unwashed small coals.
Turning to a more optimistic picture, there is no doubt that we are making considerable strides in technology. The Coal Board and the Ministry are to be congratulated on the various developments which they have been making. Their most recent experiments are in the use of hydraulics underground, which has, I think, probably a limited application. The Board is now experimenting with a machine called the Goodman Continuous Loader, which I think is the logical development of the American Joy Loader, with which we started our original experiments in power loading in this country in 1944. I have always regretted that we did not continue with the experiments then carried out. They were in board and pillar work. Since then we have gone over to power loading on our traditional longwall faces. Certainly our experiences, and subsequently those of the National Coal Board, with the board and pillar work were that it had a very high initial cost, but when it came to the final result it turned out to be a very worthwhile method of dealing with this problem. Indeed, despite the fears at one time expressed, we found that we had almost total extraction. I very much hope that this Goodman Continuous Loader may be tried out in those conditions.
The main part of my remarks arises out of much of the work which we did in the Select Committee. One thing which was borne in on my mind and, I imagine, on the minds of all in the Committee, was the vast scope and extent of the problems with which the National Coal Board is confronted. Let us be quite objective about the National Coal Board. It consists of very ordinary men. They are not supermen; they are ordinary men doing a job to the best of their abilities, often under very difficult circumstances. They are not men of vast industrial experience, nor would they claim to be, yet week after week and day by day they are confronted by a wide variety of difficult problems from a variegated industry.
We expect them, together with the part-time members of the Board, who are trained industrialists, to be able not only to solve those very intricate problems and to give sensible and reasonably quick decisions on a whole host and variety of questions, but also to be the functional heads of the biggest industrial empire in the world. I do not think that it is either reasonable or practical that they should be expected to do that.
I wish that the right hon. Member for Easington (Mr. Shinwell) were in his place, because if he were not the architect, he was at any rate the standard bearer of the scheme originally introduced for the conduct of this industry. I do not think I am putting words into his mouth when I say that he is much too wise and experienced a man to say that he is satisfied with the present situation in the coal industry. I am sure that he is not, and I believe quite firmly that he feels that it should be thought about again. When he says that, I am sure that he is right. We need to think about it again, and we on these benches must take our share of the blame in being hesitant so long.
We have in the Ministry today men who I think have both the imagination and the courage to do so, and I hope that it is not long before we find that they have not only embarked on the solution to this problem but that we may become aware of their intention to solve it.
I should like to crave the indulgence of the House on this occasion, it being the first time that I have been privileged to address the House. I am very happy to be the Member for Wigan, a town whose history can be traced back to the twelfth century. In fact, the Charter of 1199 first mentions the name of Wigan, spelled then as it is spelled now—a town, I believe, of Saxon origin. In the Charter of 1662 authority was given to the borough to use the motto "Ancient and Loyal", and from that day onwards Wigan has been known as the ancient and loyal Borough of Wigan.
The people of Wigan, known affectionately as Wiganers, are a happy, kindly people, tolerant but yet outspoken. I have always found it very difficult to understand why third-rate comedians find so much material from Wigan when they are on the stage. As Englishmen, we have a sense of humour, and I believe that our sense of humour and our ability to laugh at ourselves is one of our greatest national assets. I hope that in some small degree I share that asset, but the type of humour which these third-rate comedians turn out bears no relation whatever to the type of people who live in Wigan or to the structure of the town.
Poverty, so vividly described in George Orwell's book, The Road to Wigan Pier, has, I am glad to say, disappeared, and I am sure that hon. Members on both sides of the House do not want it to reappear. Wigan has been associated with coal for very many generations, but it may interest hon. Members to know that very little coal is being produced in the Borough of Wigan now. Unfortunately, Wigan, so far as coal production is concerned, is a dying area. Many of the inhabitants are in coal mining, but are outside the area, such as in the neighbourhoods of Manchester and St. Helens. Wigan has a very fine mining college and attracts students from all over the world.
I should now like to make two observations on Volume 1 of the National Coal Board's Report. Paragraph 233, on page 47, reads:
There are good reasons why absence rates may be higher in mining than in some other industries.
Until nine weeks ago, I was an underground mineworker. During the latter half of 1957 we had, as we have had
periodically since nationalisation, attacks on the miners about the problem of absenteeism. I do not want to be controversial. I wish to uphold the traditions of a maiden speech, but the miners resent being singled out for special attention and publicity in this matter. We on this side of the House cannot, of course, condone habitual absenteeism; we never have done.
I should like to describe an experiment which we carried out in a Lancashire coalfield and which may have been tried in other coalfields. We set up committees, called attendance committees, consisting of an equal number of representatives from the Coal Board and the National Union of Mineworkers. The purpose of these committees was not to discipline men, except in the last resort, but to try to find oat exactly why a man was habitually and consistently off work. We considered whether this was due to domestic or personal reasons, because they play a part in a man's employment.
What happened? Unfortunately, these committees were killed largely by the undesirable publicity which they received from the Press. When captions such as, "Lazy miners to be sacked", or, in one case, "Four lazy miners to be sacked" appeared in the Press, immediately the traditional loyalty of the miner was aroused for his fellow worker, and it became impossible to work these committees. When they could work in an unobtrusive way and without publicity, they did a great deal of good work. The mineworkers' leaders in Lancashire should be congratulated on their courage in facing up to this problem. This was to a certain extent an effort in the art of self-criticism, which, I think hon. Members will agree, is the highest form of criticism. I only hope that when people criticise the mineworkers, as they do, they will sometimes apply the same tests to themselves.
I should like to say a word or two about absenteeism in general. It is recognised that mining is a difficult and unhealthy job. Therefore, in a job of that nature there is bound to be a certain amount of absenteeism. A man must present himself at the pithead in time to go down at the last winding. If he is a minute late he loses a day's work. That does not appertain in other industries. Even though a person is late, perhaps by a quarter of an hour or half an hour, he can do some work during the day. That factor again contributes to a higher rate of absenteeism.
I now turn to the question of the ever widening gap between wages and sickness pay, which is relatively wider today than it was before the war. If I may speak from personal experience, while I was down the pit there were some men, not many, many of them middle-aged low-paid workers, who would take a couple of days off rather than go to the doctor because he might sign them off for a week or a month, which they could not afford. That is another reason which has contributed to voluntary absenteeism.
I have with me a cutting from the Observer which I should like to quote. The Observer is a newspaper for which I have a great affection. I believe that it is a paper that contains exceedingly good, clear and original articles. But I can hardly agree with this comment in it:
One of the few attractions of being a miner is that it is possible to earn good money without too regular attendance, so that the job likely more and more to attract men of a particular type and personality—just as teaching attracts people who like long holidays, and the Civil Service people who like security.
It is not my intention to bring discord into the debate in discussing the relative merits of why people go into teaching or the Civil Service. But if it is not unparliamentary language, it is sheer tripe to say that men go into mining because they want to indulge in absenteeism. If that were true, when the Coal Board advertises for new recruits it should also advertise not only a good pension scheme and holidays with pay, but plenty of absenteeism thrown in.
I should now like to turn to page 49 of the Report, which deals with welfare. The Board has done a great deal in this direction. I am particularly interested in this matter because I was the vice-chairman of the colliery canteen and baths committee. The Board's job in the matter of human relations has two aspects. First, it has to raise the economic position of the miner, which it has done, and, secondly, to raise his social status. It has tried to do this by providing baths and canteens.
We know that we are faced with competition from the new form of fuel from atomic energy. We shall not approach this matter with the mentality of a Luddite. We shall approach it in the proper way. Coal has been the basis of this country's prosperity for many generations. I believe that the ingenuity of our scientists and technicians can find fresh use for this wonderful commodity and mineral. The Coal Board may have organisational and structural defects, but it has given the mineworker a sense of security and justice that he has not known before.
First, I should like to congratulate the hon. Member for Wigan (Mr. Fitch) on his maiden speech. If he felt anything like I felt on making my maiden speech, he will be glad that he has got it over; and, if I am not being presumptuous, he got it over extremely well. We detected a sense of humour in his speech, and we look forward to hearing from him again in the future. At the same time, we could not help thinking of his predecessor, Mr. Ronald Williams, whose tragic death I am sure made us all very sad. Nevertheless, in the hon. Member for Wigan we have someone who is obviously very conversant with the coal mining industry to join a large number of hon. Members opposite and, possibly, on this side who are experts, although not from the practical angle, in this great industry. I hope we shall have the opportunity of hearing more from the hon. Member.
I now turn to the speech of my hon. Friend the Parliamentary Secretary. First, I should like to congratulate him on his statement about the allocation of industrial coal. I have thought for a long time that a large number of people were employed in this section of his Ministry who might well be replaced, and I think that the action which he has taken is a good one.
I should also like to congratulate him on his stand against a good deal of criticism about opencast working. It appeared from the speech of the right hon. Member for Blyth (Mr. Robens) that much of the criticism of opencast coal working comes from the fear of unemployment in the coal mining industry. If that is so, I think that it is misplaced and unfortunate. In my view, we shall need opencast mining for a long time, and I do not think that the mineworker need be frightened that it will put him out of a job.
The third point which I want to stress is the question of exports. Whatever may happen with opencast mining and the question of supplies, I am satisfied that over the years there will always be a demand for this coal on the Continent.
In paragraph 129 of its Report, the Select Committee, on the subject of coal export, said:
Despite the generally gloomy situation, the Board see no reason to change the long-term export plans that they made in 1955.
The conclusions reached by the Select Committee did not deal specifically with that point. We have heard something about the 1955 policy. As my hon. Friend the Parliamentary Secretary has stated, the coal simply was not available and it would have been uneconomical to import coal for the purposes of export. That may be true, and I am not arguing the point now. What I am arguing is that the position has radically changed. If the Board takes the view that it has still to work on the 1955 policy concerning exports, my view is that it is wrong.
Let me remind the House of some of the figures which have already been quoted concerning coal stocks. For the moment, I refer only to undistributed stocks. A year ago, they were in the neighbourhood of 6 million tons, and today they are in the region of 11 million tons. Hon. and right hon. Members who have discussed this aspect have suggested that that is not a high figure. If, however, one considers the cost of financing the extra 5 million tons over last year at a 5 per cent. rate of interest, I calculate that it is costing the Coal Board some £3 million, which either reduces its profit or increases its losses. If we assess the deterioration in the coal at the same time even as low as 10s, a ton, we arrive at an additional £3 million. This is something which the House should take seriously.
My hon. Friend the Parliamentary Secretary said also that the surplus represents only two weeks' production. If one considers the whole of the stocks in industry, both distributed and undistributed, I calculate them as being something over five weeks' stocks.
If any industrialist had six weeks' stock of his total production in the yard, he would be extremely worried. I am worried too.
My hon. Friend the Parliamentary Secretary made another statement in trying to paint too rosy a picture. He said that production was not falling. That may be true of the general trend, but let us consider more specifically the type of industry which is the main purchaser and consumer of coal. In this way, we find a different picture. As far as I can see from a good deal of research, the production of the main consumers of coal is falling. Stocks in the steel industry are at the moment roughly the same as they were a year ago at about 1,400,000 tons. Comparing May this year with May, 1957, however, and applying the figures for those weeks on an annual basis, there appears to be a fall of 3 million tons in the production of crude steel. That is a great amount.
Of something like 21 million tons, it is one-seventh. That is an industry which is a very large buyer of coal. Making a similar comparison in the case of iron ore, there is a drop in production of something like 3½ million tons. The right hon. Member for Blyth has already spoken of the change-over to oil by the railways. On the whole, therefore, I feel that my hon. Friend the Parliamentary Secretary is far too optimistic and complacent when he seems to think that everything will be all right because production is going up.
When we come to the position in the autumn, with coal stocks 5 million tons higher than last year, with crude steel production down 3 million tons and iron ore down by 3½ millions tons, when we look to the forward position in the iron foundry industry, which is going on short time, in shipbuilding, which is in difficulty already, and in the refractory industry, which is already on short time, I do not believe that my hon. Friend is right in suggesting that the sale of coal will become easier in the autumn.
My hon. Friend must not inadvertently put words into my mouth. What I was arguing was that over the years that we were discussing production had not, in fact, fallen and that another reason must be found for the fall in the demand for coal, which was largely the transfer to oil. I never said that I did not think that the situation in the autumn would not require a very active sales policy by the Board. I think that it will.
I am delighted to hear that. It was not quite my recollection of that passage of my hon. Friend's speech, but I will look it up tomorrow.
I wish now to deal with the Ministry's reaction to the selling of exports of coal in the autumn. In an earlier debate, my hon. Friend the Parliamentary Secretary gave us his views. Governmental statements usually seem to stress the vital need of exports. My right hon. Friend the Chancellor of the Exchequer made a speech of this kind only a week ago, and my right hon. Friend the Prime Minister has stressed the same theme. At the Ministry of Power, however, we find a strange reluctance to face these facts.
If we refer to page 31 of its Report, we find that the Coal Board deals with this aspect merely by saying that there were a few extra tonnages in 1957. In the debate on 14th May this year, my hon. Friend the Parliamentary Secretary said:
Without increased production"—
that is, of coal—
unless and until home consumption unhappily falls off, there just is not a margin for net exports.
I cannot see how my hon. Friend reconciles that with the facts and figures which we are discussing today. In that debate, I pressed upon him certain suggestions for dealing with this matter. Some of them have already been mentioned by the right hon. Member for Blyth this afternoon. They were, I thought, reasonably sensible suggestions. One was that we should make long-term contracts abroad; a second was that we should have flexible prices; and a third was that we should have some form of guarantee of quality.
What did my hon. Friend say to that? In that debate on 14th May, he said:
Unless production increases, and unless we can be sure that it will increase over a series of years ahead, it is quite impossible, it would be almost dishonest, for the Government or the Coal Board to make the kind of statement for which my hon. Friend asks …"—[OFFICIAL REPORT, 14th May, 1958; Vol. 588, c. 581–2.]
I regarded the use of the word "dishonest" as somewhat unkind. Leaving that out of account, however, those
are the sort of arguments which have been pressed upon my hon. Friend from both sides of the House today, and I hope that when my right hon. Friend the Paymaster-General winds up the debate we shall have a more satisfactory reply.
When we are faced with the position in heavy industry as we see it at the moment—and heavy industry generally takes a much longer time to pick up following the financial restrictions which are imposed upon it by the Treasury; the present relaxation of credit will not bring about any quick production this autumn—I believe that my hon. Friend the Parliamentary Secretary must take a more realistic view of the future. He cannot merely sit back and wait for a boom to get him out of the present difficulty. If he does that he will be adopting the attitude of the ostrich, and if the boom does not come he will have a good deal of responsibility for increased coal stocks if they occur.
I am not blaming only the Parliamentary Secretary for this attitude of mind, because I think it permeates the Ministry of Power quite a long way. The reason I say this is that a speech was made by the present Minister of Supply in 1955 just before he became Minister of Fuel and Power. In that speech the right hon. Gentleman the Minister of Supply, talking again about exports, said:
There has been talk this afternoon of exports. There was a word which the Minister used"—
the present Minister of Education—
which filled my mind with doubt. It was the word 'reluctantly'. He said 'We acquiesce reluctantly in restriction of exports'. In the years past we have gone on exporting in the expectation that some day output would suffice to cover both exports and home requirements. The expectation has been falsified.
He went on to say:
… the industry has been the prisoner…"—[OFFICIAL REPORT, 20th July, 1955; Vol. 544, c. 415.]
of this idea of exporting. He then became the Minister of Fuel and Power, and practically from that moment exports from this country were severely curtailed.
Unless this situation can be rectified quickly, I believe we shall get into a position, as the right hon. Member for Blyth said, whereby we shall not be able to get back into traditional markets on the Continent. It is important that we should appreciate fully what is the position on the Continent. The overall demand from the Continent for the next year, according to the best figures I can get, is something in the neighbourhood of 29 million tons, some of it large coal, some of it coking coal, and some of it small steam-raising coal.
The average orders from the U.S.A. for 1958, which we are now in, is 25 million tons. In other words, the American market is pushing on to the Continent anything from 25 million to 27 million tons a year. Our traditional exports to these small ports which the right hon. Gentleman was talking about have fallen off practically to nothing.
I make a confession to the House which, possibly, I might not have done some years ago because of the political approach that there was to this problem. I was managing director of a coal mine before vesting date, and I therefore had some experience in the form of selling coal. It was very necessary for me to have my finger on the pulse. In those days, leaving out politics altogether, it was vital to keep export markets even though they might be at a lower price. Time and time again, we took long-term contracts slightly below the market price, and in a year or two we were extremely glad that we had done so. That was the form of ordinary business.
The right hon. Gentleman asks about miners' wages. The very fact that we insisted on certain longterm contracts abroad enabled us to keep mineworkers at work in the colliery when other collieries, because they did not have export orders, were on short time.
I was talking about the necessity of keeping people at work by taking long-term export orders. If the right hon. Gentleman does not see the point, I cannot help him.
This is an interesting argument, which I hope to continue later on. Would my hon. Friend tell the House what are the implications of what he is now recommending? Is it not a fact that if we sell coal in Europe below cost, as the National Coal Board has a statutory responsibility to pay its way, taking year with year, it would be necessary to put up the home cost of coal to offset the losses on exports? Would that not be highly inflationary?
No. I shall deal with that point at the end of my speech. I should like to build up to that final point. I do not believe it is necessary to put up home prices to cover exports at the present time if we are to be faced, as I believe we are, with a general drop in prices over the past. We have coal in stock at certain prices, and if we do not reduce our price of selling it, so far as I can see it remains there for ever. No doubt we shall hear more about that later on.
The situation with regard to prices—I will deal with it now as my hon. Friend has interrupted—is that we have this screening which we have heard a good deal about. I am not talking about the past but about the future. The export business is one which fluctuates up and down. One does not always get in at the top; one has to take the average. Over the last seven or eight years, the National Coal Board has been on a good wicket. It has sold at very high prices and made a premium over the last ten years of between £70 million and £100 million in selling coal abroad at a higher price than it would have sold it at home. That is something that should be kept in mind in the export field. We have that premium, and over the years we could have levelled out a selling policy. Then, of course, the National Coal Board cut off exports altogether in 1956. The result is that the Continental importers quite frankly did not trust the policy of the Government or the desire of the Coal Board to substantiate long-term contracts.
The impression which the Minister has given at the moment is that it is no good exporters abroad looking to Great Britain, because we just will not have the coal. If I am right in thinking that that is the kind of impression he has given, I believe that something should be done today to rectify it. I hope that the Paymaster-General will be able to give some confidence to those people who want to buy United Kingdom coal in the future that the coal will be there to sell to them.
If by any chance the Parliamentary Secretary were to say, "We may want the coal ourselves," I would point out that at the present moment we are selling coal at a ridiculously low price, far below the price at which we can produce now. Some of our statesmen go across to the Continent and talk about a Free Trade Area and liberation of trade; yet the Minister of Power looks askance at any suggestion of importing cheap Polish coal below the cost of production in order to cover the sale, very likely at higher prices, of British coal to the Continent. That is an argument which one can take up at another time.
All I am saying today is that every endeavour should appear to be taken by the Minister and by the National Coal Board to recover these traditional British markets on the Continent. I hope that they will come before the falling off of opencast mining.
I now come to the question of policy. We have had over the last year a series of Ministers of Fuel and Power or Ministers of Power and the problem of controlling the export trade from the political point of view. Let us face it that there is a political content now, whether we like it or not, because we have a nationalised industry, a Coal and Steel Community on the Continent, and more and more industrial control by the Government. I believe there is some idea that the Committee of my right hon. Friend the Member for Blackpool, North (Sir T. Low), or some other Committee on coal, should keep a watch on export policy and that hon. Members on both sides of the House might sit under the chairmanship of the Parliamentary Secretary or the Minister of Power in order to see that we have some sort of continuity of sale for our export trade. The chopping and changing of policy that we have seen over the last five years is doing us no good at all.
I come to the question which my hon. Friend the Member for Kidderminster (Mr. Nabarro) raised of finance. I have mentioned the premium, the argument for an exports pool into which premiums when they occur are put to set off against losses when they occur. In an enormous industry like the coal industry, the balance is struck over a large number of years, or should be, but we are faced with the problem that the Coal Board has to make a balance of one year with another.
I remember how this was argued with the right hon. Gentleman the Member for Easington (Mr. E. Shinwell) years ago when we were in Committee on the nationalisation Measure. We had many arguments about whether or not the Coal Board should have to balance its books by the end of each year. The arguments were carried on in the Standing Committee and in the House as to how this should be done, and the right hon. Gentleman came down in favour of a balance one year with another because it was felt that by economic necessity some form of control over efficiency would thus be arrived at. There is a balance of argument about that, but I feel that we should have some flexibility in this type of industry and that we should not have to try to balance one year with another, even if one year is extremely good for exports and another is extremely bad for exports.
That is interesting. I hope the right hon. Gentleman may be able to develop that. My understanding of the matter is that legally the Board must balance one year with another. I do not know if one is to assume that it means that we can jump some years between one critical year, good or bad, and another critical year, good or bad—
I think the right hon. Gentleman is on my side, if that is the conclusion. So far so good.
We have applied this to the railways. The railways have to balance their books over a number of years. The same practice should be applied to the coal industry.
I hope we have a definite policy over the next two years to get back the export markets we have lost, and my answer to my hon. Friend the Member for Kidderminster is that to achieve that we are prepared, I hope, to say that if there is a loss in one year we must not necessarily bring about a balance the year after. I am not prepared to accept the one year with another argument, and I understand now that the right hon. Gentleman the Member for Easington does not accept it either.
Do I interpret my hon. Friend correctly when I say that what he is really telling the House is that he recommends a subvention by the Government to finance perpetual losses?
I think that that is a considerable travesty to put up. However, I will leave it at that.
I believe that the position in the autumn will be difficult for the Coal Board. Steps should have been taken to get our export market back as long ago as June of last year, when certain of us did utter warning statements. We have now a very much longer and more difficult road to travel, but it will pay us—and when I say pay "us" I mean pay the Coal Board, pay the country—to go into the export market now even if it means selling coal at slightly less than the cost of production, the cost at which the coal was put in stock.
First of all, we should attack the traditional export markets on the northern coast of Europe, the markets for deep-mined coal for power stations. That brings me to the point made by the right hon. Gentleman the Member for Blyth and Governmental action. The Government might help in Denmark and Finland. The Finns have cut British coal exports which could very well be resuscitated. Then there is Italy. The Italians have imposed a 10 per cent. barrier against coke going in from this country. There are many things which the Government can do if they want to.
What, above all, they can do is to reinject confidence in those people who want to buy British coal, confidence to enter into arrangements with the Coal Board, confidence that, if they do so, they will get the sort of coal they want and get it over a number of years.
I do not like this idea of restriction of which the Parliamentary Secretary spoke. I think he said he was glad at the restriction on production. I will study carefully in the OFFICIAL REPORT tomorrow what he said, but the impression I got was that he was rather glad there was this restriction because it was more economic. That is not the policy of the Conservative Party. We are expansionists. We must go on expanding production in this industry for the market at home and abroad, and I sincerely hope that the Paymaster-General will be able tonight to give a more encouraging reply to the House than any which the Parliamentary Secretary has given us in the last month.
I have tried as diligently as possible to follow the argument of the hon. Member for Sheffield, Heeley (Sir P. Roberts). It has been only with the greatest difficulty that I have followed him. I will take him up on three points.
First, the hon. Member regards the fears which miners have expressed about opencast working as being due purely to fear of unemployment. I would assure the hon. Member that that is far from the truth, and that miners are just as appreciative of beautiful countryside as right hon. and hon. Gentlemen opposite. That is distinct from the question of the necessity for opencast coal.
I cannot swallow the argument—and here I disagree profoundly with the so-called experts either of the Ministry or of the National Coal Board—which attempts to prove that there is the same value, the same quality, in opencast coal as there is in deep-mined coal. It is time that those who think that there is undertook some further analytical examination. Even if that is their opinion, it is not the opinion of the layman, and I am sure it is not the opinion of the householders, nor yet the opinion even of industrialists. Apart from anything else, there is the fact that within a short space of time it deteriorates and weathers to such a degree that if it were given to the local authorities for roadmaking it would have a more distinct advantage.
I cannot swallow that figure of £9 million profit. It may be the figure on the books, but it cannot otherwise be an accurate one, taking into account the amount for stocking and the amount for distribution afterwards. My view is that it is a figure arrived at on the production site and left at that.
The hon. Gentleman astounded me by glorifying the colliery of which he was a director. I know particularly well the area around that colliery. I know full well the conditions of the men working at that colliery at that time. They were very much the same as those at mine, although they were not in the same syndicate. The coal was sold at 12s. 6d. a ton. The hon. Gentleman told the House that that was done to keep the men at work. What a ridiculous statement to make.
The men were working only two or three days a week and the coal was sold at that price, exploiting the men in Europe. When we tried, as we did in Yorkshire, to get an increase in wages and better conditions, we were told—and it was the concerted policy of the coal owners at that time—"We have to compete with coal owners in South Wales and in Durham, and, therefore, we cannot increase your wages." The hon. Gentleman's argument was fallacious. I am sorry that he raised it.
I was rather hoping that that sort of argument was a thing of the past. I was pointing out to the House how we had long-term export contracts and how important they were. Had we not got them the men might not have been employed for even two or three days in the week. Surely the hon. Member agrees that it is better to have two and a half or three days a week at work than none at all.
The answer is not as simple as the hon. Member is attempting to make it seem. It may do for unintelligent and for uninformed people, but people who know the industry know quite well that there was stockpiling going on, that what was then done could not have been done in ordinary circumstances, that our miners were being exploited, and that continuity of pit working was obtained at the expense of the miners.
I come to the question of balancing one year with another. The position has been explained perfectly clearly. The calculation of deficit cannot be based on one year or the next. It must be governed by a series of years, and the Coal Board is responsible for the deficit and must make it good. The question of how long that process must take must be a matter to be determined by the Government of the day. Argument on this point, therefore, is rather fruitless.
I agree with the hon. Member for Heeley that the Parliamentary Secretary painted a far too rosy picture of the industry. I cannot see the situation as being half as bright as the Parliamentary Secretary assumes it to be, and there are a number of things which I should like to hear explained more fully when we have the Government's reply to the debate. The Parliamentary Secretary said that the price of oil, the most serious competitor to coal, had increased by one-fifth since 1951, while the price of coal had gone up by 60 per cent. That is a rather vague statement. I hope that we shall have the disparity in these prices explained.
The Parliamentary Secretary also referred to the deficit which the Coal Board had to meet this year. It is no doubt a source of amusement to the Tory Party to fling around the news that a nationalised industry is faced with a deficit at the beginning of the year of £30 million, but it would be as well if this figure were examined more closely and if some of the reasons for it were taken into consideration rather than that vague statements should be made about it.
Earlier in the debate, it was stated that there had not been very much more capital investment under nationalisation than there had been in the industry before the war, but I do not think that the figures bear out that statement. During the last five years considerably more money has been spent.
Of course, but the Tory Government have increased the interest charges which the Board has to meet. The Board has had to meet extraordinary interest charges, well above those that prevailed in 1945–51, plus Income Tax and—no doubt a nauseating fact for hon. Members opposite—millions of pounds in compensation for 200 pits closed since the nationalisation of the industry.
I would not say that the Coal Board is everything that might be desired, but I would seriously submit that, with all its shortcomings, it has done an exceedingly good job in extraordinary difficult circumstances. If there are complaints to be made about the Board, or about the men, we are entitled to make them, but I should like to hear those complaints expressed by those who have been or are engaged in the industry and know something about it.
The hon. and gallant Member for South Fylde (Colonel Lancaster) rightly said that with power loading and the introduction of increased mechanisation there is an increase in the production of small coal. It was inevitable that there would be more small coal and more dirt. Non-miners do not understand that. The Coal Board has done a terrific job in spending millions of pounds on the separation of saleable coal. This is a problem that can be very well left to the National Union of Mineworkers and the Coal Board. We all want to see the Board mine large coal, but that involves fewer shots. That is an important point.
It may not be the whole answer, but I agree that it is a very important factor which should have the most serious consideration by the National Union of Mineworkers and the Board. Attempts are now being made to solve this problem and I hope that an agreement will be reached to the mutual advantage of all concerned.
The Parliamentary Secretary dealt with one or two items about which we are entitled to express an element of joy. One of them is the overall increase in productivity at the coal face. The increase may not be as great as one would have hoped, but it is a step in the right direction which should please all of us. The Parliamentary Secretary was not unfair about the manpower situation. His remarks were generally acceptable, but we as miners' representatives and Members of the House cannot alone deal with this problem.
The National Union of Mineworkers, its officials, the officials of the Coal Board, the Electricity Board and every other authority in the land have been under a delusion about this industry. It was generally accepted, until twelve months ago, that it would be a physical impossibility for us to get as much deep-mined coal as would be required for our internal developments and needs. That was the general opinion of all our experts and that opinion has been falsified. I am afraid that, although we have reached the position when we have sufficient for our home consumption, it is not of the right kind.
It was nice to hear the Parliamentary Secretary say that there has been a substantial fall in tonnage lost through disputes. We all welcome that. I represent the North-East Division and we are nearly at the top of the absenteeism league. However, I think I am voicing the opinion of all my hon. Friends when I say that we would like to see the position improve still further.
The Coal Board must do something about export coal before it is too late. Once we lose markets, it will be difficult to regain them. I am rather alarmed because it is not many years since, with my hon. Friend the Member for Bedwellty (Mr. Finch), I met the export officials of the Board. They were most anxious to export coal, but could not get sufficient to do so. I hope, therefore, that the mission will be successful. I agree with my right hon. Friend the Member for Blyth (Mr. Robens) that it will be useful from the trade aspect, because a serious position confronts us over demand and supply.
I have read the evidence submitted in the Report and have nothing but commendation to offer to the right hon. Member for Blackpool, North (Sir T. Low) and his colleagues on the Select Committee who ascertained these facts. One could hardly believe that it would have been possible to do this unique work so well. This first venture involved an exceedingly big job and they have done it in a very satisfactory way.
Many people regard investment in mining as similar to normal business investment. That is not the case, because 75 per cent. of our deep-mined coal is from shafts over fifty years old. Any hon. Member knows that machinery in an engine shop will not work as well after fifty years as some that is only five years old, especially if it has been worked continuously. Coal mining is an extraction industry, and the investment programme must be heavier as time goes on, even to keep up the present output, let alone to improve it.
I have dealt with the question of prices to some extent, but there is one suggestion which was made by the Select Committee which. I am sorry to say, the Government have not thought fit to accept. It was a practical and sensible suggestion that the responsibility should be removed from the Board to the Minister and then brought by the Minister to the House to be debated fully and for prices to be determined.
My final point concerns uneconomic pits, which are a difficult problem involving human relationships. If we have to move men from one place to another I hope that they will be treated generously. I am pleased to note that there are only 15 collieries, small ones at that, so earmarked, but I fear that many more will be affected. I hope that my fears will not be justified, but I trust that the Board will treat the men and their families generously, will look with a sense of responsibility into the question, and that generous allowances will be made to people who have to leave their place of birth and go to what is more or less a foreign area, particularly until they get rehoused.
This is the first instalment of a very full inquiry into a complex and large industry. Many good points have been brought out in evidence and I have no doubt that, with good will on both sides, there will be good results from the Report.
The hon. Gentleman the Member for Rother Valley (Mr. D. Griffiths) has great experience of this industry and he is always listened to with respect. It is for this reason that I value, as I am sure will my colleagues on the Select Committee, his remarks on the usefulness of the Report now before the House. If the Report is valuable to the hon. Gentleman with his knowledge, it is an added tribute.
At the outset, I wish to thank the right hon. Gentleman the Member for Blyth (Mr. Robens), and my hon. Friend the Parliamentary Secretary, for the kind things that they have said about our work. We worked as a Committee and it would be wrong to pay a tribute to myself or to any individual. Sitting next to the right hon. Gentleman on the Front Bench opposite is the hon. Gentleman the Member for Houghton-le-Spring (Mr. Blyton), whose expert assistance was of great value to us. We had the benefit, also, of the expert knowledge of my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster). We were lucky to have those two, in particular, with their special knowledge of the industry.
May I say, personally, how delighted I am that the Opposition have chosen the hon. Member for Houghton-le-Spring to wind up the debate for their side this evening? That is another tribute to the Select Committee, in that it has been able to produce the hon. Gentleman to wind up the debate tonight for the Opposition.
I should like to make one or two general remarks about the work of the Select Committee, as I see it, and here I am speaking only for myself. I have not been able to speak for myself for some time, but I am now able to do so, and perhaps hon. Members on both sides of the House may agree with me. There are 13 members of the Select Committee—rather a curious number for a Select Committee—and we approached our inquiries, as I think we were bound to do, as laymen. Though, on this occasion, we had two hon. Members who had special knowledge of the industry, that will not be so in every case with similar inquiries. We lack expert advice, and we felt it on this occasion, and that is why the Committee made the comment that it did in the closing sentences of the Report to which the right hon. Member for Blyth referred. I do not think that we ourselves have sufficient experience or sufficient feeling of the problem to make any definite recommendations at the moment.
But I do think that it is an extremely good thing that a Committee carrying out an inquiry like this is a Committee of laymen, because the worst thing we could do in this House would be to set up from among ourselves a body of men who thought that they were experts in the matter and who might try to blur the responsibility of the Coal Board, the House of Commons, the Minister and the Parliamentary Secretary. I shall say a word or two about responsibility in a moment, and it is a question on which, I imagine, my hon. Friend the Parliamentary Secretary will be waiting to hear something from me.
On this point, I should like to express the hope that if any hon. Members on either side of the House think that we ought to conduct these inquiries in a different way, they will let us know, because we are feeling our way. It is bound to be rather experimental for the time being, but I think that, on the whole, in this particular inquiry we have served a useful purpose, at least from the point of view of the House of Commons. Indeed, I have been pleased to hear that certain passages in the Report and the comments we made have been quoted as of value to hon. Members of the House.
This Report serves another purpose. It has, or ought to have, calmed the fears of the critics of the idea. The right hon. Member for Blyth said that he, too, had had these fears, and that he thought the Report proved that they were not justified. I hope that his right hon. Friend the Member for Lewisham, South (Mr. H. Morrison), who also said that he had these fears, and who expressed them in his usual lucid and moderate fashion in his excellent book—for it is an excellent book—"Government and Parliament", on page 282, when he has read what I have to say and has had a look at the Report, will also feel that his fears were not justified.
In particular, the right hon. Gentleman feared that the Committee might develop into a body of anti-nationalisers and pro-nationalisers, who might use the Committee for the purpose of discrediting public ownership, on the one hand, or, on the other, for the purpose of seeking to say that the work of the Board was perfect. That certainly was not done; there was an objective analysis.
Foremost among other critics was The Times which, in its various leaders from time to time, and particularly in August, 1953, appeared to consider that Parliament has all the machinery needed, without setting up a Select Committee, for performing this important duty, which it saw as the duty of exerting long-range vigilance, coupled with wise balance, that would stimulate efficiency and enterprise in the nationalised industry. It foresaw the danger that a Select Committee might provide the conditions in which efficiency and enterprise would wither. I do not think that any hon. Member who has read the proceedings of the Committee and has looked at the evidence will think that that fear was born out on this occasion.
There is obviously a limit to what such a Select Committee can do, and a limit to the ground which it could cover. Quite clearly, it did not cover everything. We did not cover opencast coal mining, for example. In passing, I would point out that I do not agree with what the hon. Member for Rother Valley said about opencast coal mining. If I am to mention it, I should declare a slight interest, because I am connected with a company which digs up the coal to be sold at the unfortunately low price which has been commented upon. I hope that the hon. Gentleman, who is usually so careful, will look up his facts and have a look at the problem anew.
During the inquiry, I think that most of us as individuals must have reached certain broad conclusions about this great industry and the two most important conclusions that I have reached, or the reactions which it created in me, were these. First, and my hon. and gallant Friend the Member for South Fylde has already made the same point, I was impressed, indeed almost terrified, by the complexity and vastness of the problems which face these men whose duty it is to serve upon the Coal Board.
We have included in our Report a warning against generalisations on the problem of coal, and that is most important, because even coal itself is not one thing. We hinted, also, at a warning against too great centralisation, and many others have made the same point, I wonder yet whether there is the right balance between decentralisation and central control. We did not go into that, because we thought it right at first to stick to other things, but perhaps at a later date some other Select Committee might like to see how that problem can be worked out.
With this vast and complex machine to control, a tremendous amount must depend on the quality of the men we are able to get to serve the nation in the coal industry, particularly in high positions under the Coal Board. I have no doubt at all that, quite apart from many other considerations, one of the considerations that will affect our ability to get these men will be the way in which this House of Commons and the Select Committee conduct themselves towards great industries like this; and I hope that all of us have tried, both on this occasion and in earlier times, to set an example in these matters.
The second general point that occurred to me was one to which I have referred earlier—the point about clear responsibility. It seems to me that where we have a vast and complex set of problems, it is absolutely vital that the responsibility should be clearly understood to lie where it does lie, and it is on this point that I attach so much importance to the recommendations that we made about prices.
Let me now deal with the recommendations and the comments we made, and, first, deal with the general question, to which my hon. Friend referred, of the reply to be made to a Report such as that which the Select Committee has now put before the House. To my mind, the important thing is not how a reply reaches this House, or who makes it. I can think of several constitutional points concerning whether the Coal Board should lay the Report before Parliament or whether it should come from the Minister, as does the Annual Report, which, I would say, was perhaps the most convenient way to do it. The important point is when that reply comes.
If it is known that the House is to have a debate on coal and upon the Report of a Select Committee, it is very convenient for hon. Members to be able to study the reply of the industry commenting upon the Report. I venture to say to my hon. Friend the Parliamentary Secretary that it would also be convenient to him, because it must have been a great feat of strength for him to stand at the Box for 75 minutes, and his speech would have been much shorter if he had first been able to lay before the House a report from the Coal Board giving its comments on the Report of the Select Committee.
I realise that great ministerial questions of policy may be involved in a Report like this. Those matters could be easily be reserved if that were thought right. However, I do not think that my hon. Friend should dismiss from his mind the possibility of putting in front of the House as soon as possible, after a Select Committee reports, the nationalised industry's reply, so that we can all see it before we have a debate. After all, Members of Select Committees are human and make mistakes, and it is right that the industry should have a chance to correct comments and factual statements as well as recommendations.
—the point the Parliamentary Secretary took about the reply to the Select Committee's Report. I am not on the question of prices at all; I am on the general question.
Having dealt with the general question, I now come to a specific recommendation, and I will take, first, the one on prices. The recommendation on prices is the only recommendation and the only comment with which the Government or the Coal Board have thought fit to differ. It seems to me that a vital thing in such a great industry is that responsibility should be clearly defined—I have said that previously—and it also seems to me sensible that the procedure suggested by the Select Committee, or somthing very like it, should be adopted. That procedure is not so very different from what the Parliamentary Secretary was putting to the House as he may have led us to believe.
We suggested that, before making an alteration in prices, the Board should, as it does now no doubt, have a consultation with the Minister. At that stage it would be informal, just as it is now. We then suggested that it should be for the Board, after its consultation with the Minister and in the light of its knowledge of where he thought the public interest lay, to make up its own mind, because it is responsible for running the industry and ensuring that its accounts keep in the black.
We then suggested that if there were paramount national interests which, in the Minister's view, demanded that the Board's decision on prices should not be allowed to go through, the Minister should give a clear statutory directive and put it in front of the House. It is only in that case, where the Minister has differed from the Board, that the House of Commons becomes directly concerned.
There is nothing very novel about this. If hon. Members will think back to the Iron and Steel Act, 1953, and the procedure imposed by the House upon the Iron and Steel Board, they will see that there is something very like that in the case of steel. The Iron and Steel Board does not own the iron and steel industry, but it has powers to fix prices. Normally, it will lay down the prices without ministerial interference, but elsewhere in the Act the Minister is giving power to give a direction on prices to the Iron and Steel Board. As I remember it, that direction has to be laid before the House.
That procedure is very close to the procedure which we suggested. Though my hon. Friend stressed the importance of informality and close contact between the industry and the Minister—I understand that, of course, and agree with it—I beg him to have another look at this suggestion in the light of what I have said in expanding upon it. To sum up, according to our suggestion there would be the discussion stage before the prices were fixed, and that would be informal. If there were agreement, the procedure would be informal. Only if there was disagreement would it be formal.
May I assist the right hon. Gentleman on this occasion? I served on the Select Committee under his chairmanship. I think he will agree that our intention was that the power of Ministerial direction should be a reserve power.
I am most grateful to the hon. Member. That has probably dealt with the fears on the other side of the House. What he has said is inherent in the suggestion. I was trying to put the matter as clearly as I could and to remind the House of the example of the steel industry.
My right hon. Friend who is now the Minister of Defence and I, who was Parliamentary Secretary to the Ministry of Supply at the time, took pains on many occasions, during the passage of the Iron and Steel Act, to draw the line between the supervision of the national interest and the supervision of the industry as an industrial proposition. I believe that that drawing of the line and defining of responsibilities is a most useful thing to do when public interest and industrial interest are closely related.
There are two other things that I want to say about prices. I hope that the Parliamentary Secretary will read our recommendations and comments again. He will find that we never suggested that prices of coal should go up at once. In fact, at paragraph 138 we commented as follows:
Although there are several sound and strong arguments for the proposition that the price of coal is too low relative to its true costs, Your Committee believe that any further increase in the price of small coal might tip the balance in favour of oil as against that of coal for a number of uses. They therefore note with approval the greater emphasis now being given by the National Coal Board to reducing their costs as against the absolute priority they gave earlier to the volume of production.
It was in all our minds that it would not help the coal industry nor the country at the moment to have any further increase in the price of coal.
The other point on prices to which I wish to draw attention is this. In our conclusions we said that we agreed generally with the Board's attitude to prices. I did not hear the Parliamentary Secretary say whether or not he agreed generally with the Board's attitude to prices. It is important that we should know.
I am very glad to know that the other recommendations were accepted. There has been much discussion today about the importance of exports. We covered that subject. We made no positive recommendations upon it because we regarded the matter in the main, in its present state, as a commercial problem, and, frankly, we were satisfied—at any rate, we were not dissatisfied—with the way in which the Board was tackling it.
It is easy to oversimplify the problems of exports of coal. It is not just a question of selling coal overseas when we have enough coal to sell overseas. If we want to preserve coal markets, like any other markets, we have to take action to preserve them. It is clear from the evidence that if the Board and everybody connected with that had been left alone it would have liked very much to have preserved its markets, but it was a Government decision—I was a member of Her Majesty's Government at the time —to limit exports—not cancel them altogether.
Hon Members have only to look at the statistics to see this: exports were always considerable, up to 6 million tons—because we had not enough coal here and we could not afford to go on importing coal from overseas. It was not just a question of the amount of dollars that we should have to pay, though that was important it was a question of transport and dock facilities in this country, which are very important, and a question of the freights. The Transatlantic heavy freights were being forced up as a result of the extra quantity of coal which was being transported across the Atlantic.
All those things were taken into account. I was then responsible for overseas trade, and I well remember the impact which it had on our trade relations with the Scandinavian and other European countries with whom I was trying to make arrangements to increase trade in other respects. Looking back, I now realise that it had perhaps an even greater effect on the future markets of the Coal Board than I thought it would have. This matter of exports is vital and the Board has to do everything it can to try to recapture the markets which it has lost, but I hope, only temporarily lost.
My hon. Friend the Parliamentary Secretary has been accused of being too optimistic, but I do not think that he was over-optimistic. I thought that he was realistic in rightly reminding us of some of the factors which are favourable. We have become used in discussing the Coal Board problems to thinking in terms of millions of tons of output, but that is not the only thing that matters. Efficiency and the cost of that output also matter. They would matter to our economy in any event, but they matter still more in an age when oil is competitive, especially with small coal.
The right hon. Gentleman the Member for Blyth made some comments on the competitiveness of oil. I expect that he has read the evidence given to the Select Committee by the Coal Board on that matter. However, there seems to be no doubt that oil will remain competitive for a number of uses, and particularly competitive with small coal.
I regard that as a good thing, but I can appreciate that if I were a miner, or the hon. Member for Houghton-le-Spring. I should have some apprehension about that competitiveness. Nevertheless, in the interests of the consumers and the country generally, it is a good thing that we should keep the present balance of competitiveness between oil and coal.
I am sure that that competition will be fair. The hon. Member will have noticed that in the electricity generation industry there is a preference for small coal, so we need not have too much fear in that respect.
The downfall in demand must also be causing apprehension to miners and people responsible for the industry. We should not overlook the boon which that fall off in demand may be for the consumer, for after many years of booming demand, demand being much greater than supply, it is a good thing to have a slight relaxation and to have greater emphasis on costs and greater costs consciousness. None of us wants that situation to continue for too long, and we all have in mind the problems of men who lose their work, as the hon. Member for Bother Valley pointed out.
However, it is not a good thing that because of overweaning demand the Coal Board should be forced to keep in production pits which should have gone out of production long ago and which would have been put out of production but for that demand. Profitability may be greatly assisted by this slight relaxation in demand. It is on that note that I end and on that that I share some of the optimism which permeated some part of my hon. Friend's speech. I take hope, because at last conditions have allowed the Coal Board to be more cost-conscious than it was previously able to be.
There has been a remarkable change in the climate of opinion among hon. Members about the National Coal Board. Several years ago we were engaged in debates which engendered considerable bitterness. Now a vast change has come over the scene. The right hon. Member for Blackpool, North (Sir T. Low) was Chairman of a Select Committee which unanimously gave the National Coal Board a clean bill of health. That is a significant feature of the debate.
Another is that in the course of the debate I have not heard a single specific criticism levelled against the National Coal Board. There have been generalisations and assertions of a vague character, but no hon Member has endeavoured to pinpoint some grave defect in the functions or activities of the Board. Over and above that, it is obvious, whatever may have been the opinions of hon. Members opposite in years gone by, that nationalisation of the coal industry is accepted, nationalisation of the coal industry has come to stay. Everyone agrees that in a vast industrial enterprise of this character concerning the national economy and employing 700,000 to 800,000 employees defects are bound to emerge from time to time, but not more so than in privately-owned industry.
Having regard to the circumstances in the past few years and in view of the undoubted fact that because of past neglect of the industry over many years, especially the natural and inevitable neglect during the war, the National Coal Board has done an excellent job in organising and administering this very difficult industry. That should be said in a forthright fashion, with no nonsense about it. Let us treat this matter, not in a partisan spirit, but objectively. We are now all concerned, since it is now accepted that the national ownership of the industry must remain, to maintain and improve the industry and remove whatever defects exist.
Congratulations have been showered on the right hon. Member for Blackpool, North, and I am the last person in the world to deny him or anybody else praise for a worthy achievement. However, I hope that there will not be too many Select Committees. From what some hon. Members have said—and I am not sure that it was not in the mind of the right hon. Member for Blackpool, North when he referred to the advantage of Select Committees—it seems that some Members have the idea that a Select Committee should be kept in reserve to keep a watchful eye on the nationalised industries.
We shall place the nationalised industries in a most invidious position if we make it necessary for them always to look over their shoulders. That is not the position of private industry. There are no Select Committees for I.C.I., General Electric, or the many concerns with which the right hon. Member for Blackpool, North is associated. A Select Committee now and again is all very well, but let us not have too many. At the inception of nationalisation, the whole idea was that the Coal Board, the British Transport Commission—which is not under review today—and the other nationalised boards or authorities should be empowered to conduct their administration without unnecessary interference.
If anybody knows about this it is myself—if I may say so with all due modesty—because I had to pilot through this assembly the two nationalisation Bills concerned with the coal and electricity industries, and I also had something to do with the preparation of the Gas Bill. I remember the discussions which preceded the introduction of the Coal Nationalisation Bill. We had to concern ourselves with a choice—to build up the industry either under national ownership, on the model of the Post Office, with full Ministerial and Parliamentary control, or under some board or corporation operating under the general direction of a Minister. We plumped for the latter policy.
Our idea was that the Coal Board should have full power of administration and that there should be no unnecessary interference; indeed, the only possible interference we provided for was by way of a general direction from the Minister. This was accepted by the House. If we had proposed the alternative Post Office conception, it would undoubtedly have been opposed by hon. Members opposite. On the whole, the system has worked very well. My only caveat would be that the time has come when we might be permitted to ask occasional Questions in the House about administration.
If I am told that that was not my idea when I stood at the Dispatch Box presenting the Bill to the House and that there should be no interference in day-to-day administration, even by way of Questions, my answer is—and this is attributable to Lord Acton, the great political historian and scholar—"Never mind what I have said or written in the past; you consider the opinion I express now", or words to that effect. There is no particular virtue in consistency. We must take into account changes which have occurred during the years. I do not want to pursue this matter, because I imagine that we shall have an opportunity of discussing a subject bearing upon that aspect of political philosophy at another time.
Let us consider the position of the Coal Board at its inception. The Board had to proceed upon the formidable task of almost wholesale reorganisation. Furthermore, not only was it faced with a shortage of labour; what labour it had was largely middle-aged and old—much of it too old. All those difficulties were known to me, because I had to bear the brunt of them. Incidentally, there was much talk about the crisis that we had at that time. One day, when we are allowed to divulge Cabinet secrets, the full story will be told. But there have been several Ministers of Fuel and Power since 1947, and it seems to me that we have had crises ever since.
There has always been trouble in this industry. We either have too much coal or too little. The present problem, apparently, is that we have too much coal; the Parliamentary Secretary, in his admirable presentation of the case—it was a little too long, but we cannot help that sort of thing; we must grin and bear it—seemed to take that view.
We must consider what is to happen to the industry in future. Speaking with such knowledge as I possess, and without any attempt at unnecessary conjecture or indulging in any crystal gazing, it seems to me that some of the apprehensions which have been expressed by hon. Members on both sides of the House are quite unnecessary and likely to create alarm and despondency in circles which may regard them seriously. I do not think there is an iota of truth in any of these pessimistic statements. The Parliamentary Secretary was right. Far from being unduly optimistic, he was not optimistic enough. Just now there is an abundance of small coal. There would not have been so much small coal if it had not been for mechanisation.
In spite of the criticism of opencast operations, I have been associated with this industry long enough—for forty years or so, politically and otherwise, in terms of the constituencies that I have represented and as Secretary for Mines, Minister for Mines, Minister of Fuel and Power and the rest—to know, through the technical experts, that one also gets a substantial amount of inferior coal from deep-mined production. Do not let us cavil too much about opencast coal on the ground of its inferior quality.
Is the future as black as it is painted, or is it the kind of future which is calculated to attract young persons into the industry? I very rarely trouble with notes of any kind, but I happened to take note of some statistics, and although they may not be acceptable, I venture to use one which has a bearing upon this subject. I believe it was the hon. Member for Sheffield, Heeley (Sir P. Roberts) who referred to the possibility of utilising our present stocks. Although he was pessimistic, I would point out that we have to take into account the possibility of increased consumption not only in this country but on the whole Continent of Europe.
In this respect, one figure is worth while considering. The European consumption of fuel and energy in 1955—coal, electricity, oil and any other form of fuel—was 730 million tons. In 1975, it is estimated that we shall require 1,200 million tons. I do not think that that is too optimistic an estimate. Production is rising all the time. Whether the present position is due to the Government policy of the credit squeeze, or some other monetary consideration, is beside the point under the capitalist system we are bound to have booms and slumps. No doubt slump conditions will disappear and for a while we shall have a boom—we should have a boom all the easier and all the more prolonged if we could get rid of the present Government; but I do not want to indulge in controversial topics. Therefore, it is quite wrong to assume that the industry is played out, as so many people have said, or that it is not an attractive proposition. It is a very attractive proposition indeed.
Let us not forget that one of the principal problems confronting the industry since nationalisation is the fact—it is a remarkable thing—that our industrial position has been improving all the time. Indeed, the problems of the coal industry, in a sense, are the measure of our industrial prosperity.
The right hon. Gentleman would be correct in what he said a moment ago if he would have some regard to the fact that progressively, year by year, the efficiency with which coal is used in this country is improving enormously—
The right hon. Gentleman says "of course", but let me finish. The corollary of that is that each year the demand by industry for coal is being progressively reduced. Will the right hon. Gentleman try to evaluate that before making these sweeping generalisations?
I do not quarrel with the hon. Member when he says something sensible; why should I? We welcome these occasional sensible observations—even intelligent observations—from the hon. Gentleman; of course we do. Of course, I accept that. Naturally the increased efficiency in the firing of boilers has helped. That is the sort of efficiency which the hon. Gentleman himself has suggested in this House from time to time, and it is a very valuable contribution. I wish the hon. Gentleman would make other valuable contributions. But that single contribution seems to be peculiar to him. Of course, all these things are very valuable, but that is not the sole reason why the coal problems have accumulated.
There is no doubt that in electricity generation, in gas production and in the industrial use of coal, generally speaking there has been a vast improvement. And, of course, that has increased the problems of the coal industry. But for a time, as I say, there is a lull. What are we going to do about it?
Before I venture to indulge in one or two positive proposals—one ought to do that if one is inclined to criticise—let us have a word or two about the social aspect. The Parliamentary Secretary referred to the possibility of pits closing down and that that involved perhaps a million tons of coal. It does not seem a great deal, but I understand that a pit is to close in my constituency.
Of course it is different. It does not happen to be a small pit, nor is it in a small village.
It is easy enough to say that the men can find employment elsewhere. No doubt they can be absorbed after we get rid of the redundancy—the waste. But what does waste mean? It does not mean people dying or even being pensioned off. It means that at a certain age there is no more work for them, because the older men have to go first. It means, also, that men who have to find employment elsewhere will have to travel many miles. It may mean the uprooting of homes. This is not merely a matter of sentiment—something we can mention with tears or with emotion; it is a practical proposition affecting the lives of people. There are material considerations involved, and we have to be very careful about it.
I should like to say a word about how I think we can face some of the problems. Take, for example, the three main factors in the present position: first of all the excessive accumulation of small coal; secondly—the one I have just dealt with—the fear of pits closing; and thirdly, the loss of export markets. These are the three main problems. Two are of an economic character and one of a social character. How shall we deal with them?
If there is any criticism to be levelled against the National Coal Board, it should be in relation to the lack of mechanical means of briquetting. I had something to do with this while at the Ministry of Fuel and Power. I saw many briquetting works throughout the country—not as many as I should have liked to see, and there are not as many now as one would like to see—and I thought at the time that the Board should devote more attention to the construction of briquetting operations. No doubt the Board has been engaged in extensive reorganisation in the pits—the sinking of shafts and other long-term tasks—but I believe that if more attention had been devoted to briquetting operations we might have been able to deal with at any rate part of the problem presented by small coal.
Inasmuch as it possesses volatile qualities, much of this small coal could be used in by-product operations, and not enough of that has been done. At the time when the nationalisation legislation was going through the House I appointed a scientific member of the National Coal Board with the idea that he would devote attention to research into the uses of coal. Not enough has been done on those lines, and the Board might pay more attention to that aspect.
A great deal has been said about prices. I do not cavil at the idea that it may be necessary to reduce prices to some extent in order to sell more coal abroad. But I agree with the hon. Member for Kidderminster that we cannot go too far in that direction. Otherwise the Coal Board will suffer a financial loss which can be made up only by it refusing to meet the demands of miners for increased wages due to an increase in the cost of living or some other reason—the loss of Saturday working and the like—or by rising prices. That would create more criticism against the Board than exists at present. But something can be done in that direction. I believe that if the Board is encouraged to proceed with its export policy, in the course of time—perhaps not this year or next, but in two or three years—we shall again build up our export trade. I agree with every hon. Member who has said that this is of the utmost importance for the economy of this country.
Now I will deal with the question of the social effects of the closing down of pits. I must be brief, because to deal with it in detail would take a long time. There is a matter which has been very near and dear to me, a subject to which I attach the greatest possible importance, although I do not expect everyone to agree with me. It is this. When the nationalisation legislation was passing through the House we inserted an Amendment which provided for consultation between the representatives of the workers in the trade unions in the industry and the National Coal Board; not only regarding wages, or health, or safety or amenities—they were all included—but also—I think I can use almost the exact language—on any matter relating to the organisation and administration of the industry. In my innocence, I believed that that would not only be acceptable but be carried out to the full. I have been grievously disappointed.
I am not speaking of pit committees, area committees and the like, but full consultation, amounting to full co-operation, between the National Union of Mineworkers and the Coal Board.
At the highest level. I am not suggesting that the National Union of Mineworkers should associate in partnership with the National Coal Board. It would not accept the idea. I know the views of Mr. Ernest Jones, Mr. Arthur Horner and other miners leaders on this subject. They accept responsibility for their own membership, and they wish to leave themselves open to engage in dispute when necessary and to reject arbitration awards.
I do not seek to deprive them of those privileges or responsibilities, but in so far as it was possible for them to associate themselves with the Coal Board in the economic considerations which affect this great national industry and, of course, affect miners as much as the Coal Board and the country, it would lead to better feeling in the industry. They could associate themselves, for example, in the checking of accounts, the ascertainment of expenditure, the right to ask this question and that question which affects the build-up of miners' wage rates, the right to ask questions about how prices are regulated and how decisions are reached about the price of coal and about a variety of other subjects. If that were done it would lead to a much better feeling in the mining industry and would at any rate give the miners a status and a sentiment that, after all, they count for something in this great national industry and are not merely hewers of wood and drawers of water, if I may use that commonplace expression.
I believe that something of that kind is required, and I very much regret—nor am I afraid to say it—that because of the refection of its demand for an increase of 10s. for the day-wage-rate workers—and, heaven knows, the day-wage-rate workers need the increase, because their wages are much too low—the National Union of Mineworkers has decided to suspend arbitration arrangements. I regret it, and I do not think that it will lead to any advantage for the miners, for the Coal Board or for the industry.
A great deal has been said about production and productivity, and I was very glad to hear the Parliamentary Secretary speak up for the miners and defend them and say that output per man-shift has increased. It is a very good thing that we should have someone on the Government benches praise the Coal Board and the mineworkers, for a change. Let us have more of it.
But we ought to have had greater productivity. It is all very well to say, "What is the use of producing more if we cannot sell it?" Output per man-shift is of the highest importance. It ought to be improved throughout the whole of the country and in every possible industry. If we want a larger share of the cake, we must see that production is increased. The only point is that we must ensure that we get a larger share of the cake.
Dealing, finally, with the question of prices, I understand that the Select Committee recommends that when the Coal Board decides to increase the price of coal at any given moment, based on the prevailing conditions, it should go to the Minister and enter into consultation with him. If the Minister agrees, that is the end of the matter, because the Coal Board then makes its own determination. There may be some criticism, but that is beside the point. On the other hand, if the Minister disagrees, for one reason or another, there is a conflict between the Minister and the Coal Board, and that conflict reaches the House, because the reasons for the Minister's refusal to agree with the Coal Board's proposition must come before the House.
What is the situation then? As I see it, the Government are bound to support the Minister; they cannot do otherwise. If they did otherwise he would have to resign and that would be a Governmental crisis. They are therefore unlikely to oppose him. The Government would support the Minister against the Coal Board, and if we were in opposition we should be supporting an increase in coal prices while hon. Members opposite were refusing the increase. I do not think there is any political advantage in that. It might be even worse if we were the Government.
Whether we were the Government or the Opposition, there would be a conflict.
I would much rather accept the Government's view and reject that proposal. I would rather leave it to the Coal Board to consult the Minister about its proposed price determination. Having been consulted, the Minister must say, "It is your business. You raise the price of coal and you must accept responsibility." It is far better to do that. I agree that the Minister has to bear in mind economic considerations of a national character. Nevertheless, in view of the fact that we vested power in the National Coal Board to determine these matters for themselves, and particularly because so many hon. Members on this side of the House have said that the Coal Board must have the right to increase prices where necessary because otherwise they could not pay decent wages and meet their obligations, it is far better to leave the decision to the Board.
I have said enough on the subject, and I regret having spoken for so long. Let us get rid of this gloomy and pessimistic outlook towards the coal industry. It has a great future. I enjoyed the excellent opening speech of my right hon. Friend the Member for Blyth (Mr. Robens), as I am sure we all did. Speaking with great breadth of knowledge and great wisdom, he said that in our indigenous coal we have a priceless asset. It is an asset which will last many hundreds of years. It may last much longer than oil resources, which are not inexhaustible. Let us not forget that they are subject to political manœuvre in many parts of the world. Let us treasure this priceless indigenous asset of ours and, instead of criticising the National Coal Board, let us consult the Board, ask questions in a courteous fashion and endeavour in whatever way we can to make nationalisation of the coal industry a great success.
Successive Conservative Ministers responsible for fuel and power have proclaimed that the nation's fuel policy rests on three tenets. They have said this every year since 1954. The first is that we should endeavour by all means to mine more coal. The second is that we should endeavour to develop to the best of our ability alternative forms of fuel or energy resources, including, notably, atomic power and oil. The third is that we should use all our fuel and energy resources, notably coal, with the maximum possible efficiency.
Having regard to the profoundly changed circumstances of the coal industry, I wonder whether my right hon. Friend, in winding up the debate, will tell us this evening whether the Ministry of Power's future fuel policy rests upon those three fundamental considerations. That is the crux of our debate today. There has not been any proclamation from the Treasury Bench as to what should be our general direction in fuel policy matters and whether those three essentials, enunciated year after year by Conservative Ministers, still hold good in the profoundly changed circumstances of the coal industry today.
What are those circumstances? I will relate them in my own way. The first is the conversion of a sellers' market for coal, which has existed since 1940, into a buyers' market that is commercial parlance. The second is the existence of inconveniently large stocks of somewhat unsuitable grades of coal. The third is the large loss forward or financial deficit of the National Coal Board. The fourth is the unprecedented scale of absenteeism in the pits. The fifth is the change in the political circumstances in the Middle East manifest by today's events, which may change overnight the fuel and power position in this country, marginally reliant, as we are, on imported fuel oil.
I want to deal with those fundamental issues. Three years ago, in 1955, I felt so strongly about the behaviour of the Government in relation to the Coal Board that I led 25 of my hon. Friends into the Lobby against the Government. I thought that the finances of the Board were deranged. I thought that the employment of our fuel resources was unsatisfactory and inefficient. So did my hon. Friend the Parliamentary Secretary.
I am glad that my hon. Friend nods assent. I was closely associated with him on that occasion, when he voted with me against the Government. [Laughter.] It is nothing to giggle about. I prize independence in the House. If in saying things this evening I tread on a lot of corns, I am not in the least worried, because I believe with conviction that I am right.
I want to ask my hon. Friend to bear in mind the Motion for which he voted on 10th May, 1956. I must refresh the memory of the House as to the terms of the Motion which I moved. It stated that
this House, while welcoming any measure which would increase the economic production of coal, declines to give a Second Reading to a Bill which will extend the ability of the National Coal Board to borrow without adequate Parliamentary control, and which permits a large increase in public expenditure upon an undertaking which has made continual losses despite heavy capital investment".
My hon. Friend voted for that Motion with me.
No; my hon. Friend is not a poacher turned gamekeeper.
However, the point about which I want to ask my hon. Friend concerns the assurance given to me on that day by the then Minister of Fuel and Power, the present Minister of Supply, my right hon. Friend the Member for Birmingham, Hall Green (Mr. Aubrey Jones). In c. 1437 he said.
If the annual borrowing"—
that is, of the National Coal Board—
were to exceed £75 million it would be permissible only by Order debatable in the House. In no other nationalised undertaking does any such provision exist," [OFFICIAL REPORT. 10th May, 1956; Vol. 552, c. 1437 and 1452.]
Governments often forget their promises very easily, even a Tory Government. [HON. MEMBERS: "Hear, hear."] I listened to my hon. Friend for 74 minutes without once interrupting him.
I left that to the Opposition.
What I was saying to ray hon. Friend was that in 1956 we were promised a Statutory Instrument when the capital investment of the Coal Board in any full year exceeded £75 million. It has so exceeded that sum in each of the last three years. But where is the Statutory Instrument? I want to debate it. I shall want to pray against it. I shall want to relate it to the deficit forward of the Coal Board which, at 31st December last, was almost £30 million. Will my right hon. Friend the Paymaster- General tell me when the Statutory Instrument will be forthcoming? That is my first question.
Secondly, I want to know what is likely to be the attitude of my right hon. Friends on the Treasury Bench towards the financial loss forward of the Board. I am not particularly interested in the academic argument as to how many years one must take as a cycle, for the Board to pay its way, taking year by year, in accordance with the terms of the nationalisation statutes. The right hon. Member for Easington (Mr. Shinwell) introduced disingenuous and almost un-interpretable words into the nationalisation Act for which he was responsible in 1947.
But he knows as well as I do that the chink in the armour of the economic policy of the Government at this time is this. Last September, we were told that the Government would not underwrite inflation. But Her Majesty's Government are responsible for furnishing the money for the Coal Board. The loss last December was £30 million. My estimate of what the loss will be at 31st December, 1958, is approximately £55 million. I think that the Board will lose £25 million on this year's working. In the first quarter it made a surplus of £3 million, compared with last year's surplus in the first quarter of £8 million. It was £5 million worse off. Since then, production has steadily declined and is now running in a full year at the rate of 10 million tons less than last year.
The solvency of the Coal Board depends not only on balancing its expenditure with its income year by year in the terms of the Statute, but upon raising production and not allow it to fall. The Board cannot possibly earn a surplus on this year's trading with a loss in production of 10 million tons compared with last year. My hon. Friend referred to 15 little pits with production worth 1 million tons in a full year, or equal to less than half of 1 per cent. of national coal production, which is, to use the vernacular, a piddling amount. It is so piddling as to be infinitesimal. If the Coal Board is to be solvent, I am concerned with whether my right hon. Friend is right in continuing a policy of deliberately depressing coal production, which appears to be what he is doing today.
I asked my hon. Friend in a Parliamentary Question, the Monday before last, whether he viewed with equanimity the fall of 10 million tons in coal production this year compared with last year. His reply was to the effect that this was a planned reduction in production. That is a disastrous policy. The finances of the Coal Board can remain solvent only if productivity and production is continued at a high level. How, then, is the accumulated deficit to be dealt with?
I am not in the least worried today about a temporary surplus of coal which may for the time being be a little difficult to place. Why am I not so worried? Surely the sort of surplus which we have today, representing perhaps five weeks' production, is tiny compared with the total fuel requirement of this nation. We are dependent today for most of our marginal supplies of fuel upon imported oil.
I now come to a point of close identity of view with the right hon. Member for Easington. I condemned root and branch the policy of my right hon. Friend the present Minister of Education when, in 1954 and 1955, he said over and over again that he proposed to place increasing reliance on imported fuel oil. I told him that, due to political circumstances and for a variety of other factors, it was a disastrous policy. Today, I am more apprehensive than ever.
Iraq is in a state of revolution. Britain's principal ally in the Middle East is prostrate and her Prime Minister murdered. Nuri Al Said was here just eleven days ago. A substantial part of Britain's imported oil comes from Iraq. Suppose that source of supply is lost to us? The next step would be the grave imperilling of our supplies of fuel oil from the Persian Gulf.
I know that oil is not mentioned in the Motion, but copious reference has been made in earlier speeches today to oil, in view of the competition that there is on our home market between fuel oil and coal supplies. In view of this new political crisis in the Middle East, we would be ill advised to place increasing dependence on fuel oil. Rather would I have a policy here at home of continuing to mine the maximum tonnage of coal, even if it means storing increasing quantities.
The right hon. Member for Easington represented a coal mining constituency in the inter-war years. He remembers depression. He will also be able to tell me, roughly, what were the stocks of coal on the surface in those days. They were enormous compared with the quantity which we are saying is an embarrassment today. In 1926, we went through several months of almost total stoppage in the coal industry—[An HON. MEMBER: "We imported Polish coal."]—with no other industry dependent upon coal being stopped. It is true that we imported Polish coal and coal from many other sources. My point—I do not have the figures available, but the right hon. Member for Easington knows that I am talking the truth—is that stocks on the surface in those days were immeasurably larger than the 25 million tons that we have on the surface today, distributed from pitheads and undistributed.
What I want to say to my right hon. Friend the Paymaster-General, who will be replying to the debate tonight, is that it would be a mistaken policy and a policy which, in my view, would lead to increasing troubles, economic, financial and otherwise, which would affect a sphere far wider than that of the Coal Board, if we endeavoured in any way to circumscribe or to inhibit the policy, which we have proclaimed to be the correct one for many years past, of mining as much coal as we possibly can year by year. As a corollary or consequential upon what I am now enunciating in the national interest, I say that such a policy would be more likely to lead to restoration of the Coal Board's finances and its future solvency than the policy of planned reduction in coal output to which my right hon. Friend at present seems to be adhering.
I ask my right hon. Friend, when he winds up the debate, as a complement to what I have said about the need for continuing to increase coal production as largely as possible, what is his view as to the future of our combined efforts in this House to promote the most efficient use of coal in industry, and in the home.
The right hon. Member for Easington put his emphasis in the wrong place. The right hon. Member for Blyth put his emphasis in the wrong place. My hon. Friend the Parliamentary Secretary put his emphasis in the wrong place when he tried to analyse causes for the decline in the consumption of coal. It is nothing whatever to do with the stagnation, as right hon. Gentlemen opposite have called it, of British industrial production. The right hon. Member for Easington did not say that, but the right hon. Member for Blyth did. He used the word "stagnation".
Yes, I will. I will deal with all these matters in the next moment or two.
In my view, the decline in the consumption of coal is not mainly due to causes attributed to it by right hon. Gentlemen opposite. The principal and primary cause has been the remarkable and progressive increase in the efficiency with which coal is consumed and burned. Take, for example, the electricity industry. In the last few years, the right hon. Member for Blyth has been fond, and rightly so, of commending the nationalised electricity supply industry for its great increase and improvement in the efficiency with which coal is burned.
In fact, we should need about 5 million or 6 million tons of extra coal every year to promote the growth of electricity generation at a rate of 10 per cent. per annum, power supply, in arithmetical progression, doubling in each decade, coupled with the increasing needs of the gas industry, coupled with the increasing needs of 300,000 new houses erected every year, and so on. The aggregation of increased demand for coal each year notionally should be about 5 million to 6 million tons. The whole of that has been offset and coal consumption has actually been reduced in each of the last two or three years, largely due to the quite sensational results of fuel efficiency efforts.
I am not the only person who has said that we could save up to 10 to 15 million tons of coal a year by greater combustion efficiency. Far greater authorities than I have written and said it outside the House. The plain fact is that a group of Members, on both sides, took through the clean air legislation. Many doctors may have been concerned about the condition of people's lungs. Of course, I wanted their health impoved or their lives saved, but that was a corollary to the economic factor that the only way we could legislate for British industry to burn coal more efficiently was by attacking dark and black smoke. We are now doing that on a large scale. It is increasing the rate of decline of consumption for bituminous coal and will do so progressively over the next few years.
Every mining Member on the benches opposite will agree with me when I say that. Equally, every mining Member opposite will agree when I say that the right hon. Member for Easington, as Minister of Fuel and Power, or the right hon. Member for Blyth, in his capacity in those years as Parliamentary Secretary, were both keen on getting industrialists to insulate their buildings. Half a dozen Socialists and half a dozen Tories joined together last Session to take through the Thermal Insulation (Industrial Buildings) Bill. It will increase the rate of decline in consumption for bituminous coal progressively year by year until it reaches a saving of 6 million tons in a full year. That is not my figure. It is the figure of the National Industrial Fuel Efficiency Service.
I hope, therefore, that hon. Members opposite will not proclaim that the decline in the demand for coal is a corollary of stagnation in British industrial producton. I do not think that any significant part of it can be attributed to that cause. The major single factor is the great improvement in efficiency with which coal is burned. That does not, however, mean that I am lacking in any way in my confidence as to the future of the coal industry. Even when the whole of Britain's electrical power demands are generated by nuclear means, even when our only two primary methods for fuel and energy production are based on nuclear power and on oil, coal will still be overwhelmingly valuable to us for a reason which was not mentioned by the right hon. Member for Easington.
In the year 2000 A.D., if I read the future in any way correctly, the value of coal will be that we shall extract from it 100 per cent. of its priceless chemical qualities, a manifestation of which is to be found today in everything from the common aspirin to ladies' nylon stockings. We shall extract from it 100 per cent. of its chemical properties. That is the future of coal. We shall not burn coal as we have done in the last few years, and see 80 per cent. of it wasted and only 20 per cent. of it gainfully used.
To return to my first few words, I want my right hon. Friend the Paymaster-General to make it quite clear to the House, having regard to all the circumstances to which I have referred, that the policy of Her Majesty's Government in fuel and energy matters still rests upon those triple tenets: first, to increase coal production by the maximum amount; secondly, to develop the use of alternative fuels, notably nuclear power and oil, to the maximum extent; and, thirdly, to use all our fuel and energy resources with the maximum efficiency. That has been our fuel policy. Having regard to the changed circumstances of the coal industry, is it to be our fuel policy in the future?
We on this side will forgive the hon. Member for Kidderminster (Mr. Nabarro) much—and we often have much to forgive—because of his buoyant and wholehearted enthusiasm for making the best use of British coal. We would all agree with him that the future lies with the best possible forms of production and the development of by-products, not only for use in industry, but for use in the home. The younger housewife and the more modern-minded older housewife are now more ready to use by-products such as briquettes.
Probably some of us in this House are historical survivors, especially those of us who come from the mining areas, because it is difficult for us to think of a home as being somewhere without the old-fashioned fireplace and the poetry and movement of it. That is a passing thing. It is not something of our generation; it is a thing of memories. I think it is true, as the hon. Member for Kidderminster said, that the future of the coal industry will be very greatly influenced by the fact that in a changing world we may find ourselves exporting not so much raw coal but all kinds of by-products which we have at the present time and others which the future will bring forth.
It will be a great relief during this debate not to be having stone in the coal and the faults of the miners thrown at us all the time. I hope that some hon. Members opposite, after reading the Report of the Select Committee, feel a little penitent about many of the unfair criticisms which they have made both of the Coal Board and the miners, because those of them who did not formerly know the facts now know that in a period when we were short of coal and encouraging the Coal Board to maximum production it was absolutely inevitable that with the new coal cutting machinery we should have a great deal of small coal and dirty coal. Yet almost in the same breath many hon. Members opposite are critical or fearful about the amount of money spent in capital equipment in the pits. At the same time, they want more money spent in developing machinery which can give us selective qualities of coal. They cannot have it both ways.
The fascinating part of this debate for me has been how many of us are trying to have it bath ways on the economic front. The part of the Select Committee's Report dealing with the price of coal opens up an entirely new approach for us in this House. The Committee made it quite clear that there is a dilemma between the economic price and the social price. The miners and the Coal Board—everyone who lives in this industry—are very conscious of that fact, and also very resentful of the fact that while, since 1940, there has been a sellers' market in coal, there has been every kind of political and social stricture put on the price of coal. To many of us it seems very unfair if that has to be the world in which the Coal Board and the miners and the Miners' Union operate while at the same time their products are going into many private industries which have very different laws altogether.
The most outstanding example is the relationship between coal and steel. I do not see how we can face the future without some measure of economic planning which says that whatever law is right in fixing a price for coal must also be right for steel. We cannot have the collier saying that he is working in order to make profit for the steel industry.
I do not want to broaden the debate unduly, but no one so far has answered the dilemma raised of whether or not the product is going to demand an economic price or is going to be controlled by social and political considerations. I hope that before we have many more National Coal Board debates it will be serious politics in this House to talk of a Ministry of Economic Planning. We can look at the work which has been done by the Treasury, by the Board of Trade, by the Ministry of Power, but if we in this House are going to take any kind of useful and intelligent control over nationalised industries, then I think that we have to look at the grouping of our Government Departments.
It is absolutely essential in the position in which not only British coal but British industry is today, and with all our import and export problems—and we have very much in our minds the development of the situation in the Middle East—that before we can decide the price of coal we have also to decide the selling price of gas, electricity and transport, whether it is rail, road or canal. We are well on that journey already, but we have not gone far enough and we cannot stop now at the half-way house. I hope that the next time we come to discuss the selling price of this basic commodity it will form a logical, defensible and understandable plan related to the selling price of our other basic commodities.
It is late, and I do not want to take up too much of the time of the House. There are, however, two things I want to mention today. I am not asking the Government to say that they should advise the National Coal Board to stop opencast coal mining. I know that it cannot be done just like that. I ask the Government to remember that opencast coal mining does not produce merely a commodity to be put on the market but is a way of producing coal which disturbs the whole life of a mining community much more than a deep-mine pit. We are used to the pits and accept them. We are used to thinking of those areas as home, where the schools are and where one can get some sanctuary and immunity from the pits. But what we get in too many parts of the country—I do not speak only for my own constituency in the Midlands—is mining villages completely ravaged by the workings of opencast coal mining.
It may be that the Government are not so worried today about recruitment in the mining areas. We warn ourselves each year that it is the older men who are manning the coal mining industry and that we are not yet making it sufficiently attractive to bring in the young men or even to keep as many of our young men as we may want. If this industry is to have the future that it must have, because coal's future is Britain's future and coal is something indigenous which we have and can cherish and use to the best possible ability, we have to see that we build up family life and possibly plan for beauty as well as labour in those areas. Each time we get a mining village devastated by opencast mining we get a very discontented and often very unhappy population.
The other thing which I want to take time to discuss is something which lies very heavy on my heart. Like practically all who are taking part in this debate, I too was born in a mining village. My father and grandfather were miners, and I represent coal miners. There is no sadder sight than that of the old miner who is coughing, whose lungs are broken up and who has no future to look forward to except that of increasing poverty and increasing pain and suffering.
We try to do something about pneumoconiosis. We tabulate the number of men certified year by year, and we are trying preventive measures. We have not done enough about that yet, but we have it very much on our minds. We are trying to reduce the incidence of the injury to the lungs from coal working and from coal dust. From page 52 of Volume I of the National Coal Board's Annual Report and Accounts, we see that from 1949 to 1953 20,878 miners were certified as suffering from pneumoconiosis.
Yet in the two volumes of this Annual Report there is not a single mention of chronic bronchitis. We cannot dodge this issue much longer. It is not enough to say that chronic bronchitis is not confined solely to miners. Of course it is not, but it happens to be a fact that the number of underground workers in the mines who die from chronic bronchitis compared with the number of agricultural workers who die from chronic bronchitis is 6 to 1. I asked a Question on 7th July about the relative number of deaths of miners and agricultural workers from bronchitis, and I was given the total for the period from 1949 to 1953, in the age group 20 to 64, as being 692 agricultural workers and 1,540 coal miners. I have already given the number of men certified as suffering from pneumoconiosis in the same five years.
Why cannot we have the same amount of insurance and protection for chronic bronchitis? In the cotton industry, if a man or woman who has been ten years in the industry suffers from chronic bronchitis, then it is considered an industrial disease. Could I have it explained to me why, if a man has been working in the coal pits for over ten years—I should like that period to be shorter—and develops chronic bronchitis, even though it is not caused solely by the conditions in which he works, it is not regarded as having been probably caused by them and why he should not be given the benefit of the doubt?
I come once again to the problem of getting the right kind of optimism in the mining industry. I want to see the flower of our youth work in the coal industry. A prudent young man, looking ahead—or, still more, a prudent young woman looking at an imprudent young man, and thinking of the future—and knowing that father or grandfather, or a friend or a neighbour is coughing his lungs out, will not be attracted to the industry unless there is proper provision made against the incidence of the disease.
Perhaps that prudent young woman has memories, as some of us have, of going to the doctor and being told, "Do you mean to say that every time that man comes here he has a cough?" I have seen many a good man humiliated and angered and insulted by practically being told that he was putting it on. Once upon a time a doctor's examination did not reveal the cause of the cough. I have often heard it said that a man who wanted to dodge the column could cough a bit more and make himself seem a bit worse. It is very encouraging that now we have breathing tests and other checks in addition to X-ray examinations which quite conclusively prove that if a man says he is suffering from severe bronchitis he is indeed suffering from it.
I do not see how it is possible for us, with our civilised conception of the Welfare State and with our desire to attract the best of our youth into a great industry like this, not to begin to give more serious consideration to this problem than we have hitherto done. We shall never get the quality of miner we want, the best brains and the best standards, until we attend to these social problems. There must be decent homes for miners' families. A miner must have a decent home from the beginning of his married life. A miner must not, as he too often has to do now, have to wait several years until his second child is born before getting a home.
This is the industry of the future, and it is an industry which will offer great excitements and an ever widening diversity of products, and I hope that in this debate we shall concern ourselves not only with production, as we so rightly do, but also with producing the right kind of environment and the right kind of social and medical amenities for the men who man the mines.
In following the hon. Lady the Member for Cannock (Miss Lee), I would touch on the problem she mentioned of pneumoconiosis and lung diseases. One of the most rewarding jobs the Medical Research Council, of which I have the honour to be a member, has recently done is through its remarkable unit which has been working on pneumoconiosis for a number of year in one of the South Wales valleys and which has thrown so much light upon the causes of the disease. Indeed, the fundamental work is now changing and the unit is turning to wider aspects.
Like the hon. Lady, and like my hon. Friend the Member for Kidderminster (Mr. Nabarro), I have much hope and enthusiasm for the future of the industry. I think that the importance of the work of the Select Committee, on which I had the pleasure of working for a number of months, has been in throwing into focus, in a way no previous report on the coal industry has done, whether an annual report or reports on certain aspects of the industry, the fundamental problems about the future of coal mining in the United Kingdom with which the National Coal Board and the Ministry are confronted.
The hon. Lady the Member for Cannock dealt shortly at the start of her speech with what, I believe, is probably the most important result that we in the Select Committee on Nationalised Industries obtained when she referred to the problem of coal prices and said, very truly, that these are in a half-and-half world which is neither economic nor social. Although that argument had been put forward by those who study the industry, it was our investigation in the Select Committee that brought up this dilemma so clearly. Study of the evidence given last year will show not only confusion among members of the Committee, which might have been expected, but among those who appeared as witnesses, as to the bases of the Coal Board's pricing policy.
I therefore heard with regret that the Ministry has turned a cold shoulder to the recommendations which we made in an effort to secure a more certain basis for future coal-pricing policy. We thought that the right way to do it, without undue interference with the industry, was by making the line of responsibility much clearer than it has been in the past, as was suggested in an earlier speech by my right hon. Friend the Member for Blackpool, North (Sir T. Low). We must have a pricing policy which, in so far as it is based on social considerations, must be based on considerations which are clearly known but which, I think, ought also to be based more than in the past on economic considerations.
There has been much talk of the booming demand for coal in the past ten years, but that demand undoubtedly has been the result of deliberately keeping down the price of many industrial grades of coal, for reasons which have never been fully explained to the House. I have no doubt that the fuel efficiency improvements to which my hon. Friend the Member for Kidderminster (Mr. Nabarro) referred, and in the advocating of which he has played a notable part in the House, would have been stimulated much earlier if industrialists and others had had to think more closely about their consumption of coal than they have done in the past. The truth of the matter is that a nationalised industry, dealing with a commodity which touches everybody's homes so closely, in the sense of the money that it takes out of the family income, will always be exposed to much political pressure, not only in the Press but in the House. It will be extremely difficult for Ministers of Power to resist demands that the price of coal should not be increased when there may be perfectly good economic reasons why an increase is not only desirable but essential.
Unless considerations like this are taken into account, we shall have in the future a repetition of the situation on which the hon. Member for Houghton-le-Spring (Mr. Blyton) and myself joined issue with the Select Committee, namely, on averaging the price of imported coal with that of home-mined coal, thus stimulating demands for more coal, making further large imports necessary, with a resultant further loss of dollars into the bargain. Nor, unless we take a continuing rational view of the price structure for our coal, will the Coal Board be able to formulate a proper investment policy for the industry.
Neither in Appendix 22 of the Select Committee's Report nor in the discussion about Treasury supervision of Coal Board borrowing can one find a clear basis on which to make a rational decision on whether an investment ought to be made or not. Appendix 22 shows varying scales of returns on investments. These are clearly due to the fact that the Coal Board must have invested capital without knowing whether or not it was putting in equipment to meet demands for coal artificially stimulated by a fictitious price structure. I hope, therefore, that the Ministry will take a more sympathetic view than it has done so far of the Select Committee's recommendations, which are a first and important step towards improving the price structure.
If that were done, not only would the investment problems begin to sort themselves out, with savings valuable because there are far two few of them, but a social problem would begin to sort itself out. It is the problem, to which the hon. Member for Rother Valley (Mr. D. Griffiths) referred, of the closing of uneconomic pits. In the great scramble for coal which demand stimulated we managed to close fifteen pits. A study of Appendix 22 leads one to wonder whether other and larger pits should not have been closed to make sure that our money was being invested to the best advantage in places where it would secure the best return.
Another object of a price policy should be to protect those affected by changes. When a pit is shut down, community life is changed. Part of the cost of obtaining coal which should be taken into account is the cost of proper treatment of those who have had their livelihoods and places of living changed so drastically. That is the view which is taken not only in this House but in the Coal and Steel Community in Europe.
I come back to the point that we want to see a more rational pricing policy on which our wishes for the future development of the industry must be based. I hope very much that the Ministry, through its spokesman, will give better reasons in reply to this debate than it has given hitherto for rejecting the Select Committee's recommendation, or will find good reasons for accepting it.
I listened attentively to the Parliamentary Secretary when he made his opening speech, and while, as a general rule, I do not agree with what is said from the other side of the House, there was one phrase on which I must congratulate the hon. Gentleman. It was on lines along which I had been thinking. If I have his words correctly, the Minister said that it is certainly not true that the production of coal has decreased.
It has been said on many occasions by opponents of the nationalisation of the coal industry that the production of deep-mined coal has gradually decreased, although what the Minister told us today is nothing new. I remember reading, two or three months ago, an extract from a speech made by the Chairman of the National Coal Board in which he pointed out that the production of coal from British mines was the highest in Western Europe and that our prices were certainly the lowest.
A man with the responsibility of the Chairman of the National Coal Board would not make a statement of that kind without due consideration. We have only to look at the Report of the Board which we are now discussing to see the true position. Incidentally, the Report is one year and two months old, so those of us who are speaking about it, except those on the Government Front Bench, are rather behind with our figures.
The fact is that in 1957 the output of all coal was 223·6 million tons, an increase of 1½ million tons over 1956. Of that total 210·1 million tons was from deep mines and 13½ millions tons was from opencast. Output per manshift during the same period was 1·23 tons, the same as in 1956, while output per manshift at the coal face increased from 3·33 tons in 1956 to 3·36 tons in 1957.
Great play has been made in the Press and in speeches about productivity, about the general finances of the Coal Board, and about investing money in the industry and getting the best value for that investment. It is well sometimes to look back. Those of us who have been connected with the industry for well over thirty years can remember many of the things which happened in those days. While we do not want to harp on the past, it is well to look back occasionally.
Since the end of the 1914–18 war up to vesting day the Government twice gave the coal owners subsidies to guarantee them profits. Owing to the lateness of the hour, I will not go into the figures, but that is a well-known fact. Since vesting day, however, right up to the compilation of this Report, the Board has made operating profits. It is true that it shows a loss, but the surplus has been converted into a deficit by payments made to the Ministry of Power under the nationalisation Act.
These payments go to compensate the coal owners for interest on capital, etc., and include capital payments to them for pits which have been closed for well over ten years. Therefore, when the Board is faced with burdens with which its predecessors were never faced with and when its predecessors, on two occasions in the period I have mentioned, received Government subsidies, it is only natural that the profit made by the Board should turn into a deficit.
Another burden which the Board has had to bear is that of surface subsidence. Those of us who live in mining areas have argued for compensation for mining subsidence over a number of years. The tragic thing is that much of this subsidence came about prior to vesting date, and when this House finally agreed that some compensation should be paid for the damage caused, the burden was put upon the Coal Board, although the Board itself had never actually worked the coal underneath the land and had not received the profits from the sale of that coal.
The question of the price of coal in relation to coal produced in other countries in Western Europe has also been raised. During the past ten years, privately-owned mines in Germany and Belgium, which produce nearly 80 per cent. of the coal in the countries in the European Coal and Steel Community, received some Government assistance in some shape or form, yet the coal mining industry in Britain not only produces the cheapest coal and stands on its own feet, but also carries the burden, which I have already mentioned, of imported coal, so that coal may be sold at an economic price in this country.
The public should understand that the British coal mining industry has provided, on the average, £10 million per annum from 1950 to the end of 1957 to enable foreign coal to be brought here and sold at the prices of British coal. The industry itself has had to bear this cost, when some of us have argued, and have suggested by Questions in this House, that it was a Government responsibility. The Government, however, declined to accept the responsibility.
During the years when there was a shortage of coal, from the war right up to about twelve months ago, when the miners could have made exorbitant demands and when anything for which they might have asked would almost have been forced to have been granted, they held their hands and obeyed the advice of their leaders not to be extortionate in their demands, because that might quite easily crush the economy of the country.
I have heard several speeches today on the price of coal, and I have just explained how moderate the miners have been in their demands during the period of shortage. Not so the distributors. Since vesting date, out of 30 increases in coal prices applied for, 22 were direct applications by distributors. It is well known that the Coal Board cannot raise prices except with the authority of the Minister. In fact, to quote the Report of the Select Committee:
In the last analysis, it is the Minister of Power who says what the public must pay for the coal.
Yet, out of 30 applications to increase prices, the distributors themselves were responsible for 22.
A fortnight ago, I was looking at the financial column of a national newspaper. It is not very often that I do that, because I have never had a great deal of money to invest, but there was one item which
struck me. It dealt with the amount of profits which are made by distributors of coal in this day and age. It mentioned the name of the company, and said:
The company distributes coal and coke, acts as agents for the North-Eastern Division of the National Coal Board … It is a Small company but by no means to be ignored. Its total capital is £100,000, all in 1s. shares, and its consolidated trading profit last year was £383,982, which is nearly four times its capital. Even after Income Tax has been deducted, there is left the substantial sum of £156,652. The fortunate shareholders in this company get a total distribution of 50 per cent. And a year ago they were given one share free for every three shares they held.
I remember plugging the idea, about four or five years ago, that while we had solved the problem of production as a nation, we still left the problem of distribution in the hands of private people who are making profits such as I have just described.
As I have said, the miners, through their leaders, did not, during the years when everything was in their favour, apply for wage increases, as they could have done. Only recently they applied for an increase of 10s. to compensate them for the loss in purchasing power of their wages. The application was turned down by the Board and it went to arbitration. One begins to wonder whether any Government policy or direction behind the scenes influenced the decision at that time.
Opencast coal mining has been mentioned. My right hon. Friend the Member for Blyth (Mr. Robens) rightly said that coal which is stocked, whether at pitheads or in open quarries, has a psychological effect upon the men in the industry. They are frightened that we shall return to the days between the wars when there was a surplus of coal. It seems ridiculous that we should still further despoil our agricultural resources by producing opencast coal when 28 tons of every 100 are unsaleable.
Surely the sensible thing to do is gradually to run down the opencast operations and not to begin any new ones. I appreciate that the machinery would rust, but I am satisfied that the opencast operations could gradually be run down. It should be remembered that opencast mining was begun only as a war emergency and carried on immediately after the war because of the shortage of fuel. During those years the shortage was such that it did not matter what type of coal we obtained as long as we could find a market for it.
I was surprised that the Parliamentary Secretary, in face of indignation from this side of the House, stuck to his guns and said that opencast mined coal was as good as deep-mined coal, and, therefore, it did not make any difference. He got out of it by saying that the Board's experts had advised him on that. There are hon. Members on this side of the House who have spent a lifetime in the industry and can say with truth that deep-mined coal is much harder than opencast mined coal and will weather better when stacked than opencast coal will.
If there is a surplus of coal at the moment, which everybody admits there must be—we have not got the export markets that we had before the war—what about reducing miners' working hours from seven and a half to seven? Today, the miners are working half an hour longer than they did thirty-five years ago, in spite of the fact that a Royal Commission declared that seven hours was long enough for anybody working in the mines. If supply is greater than demand, then surely the sensible thing to do is to cut half an hour off the working day of miners and thus gradually reduce the supply of coal.
Coal mining is still a most dangerous occupation. It is acknowledged and can be statistically proved that there are at least sixteen times as many accidents in coal mining as in any other industry. While mechanisation has brought its advantages, in its trail have come many more cases of the dreaded disease pneumoconiosis, to which my hon. Friend the Member for Cannock (Miss Lee) referred. According to the records, every year there are 5,000 fresh pneumoconiosis cases. What a price the men in the industry have to pay for our coal!
My hon. Friend the Member for Cannock briefly sketched the way that this disease affects miners. Unfortunately, she referred to the disease affecting old men, but it also affects middle-aged men. A man may have worked in a pit for thirty or forty years, but if he started work, as many did, as a boy of 14 or 15, he is still only in his fifties, and yet he is possibly coughing out his life with no hope of any cure. The old men my hon. Friend mentioned have now left the industry.
The National Union of Mineworkers and the Board have planned a pension scheme to be additional to the ordinary State pension. Admittedly, the pension is small, but the Board is to be congratulated on its good sense in the negotiations about it. However, some men retired before the scheme came into being, so they do not receive that pension. The pension fund which has been established does not receive a penny from the Treasury. This is a scheme which is not generally known to the public. However, something must be done about those men who retired too early to benefit from the scheme.
It has been suggested that plants capable of burning oil or coal—plants which can be dual-fired—should be made or encouraged to use coal during this temporary or possibly permanent surplus of coal. As has been said, the trouble with oil as a fuel is that there needs to be only a little trouble in any part of the Middle East, and there is a shortage of oil, as we saw during the Suez episode.
The Government must take their full responsibility, for it is the free-for-all policy that they have pursued in the last few years which is now having an effect upon the mining industry. I warn the Government that the miners will not be the whipping boys, as they were between the wars. It has been suggested by certain people who are members of the party opposite that now is the time for a showdown with the miners, because they have had it too good. I am not suggesting that any responsible person has said that, but it has been said. Those who have said it must bear in mind that the union, through its leaders, will defend the men. I do not want to be aggressive, but I would warn those people that never again will our miners go through what the miners of my generation and older generations had to endure between the wars.
I therefore suggest that the Government should bear in mind the points which have been raised by my hon. Friends and myself. This is the basic industry upon which our whole economy is founded, and it is up to the nation to see that it does not collapse through misdirection, or an attempt to use outworn ideas in running it.
I have been done the honour, on behalf of the Opposition, of closing this debate on the future of the coal mining industry. My right hon. Friend the Member for Blyth (Mr. Robens) outlined the position quite forcibly in a very good speech. I congratulate my hon. Friend the Member for Wigan (Mr. Flitch) upon his maiden speech. He spoke of things that he knew about, having spent many years in the pits. He spoke very clearly and with great knowledge, and I am sure that hon. Members on this side of the House will look forward to hearing him speak again on this subject.
The right hon. Member for Blackpool, North (Sir T. Low) was Chairman of the Select Committee which investigated the industry, and I had the pleasure of serving under him for over ten months. With one exception, I am quite satisfied about the contents of the Committee's Report. Twelve months ago none of us anticipated that he would have to consider the issues which confront us today in the mining industry. Before the Second World War we were always concerned about the decline in the industry, but since the war we have been faced with entirely different problems. We have been living in an expanding economy—until last year, when we found ourselves in a contracting economy, bringing with it many of the problems that we have considered today.
In examining the present situation, I want to make it clear that we must consider these problems with a sense of responsibility. It would be disastrous for the principles and practices of nationalisation, for which hon. Members on this side of the House have stood for a long time, if we failed to appreciate our continued responsibility for its success. No matter what our critics may say, the nationalisation of the mines has provided this nation with coal and power when it would otherwise have been weakened financially, either by purchases of coal from abroad or a large measure of unemployment in our industrial population.
The men in the industry have received better wages than they could ever have got from the old mine owners. We have benefited to a great degree in safety, health and welfare in this unattractive industry. Because of these factors we cannot disregard the importance of doing our best, even under present conditions, to secure that the industry becomes efficient, and that there is co-operation between everyone connected with it.
There must be mutual co-operation between the Board and the National Union of Mineworkers. The union must be taken into the confidence of the Board. We cannot expect to solve our problems unless the men are provided with evidence on which they may be able to judge what is best in a given situation. We may appear critical in some respects in this debate, but that attitude is not due to any desire to retract from the principles of nationalised mining. It is an attempt to help to seek a solution to our present-day difficulties.
The new situation is that while for ten years we have been suppliers of coal, now, for the first time since the war, we have to learn to sell it. There are many arguments about the cause of this situation. We agree that external factors are the basis of the present recession, but the Government are not blameless. Their policy to meet world economic difficulties has certainly aggravated the problems confronting us. The credit squeeze, the attempt to create a market of unemployed to make more competition for jobs in industry, has done real damage to the coal industry, and the Government must accept responsibility for some of our problems.
The simple issue is that if we contract full employment we reduce the necessity for a large amount of coal. The industry cannot be prosperous if it is surrounded by unemployed workers from other industries. If, apart from the miners, other members of the working classes are unemployed, that affects the economy, and, in the end, is bound to affect the men and women in the coal industry. Therefore, in my opinion, no one can blame the Coal Board. It did not create the difficulties. As I have said, they came from the state of world economic affairs, accelerated by the policy of our own Government, and the body confronted with this situation therefore sought ways and means to meet the changed circumstances.
I do not intend to deal in detail with the background to this position, but when the mines were nationalised consumption was merely 179½ million tons a year, with exports added; and by 1956 the consumption figure for coal rose to 218 million tons, an increase of 39 million tons a year. On the average, coal consumption went up over 3 million tons each year from 1945 to 1956, and this was a period of full employment. As I said, full employment means increased consumption of coal. During those years an ever increasing quantity of coal was required.
Everyone—the Minister, the Government and the Coal Board—all agreed that future consumption would rise. By 1965, it was expected, the total fuel consumption would amount to 300 million tons of coal, or its equivalent, each year. This was divided as follows: the mining industry to find 240 million tons; atomic energy to find 18 million tons; and oil to meet the gap of 42 million tons. That was the future policy, Now we are faced with coal consumption falling by 5 million tons last year and expected to be 7 million tons less again this year. For years we have been trying to meet consumer needs and now we find a recession in the consumption of coal. It was in this changed situation, with the need to maintain production, that the Board decided to stock large quantities of coal.
I think that in dealing with exports the ground has been covered fairly well by my right hon. Friend the Member for Blyth. All I want to say is that our prospects of getting our markets back in the near future are very bleak. Here the Board must take vigorous action in the stimulation of sales. It must be much more vigorous than it has been in the past. The whole question of over-production is facing not only us, but also America and Europe, and while we must do all we can to export, let us not underestimate the obstacles which we have to face.
We should now face the question of making the most of our indigenous fuel. Efforts must be made to improve our large coal production and to look more closely at the problems of supply for power stations, gasification and the briquetting of small coal for use by the railways and domestic grates. We cannot be complacent about the question of oil, as the Parliamentary Secretary seemed to be today. The whole question of the importation of oil must be taken into account if we are to have a fuel policy.
I ask the Paymaster-General: can we afford to spend dollars on oil and to maintain a large defence force to keep the pipelines safe and, at the same time, close our mines as a result of not using the fuel which we have in the ground? We believe that the Government must now look at their policy, seek to secure the maximum use of our fuel and limit the unnecessary oil imports into the country.
Further, in competition with oil the Board must be given the same freedom as the oil companies have. The Board is bound by law not to exercise undue discrimination in price amongst its customers, whereas the oil companies are free to fix their prices and to pick and choose where it suits them. During most of the post-war period, when supplies of fuels of all kinds have been barely adequate to meet the demands of the country, it has been the policy to encourage conversion to oil. Now we must insist that where coal is the natural and economic fuel, it should be used.
If, as the Government say, in the years ahead the country will need much more energy, then it is essential that we should plan ahead now. I believe that the scope for nuclear power to replace coal is limited. Even for electricity generation it has not yet overcome the problems of providing more than base loads economically.
But whereas coal must provide the basic energy requirements of the nation, we must not forget that oil is bound to play an important part. Coal must, therefore, have a fair chance with oil and the industry must also be assured of fair competition. It is not fair competition when it is asked to bear losses on imported coal and other charges which inflate the price of coal when competing with oil. It must be free to fix prices for coal commercially and must not be hampered by restrictions, Parliamentary or otherwise, which no not apply to the oil companies. I shall have something to say about price later.
It is unthinkable that this country should be prepared to base its industries and standard of life upon imported oil, with all the attendant risks, but, in whatever field coal has to compete with oil, then the Coal Board should not be hamstrung while the oil companies are left free to do what they please. Only the Government can help in this matter, and I ask them to treat it as a matter of urgency.
I think that we are now reaching the stage when the stocking of coal will cease. It is impossible to keep teaming coal on the ground, with the cost of putting it there, and lifting it again, with the degradation of the coal and all the deterioration that the coal suffers in the process. This increases the cost by over 13s. 6d. per ton.
The Board also decided to cease recruitment for a period, and this policy is still in existence. As yet there are no signs of relaxation. The Board also stopped imports. Another decision was to close uneconomic pits and to get the men not to work on Saturdays.
I impress upon the Paymaster-General that the effects of these decisions are bound to give rise to anxiety to the people in the coalfields, who have memories of what happened in this industry in years gone by and are now asking themselves whether those years will come back again. Personally, I do not think that the present difficulties indicate a return to those times. If we face the difficulties together, and there is mutual co-operation between all concerned, I believe that many of them can be overcome.
I now want to deal with some of the decisions of the Board that will affect the industry in the future. There are many problems, many of which were touched upon in the Select Committee's Report. The Committee spent a long time inquiring into the industry. Its Report is the first to be issued since the coal mines were nationalised. It contains a great deal of information for hon. Members. Only in one respect do I disagree with the Report, and that is in relation to the importation of coal, should it be necessary in future. It deals with past, present and future investment, manpower, prices, large and small coal, uneconomic pits, mechanisation and competition. Nearly every phase of the industry was examined and embodied in the Report.
At this stage, I should like to pay tribute to my old colleague of the Northumberland mines, Sir James Bowman, and his deputy, Mr. Latham, respectively Chairman and Vice-Chairman of the National Coal Board. I regard "Jim" Bowman, whom I have known for over thirty-five years, as a first-class man in his job. He came up the hard way. He worked in the mines. He had a good training in our union and I believe that he is a first-class businessman. I say to the miners that I am confident that he will always try to ensure that the impact of the present economic situation upon mining will not be used to worsen the lives of the men in the mines from whence he came, and that the closing of a colliery will be the last resort.
I want to say a word about uneconomic pits. A responsible person would not say that all pits which are uneconomic should close. It is said that 167 pits are losing over £1 per ton, but the cardinal principle in which I have always believed was that the nationalised industry would enable pits which were uneconomic to be worked. The economic idea behind nationalisation was to pool the resources of the industry and not to determine whether a pit should be closed or worked according to whether it was profitable.
I am not saying that every pit which is now working must continue for ever. Every part of the mining industry is a wasting asset. A colliery is sunk, the coal is taken out, and there must come a day when the pit is closed, because there is no more coal or it is easier to take the coal from another pit. It should not be the policy to close pits to contract production. To close a pit can mean that its resources are lost for ever. It cannot be reopened in the same way as a factory. If, for this reason, there is no work for the men and no other mining work is available for them, many of the skilled miners could be lost to the industry.
Nor must we forget the impact upon a district of the closing of a colliery, with all the social consequences to the people in the area. Ruthless closures of pits can create terrible bitterness among the men. Many uneconomic pits must always be kept working because of the special kind of coal they produce, such as coking coal and anthracite. Furthermore, prices are fixed so that the industry should not show a substantial profit or loss, and average prices are fixed to cover average costs. We must, therefore, view the mines as a whole and not each one as an individual undertaking.
The Coal Board told the Select Committee that it intended to deal only with the pits which were practically exhausted. Nevertheless, we must face the unpleasant fact that some uneconomic pits must go. Since 1947, over 200 collieries have been closed, for which the industry has had to pay compensation. These assets have cost us dearly. It was for many of these reasons that the Select Committee said that closure should be done in close consultation with the National Union of Mineworkers, and it is pleasing to note that the Coal Board has agreed to do this. Every case for closure will be examined, all the facts will be placed before the men and everything possible will be done before the last resort of closure is adopted. It is imperative for the union to work with the Board on this issue, as it involves transfers to other areas, and the problem of the disabled is bound to arise in an acute form.
The problem of what is to happen to the disabled men when a colliery closes is of vital importance. At every colliery there are men in what we call light work, men who have been seriously injured and who are able to do only a light job. We have the pneumoconiosis cases and many men who are doing light work for reasons of illness. When a pit is closed, these men will not usually be able to get jobs at the pits to which their able-bodied colleagues can transfer, because the work for which they might be fitted at another colliery is already being done by the disabled in that area. This is where the Government must come to the aid of these areas by introducing light industry to help those who will be left high and dry when a pit is closed.
We have seen derelict mining villages in the past. My own county knows the tragedies of closed collieries, where men of 40 were regarded as too old for work at other collieries and the injured were thrown on to the scrap heap, never to work again. This must not happen. While I am certain that the able-bodied men will be absorbed in other collieries, I say that the Government have an obligation to the disabled men in the mining villages where a pit is closed to see that they are not thrown on the scrap heap.
I now want to deal with recruitment and manpower. According to the latest figures which I have, manpower, since the Coal Board operated its policy, has gone down by 9,600. If there is more coal now than we need, it is very important that unemployment among miners must be avoided. I say to the Paymaster-General that in 1949 there was a recession in coal consumption and the then Minister of Fuel and Power, my right hon. Friend the Member for Derby, South (Mr. P. Noel-Baker), met the National Union of Mineworkers and said to them the same thing as the Coal Board had stated at that time. Its statement was that as we were producing 10 million or 11 million tons of opencast coal, and 11 million tons per year by Saturday working, we should be able to rely on those two cushions in the interests of the miners if there was a recession in consumption or in the demand for coal.
We have always held the view that, by and large, we could avoid unemployment in the industry. As the Parliamentary Secretary has said, we lose 60,000 men a year by wastage and our youth recruitment is about 20,000 a year. So, each year, either by "green" labour, or by ex-miners, or men coming in from other industries, we have had to find 40,000 a year. So all that we do on this issue is to run down the numbers of our recruitment and maintain our full labour power within the mining industry, thereby preserving the employment of the manpower in the mines.
We are not worried unduly about the cessation of recruitment so long as there is no interference with the right of the men in the industry to go from pit to pit, if they choose. If a man can do better at one pit, and a job is available, we think that he should be free to go there, and we insist on the right of freedom of movement within the industry to our men.
This brings me to a manpower problem which we must take into account. The Fleck Committee's Report is still giving rise to contentious arguments in the pits. We are very concerned about the substantial increases in the administrative staff, particularly at supervisory levels. It is said by the National Union of Mineworkers that, despite the enormous increase, all the evidence establishes beyond doubt that there has been no increase in efficiency, because the test one applies to the coal industry is the difference between its capacity and its achievement, and not all the increases in established personnel have resulted in or promoted efficiency.
If we on our side have to face any consultations with the Board on the closing of the uneconomic pits, there must be an inquiry also as to whether all the appointments made under the Fleck Committee's Report are justifiable. The impression must not gain ground, in the economic circumstances of today, that the established personnel are to be saved while the men have to put up with all the difficulties. There has been a 25 per cent. increase in the established staff since the Fleck Committee's Report was implemented. We are given to believe that the administration is top-heavy, and as we have to face the new problems, which will cause us many difficulties, it is of paramount importance that this is looked at very carefully. The Chairman of the Coal Board stated last year that he would have the fullest possible discussion with the union and the Board on these matters, and he told the Select Committee that he would welcome this, but up to that time he had not heard anything from the union.
I would suggest that both sides now should examine the result of the Fleck Report. It has been in operation a few years now, and the question whether it has brought more efficiency or not can now be determined. A report on that would clear up a good deal of the misgiving and misunderstanding in the coalfields. It would make relationships much happier in the districts and give some proof to the men that they were not to bear all the sacrifices in this new situation.
Opencast working has been fairly well discussed today and I shall leave those arguments as my hon. Friends have put them.
I come to the question of prices. The Select Committee came to the unanimous decision that the time had come when the gentleman's agreement ought to end and that the way in which prices are determined should be defined. I was a bit surprised today when I heard the decision of the Government from the Parliamentary Secretary.
We may see from Appendix III of the Report how the prices, under both the Labour Government and the Tory Government, have operated. I do not want to deal with prices policy extensively, but I am convinced that the coal industry can be made a battledore and shuttlecock of politics, especially in the realm of prices.
In 1947, the Board had a £7 million deficiency. In 1955, the year of the Election, it was a £19·6 million deficiency. There is no doubt that the fact that the Board was not given the increased prices it asked for when it asked for them has affected its finances. In 1953 the Board asked for an increased price to liquidate its deficiency and to provide a reserve fund, which I consider very necessary if it is to do any sound financing at all. This was refused. Our high payment for interest rates could have been lower had the Government allowed this increase.
The year 1955 was Election year. The increase for which the Board asked was not given until 7th July that year, after the Election was over. The Board asked for 11 per cent. in February and was given 18 per cent. increase in July. There is no doubt that the Board was left high and dry, with unprecedented imports losing £2 10s. a ton, and on top of that we had the new wages structure, which was costing several million pounds.
I appreciate the argument that the Board cannot have full freedom on prices, as it is a national monopoly, but, nevertheless, it cannot be left in the intolerable position it is in today. Either we say that the industry is a social service and not run on a commercial basis, or if it is to be criticised each year on its balance sheet and not have the same freedom as free private enterprise, we are not being fair to the Coal Board.
If the Board, in the years which are gone, had had freedom, the same freedom as commercial undertakings, it could have made huge profits on the Continent by selling its coal, but full employment would have been sacrificed here. There is too much of a hole-and-corner business in this fixing of prices. The Minister exercises powers under the gentlemen's agreement because the Board must come to him to get a price increase. We never know on what basis he either gives or rejects a price increase.
We suggest that there should be an arrangement whereby if it is the Minister who issues the directions he shall take the responsibility, and if it is the Coal Board it shall carry its responsibility as well. I hope that the Minister will give every consideration to this important problem.
Relations in the coal industry today are worse than I have known them since 1947. This has arisen from the fact that the former Chancellor issued an edict to arbitrators that if they gave increases they would not be financed in the nationalised sector by him. I raised this matter on 6th February and concluded my speech by saying:
Unions will now refuse to go through the process of arbitration. Therefore if, because of the Government's decisions and statements, arbitrators make refusal after refusal in the light of circumstances of this character the Government must not be surprised if unions ignore their arbitration agreement and go back to a war of attrition, which means the use of the strike weapon."—[OFFICIAL REPORT, 6th February, 1957; Vol. 581 c. 1437.]
We have arbitrated on agreements for years, but the miners' conference last week decided to end the compulsory arbitration agreement. The men in the coalfield believed that the Government dictated to the arbitrators and that their case for wages would not be determined on its merits.
As to the fuel policy which ought to be put into operation, we believe that there should be no attempt to worsen the wages or working conditions of the men because of our present difficulties and that, where practicable, efforts should be made to improve their standards. There should be a restriction now on opencast working. There should be a cessation or suspension of work on new sites and a progressive retrenchment, as it becomes possible, on existing sites. As a short-term measure, the control of recruitment should be accepted, but control should in no way result in losing experienced miners to the industry or in tying them to their existing posts. The Coal Board should take such steps as to ensure that pit closures are the last resort, and no attempt should be made to close pits if such closures result in unemployment. New industries should also be brought into the areas to give work to the disabled.
A policy should be brought into being immediately designed to secure the maximum use of our indigenous fuel and the limiting of unnecessary oil imports. There should be a drive for vigorous action and co-ordination by the Coal Board's marketing, production, and scientific departments. The Board should be left free to fix prices in competition with oil and should be given the chance of fair competition. There should be a drive for the greatest possible efficiency, and an investigation into the circumstances of the rise in non-productive manpower and staff since the Fleck Committee's Report was implemented.
We consider that there ought to be greater economy and efficiency in coal production. As a means of stimulating British industry in general the Government should seek to extend East-West trade. As a matter of urgency, the Board should accelerate the introduction of a large-scale briquetting industry and the Gas Council should be encouraged to bring forward as speedily as possible the gasification of small coal. The Board should be encouraged to enter into longterm commitments in the markets of the world and to maintain its influence on those markets. The Government should now embark on an expansion in our economy, as this must come about if mining is to be helped.
We on this side of the House will do all we can to try to solve the problems that face us in the industry, because we realise that we can occupy the benches opposite after the next General Election and we want a flourishing mining industry, full employment and an expanding economy.
The hon. Member for Houghton-le-Spring (Mr. Blyton) has covered the whole of the coal mining industry in its present situation with a great experience which I could not hope to rival. He has put forward so many suggestions that I do not think I could carry them all in one speech, but all of them will be most certainly examined with the care that is deserved by suggestions from the hon. Member on a matter of which he knows so much.
May I first apologise to the House for not being here as much as I would have wished to be today, since I am winding up the debate. As the House is aware, there have been some formidable things happening today, and hon. and right hon. Members will understand why it has not been easy to be present. In so far as I have missed any speeches, my hon. Friend the Parliamentary Secretary has given me a note of the main points made by the speakers.
I also wish to say how glad I was to be here to listen to the maiden speech of the hon. Gentleman the Member for Wigan (Mr. Fitch). It is always extremely interesting to hear a man who speaks with so much intimate and recent knowledge of his subject, and I can say for those of us on this side of the House that we shall certainly look forward to hearing the hon. Gentleman on many occasions. He raised the important point of new uses for coal. I can assure him that the National Coal Board, the Department, and the scientists engaged in both organisations are well aware of the importance of developing coal, not merely as a source of energy and heat, but also as a source of chemicals and many other things. The chemistry of coal and the development of chemicals from our coal resources is clearly of great importance. I can assure the hon. Gentleman that much work is going on. I am sure he is equally aware that a little prodding from the House of Commons helps the work of Ministers, Departments and others.
My hon. Friend the Parliamentary Secretary, in his opening speech, covered the main ground of the present situation in the coal industry and the general policy problems facing it. I shall hope in what I say to reply to the points made in the debate and to put them into a coherent sequence. May I start by echoing what has been said by so many speakers in congratulating the Select Committee and, of course, my right hon. Friend the Member for Blackpool, North (Sir T. Low) its Chairman, on the remarkable nature of its Report. It is a remarkable thing that such a Report could receive so wide a measure of agreement in this House. On some previous occasions it would have been almost unthinkable to have a report from a Select Committee on the coal industry which would meet with such general approval. This reflects credit not only on the members of the Select Committee but on those who gave evidence before it. It must be a fairly frightening thing for the most seasoned people to give evidence for the first time before a Select Committee of this House, and we are indebted to them for the clear and helpful way in which their evidence was laid before it.
In referring to personalities, may I at the same time echo what was said by the previous speaker about both the Chairman and Deputy Chairman of the National Coal Board, with whom I have had the pleasure of working now for some months. It has been a very great experience for me to meet people of such capacity, who have such a wholehearted devotion to the interests of their industry.
One or two people have asked us about our fuel policy. It was suggested that we have not got a fuel policy. I was asked by my hon. Friend the Member for Kidderminster (Mr. Nabarro) in my absence whether our fuel policy was still the same as it was. Certainly the basic principles of our fuel policy are exactly the same as they were when I tried to state them in the debate of April last year.
They are threefold. First, we base our plans on providing sufficient energy to meet the energy requirements of British industry and of the British economy generally. If we have to plan for a margin, we should plan for a margin of safety. We are at the present moment embarrassed, probably for the first time for many years, with excessive stocks of coal. I would think that would be the least of any Government's embarrassments. It is far better to plan on the generous than on the narrow side.
The second point of our policy is that we believe in giving freedom to the user to choose the form in which he wishes to take his fuel, whether it be coal, oil, electricity or gas. The third point is that we wish to see our indigenous sources of energy providing the maximum production they can for the economy and for the balance of payments, although, of course, in the light of the economic cost of so doing. Clearly, although it is an advantage to use indigenous resources rather than to import, if that is done at an excessive cost we do ourselves harm on balance and it is not an economy.
In the debate last year, to which I have referred, I quoted some estimates, to which I think the right hon. Member for Blyth (Mr. Robens) and also the hon. Member for Houghton-le-Spring have referred. They were the best estimates we could make of the likely national demand for fuel or energy in 1965, and these estimates, of course, are liable, as everyone knows, to a very considerable margin of error. The best estimate I could then give the House was that in 1965 we should need something like 300 million tons of coal equivalent, plus another 10 million tons for the scale of exports which we hope to see happening at that time.
Certainly, I see no reason at present to withdraw from those estimates. They were based on a certain rate of expansion of the national product which, certainly at the present moment, is not taking place, but I would ask hon. and right hon. Members not to assume that the average for the period will necessarily be lower because in the initial period we have not been achieving any expansion. I do not think it is true to say that the economy has been contracting, as one hon. Member said. There has been a general level of expansion. I think the word used by one hon. Member was stagnation, and I have heard so many different definitions of stagnation in the last few months that I hesitate to use the word now.
The figures we were working on were of 310 million tons of coal equivalent in 1965, which means 60 million tons more than in 1955, and only last year we were hoping that about 20 million tons of that would come from an expansion in coal production and coal consumption. I have said that at the moment we see no reason to depart from these estimates, and certainly no reason to change our hope that there will be this expansion in the production and consumption of coal.
What has happened recently has been a very great change in emphasis from production for production's sake to production on an economic basis. The National Coal Board has become very cost-conscious, not that I think it is in any way its fault that it was not cost-conscious before, because it was rightly concentrating, as it was asked to do, on production. Now, the Board has reacted to the change of circumstances and has become clearly conscious of the importance of having regard to costs. The fall in the demand for coal, which has so much underlain the discussion this afternoon, is, I agree with the right hon. Member for Blyth, a passing phase. I was very glad to hear what the right hon. Gentleman said about the possible needs of the future, which was clearly designed to help to maintain the morale of the industry, as we should all wish to do.
My hon. Friend the Parliamentary Secretary rather tended to come under fire from two sides, partly for being too optimistic and partly for being too pessimistic, which confirms my view that he probably was exactly right—"Not too much, not too little, but just right," as I think the advertisement says. I agree that this should be regarded as a passing phase, but the extent of the phase and its duration must depend very much on the competitive performance of the coal industry. It is significant that while in the last year or two the total demand for energy has remained fairly stable, the demand for oil has been going up and that for coal going down, and that must surely reflect the competitive position of the two industries.
My hon. Friend the Parliamentary Secretary referred to the fact that coal prices have in the last five years risen a great deal more than oil prices; and there is the other important factor of convenience, to which the right hon. Member for Blyth referred. I think that convenience in this context of consumption means much more than the convenience of the householder. It is the convenience of the industrialist or the manager of a works, and there are many factors, as well as rising prices and convenience in use, which have caused the competition between coal and oil to become more severe.
If the coal industry is to come out of this passing phase, in the general context of the demand for fuel as the background to it, it is important that we should keen in mind the competitive position of the coal industry, as compared with the oil industry. It is in the nation's interests, just as it is in the interests of the coal industry, that the competitive position of coal as compared with oil should improve. In that way, we shall see more consumption of coal, but not at the cost of imposing restrictions on the right of the user to select the fuel which he thinks is most efficient for his own purpose.
One or two alternatives have been put forward today. For example, references have been made to a reduction in opencast mining—references mainly by hon. Members who are in favour of substantially reducing opencast production. I think I am right in saying that the right hon. Member for Easington (Mr. Shinwell) took a slightly different view. It is important not to think that one can turn opencast operations on and off like a tap when the total demand for fuel falls or rises. At the moment, my noble Friend is being more critical and more selective in respect of applications to work opencast sites. Some applications which in previous circumstances would have been accepted have been deferred indefinitely. There is a definite tendency to be much more restrictive and selective about giving permission for opencast working.
I do not think it is wise to go quite as far as some hon. Members have suggested, for more than one reason. There is the reason of profitability, to which my hon. Friend rightly referred. As he suggested, it is not the only reason. It seems a fairly important reason when so much attention is concentrated on the financial position of the Board, but there is also the nature of the operation and the amount of capital equipment involved, to which the right hon. Member for Blyth referred. There is also the point that I think was in the mind of the right hon. Member for Easington, that we shall in future need large quantities of opencast coal as the expansion of demand for coal, which we all hope to see, takes place. For all those reasons, we are wise to proceed cautiously in any restriction of opencast production. I am not in any way disagreeing with all that is often said from both sides of the House about the unpleasant nature of the operation to those who live in the district where it is going on.
The next suggestion was that the imports of oil should be restricted. I find myself at variance here with the hon. Member for Houghton-le-Spring and other hon. Members. The hon. Member for Houghton-le-Spring said that there should be fair competition between coal and oil. I agree, but I suggest that he is putting a little too much emphasis on the the commercial freedom of the oil companies in their quotation of prices. Certainly it can be argued that they have a more flexible position than the National Coal Board has, but it is easy to exaggerate the effect of that on competition between coal and oil. On the other hand, it could be argued that the Board has certain advantages which the oil companies have not in access to capital on preferential terms and so on. Generally speaking, I am sure the arguments are very strong against restricting oil imports and the right of choice of the consumer.
First, there is the cost of fuel. As the Parliamentary Secretary said, in this country we have a great interest in ensuring that our industries get their fuel at the lowest possible cost. Secondly, we have a very great interest in international trade in upholding the principle of the freest possible flow of goods. If we were to adopt a policy of putting restrictions on the import of a commodity because it was competing too vigorously with our own home product, we should be undermining one of the main principles on which our general commercial policy is based. Therefore, there are very great dangers in any attempt to restrict artificially the consumption of oil.
The Government have made two moves in recent months which affect the probable consumption of small coal over the next seven or ten years. The first is the reduction in the purchase of oil by the Central Electricity Generating Board for the power stations. That has been reduced about as much as was consonant with the contracts. I think I remember the right hon. Member for Blyth saying that it would not be right to try to break contracts which had been entered into. I believe that means an increase in the potential coal consumption of the electricity industry of about 3 million tons a a year. The rephasing of the nuclear programme has added another 3 million tons. Taken together, those two mean an increase in consumption of about 6 million tons of small power station coals over what has otherwise been envisaged.
It is clear that there has been no escape in recent months from some temporary reduction in output. I suggest to the House that what the Coal Board has been doing has been the right thing, to reduce production on a temporary basis with an eye to be ready to expand again when demand arises and, equally, with an eye on the interests of the men employed in the industry. The Board has chosen wisely in choosing methods of reducing output which will not bear heavily on the men employed in the industry, and which will give it the maximum flexibility to meet rising demand for coal when rising demand returns.
The main methods which the Board has adopted include slowing down recruitment, or selective stopping of recruitment. I was very glad that the hon. Member for Houghton-le-Spring, with his experience in the industry, felt that that was a successful method to tackle this present circumstance. In a way, it is a piece of good fortune that the wastage in the industry is so much that total manpower can be adjusted without having to turn people out of work. There is also the cessation of Saturday work which, I gather, both sides of the industry have for some time felt to hold possible advantages.
There is also the closing of uneconomic pits, to which the hon. Member for Houghton-le-Spring, the hon. Member for Rother Valley (Mr. D. Griffiths), and other hon. Members referred. I am glad of the opportunity once again to say that the effects of this policy should not be exaggerated, because it does not involve many pits. The number of uneconomic pits involved this year is fifteen. In this year already, nineteen have been closed as a result of the normal process of exhaustion. As has been rightly said, more than 200 pits have been closed for this reason since vesting day. That is a natural process. The additional fifteen pits are to be closed, not because they are absolutely exhausted, but because they are uneconomic. They will not add much to the problem.
By and large, yes. The total number of miners to be affected is 3,000. I imagine that the older men will retire, and apart from those it is expected that all but a few hundred will be able to get other work in the coal industry. Of course, these things will be done with the fullest consultation between the Board and the National Union of Mineworkers, and I understand that compensation will be paid to those men, as in every case of redundancy because of reconstruction. I understand, however, that this matter has not yet been settled between the Board and the union, although it is the intention that matters should be handled on that basis.
There will be the fullest consultation and all facilities will be made available by the Coal Board and by the Ministry of Labour and others to help where pits are closed for that or for reasons of exhaustion. I am glad of the opportunity to state that, because it is possible for these things to be exaggerated and for there to be concern which is not fully justified.
I want to refer to exports to which many right hon. and hon. Members have referred, especially my hon. Friend the Member for Sheffield, Heeley (Sir P. Roberts) and the right hon. Member for Blyth. I do not quite know what the attitude of the Government is thought to be. There seems to be some impression that we are stopping exports. Far from that being the case, the Government and the Board are extremely anxious to see exports increased. However, as has been recognised already, circumstances in Europe are extremely difficult. Europe, where our traditional purchasers are, has large stocks of coal and has long-term contracts with the Americans. We must recognise that Atlantic freight rates have fallen from about £6 to a little over £1 a ton and that the Poles are cutting prices in a big way. They are in a position to cut prices in a big way, but we should be wary of indulging in too much cut price competition unless we are quite sure where it will lead.
The main point seems to be that the Coal Board should offer some guarantee of continuity of supply. That is a very difficult thing to do. In 1955, exports had to be cut back because of the balance of payments position. I ask hon. and right hon. Members opposite to remember that at that time we were importing coal for dollars and to import coal for dollars and to sell it against European currencies was not a very easy thing to do when facing a serious balance of payments situation. In a situation where there was convertibility of sterling that difficulty would not arise, but the party opposite has never urged upon us the advisability of embarking rapidly upon that policy.
In 1955, there was a very heavy drain upon our balance of payments in the dollar cost of imported coal. In 1958, the situation is certainly different, and the Coal Board is anxious to enter into long-term contracts for the export of coal. But there are two sides to the question. It would be quite wrong for us to undertake to export so many millions of tons of coal a year and to get no guarantee in exchange. We should be supplying only when the market was scarce and would have no sales when the market was easy. These must be balanced contracts. Secondly, we must be clear that if we succeed in landing many long-term contracts we shall not find ourselves again in the position of having to import substantial quantities of coal in order to meet a deficit which might arise at home.
In those circumstances, I would have thought that coal prices would be high and that, relatively, the cost of the coal we imported from America to make up our deficiency might be much higher than we would continue to get under a long-term contract. I say this not because I think it is wrong to go in for long-term selling but to show that there are considerable difficulties in re-asserting our position in the coal export market. I can assure my hon. Friends who are interested in this matter that neither the Government nor the Coal Board has any doubts about the great desirability of restoring our coal export trade and as to the importance, for that purpose, of giving the greatest possible assurance, of a continuity of supply.
The question of a gentleman's agreement was raised by many speakers, including my right hon. Friend the Member for Blackpool, North, the hon. Member for Houghton-le-Spring and the right hon. Member for Easington. This is clearly not an easy matter upon which to reach a decision. As the House is aware, the Government have felt that at this point it would not be right to accept the views of the Select Committee. We feel that it is a great pity to start a system of directions if we can possibly operate without them. We believe that there are great disadvantages in a system of that kind—disadvantages to the close and constant relations between the Board and the Minister which must be maintained if this nationalisation system is to be a success.
I recognise that there are arguments on both sides, but I think that the hon. Member for Houghton-le-Spring was wrong in referring to this as a hole-and-corner method. It is admitted that if the Coal Board disagrees with the advice tendered to it by a Minister it is entitled to publish that fact, and it does so.
I was under the impression that the Coal Board had recently made clear its disagreement on a certain point. Its members are men of substance, and long may they remain so. It is not correct to describe this as a hole-and-corner method.
The real point is the constitutional one. The practical position is that, under the gentleman's agreement, if the Coal Board wishes to increase the price of coal, it undertakes not to do so without consulting the Minister. The Minister then explains to the Board, as he should, what he considers to be the national interest. It must be remembered that there are two possible conflicting interests here—the general national interest in the price of coal and the statutory duty of the Coal Board to balance its accounts, taking one year with another. It is a situation in which there may be a clash of interests, but there would not be very much practical effect in substituting, for the present system, where the Minister expresses his opinion informally to the Coal Board, a system whereby he does so formally, by means of a direction. That would be the only effect of carrying out the recommendation of the Select Committee.
Surely my right hon. Friend is wrong in saying that that would be the only effect. There would be one more effect. As things stand now, it is a question between the Coal Board and the Minister whether the gentleman's agreement goes on. If the Select Committee's view is adopted, it becomes the statutory duty of the Minister to have the last say about prices, and he would be able to give up that statutory duty only with the permission of Parliament. At the moment, he can give up his interest in prices altogether by private arrangement with the Coal Board. That was one of the things to which the Select Committee objected.
I think it is certainly true that he could give up his interest. But I cannot conceive that any Government in present circumstances could abdicate its interest in the price of coal. I think I am right in saying that while the gentleman's agreement continues, as the Government hope and trust that it will continue, the practical effect of the suggestion made would be as I was outlining.
I was going to say to my right hon. Friend that we did not reach this decision without great consideration, because it is a fundamental point in the relations between Ministers and nationalised industries. We reached our decision because we were convinced that in the long run the best interests of the industry and the public will be served by maintaining the present system; that there would be considerable danger involved in going over to a system in which there was more emphasis on statutory direction and less emphasis on informal and regular consultation.
A number of other points were raised by various speakers. The hon. Member for Houghton-le-Spring referred again to the Fleck Report and the recommendation about the number of supervisory staff. I think that sometimes the Fleck Committee's recommendations are rather unfairly criticised. The Board has been applying them selectively and carefully, and in many cases it finds that it gets good results. For example, there is the question of centralised purchasing and that sort of thing, which has provided considerable economies.
My hon. Friend the Member for Kidderminster asked about the promised Statutory Instrument. As I have said before, that will be available in the autumn.
I cannot recall that my right hon. Friend has ever said that before. The fact is that we were promised a Statutory Instrument in 1956 on an annual basis, which means that the Government are now three years in arrear. Shall we have a Statutory Instrument for three years?
If it is a question of borrowing for a given year, I cannot understand how it can be more than for a given year. But obviously I have not understood what my hon. Friend has in mind.
The hon. Lady the Member for Cannock (Miss Lee) referred to the question of chronic bronchitis. I have taken advice on this matter, and I am told that it is impossible to distinguish between the occupational complaint and the non-occupational complaint. But there is a high incidence among miners unrelated to pneumoconiosis. The main cause of chronic bronchitis in the industry is gas, dust and fumes.
I have endeavoured to deal with some of the matters which were raised during the debate. I will see that points which I have omitted or have not understood—like that of my hon. Friend the Member for Kidderminster—are put forward and properly deliberated on. I think it should be an encouragement to the industry and all who work in it that we have had this Report from the Select Committee, and also this debate, which has ranged so wide and gone so deep into the very baffling problems concerning this basic industry.