Clause 1. — Borrowing by, and Loans by Minister of Power to, National Coal Board.)

Coal Industry Bill – in the House of Commons at 12:00 am on 2 December 1965.

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Photo of Mr Geoffrey Lloyd Mr Geoffrey Lloyd , Sutton Coldfield 12:00, 2 December 1965

I beg to move Amendment No. 1, in page 1, line 15, after "Minister", to insert: or, with the consent of the Minister, from any other person". In the Bill the Government propose that in respect of short-term borrowing the Board can borrow either from the Minister, or, with the consent of the Minister, from any other person. When it comes to long-term borrowing, the Bill says that the Board can borrow with the consent of the Minister, from the Minister only. I suggest that the same formula should be used for long-term borrowing as the Government have in the Bill for short-term borrowing, and that with the consent of the Minister the Board should also be able to borrow from any other person.

My first point about my Amendment is that it is permissive. This means that the borrowing, even if from another person, will be possible only with the consent of the Minister. Thus, he will retain full control, but the Amendment will give the Board and the Government greater flexibility in arrangements for long-term borrowing than will the proposals at present in the Bill.

As a former Minister, I am familiar with the arguments that have gone on with regard to this question, because it was proposed in earlier times that the Board might be allowed to borrow from the market. This question also arose with regard to other nationalised industries, which of course at one time were allowed to borrow from the market as well as from the Minister, which means the Treasury, and coming out of the Exchequer. The argument was that from the point of view of the Treasury and of the Bank of England it was easier, in the technical management of the National Debt, if the Board did not borrow independently, and all the money was channelled through the Exchequer.

That is a technical argument. I am not saying that it is without a good deal of power, but it is an argument that was used many years ago. I suggest to the Minister that it is wrong to continue this old formula, which I think I am right in saying has been used ever since the Board came into existence, because the industry today is facing totally changed conditions compared with those which it faced when it was nationalised.

When the industry was nationalised, it had what appeared to be a perpetual captive market. It was a monolithic industry, dealing almost entirely and alone with the supply of coal. It appeared that the market was so certain that it might almost be regarded as a kind of economic social service. Nobody in those days, or even for many years, could have anticipated the state of affairs which the industry faces today. The position is entirely different, owing to the competition of oil, natural gas coming into the picture, and so on, and I suggest that we ought to have some fresh thinking on the financial structure of this great industry, which I think will be for the benefit of the industry.

In my Amendment I contemplate that the Board, with the permission of the Minister always, would be able to borrow medium or long-term from people other than the Minister—that is, from market —but I should also like to introduce the concept that it would permit borrowing by the Board from the market on equity terms as well, rather on the lines which I think have been introduced with regard to B.O.A.C.

I make that suggestion because the Board is now branching out—and I commend it on its enterprise in doing so —for example, into the exploration for natural gas in the North Sea in cooperation with the Gulf Oil Company of America, and the Allied Oil Company of America. An operation which is engaged in trying to find natural gas in the North Sea is an operation which I think most financial experts would say is pre-eminently a risky one, appropriate to be financed by equity capital, and not at all a debenture operation, which is more appropriate to some safe public utility type of operation.

The same consideration applies to the enterprise which the National Coal Board is undertaking with Stewarts and Lloyds for the making of plastics, and I think we have to contemplate that in the future the Board, which under Lord Robens' dynamic leadership has become very enterprising, may branch out into joint ventures with other big industrial concerns in this country.

These ventures will have a considerable risk element in them, and I suggest, therefore, that we ought to be thinking in terms of some change in the financial structure of the Board, which we might call an equity element, to match that which is coming from its private enterprise partners in particular enterprises of this kind.

I should like just to touch on the even more difficult question whether, as would be permitted under my Amendment, there should ever be an equity element in the main capital structure of the Board. This is obviously a much more difficult question. It would be a brave man who would suggest that that should be done at the present time, although I might point out that when the Government, as in this Bill, are halving the capital of the Board, they are in effect admitting in principle that it was equity all the time. I know that it would be a very big question indeed to consider equity as far as the main activities of the Board are concerned, but we should give some support to this great industry in the difficulty that it is facing at present.

I admire very much the efforts which Lord Robens has made to introduce the most up-to-date management techniques in this industry. In the same way, I am sure that hon. Members are pleased that the Postmaster-General has brought in a consultancy management firm to help with regard to the Post Office, and we know what Lord Aldington, when he was Chairman of the Select Committee on the Nationalised Industries, my right hon. Friend the Member for Guildford (Sir R. Nugent), and many others who served on this Committee did towards the efficient operation of the National Coal Board.

At the present time this great industry is facing considerable difficulties, and yet, if we look on the other side of the Atlantic to the coal industry there, we find that there is a message of hope for our own industry. It is a remarkable development which we have seen over there. It was described in a most interesting article in The Times of 27th October which commented upon the great resurgence of the coal industry in the United States during the last four years. The most startling development of all was that one of the large American oil companies, Continental Oil, made a 600 million dollar bid for one of the largest American coal companies, Consolidated Coal Company, because they believe, with the new processes which have been developed over there for the making of petrol from coal, that coal is becoming competitive and commercial once again.

It is in the spirit of an equity element introduced into the National Coal Board at some lime in the future that I have moved the Amendment. Under the Amendment it would be permissive and not mandatory. We might thus improve still further the commercial viability and the commercial and industrial dynamism of the coal industry. It is in that spirit that I put forward the Amendment and appeal to our business experts and economists to have some fresh thinking about the financial structure of the nationalised industries.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

Does the right hon. Gentleman not agree that it would be fair to the coal industry if it were given extra powers to go into other fuel industries, such as the oil industry, with equity capital?

Photo of Mr Geoffrey Lloyd Mr Geoffrey Lloyd , Sutton Coldfield

It seems that the powers are already sufficient, because the National Coal Board is already in cooperation with oil companies of America in a search for natural gas and in cooperation with Stewarts and Lloyds in the manufacture of plastics.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

Mr. Leo Abse (Pontypool) rose——

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

Order. The right hon. Member has moved the Amendment and I should now propose the Question.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

I should like strongly to support the Amendment, not because I am expert on coal, although I once worked briefly in a coal mine, nor because I am an expert on finance, though, like most hon. Members, I have an overdraft. I support the Amendment because I feel that, above all, we need new thinking in our search for new capital. We must get away from some of the older formulae which have been with us for so long. I support it, too, because it offers a prospect of greater flexibility in providing finance for the Coal Board and because it could tap new sources of badly needed capital, including international capital.

As was said by my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), the Coal Board is plainly moving into some quite new fields. For the most part I welcome this, although I might have some objection if the hon. Member for Bristol, Central (Mr. Palmer) were to press what I think he has in mind. The Coal Board is already producing, for example, bricks; I think that it is the second largest brick producer in the country. It is engaged in gas exploration in conjuction with American oil companies, it is contemplating the manufacture of pipes and it has even been in advertising, although I gather that at the moment the Board is withdrawing from advertising. These are new departures for the Coal Board which I welcome.

But where the Board goes off in these new directions, it is right that we should try to find new ideas of how to finance them. It may be that there are some ways in which we can assist the coal industry in working in conjunction with private enterprise in many of the new fields. I should like to commend to the House one tentative approach to new international financing for the Coal Board which I think has some merit. I suggest to the Minister the pattern which has been followed by the High Authority of the European Coal and Steel Community. The Amendment would make that possible. There would be an advantage if we followed that pattern, because the day may come when we associate ourselves with Europe, and, to the extent to which we had begun to follow their pattern, we should find our arrangements helpful.

But there is a much narrower advanttage, and I should like to explain how this could be brought about. Over the last 10 years the High Authority has borrowed very large sums of money at very favourable interest rates in almost all the financial centres of Europe and America. The industry has benefited from this enormous injection of capital which has helped in all kinds of operation, such as the opening of new mines, the construction of coal workers' houses and many things which we need in this country, too.

4.15 p.m.

I should like to quote from the latest report of the European Coal and Steel Community. Over the last year alone the Authority was able to borrow 100 million DM. from a group of German banks for coal-mining purposes. The Authority obtained another 30 million DM. from privately-owned banks at 5¾ per cent., and 150 million French francs. The total was about 127 million dollars of new capital which the Authority was able to borrow from international banks.

In particular I commend to the Minister the fact that the High Authority was able to come to London and to get the merchant banks, led by Warburg, Hambro and Rothschild, to float on behalf of the European coal industry a loan of no less than 30 million dollars. This was a public issue in Euro-dollars handled by British brokers and offered at a rate of 5¼ per cent.—which I suspect the National Coal Board would be delighted to get at present —over a period of 20 years. When it was quoted on the London Market only a matter of months ago it was snapped up on the same day. It was an undoubted success. People were willing to invest in the coal mines of Europe—in many cases nationalised but in some cases not entirely State-run.

Why should not the British coal industry be enabled to tap these badly needed sources of capital? Heaven knows the industry needs the capital. There is is nothing revolutionary about this procedure, because the High Authority has been doing it since 1957. I saw something of its first attempt when it brought to Europe a whole trainload of well-to-do American coal owners, union leaders, bankers and so on and Jean Monnet took them around the coal mines of Europe and let them see for themselves. When they went back to New York the High Authority asked them for 100 million dollars—and they provided it.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

I do not know whether I have misunderstood the proposal, but I understand that there is no suggestion that equity capital should go into the coal mines. What is being suggested is that equity capital should be used for what is described as risk capital in connection with plastics and gas exploration, for example. Am I being naïve in thinking that what hon. Members opposite want to do is to get a good return on the new, the novel and the developing industries and to make certain that they do not put their money into existing coal mines?

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

The hon. Member is never naive, but his question demonstrates the intense and old-fashioned suspicion of hon. Members opposite to any new idea. What I am trying to propose is a new source of badly needed capital for the coal industry, and what the coal industry does with it is its own business. That is a straight answer to the hon. Member. I hope that where the coal industry is going into new departures, such as the manufacture of pipes and the provision of gas, this would be an attractive proposal. But we need that money anyway, and at the moment the British Treasury is stretched to provide it. I am sorry to hear the hon. Member trying to get in the way of a nationalised industry finding more capital for itself than we in this country are in a position to provide.

May I come back to the arrangements which were made on that first High Authority loan in 1957. The High Authority signed a contract with 50 investment banks in New York, under the leadership of Kuhn-Loeb, Lazard-Freres and the First Boston Corporation, and sold 35 million dollars worth of High Authority bonds. The public offering was snapped up in eight hours.

I underline to the Minister—who, I am sure, is paying the closest attention to this new possibility of capital—that the private international banking houses did not ask for a lien or mortgage on the physical assets of the High Authority's coal mines. How was it secured? I suspect that hon. Gentlemen opposite might object to any such loan operation on the part of the British Coal Board which would involve giving to international or private financiers a lien on the pits in this country.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

Yes indeed, but on this occasion the hon. Gentleman has walked straight into it because this lien required no such arrangement. That is why I am making this suggestion to the Government today. If it had required British national assets—the pits here—to be pledged to international moneylenders I would certainly not expect hon. Gentlemen opposite to accept the idea, but it did not require such an undertaking.

These High Authority loans were secured on what is known as an act of pledge. The High Authority merely offered to the lenders its good name and that of the Governments which stood behind it. No more than that was needed. For all practical purposes, the loan of the Warburg and Hambro Companies which was floated a few months ago was unsecured and nothing more than what is known as a negative agreement on the part of the High Authority was required. In other words, the High Authority said, "In return for your lending us this money against our good name and prospects as a coalmining industry we simply agree not to offer a lien on our pits to anybody else during the term of the loan. However, if, for some unforeseen reason, it is found necessary to do so, we will not offer a lien to anybody on terms any more favourable than we would offer to you and our creditors".

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

My views are clear cut on this issue. Considering that we are discussing assets which are in public ownership and a public enterprise industry, would the hon. Gentleman be in favour of some kind of mortgage of British public property for the purpose he is describing?

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

I hope that I was not so unclear in my remarks. I specifically said that if the international banks in question were to ask Her Majesty's Government that they should be given a lien on British Coal Board physical assets in this country, I would then not be so naive as to put the suggestion I am making before the present Government. I have tried to explain that all that was given as security for this loan was an act of pledge; in other words, an undertaking not to give mortgages to anybody else during the term of the loan, a perfectly reasonable arrangement. For any hen. Gentleman opposite, after a Labour Government have been in power for a year during which they have pledged almost everything except the Crown Jewels, to object on this ground is quite flimsy.

Here is a new source of capital which is capable of being tapped and, to answer the question put earlier by the hon. Member for Pontypool (Mr. Abse), it is capable of being tapped and used without specifications being given. I imagine that that meets the point he had in mind.

I am not suggesting that this is the exact pattern which the National Coal Board should follow. My right hon. Friend the Member for Sutton Coldfield said that the Amendment was permissive and not mandatory and I have been given to understand that many important members of the National Coal Board take a favourable view of this suggestion. I ascertained that beforehand. I also ascertained that there is considerable support for it in the City of London from the point of view of lendine, to the nationalised industries.

It should be realised that it would provide a new source of international capital at favourable rates over a long period. Above all, we should be using our national asset, represented by the coal industry, in a dynamic fashion. To do this we should get international loans, which at present we are not getting, based on the assets of our basic industries. To do so would cost the Government nothing —except, perhaps, their pride.

The Amendment does not require the National Coal Board to take this action. It does not ask the Board to do it but merely says, in effect, "Do not legislate yourself into a corner so that you cannot, in any circumstances, do this if it suits you." It merely asks that the Board leaves itself open to avail itself of this source of capital if it should so desire to take advantage of it—and then with the permission of the Minister. The Minister would lose nothing because his permission would remain.

I hope that, whatever our political views, none of us regards the present state of nationalisation as the end of the road. Technical changes are occurring the whole time. Hon. Gentlemen opposite have changed their views on many things, as have my hon. Friends and I. Technological and other developments are changing the whole structure of world trade and there is need for change in the formulae and techniques of the management of our basic industries.

I urge the Minister to have the wisdom to contemplate new approaches to this difficult problem, particularly at a time when all industries and social services are looking for new sources of capital. Do not let us write into the Bill a Clause which would preclude the coal industry, with the permission of the Minister, from looking elsewhere.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

I certainly do not dismiss the point made by the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) and I agree that we should not be hidebound in looking at the Statutes governing the nationalised industries. If there are ways in which we can, to advantage, assist these industries to meet the changing pattern of world trade, then by all means let us look at them.

It was in that spirit that the Government looked at the position of B.O.A.C., where we now have Exchequer dividend capital being utilised. This is being done in what we consider to be an extremely worthwhile experiment and, frankly, we are going to look closely at the results of our experiment so that if it might be appropriate in other instances, we do not close our minds to that possibility.

The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) pointed out that the National Coal Board has never had powers to borrow long-term from other than the Minister. I appreciate that conditions are changing rapidly. For that reason I listened with great interest to the remarks of hon. Gentlemen opposite, though I must say that I do not believe that a case has been made out as yet for the Government accepting this particular Amendment.

As the right hon. Member for Sutton Coldfield pointed out, the present method of borrowing came about some time ago. Under other statutes other nationalised industries had power to borrow long-term from people other than the Minister, but this arrangement was deemed to be causing considerable technical difficulties in the market and a Conservative Administration altered those provisions and adopted what is now the present condition of borrowing.

The hon. Member for Bury St. Edmunds discussed the methods of financing in Europe. He will appreciate that a great many of the coal mines in the E.C.S.C. area are privately owned and operated and that, therefore, they have no access to Government loans as such. E.C.S.C. loans are made available to the industries at rates compared with the market rates obtaining in those countries.

In many ways they come from a sort of quasi-Government credit within E.C.S.C. I think the financing is on a basis which is in large measure almost equivalent to Government financing. I make that point because it would not be giving the Committee the right impression if it were suggested that there were great advantages in having private investment in what, for the purposes of what we are discussing, are nationalised industries, whereas in the E.C.S.C. countries they are largely privately-owned.

4.30 p.m.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

I must ask the Minister to accept that he is not correct. The great majority of the coal industries in the countries mentioned are nationalised. In New York and elsewhere loans are floated which are in no sense quasi-Governmental but are made against the good name of the High Authority.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

The information I have given the House is that in those extensive areas where there are privately-owned coal-mining operations——

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

We can settle this as the debate proceeds. I shall get further information if the hon. Member disputes what I am saying. My information is that they are given specially advantageous terms and conditions and at the end of the day they have practically the equivalent of Government loans.

If we look at the position which arose during the 1959–60 period we see that the Radcliffe Committee gave an opinion on this, which I shall quote to the Committee: If the nationalised industries are to make their own issues, either they must time them according to the level of their bank borrowing (the practice until 1956), or they must time them at their own discretion, or they must be subject to Treasury discretion. Either the first or the second would be liable to lead to just the same kind of difficulty as before 1956, and we should prefer that, as long as the securities are equivalent (as most of them must remain) to Government bonds, the monetary authorities should have unfettered discretion in their issue. This was brought about by a Conservative Government following the Radcliffe Committee's Report.

The right hon. Member for Sutton Coldfield pointed to the great difficulties in liquidity prior to this announcement, and although certainly my mind is not closed to the need for change in these matters, I have not heard a case made which vitiates the great problems to get rid of which the present mode of financing was instituted. I put it to the Committee and point to the Government's experiments with B.O.A.C. that it is not a question merely of a blank refusal of any new form of financing. That, I think, is answered by the B.O.A.C. decision. Hon. Members opposite, when they were in power, not only adopted but created these conditions. There was no provision in the Transport Act, 1962, for borrowing long-term other than from the Exchequer. The position relating to nationalised industries' financing has not changed since then. For these reasons I hope that the Committee will reject the Amendment.

Photo of Mr Eldon Griffiths Mr Eldon Griffiths , Bury St Edmunds

I wish to comment briefly on the points made by the Minister. Would he not at least agree to consult the Coal Board before closing his mind to this proposal? Could he not at least ask the Board whether the proposals which have been put forward very modestly would suit the Board and whether the Board would like to do this? His reply has not shown deep knowledge of the subject. With respect, I do not think that he had done his homework about the financing of the High Authority. The High Authority in the past years has borrowed from international banks large sums of money without pledging the assets in question. I ask the right hon. Gentleman to consult Lord Robbens or anyone else to see whether this will suit the Coal Board.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

In answer to the hon. Member, I consult Lord Robens almost hourly on issues now confronting the Coal Board, but there has been no suggestion from Lord Robens nor from any nationalised industry that this kind of financing is considered by them to be important. There are private mines in Germany except in the Saar and in Belgium. There are State mines in France and Holland. The production in Germany alone is about 140 million tons, which is well over half the production for the E.C.S.C.

Mr. J. T. Price:

I do not wish to detain the Committee for more than a few minutes, but I am constrained to say a few words because an entirely false impression would be created in this important matter if it went out from Parliament that the Labour Party is completely hidebound in the changing circumstances of the modern world. That is not so. I am grateful to the hon. Member for Bury St. Edmunds (Mr. Eldon Griffiths) and the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd), who have made temperate speeches, for raising this issue, though the proposition may not at present be acceptable to this House. Nevertheless, it is important that these issues should be raised.

The hon. Member for Bury St. Edmunds could have made his case stronger than the premise on which he argued if, instead of quoting the High Authority method of financing which, so far as my limited information goes, he quoted accurately, he had quoted the Italian experience. Italy has been described as the economic miracle of Europe. I have been to Italy a number of times and I have been there quite recently. I have no axe to grind in this matter; I am not tied to any commercial interest, as my hon. Friends know. Italy has made tremendous progress. It has employed the most novel methods of financing for its nationalised industries.

It has great institutions such as the Istituto per la Ricostruzione Industriale, which is an agency of the Government in Italy. The I.R.I. is a Government-sponsored agency answerable to the Minister of Planning of the Italian Government and it controls 80 per cent. of the Italian steel industry which is making great progress. It controls the whole of the shipping lines, all the great shipyards, shipbuilding in general, and the whole of the air fleets, Alitalia Airlines and the motorways, which at present are producing a substantial revenue. It controls all telecommunications and other services, which are vital and are the commanding heights of the Italian economy.

Although many Italians do not enter into the sort of ideological battles to which we are accustomed—I am not running away from any ideological battle —and while they have carried out vast reorganisations of Italian industry under direct and indirect Government control, they have not been ideological in the way in which they have raised finance. Anyone can consult the authorities about this, for there is plenty of literature on the subject. In Italy, apart from the railways. which were the first railways to be nationalised—they were nationalised in 1906 before we even had a Labour Party —industries have been largely financed on this basis. Italy, of course, has no coal.

The Italian Government have guaranteed 10 per cent. of the capital required to finance State-sponsored objectives and 90 per cent. has been raised on the market. In the last couple of months when the latest I.R.I. funds were floated, within a few hours 60,000 million lira were raised. On a rough calculation, that is about £35 million. This is going on on a large scale. The whole of the Italian oil industry is under nationalised control.

I do not know whether this will be any great comfort to hon. Members opposite, but they can make what they like of it from an ideological point of view. I do not run away from labels; I regard myself as a Socialist, perhaps not an entirely theoretical one, but an idealist one. I make no apology for that. I need not do so. Whatever ideological view is taken of these matters, it is true that one of our great European competitors and one of our great friends is making tremendous progress and makes no objection to money being raised; and money is forthcoming.

Photo of Mr Emrys Hughes Mr Emrys Hughes , South Ayrshire

At what rate of interest?

Mr. Price:

I am advised that the rate of interest on the last 60,000 million lira loan was 6 per cent., which compares favourably with rates in this country. It may surprise hon. Members opposite that someone on this side of the Committee should speak in this way. I am facing reality. When I entered the Chamber I did not intend to make a speech, but I have been goaded into making one by what hon. Members opposite have said. But that is what the House of Commons is about. Too many "midnight oil" speeches are made here. I should like it better if people would rise occasionally and say what they really believe and not what some civil servant has dished out to them—or some back-room boy of the Tory Central Office. However, I must not be carried away.

My only doubt in saying what I have done is that felt by most of us who have tried to look at these matters philosophically. I am always rather sceptical about putting myself in pawn to moneylenders, whether they are international moneylenders or national moneylenders. I have never taken anything to a pawnshop in my life. I have never needed to. I would not do so, unless I was driven to it.

With all these great projects it is not necessarily that there is not the will to carry them out. It is that sometimes the resources are lacking. My right hon. Friends in charge of Government Departments sometimes have to say, to my great regret, that although they want to carry out many projects the resources are not always available. Many good intentions are frustrated by the resources not being available at the right time. If novel methods could be devised, perhaps methods which have previously been rejected, on grounds which we all know, we ought to consider them with an open mind.

I have risen, not to support the Amendment, because it may not be the right way to do it at this moment, but merely to say that these things are being tried out very successfully in other parts of Europe, particularly in Italy.

Photo of Mr Geoffrey Lloyd Mr Geoffrey Lloyd , Sutton Coldfield

The hon. Member for Westhoughton (Mr. J. T. Price) may not be hidebound in his attitude to these financial questions, but I fear that the Government are. As this matter has now been ventilated, I have no desire to prolong the discussion. However, I must say that it was rather disappointing to hear the Minister, in this era of technological change, basing himself on a backward-looking view of the technical financial difficulties put up by the Bank of England years ago. The right hon. Gentleman showed no realisation of the need to adapt the financial structure of this great industry to the challenges it will meet.

In particular, the Minister entirely failed to deal with the question raised by my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths), that there might be new additional sources of capital available to the Coal Board which are not available under the present restrictive Clauses in the Bill. The Minister must be entirely wrong in his idea that the funds raised on the market for the Higher Authority are, so to speak, quasi-Government funds, because 2 million dollars have been raised in New York. Anybody who thinks that funds which come from the New York market are quasi-Government funds coming from European Governments needs to think again. It is obviously absurd. The right hon. Gentleman has given an unsatisfactory reply, but, to facilitate business, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.45 p.m.

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

I beg to move Amendment No. 2, in page 1, line 18, to leave out paragraph (a).

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

With this Amendment it will be convenient to discuss Amendment No. 3, in page 2, line 2, leave out paragraph (c); Amendment No. 4, in page 2, line 9, leave out paragraph (e); and Amendment No. 5, in page 2, line 14, leave out paragraph (g).

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

These Amendments have been tabled because we on this side believe that the Minister has a great deal of explaining to do. Clause 1 deals with borrowing. Subsection (2) gives the Board power to borrow from the Minister, subject to the overall borrowing limit, such sums as the Board may require in connection wish their functions for all or any of the following purposes". A long list follows. It is a list which greatly concerns my hon. Friends. Indeed, we have been unable to find a precedent anywhere in any other legislation of this sort for a list of this nature. We believe that we are in the presence of some very sinister legislation this afternoon. We hope that the Minister will be able to put our minds at rest when he replies. It may be that we are being unduly alarmed and that a nice cosy answer will be given by the Minister which will satisfy us. But I very much doubt it.

This list suggests to us that back-door nationalisation is being put forward in the Bill. A study of the points enumerated in the Bill shows that a veritable salad of possibilities exist. Amendment No. 2 seeks to delete paragraph (a), which is to the effect that money may be borrowed by the Board for meeting any expenses properly chargeable to capital, being expenses incurred in connection with the provision or improvement of assets". Amendment No. 3 seeks to delete paragraph (c), which provides that money may be borrowed for acquiring an undertaking or part of an undertaking. What does this mean?

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

What it says to me is that the Board is now to be given power to take over, or trade in, anything that catches its fancy. There is no definition in the Bill to say that it should not. It does not say anywhere in the Bill that the undertaking has to be connected with the coal industry, though one presumes that the word "functions" which I quoted earlier covers that.

Amendment No. 4 seeks to delete paragraph (e), which provides that money may be borrowed for subscribing for or acquiring shares, stock, debentures, debenture stock, or other securities of a like nature, of a body corporate, otherwise than by way of investment. Finally, there is the omnibus provision which we ask the Minister to look at really seriously: (g) for any purpose for which capital moneys are properly applicable (whether or not specified in the foregoing paragraphs of this subsection). An absolutely blank cheque is being given here for the Board to do exactly what it likes in entering into or trading in any business that catches its fancy.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

We had a taste of empiricism from the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) with the idea that private capital should go into public enterprise. Do I understand that the distinction now is that that is permissible but it is not permissible that public enterprise should go into private business?

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

The hon. Member has jumped the gun, as he often does. I am not criticising the enterprise which the Government seek to enter. What I am criticising is that in a money-borrowing Bill we are having slipped in a whole lot of provisions which should be debated in a totally different way in the House. We are well aware that the Queen's Speech said: Legislation will be introduced to remove statutory limitations impeding the proper use of the manufacturing resources of nationalised industries. That is pretty ambiguous, but at least it led my hon. Friends and I to believe that the Government intended to introduce proper, separate legislation to give these industries the opportunities which it was stated they required.

Photo of Sir John Morris Sir John Morris Parliamentary Secretary (Ministry of Power)

The hon. Member used the expression "slipped in". Is he suggesting that the Government are doing anything underhand?

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

Yes, indeed, I am suggesting exactly that. I am delighted that the hon. Gentleman came so clearly to the point, because here we are in the presence of a money Bill which cannot be amended in another place, and once this legislation goes through there is nothing that we in the House of Commons can do about it. The Parliamentary Secretary is exactly right. It is most underhand.

If we part with this Bill are we to assume that we shall have given this industry blanket powers to acquire whatever catches its eye? I will refer later to the possibilities that I see here. Will the Minister tell us whether further legislation is to be introduced to cover these provisions? We all know that the Government were very reluctant to introduce a Bill to nationalise the steel industry. As the Chancellor of the Exchequer made clear a short time ago, they would do it when they had a large majority. Yet here we are passing into law legislation which will give huge nationalisation powers to the coal industry without such a Bill having to go through its stages in the House and being voted upon—perhaps with the Liberal Party voting against it—and then being sent to another place.

What has happened is that very clearly—and I must admit this to the Minister—the right hon. Gentleman has managed to mask the real issue by introducing this matter into a borrowing powers Bill, but I would remind the Committee that the words in the Labour Party's manifesto at the last election on this point were that the nationalised industries will be encouraged, with the removal of the present restrictions placed upon them, to diversify and move into new fields:"— [HON. MEMBERS: "Hear, hear."] That is a sweeping statement clearly welcomed by hon. Members opposite. [HON. MEMBERS: "Why not?"] for example, the railways' workshops will be free to seek export markets, and the National Coal Board to manufacture machinery and equipment it needs. [HON. MEMBERS: "Hear, hear."] Since hon. Members opposite are so enthusiastic about this, can the Minister tell us which mining company he has in mind?

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

The hon. Member is quite wrong. I only wish that I had one. Is the Minister thinking about companies like Dowty's, which manufactures hydraulic pit props? Are we to take from the cheers of hon. Members opposite and what appear to be nods of assent from the Parliamentary Secretary that we are now moving into a period when this industry is to start taking over—"nationalising" is the word I like—various manufacturing companies in the mining industry?

Photo of Mr David Weitzman Mr David Weitzman , Stoke Newington and Hackney North

The hon. Gentleman is making very heavy weather of this. Will he look at line 15 of Clause 1(2) and read the words … such sums as the Board may require in connection with their functions …"?

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

I am most grateful to the hon. and learned Gentleman. We covered that point earlier, but I will return 10 it for his benefit. I should like the Minister to say what the functions are. Is going to the North Sea, as has been suggested, a function of the Board?

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

I said that this would be subject to legislation in the House.

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

"Subject to legislation in the House", but I am trying to get the Minister to tell us whether or not the legislation which we are at this moment considering is the legislation which allows him to permit the Coal Board to enter into this new field.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

indicated dissent.

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

Are we, therefore, to take it that this is nothing but a technical Clause which does not give the powers that I have outlined?

We are very unhappy about Clause 1(2). There are no clear definitions in it of the responsibilities of the Board. If the words mean nothing and we are not to worry about them, why are they in the Bill? If they are as important as we think they are, I should like the Minister to explain in detail what is intended. The Committee and the country are entitled to know.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I have been looking up other Acts to see whether words similar to those in this Clause can be found in them. The one which I happened to pick up in the Vote Office before coming into the debate was the Transport Act, 1962, and I have been making a comparison between Section 19 of that Act and the Clause at present before us. I noticed that they are almost word for word the same, and I am therefore not inclined to agree with the hon. Member for Lewisham, West (Mr. McNair-Wilson) that this Clause has the sinister interpretation which he seeks to place upon it. Nor can it be said that the Government are doing anything underhand when they are following the example set for them by their Tory predecessors. [Laughter.] Well, perhaps I am wrong about that.

It is true that there are a few differences in the wording and I should like to draw the attention of the Committee to these in case they have significance, and perhaps the Minister will deal with them in his reply. Subsection (2,a) of this Clause is identical with Section 19(2,a) of the Transport Act, 1962, with the exception that the words … in connection with the business of the Board appear at the end of the sentence in the Transport Act but are left out in this Clause. It may well he claimed by the Minister that the phrase quoted in an intervention covers this point and that these expenses must be in connection with the business of the Board under the whole Clause and therefore it is not necessary to repeat the words here.

In paragraph (d) the words at the end, within the meaning of section 154 of the Companies Act, 1948 do not appear in the corresponding part of Section 19 of the Transport Act, 1962.

5.0 p.m.

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

Paragraph (d) is not the subject of an Amendment.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I know, but I am taking the differences between this Clause and the Section of the 1962 Act generally because I think that it would be helpful if the Minister were to deal with the point now rather than on the Question, "That the Clause stand part of the Bill", since we are seeking to uncover the significance of this whole series of provisions.

The words in paragraph (e), shares, stock, debentures, debenture stock, or other have been added to the words which appear in the corresponding paragraph of Section 19 of the Transport Act, 1962.

The words at the end of paragraph (g), of this subsection have been added to the corresponding paragraph in the 1962 Act.

I hope that I have not wearied the Committee with these details, but I thought it necessary, for the sake of clarity, to specify all the differences between this Clause and what was obviously its model so that, if there be any deep meaning in the differences, the Minister can deal with it.

Photo of Mr Donald Box Mr Donald Box , Cardiff North

Will the hon. Gentleman clear up two points? Is he, in effect, telling the Committee that paragraph (c), for acquiring an undertaking or part of an undertaking is not included in the 1962 Act, and also that the words in paragraph (e), for subscribing for or acquiring shares, stock … and so on are not included in the Transport Act?

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

What I am doing is to itemise the differences between this series of provisions and the corresponding provisions of the Transport Act, 1962. I did not mention the words, for acquiring an undertaking or part of an undertaking". because they are identical in the previous Act.

Unfortunately, I did not have time to look at the report of the proceedings in Committee on the 1962 Act to find out whether hon. and right hon. Members of the present Opposition disputed the right of their Government to put them in at that time. Perhaps they thought that, it being a Tory Government, these powers could safely be conferred upon their own Minister. [An HON. MEMBER: "Hear, hear."] I hear an hon. Gentleman behind me saying, "Hear, hear", but it seems to me that, in considering the capital financing of the nationalised industries in general, there is something to be said for uniformity. The pattern which suits the Railways Board, for example, is very likely to meet the needs of the National Coal Board also.

Therefore, with great respect to the hon. Member for Lewisham, West, I see nothing violently objectionable in these provisions. I should like to have explanations on the detail from the Minister, but, subject to my being satisfied on that aspect of the matter, I am prepared to accept the wording as it stands.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

To take up at once the point made by the hon. Member for Orpington (Mr. Lubbock), I confirm that there are the differences which he outlined but I assure him that they are of a purely drafting nature and they do not have the slightest difference in substance from the provisions in the 1962 Act which he quoted.

As time goes on, the hon. Member for Lewisham, West (Mr. McNair-Wilson) will learn that, if one is not sure of something, it is better to ask questions and not make statements. He comes to the Box and tells us that this is back-door nationalisation, that there is something sinister about it, that it is an underhanded procedure. He should not charge his right hon. Friends with that kind of conduct. Of course, we have lifted this all from the Tory Act, the Transport Act, 1962. As the hon. Gentleman goes on, he will learn how to keep in the crease. He has just come down to the Front Bench, but when people hear about this, he will be back on the back benches before he can say "knife".

What we are doing in this Bill is to spell out what was covered by the Coal Industry Nationalisation Act, 1946. We were not clear why the Opposition put down these Amendments. We thought that, perhaps, they were under a misapprehension as to our intention in enumerating the purposes in this Bill. But, as I have said, the 1946 Act did not spell out, as we do here, the items referred to in the Amendments, and the hon. Gentleman now wants to wipe them out.

Section 26 of the Coal Industry Nationalisation Act, 1946, states simply, For the purpose of enabling the Board to defray expenditure properly chargeable to capital account, including the provision of working capital, the Minister may make advances to the Board … Obviously, the Opposition are under the impression that the new form of words adopted in this Bill widens the powers of the Board. The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) raised this point on Second Reading—his words are reported in column 854 of HANSARD—and my hon. Friend the Parliamentary Secretary answered him when winding up in this way: An hon. Member asked whether the powers of borrowing set out in the Bill would give new powers to the Board. They will not. The Board will exercise its borrowing powers within its present functions."—[OFFICIAL REPORT, 25th November, 1965; Vol 721, c. 881.] The hon. Member for Orpington pointed out that similar provisions are to be found in the Transport Act, 1962, Section 19(2), and further similar provisions are to be found in Section 5(2) of the Airports Authority Act, 1965. The same procedure is followed. In other words, the Government in 1962 created this precedent, probably a very right and proper one, in spelling out in more detail what had appeared in previous legislation in the form of a blanket provision such as that I have quoted from the 1946 Act. If one compares these so-called sinister provisions with Section 19(2) of the Conservative Government's Transport Act of 1962, one finds that they are identical except for the points of difference brought out by the hon. Member for Orpington.

While I deplore having to admit that we are copying something done by the last Government, I feel that I must rush to the defence of right hon. Gentlemen opposite. They were not trying to introduce back-door legislation to nationalise things which they had not the courage openly to nationalise. On three or four occasions, I have admitted their courage in nationalising the North Sea, but I can go no further than that.

The provisions in the Clause now before the Committee are almost word for word the same as those in the enactment brought in by the Conservative Government in 1962. I can give a specific assurance that the wording of this Bill does not in any way widen the powers which the Coal Board has by virtue of the 1946 Act. But, of course, as hon. Members have said, there is need for diversification. With our usual ability to look ahead, this need was envisaged in 1946. In the 1946 Act, the Coal Board was given quite wide powers to diversify and, during the intervening years, it has taken advantage of these and has, in fact, made arrangements with a great many private enterprise organisations. Here are some examples, most of them taken from the period when the Conservative Government was in office.

The Coal Board has made arrangements with Benzole Producers Ltd., the Yorkshire Tar Corporation Ltd., the Brick Development Association, Pitch Polymer Products, J. H. Sankey and Son, Ltd., the Coal Industry Social Welfare Organisation, Thomas Ness, Ltd.—and so one could go on. Hon. Members opposite, during the period of office of the Conservative Government, saw the National Coal Board doing these things and approved of them. It is therefore a bit much for them to accuse us of trying to provide facilities of a similar type.

I think that the hon. Gentleman owes an apology to the Committee—I do not ask it for the Government—for suggesting that the Committee is so lacking in knowledge as to think that, in 1962, the Tory Government made a sinister attempt to stab private enterprise in the back by widening the powers of the transport undertakings. To attack what we are doing after having agreed to permit the Conservative Government to so abuse the powers of nationalised industries as to work to the detriment of private enterprise, is asking too much of the Committee.

There is nothing sinister in these powers. The National Coal Board is seeking to use powers which the 1946 Act conferred on it and which we are spelling out in more detail, just as the last Government did in 1962. The words here are almost identical with those of the Transport Act, 1962. I have given an assurance that, where they differ, they do so merely in words which do not affect the substance of what I am saying.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

The Minister of Power has now answered in more detail questions that I asked on Second Reading. I thank him for clarifying points which were not clear to me. I was a member of the Standing Committee which considered the 1962 Transport Act. I have been asked whether, under the powers which we think already exist under the 1946 Act or the 1962 Act, if the National Coal Board could—and I am not necessarily being ridiculous here—buy up a peanut factory or a crisp factory, for instance, to supply its canteens.

There is a fundamental difference between the two sides. There is a contrast between the Conservative Party's attitude, which is to limit expansion of the public sector and the present Government's attitude, which is to expand the public sector. I understand that these powers, whether granted by the Conservative Government or perpetrated in the 1946 Act, could be used to bring about a much wider diversification than appears of a nationalised industry to be the case at first sight.

Before the last election there were various publications trying to illustrate the differences between the two parties. I had the chance to read two Aims of Industry publications again today. They were issued before the election. One was called "Creeping Nationalisation", and on page 3 it points out that the … popular belief is that the Labour Party's plans for more public ownership are limited to the renationalisation of steel and road haulage is false. Subsequent history has proved this true. Aims of Industry made similar statements in "Trojan Horse".

5.15 p.m.

In our debate last Thursday, I raised the question of Government policy on handling nationalised industries. I share with the view of my hon. Friend for Lewisham, West (Mr. McNair-Wilson) and some hon. Members on this side who feel that this was clouded as the real issue by the discussion on the personal hardships of the miners due to pit closures and the compensation necessary for them. Questions I asked in that debate have not been answered and I am not clear whether the Minister considers he has powers to take over mining equipment and machinery. Has he had these powers since 1946 or is he taking them now by borrowing the wording of the transport Act, 1962? I am not a lawyer and I seek clarification on this.

I have had a chance to look at "The New Britain", the Socialist manifesto, which clearly stated that the National Coal Board be given powers … to manufacture the machinery and equipment it needs. This occurred again in the Queen's Speech, when it was stated Legislation will be introduced to remove the statutory limitations impeding the proper use of the manufacturing resources of the nationalised industries. These objectives have been stated clearly. To what extent is it intended to implement them by Clause 1 of this Bill? Clause IV is as relevant now to the Socialist Party's modus vivendi as it was years ago and for the benefit of Members opposite it calls for … common ownership of the means of production, distribution, and exchange, and the best obtainable system of popular administration … This surely extended into the debates we had on the steel industry. The White Paper on Steel clearly stated, in paragraph 28: The nationalised steel industry will be able to diversify its activities when this appears commercially advantageous … Going back to the debate on the first Amendment and to the contributions made by my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) and my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths), one has to ask what is wrong in expanding the range of activities of the nationalised industries. There is the danger of the National Coal Board diversifying into fields where it has neither the commercial, technical nor managerial "know-how". Money would be spent without the safeguards which ensure that private enterprise uses its money with a certain degree of wisdom or faces the consequences of going bankrupt. In this particular instance, even within this Bill there is to be £15 million in Government subsidy, which relates to a reserve for an increase in price.

Photo of Mr Ifor Davies Mr Ifor Davies , Gower

The hon. Gentleman earlier referred to his regard for the people who might be displaced by mining closures. Would not he consider it prudent and right for the National Coal Board to set up plants for making mining machinery in those areas where pits are closed?

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

If the hon. Gentleman will allow me to complete my argument, I will define the type of conditions where I consider it would be prudent. I invite the hon. Gentleman to read my Second Reading speech, when I said that even within the coal industry there were some advantages to nationalisation. I am trying to put forward a case which is both reasonable and logical.

If private enterprise diversifies, it is still subject to the normal checks and conditions that it should operate properly and not waste resources. Within industrial organisations, the Queen's Speech is being discussed and I understand that the Minister or others have appealed to industrial organisations on various grounds, saying that it is right, not only in the interests of those organisations but of the economy as a whole, that the nationalised industries should be as free as private industry to use and if necessary diversify public assets. There have been assurances from Ministers that there is no intention of permitting the nationalised industries to launch into wide extensions of their activities. I should like the right hon. Gentleman to give an assurance that he intends to confine the extent of the activities into which the Coal Board may diversify.

Photo of Mr William Stones Mr William Stones , Consett

The hon. Gentleman has referred to diversification by the National Coal Board. I can assure him, with the full agreement of the Minister, that we do not intend to diversify the industry into the production of potato crisps, but some of the "know-how" which he has mentioned already exists within the industry. It is a fact that some improvements in technology and mining machinery have been the result of the experience of the industry's experts and technologists. Why should that "know-how" be given to private enterprise if the Coal Board's engineers and technologists can produce what the Board requires?

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

I would be the first to admit that much of the machinery provided for the Board, as for any other customer, is the result of co-operation and exchange of technical "know-how" between supplier and user. But the Minister has said that any investment to expand manufacture would be subject to Ministerial approval and private industry has been assured that that would be subject to the control of Parliament. How- ever, as I explained last week, the Select Committee on Nationalised Industries last considered the coal industry in 1958 or 1959. So much for the machinery of Parliamentary control over the Coal Board and its activities!

When an industry comprises both public and private sectors, when there is excess capacity it should be assumed as a matter of course that the public enterprise will close down and Ministers have given the assurance that such cases would be considered on their merits. But in fact quite the contrary has happened and when there has been a conflict between a private enterprise supplier and a nationalised industry—and the classic example is the supply of locomotives and, even more so, the supply of railway carriages and wagons—it is the private sector which has had to suffer. The head of a nationalised industry—in the case of transport, Dr. Beeching—comes under pressure to keep his own workshops busy. This has undoubtedly meant private enterprise can go to the wall. I imagine that such a state of affairs can be found not only in the transport industry, but in the coal industry and I want to know whether the practice is to be extended or contracted.

If private industry diversifies, it does so at its own risk and subject to the full financial control of those who have lent it their money. The classic example in recent years of a very large company which has had to pull itself round has been the General Electric Company. It is now a viable company, although five or six years ago it was in dire trouble because it had overgrown and diversified too widely. The financial market was able to apply the normal checks. This provided the drive for G.E.C. to put itself on its feet. If a nationalised industry fails, it is the taxpayer who pays. There is no commercial and market control. If it makes a loss, and that has been a feature of many of our nationalised industries, it is the taxpayer who has to raise the subsidy.

I have been impressed by the arguments of my right hon. Friend the Member for Sutton Coldfield and of my hon. Friend the Member for Bury St. Edmunds and even by the comment of the hon. Member for Westhoughton (Mr. J. T. Price) about other ways of financing the nationalised industries and I would have thought that their arguments were well worth consideration.

If the Coal Board, a nationalised concern, has to rely on the taxpayer or State funds for its manufacturing purposes, its operations should be strictly limited. That rule should apply to any nationalised industry. While an industry is subject to close interference by a Minister—and I have raised the issue of the Coal Board's advertising policy—and is subject to financial provisions such as the £15 million which we are asked to provide, it is isolated from the normal commercial safeguards and controls. This is true even although interference from a Minister may be against its interests. If an industry is to be entirely subsidised out of State funds, that is, by the taxpayer, its purposes should be closely defined by legislation and, in the case of the Coal Board, confined to the gaining of coal in the narrow sense.

However, if there is a good argument—and industrialists are quite willing to listen to argument—for expanding the Board's activities, it must meet certain conditions. Obviously, if an industry is to be expanded, the existing industry must be viable or profitable. This is of advantage to the taxpayer, even if it provides a reason for diversification and calling on money from outside.

We also have to consider the size of units. I have a note of the various sizes of units. The Electricity Board has a capital employed of £2,872 million; British Rail, £1,277 million; Shell Transport, £1,266 million; the Post Office, £1,204 million. The N.C.B. has the largest number of employees, 517,000, and British Rail has 422,000. Our existing nationalised industries are about the largest concerns without the commercial safeguards which ensure that money is used profitably and effectively.

Photo of Mr William Stones Mr William Stones , Consett

Will the hon. Gentleman say when the National Coal Board was subsidised?

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

I shall have to ask the Minister that question.

Photo of Mr William Stones Mr William Stones , Consett

But the hon. Gentleman made the statement.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

In this very Bill we are writing off half the capital. Who will have to pay for that writing off? It will be the taxpayer. There may be a good case for the taxpayer having to pay, and I do not dispute it, but the hard fact is that it is the taxpayer who pays.

Photo of Mr William Stones Mr William Stones , Consett

Can the hon. Gentleman say when the Coal Board has been subsidised?

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

That is a fair question.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

It has had protection in one form—I mentioned this last week—because of the 2d. fuel tax.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

The hon. Gentleman has repeatedly spoken of a subsidy and he has now been challenged and cannot reply. He ought not to base his case on a false premise. As a matter of fact, the mining industry has kept prices stable for the last year and no private industry has done the same. Rather than receive a subsidy, coal mining has conferred a subsidy on private industry.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

The margin of profit of the Coal Board has been far from giving a satisfactory return. I do not have the figures at my finger tips, but there have been many years when the nationalised industries have given a very poor return on the capital employed. That is the sort of yardstick to which any industry will have to match up if it is to survive. But the nationalised industries are exempt.

5.30 p.m.

Photo of Mr William Stones Mr William Stones , Consett

I believe that the hon. Gentleman is usually very fair, and I think that to be honourable he ought to withdraw the statement which he has made. The Coal Board has never received one penny of subsidy, from this Government or any other Government. I think that he ought to be man enough, and honourable enough, to withdraw his statement. What has happened is that the Coal Board during the early years after nationalisation, subsidised private industry by selling coal below market price, to keep steel and other commodities on a stable basis. The hon. Gentleman should withdraw the statement he has made, that the Coal Board lived on subsidies.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

I am not going to pursue this argument because it is irrelevant to my main point. I genuinely believed that and I will check this by looking at the HANSARD report of today's debate. There may have been a slip of the tongue if I said that the Coal Board is being subsidised. I may have got my facts wrong, but there have been hidden subsidies, in so far as the return of capital employed has not been satisfactory over the years.

Photo of Mr Thomas Swain Mr Thomas Swain , North East Derbyshire

Would the hon. Gentleman agree that one of the reasons that the finances of the Coal Board have failed, not miserably, but failed to some extent in the last few years, is because two years ago it reduced the price of coal to the steel manufacturers by half-a-crown a ton and gave them a 5 per cent. rebate on the money they spent on coal?

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

If hon. Members will allow me not to pursue this point. There has been the same problem in the steel industry. With the controlled prices placed upon the industry by the Iron and Steel Board, it found that its prices were not sufficiently satisfactory. I was talking about the size of units.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

Might I ask the Committee to recall that when an hon. Member is addressing the Committee interruptions are perfectly understandable, but they have tended to become minor speeches, minor in two senses of the word. I am wondering whether the hon. Gentleman could be allowed to complete his speech.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

I ask with very great respect, Sir Harry, if it is proper for an hon. Member deliberately to mislead the Committee and then fail to substantiate his claim?

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

Order. The hon. Member for Burnley (Mr. Dan Jones) has made a very serious accusation in saying that the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) was deliberately misleading the Committee. It is out of order to make such a charge and I must ask the hon. Member to reconsider his wording.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

I withdraw the word "deliberately" and say "misleading the Committee". There is no evidence to show that the hon. Member can substantiate that charge, and I hope that in the interests of good debate the observation made should be withdrawn.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

I have pointed out that I do not wish to pursue this point of the subsidy of nationalised industry. If I am proved wrong later, I will, of course, apologise. It was not my intention to deliberately mislead the Committee and I will look very carefully at my words in this debate. I can assure the hon. Gentleman that it was not my intention to mislead the Committee.

I was dealing with the question of the size of units, because I think that this is important. It could be that nationalised industries are too large to have the safeguards to which large companies are subject. One might ask under what sort of conditions would I approve of diversification of the nationalised industry. I think on a reduction in size. The only way of doing this is, perhaps, to split each independent nationalised authority into area boards, more independent, perhaps dependent on regional finance, and upon finance from outside whether from this country or eleswhere.

I ask the Minister to consider this argument carefully because it is the sort of argument which has been discussed in Europe, particularly in Germany, in so far as electricity is concerned, in order to make each unit of the industry more independent, flexible and viable, and able to stand up to the competition from other sources of energy. If these conditions are met, if the existing operations become viable, if the units become broken up and if financing is based upon commercial conditions. Only then are some of the conditions met which would justify the National Coal Board, or the area boards if they were made independent, in diversifying their activities. Under these conditions the taxpayer is granted the safeguards he would require. Those in my view are the conditions justifying diversification. At present we have a large, single-purpose monopoly, and if there are mistakes it is the taxpayer who pays. Without again referring to our arguments in this debate about subsidies, I think that hon. Members would agree that where there are mistakes the taxpayer pays. In this Clause we have a means of implementing Clause 4 of the Labour Party policy. The public sector as such is too large. It has taken 40 per cent. of our gross national product and I think that the infiltration of State influence into commercial activity is already too large.

If that is the case, whatever my argument to the Committee now, ultimately it is the standard of living of the people in this country which will be affected.

Photo of Mr David Weitzman Mr David Weitzman , Stoke Newington and Hackney North

I will not detain the Committee for more than a couple of minutes but I am tempted to get up in view of the long speech to which we have listened, made by the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) and which has been based on a misunderstanding of what this Bill really means. There has been a lot of irrelevant talk about sinister things and all sorts of nonsense. If the hon. Member for Lewisham, West (Mr. McNair-Wilson), who dealt with this matter in moving this Amendment, had only taken the trouble to look at the subsection, he would have seen how nonsensical the whole of the argument is. In private industry, a private company or public company, there is a memorandum of association dealing with the functions of the company in connection with its business. This subsection does the same thing for the nationalised industries. If only hon. Gentlemen opposite had had the common sense to look at Clause 1(2) which says: subject to subsection (3) of this Section, the Board may borrow (otherwise than by way of temporary loan) from the Minister such sums as the Board may require in connection with their functions for all or any of the following purposes… Those purposes are then itemised. So, to talk about anything sinister is quite ridiculous. This is simply a power given to enable the coal industry to carry out its functions. It is the same sort of power as is given to any private or public company. The whole of the speech we have just listened to is simply irrelevant and has nothing to do with the matter.

Photo of Mr John Biggs-Davison Mr John Biggs-Davison , Chigwell

I wish to be brief and not to indulge in polemics. No one would accuse the right hon. Gentleman the Minister of being sinister but I must say that I was not entirely reassured by his reassurance as to the diversification of the operations of the Coal Board. I was not at all reassured when he said that it dated back to 1946, which was not a particularly happy year in our national history.

The Minister mentioned a number of private enterprises with which the National Coal Board has connections. I do not think that I should have intervened in this debate had not the right hon. Gentleman mentioned J. H. Sankey & Son. I have no interest in this firm. Indeed, I have no financial interest in any of these matters. However, constituents of mine, particularly those concerned in supplying the building trade, were alarmed when the Coal Board, last summer, acquired its interest in J. H. Sankey & Son, which has nothing to do with manufacturing mining machinery, as mentioned by the hon. Member for Rhondda, East (Mr. G. Elfed Davies), but is concerned with the supply of solid fuel heaters. I ask the Minister to accept that there is great concern among many medium and small enterprises, to whose value to the community Lord Robens has paid tribute, at this transaction, and they are wondering where it will all stop. The Parliamentary Secretary, who is on the Government Front Bench, knows that I pursued this matter by Parliamentary Question.

I do not want to approach this subject in an ideological manner. Whether the economy is controlled or free or mixed, as ours is, competition is necessary and desirable and the need for competition is sometimes mentioned even by hon. Members opposite. But competition should be fair. It should not be such as to give rise to the apprehension that the competition of nationalised concerns with smaller private businesses will lose them the chance of competing and thus eliminate competition. The diversification of any nationalised industry, particularly the coal industry, must be limited by what is right for the general health of a competitive national economy and, as my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) said, by the technical ability of the nationalised industries to discharge these other functions.

Photo of Mr Edward Milne Mr Edward Milne , Blyth

I do not want to detain the Committee very long, but I should take up one or two remarks of the hon. Member for Chigwell (Mr. Biggs-Davison). To talk about freedom for private enterprise and of the contact of the National Coal Board with private enterprise industries seems to ignore the fact that for a number of years the Board has been subsidising private industry. If it had not been for the decision taken between 1954 and 1956 to have the output of the Board in 1965 raised to 240 million tons, many of the difficulties which we are facing may not have been encountered.

When we hear talk about the industry being subsidised, we should remember that in many ways it has been subsidising private industry. Take, for example, the time when American coal had to be imported and £70 million of coal industry money was used to sell American coal at British prices to industrialists in Britain to keep she price level. I am not arguing the merits or demerits of this policy because it is not relevant to the matter that we are discussing. But it indicates that, contrary to what hon. Members opposite have said, the £70 million used to bolster the entry of American coal into this country was a subsidy to private enterprise and a drain on the Coal Board's resources.

Photo of Mr Donald Box Mr Donald Box , Cardiff North

Despite the plausible explanation of the Minister, I support the Amendment. It is fair to say that the powers given in paragraphs (c) and (e) of Clause 1 are as far-reaching and all-embracing as any proposed for a nationalised industry. It does not matter that similar provisions were included in a Bill passed during the period of office of a Conservative Government. There is a vast difference in the policies of the Labour Party and Conservative Party on nationalisation.

5.45 p.m.

Although a Conservative Government gave the Railways Board certain powers in 1962, that does not materially alter the fact that we should examine the powers granted to the Coal Board by this Government with the utmost suspicion.

In examining the Bill we must remember that it is mainly designed to give substantial relief for the past losses or past indiscretions of one of the most unsuccessful nationalised industries in this country. It is little short of sheer impertinence for this Government, especially in the light of the recent confirmation by the Chancellor of the Exchequer that if the Labour Government had a bigger majority they would extend their powers of nationalisation to include powers to acquire any under- taking, to invest or to take over any company.

Whether right hon. and hon. Members opposite like it or not, this can be construed as a possible extension of nationalisation. Whether it is by the back door, insidious or creeping, I am not prepared to argue. But we are here to keep an eye on the Government, and that we intend to do to the best of our ability. Possibly the Minister is responsible to a large extent for his apparent reticence in putting clearly what he intended in the Bill. There is virtually no explanation of paragraphs (c) and (d) of Clause 1 in the Explanatory Memorandum, and one has to look very carefully to unearth any reference to them in the White Paper which was recently published. There are times when we could be excused for wondering whether the Minister was trying to make Lord Robens into the Charlie Clore of the coal industry.

However many reassurances we have had from the benches opposite, the Minister is bound to admit that no guarantee is given in the Bill that the activities of the Coal Board will be confined to those ancillary to coal, although he has told us that that is the case this afternoon. If that is what he means, why not say it in the Bill and be clear and concise about it? We have already seen the impact of the entry of nationalised industries into the takeover market. We saw it in 1963 when Richard Thomas & Baldwins was authorised to outbid Stewarts & Lloyds for Whitehead Iron and Steel. The principles are the same. [Laughter.] This causes great amusement among right hon. and hon. Members on the Government Front Bench. We know that a Conservative Government gave authority for this—[Hon. Members: "Oh."] The Committee will agree that they did so after the most careful thought and investigation——

Photo of Mr John Mendelson Mr John Mendelson , Penistone

That makes it worse.

Photo of Mr Donald Box Mr Donald Box , Cardiff North

—and after several hotly contested debates on the Floor of the House. Because it would have caused a great deal of damage to Richard Thomas & Baldwins if the take-over had not been permitted, it was allowed by a Conservative Government. We must remember that it was the long-term policy of the then Conservative Government, and now of the Conservative Party in opposition, eventually to denationalise both Richard Thomas & Baldwins and Whiteheads Iron and Steel, which was taken over. [HON. MEMBERS: "Why did they not do it?"] The amount involved was £10 million. This met with very considerable criticism from right hon. and hon. Members opposite who were then in opposition. I wonder whether that acquisition can be said to have resolved Richard Thomas & Baldwin's problems, because we know that losses are mounting very rapidly at the present time unfortunately, and we have read recently also of a certain amount of redundancy in that industry. At the time of this takeover bid, which was in circumstances which could pertain now, I submit——

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

On a point of order. What have Richard Thomas & Baldwins and the steel industry got to do with this coal Bill?

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

This debate has, admittedly, gone very wide, in view of the fact that many hon. Members have wished to compare the various paragraphs of subsection (2) of the Clause as they relate to other nationalised industries. Perhaps it was inevitable that other nationalised industries should have been mentioned. However, I would ask all hon. Members to remember that this Bill essentially is concerned with the coal industry.

Photo of Mr Donald Box Mr Donald Box , Cardiff North

I of course take note of what you say, Sir Harry, but I would respectfully submit that this was an absolute example of a nationalised industry taking over a private company, and that is, after all, what we are discussing in the context of this Bill.

Photo of Mr Donald Box Mr Donald Box , Cardiff North

No. I will not give way. The hon. Member will have plenty of opportunity to make a speech. He has made interruption after interruption. Why on earth he cannot get up and make his own speech I do not know. I think he must be afraid.

At the time of that particular takeover the then President of the Board of Trade referred to it as a rather sordid story, and the hon. Gentleman the Mem- ber for Ebbw Vale (Mr. Michael Foot)— I am sorry he is out of the Chamber—called it an original act of jungle aggression perpetrated by Stewart and Lloyd's. But perhaps it was best summed up by that rather voluble young man the Member for Aberavon (Mr. John Morris), now the Parliamentary Secretary to the Ministry of Power, who, during the debate then, said: This can be done only once. If a situation of this nature arose again"——

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

On a point of order. I really must insist that if the hon. Member is going to be allowed to pursue this argument on steel we must surely reserve the right on this Amendment to compare other nationalised industries—for example, such as the Army, the Navy, the Air Force——

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

—and the Post Office, and certain other nationalised industries.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

I would ask the hon. Member to allow the Chair to decide whether other hon. Members are in or out of order. I am listening very carefully to what the hon. Member for Cardiff, North (Mr. Box) is saying, and I am hoping that very shortly he will switch from steel to coal.

Photo of Mr Donald Box Mr Donald Box , Cardiff North

Again I would submit, Sir Harry, that these points are absolutely relevant, because they would apply to the coal industry just as they applied in the other case. That case is a practical example of what happened in the steel industry.

To start the quotation again—it is a very short one—talking of that bid the hon. Gentleman said: This can be done only once. If a situation of this nature arose again and the other competitors knew that the Government were backing the natonalised concern, then the prices would go even higher."—[OFFICIAL REPORT, 18th February, 1963; Vol. 672, c. 104] Well, I suggest this is a very real danger and that it did of course apply more recently where the National Coal Board——

Photo of Sir John Morris Sir John Morris Parliamentary Secretary (Ministry of Power)

Does the hon. Gentleman not recall that that transaction became a very expensive transaction indeed for the last Government? White-head's having been sold back as a private company at a figure, I believe, of £3 million or £4 million, it was eventually re-purchased at a figure slightly over £10 million. Even after making allowance for new capital investment which had taken place, it was a very expensive transaction indeed.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

Before the hon. Member for Cardiff, North (Mr. Box) resumes, I think I really must ask the Committee now not to go too deeply into the details of one specific company in another industry. If hon. Members wish to raise particular points which occurred in other industries, they may, but generally, and they should avoid getting bogged down in details which have no relevance whatsoever to this Bill.

Photo of Mr Donald Box Mr Donald Box , Cardiff North

The Parliamentary Secretary has pinpointed the danger where a nationalised industry, backed by the Government, is making a bid for a private company; and he said that this might force the price up. Here I agree with him. I think it is one of the dangers in this Bill.

I was going to get off steel, you will be pleased to know, Sir Harry, and recall a more recent bid made jointly by the National Coal Board and the British Paint Corporation for a company called Wailes Dove Bitumastic. They started bidding at 17s. 6d. and subsequently put up the figure, because of competition, to a figure of 19s. 6d. Despite the increase in the bid, which, I suggest, might have been as a result of the fact that people in competition knew the Government were partly interested, at any rate, through the Coal Board, they still failed to acquire the company in question, and when the acquisition had been confirmed by the opposing company, immediately the shares fell to 13s. 6d. I am trying to suggest that the fact that the bidding companies, one of which was the National Coal Board, had to pay up to 19s. 6d. for a share which very rapidly fell back to 13s. 6d. may be confirmation of what the Parliamentary Secretary was saying.

Finally, I wonder, if the terms of this Clause were taken to their ultimate, how long it would be before private companies would perhaps have to make their staff join one of the National Coal Board's workers' unions—how long it would be before they, too, would be subscribing to what, I am afraid, is the miserable record of unofficial strikes and absenteeism.

I suggest that the electorate of this country and the Government of this country have rejected nationalisation as a policy, and I therefore suggest that we reject this Clause and accept the Amendment.

Photo of Mr Thomas Swain Mr Thomas Swain , North East Derbyshire

The hon. Member made a reference to unofficial strikes and absenteeism in the mining industry. I wonder if his constituents are aware that his attendance record in this House is only 60 per cent.—if he challenges that I will prove it to him—and his absenteeism in this House is 40 per cent. How can he talk of absenteeism? He himself should not do what he disapproves.

Photo of Mr John Peyton Mr John Peyton , Yeovil

On a point of order. Admittedly this has been a rather wide-ranging debate, but I really do suggest that the hon. Gentleman in raising this kind of point is inviting all sorts of things which can be said on both sides. But this is really very unusual, for one hon. Member to make this kind of personal attack on another. I think it outrageous.

Photo of Mr Thomas Swain Mr Thomas Swain , North East Derbyshire

The hon. Member for Yeovil's is 30.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

Order. I must ask all hon. Members, if they will, to try to keep to the real matter in hand, which is, what is contained in the various paragraphs of this subsection as proposed by the Amendments to he left out. Therefore, I would ask all hon. Members, however much provoked, not to pick up the tail end of a speech and start a completely new topic altogether. They should, if possible, avoid doing so.

Photo of Mr Donald Box Mr Donald Box , Cardiff North

In all fairness, Sir Harry, I must completely and utterly refute what the hon. Member for Derbyshire, North-East (Mr. Swain) has said. It is completely and utterly untrue from start to finish. I would imagine that my attendance record is very much nearer 80 per cent.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

Order. [Interruption.] I must ask the hon. Member for Rhondda, East (Mr. G. Elfed Davies) not to speak from a sitting position when I am trying to give a ruling. I would ask the hon. Member for Cardiff, North (Mr. Box) to be very careful about his choice of adjectives. I think he used the word "untrue"—suggesting that an hon. Member was not telling the truth. I think he must withdraw that.

Photo of Mr Donald Box Mr Donald Box , Cardiff North

Sir Harry, that was a very inaccurate and untrue allegation which was made against me, and, of course, I sought the earliest opportunity to refute it, but if I have used any form of words which offends the Chair, then, naturally, I withdraw it unreservedly.

6.0 p.m.

Photo of Mr Thomas Swain Mr Thomas Swain , North East Derbyshire

I withdraw 40 per cent,, Sir Harry, and substitute 39½ per cent.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

The hon. Member must have a little respect for the Chair. That remark was not in order.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

The only point that I wish to make at this stage is to object to the fact that in all these debates relating to the mining industry, the hon. Member for Cardiff, North (Mr. Box) pillories the miner. There has not been one debate in which he has not taken it upon himself to say that whatever disabilities there might be in the industry —and I do not agree that they are many —they must be due to the miners. It is a most unfair observation for the hon. Member to continue to make.

The hon. Member knows nothing at all about coal mining. He knows even less about the hazardous tasks of miners. I take the view that when an hon. Member knows very little about a subject, he should not pontificate as the hon. Member does.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

Order. I ask the hon. Member to recall that we are debating Amendments and not whether another hon. Member has knowledge of a subject. I ask the hon. Member, if he wishes to address the Committee, to confine himself to the Amendment in hand.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

If an hon. Member makes an observation, Sir Harry, it cannot be too unfair for another hon. Member to reply. I do not want to pursue that, however, except to say that if the hon. Member would like an opportunity of knowing what this work is, I extend to him a most cordial invitation to come down to the Rhondda or to a mine in Lancashire with me, so that he may have some understanding of the nature of the work.

The hon. Member sought to say that if the mining industry could be kept purely to coal mining and ancillary purposes, that would be an imposition that he would put upon the Minister and, I take it, the National Coal Board. Does not the hon. Member know that the National Coal Board has vast research agencies, for which it pays handsome sums of money? Is the hon. Member saying to the Government, and in turn to the National Coal Board, that if those researches bring forward a project which is not entirely connected with coal but is related only in some indirect way to the mining industry, it must be handed over to private enterprise? That is asking for an imposition which is quite unfair. I hope that my right hon. Friend the Minister will reject that plea.

Photo of Mr John Peyton Mr John Peyton , Yeovil

Neither the Minister nor any hon. Member on the benches opposite should be too sensitive when confronted with an Amendment of this kind. The question with which we are concerned is whether the Bill adds to the Board's powers. The Minister has answered categorically by saying, "No". I feel inclined to ask the other obvious question. If it is not adding to the Board's powers, why have this provision?

I am not entirely swept away by the argument that because a Clause appeared in a Bill dealing with transport, it should necessarily appear in every other Bill in which a place can be found for it on later occasions. This habit is dear to the Establishment, no matter what Government are in power, but this is not a matter in which we should say that because we have done it once, we should always welcome such a Clause again.

A number of hon. Members opposite have shown themselves to be sensitive to any suspicion as to their motives from this side of the Committee. There is nothing underhand about their motives. They have put us on notice that they intend to extend nationalisation. This is a perfectly fair thing for them to do. We object to the measures that they might propose and we consider them to be unwise.

Hon. Members opposite must accept that we do not agree with them about this. They told us at length in the Queens Speech that it was the Government's intention to extend the area of public ownership. The 1955 Election manifesto of the Socialist Party contained these words: We shall bring sections of chemical and machine tools industries into public ownership. Where necessary, we shall start new public enterprises. "The New Britain of 1964 said that the nationalised industries…will be encouraged, with the removal of the present restrictions placed upon them, to diversify and move into new fields: for example, the railways' workshops will be free to seek export markets, and the National Coal Board to manufacture the machinery and equipment it needs". In moving our Amendments, we wanted to know the Government's intentions and why this provision was included in the Bill. We were told that this was not adding to the Board's powers, but we still have not been told, if that is the case, why the Clause is included.

One other point was raised by my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn). I realise that if anybody in the House of Commons starts talking about coal subsidies, it is a matter which engenders heat. It is a question of a terminology. Undoubtedly—let us face it—the coal industry has enjoyed a measure of protection and, in my view and that of the last Administration, for very good reasons. It is not right for hon. Members opposite to speak as if the coal industry had not had, and does not still have, considerable protection. It does. There is a 2d. per gallon discrimatory tax upon oil which is a measure of protection for the coal industry. Secondly, there is a ban on imports of coal, particularly American coal. These are measures for which the last Government were responsible, and I quite agree with them. But do not let any of us deny that they are measures of protection given, quite rightly in my view, to the coal industry.

It should also be remembered that the Bill which we are discussing gives an immense measure of assistance to the industry. I know that "subsidy" is a dirty word, but I am quite prepared to use another word if hon. Members opposite wish and to say that the coal industry has a substantial measure of protection and by the Bill is being given a substantial further measure of relief. That cannot be denied.

I see no point in detaining the Committee further on these Amendments except to ask the Minister brifley to add to his answer on this one point. If the Clause, about which we have been reasonably suspicious, does not add to the Board's powers, why put it in?

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

The immediate answer to the hon. Member for Yeovil (Mr. Peyton) is that this is a form of wording which had its beginnings in the Transport Act, 1962, and has the advantage for those reading it, that instead of making a blanket provision for capital advances, it gives details of how the capital is to be used. That is a good thing.

I can well believe that in the courts, for example, the wording of the 1946 Act would provide ample scope for legal differences about its meaning. Therefore I should have thought that, in line with the arguments we heard on the first Amendment, we should not be hidebound simply because a certain form of financing has been operative in an industry, if there is a better, newer and more modern form which can be developed. The subsection spells out in more detail the same powers as were contained in a rather blanket way in the 1946 Act.

If hon. Members would look at the 1946 Act, they will see that the National Coal Board has very wide powers, far wider in this respect than we have been discussing and far wider than any other nationalised industry. As yet, it has not used some of those powers. I do not want to spell out the whole details, because hon. Members can read it for themselves if they look at the Act. But let me quote section 1(2)(e): any activities which can advantageously be carried on by the Board with a view to making the best use of any of the assets vested in them by this Act. That is a pretty wide power in itself, and it is only one of a number of powers given to the Board.

In addition, many of the functions that it is now carrying out are functions that it derived from the owners prior to nationalisation. I may be wrong, but I have an idea that when we first nationalised steel we found that we had also nationalised Smith's Crisps. Therefore, the taking over of an industry which has a main, specific purpose does not of itself exclude the other activities of those who previously owned it.

Hon. Members will find if they look through the activities of the Board that it is very logical. I am not saying that the previous owners were wrong to do it, because it was a logical development of their main type of product. The Board now has 51 central workshops which maintain and repair mining machinery; some of these supply outside customers with castings in competition with private firms. That is a power which has been vested in the Board ever since nationalisation. It has 60 brickworks. In some parts of the country, it has a very considerable agency for the distribution of coal. In my own area in the north-west they have a very big distributive agency indeed. A great many of those activities are natural developments either of its present functions or what it took over at the time of vesting. Those are the explanations of a number of the activities it now carries out.

It has been said that the kind of diversification we are allegedly going ahead with in the Bill is back-door nationalisation. When we decide to do any more nationalisation, I can assure the Committee that we shall not do it by the back door.

Photo of Mr John Peyton Mr John Peyton , Yeovil

May I say at once that we are extremely grateful to the right hon. Gentleman for that undertaking. May I give him notice that, on the basis of that undertaking, we will very willingly withdraw the Amendments, if he has finished his remarks.

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

I have not quite finished, but I thank the hon. Gentleman for admitting that in debate he and his hon. Friends have been worsted and now wish to get out as quickly as they can.

Hon. Members will recall that in the course of the Gracious Speech the Government announced that we intend to introduce legislation for the purpose of diversifying the nationalised industries. We are not seeking to use this Bill to legislate for these purposes.

I do not want to go into all the very interesting and wide discussion that has taken place on the Amendments. The hon. Member for Yeovil took up the point about subsidies, and he substituted the word "protections". He was right to say that there is protection in the form of 2d. a gallon on oil. What we must be clear about is that although there is protection of a sort for the coal industry, it does not mean that the coal industry is unique in that respect. There is a very great deal of protection for a whole number of industries in the private sector. Steel itself is protected, and the hon. Gentleman made a point about steel.

6.15 p.m.

I am not arguing that it is wrong to protect, but it would be wrong to give the impression that the coal industry is unique because it has this kind of protection and that it is an isolated instance. As a matter of fact, there is a great deal of protection for many British industries.

One of the reasons why we are discussing today the need to wipe out or write down much of the Coal Board's debts is that it was not permitted to function commercially in the days when it could have earned a great deal more revenue, had it been permitted to use the mechanism of the market.

Photo of Mr John Peyton Mr John Peyton , Yeovil

If the right hon. Gentleman is going to prolong the argument, he is perfectly right when he says that the industry has been interfered with. The White Paper says so quite clearly. But can he tell us why the Government are doing so again now?

Photo of Mr Frederick Lee Mr Frederick Lee , Newton

I am giving reasons why the Government have to do it now. In view of the wide range of debate that we have had, it is right and proper that one should mention the historic reasons why we are now bringing forward the Bill.

It is unfair to compare the coal industry with private enterprise which would charge what the market would sustain when, because of the social implications, successive Governments quite legitimately and I believe quite rightly, did not permit the coal industry to charge what it could undoubtedly have got during the period of a seller's market.

I am glad to hear that the hon. Gentlemen opposite are going to withdraw the Amendments. In the course of the debate, we have shown that their accusations of back-door nationalisation or of sinister intent were utterly misplaced and misconceived. It has been an interesting debate and one which I am very pleased to have been able to have, because it illustrates that the content of the Bill, particularly the Clause that we are discussing, is highly relevant to the whole objective of producing a new, viable and healthy coal industry. It is for that reason and no other, especially no sinister reason, that we are asking the Committee to reject the Amendments.

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

It has been an extremely useful debate but, in view of the Minister's repeated statements that the Clause does not add to the powers of the Board and that there will be no backdoor nationalisation, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

We come next to Amendment No. 6, and I think it will be for the convenience of the Committee to take with it Amendment No. 7, in page 2, line 21, to leave out "£700,000,000" and to insert "£650,000,000", and Amendment No. 8, in page 2, line 22, to leave out "£750,000,000" and to insert "£700,000,000".

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

I beg to move Amendment No. 6, in page 2, line 21, to leave out from "exceed" to the end of line 23 and to insert £650,000.000:Provided that the Minister may by order increase this sum or sums by instalments of £50,000.000 up to £750,000,000". My hon. Friend gave notice in the debate last Thursday that he would be tabling an Amendment to reduce the borrowing powers by £100 million. He said, quite frankly, that this is an explanatory Amendment. That is precisely what it is: an Amendment on which we shall ask questions. Perhaps I should warn the Parliamentary Secretary, if he is to answer this part of the debate, that I shall want to refer, with his and the Chair's permission, to Cmnd. 2624, which sets out the proposed loans from the Consolidated Fund for the year 1965–66, as it is relevant.

I thank the Parliamentary Secretary very much for the trouble he took to reply so promptly to the points I raised in last Thursday's debate, thus enabling me to have the information in time for today.

The Amendment would provide that it is when the Board's borrowing has reached not £750 million but £650 million, that the Minister should have to come to the House for an Order to enable the Board to borrow the balancing sum of £100 million up to the overall total of £750 million. We do not dispute that level, but we want to make certain that the right hon. Gentleman has to come to the House when the level of £650 million is reached in order to proceed to borrow the extra £100 million. This can be done in two different instalments of £50 million.

If the Committee considers the figures involved—they are set out clearly in the Bill and on page 8 of the White Paper which accompanies it—it will agree that this is a thoroughly reasonable Amendment. It gives the Board £100 million in hand, which it can borrow without having to come to the House. That is to say, £100 million is the figure separating the new amount which the Coal Board carries as its residual debt of £545 million from the £650 million which we wish to set as the limit on borrowing before the Minister has to come to the House for an Order.

The reason for my belief that this is a reasonable Amendment is represented by the three sets of figures at the bottom of page 8 of the White Paper accompanying the Bill. The Government have set out on that page the Board's borrowing requirements, which add up to £750 million. I am sorry that we are looking at this with a microscope, but we have been looking at the Board's affairs hitherto with a telescope and it is right that we should give them some microscopic examination.

These sets of figures show that the sum of new investment in ancillary activities is £50 million, provision for possible deficits is £30 million and for all other contingencies £35 million, which add up to little more than the £100 million which the Coal Board can borrow without the Minister having to seek further powers.

There is a very interesting item to which I particularly want to ask for a little information. On page 8 of the White Paper—it is not referred to anywhere else, so far as I can see—we are told that borrowings after March, 1965 and allowance for seasonal movements in working capital total £90 million.

The Parliamentary Secretary will notice that this figure of £90 million is almost the same as the £100 million which we seek to reduce in the Board's borrowing powers before the Minister has to come to the House for another Order——

Photo of Sir Henry Legge-Bourke Sir Henry Legge-Bourke , Isle of Ely

The hon. Member keeps referring to page 8 of the White Paper. Is it on page 6?

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

I am referring to Cmnd. 2805, to the column of figures at the bottom of page 8.

The Parliamentary Secretary will notice that the £100 million by which we are seeking to reduce the Board's borrowing powers before another Order has to be sought is almost balanced by an equivalent to the mysterious figure, on which we shall want some information, of £90 million of borrowings after March, 1965. This is a mystery. I hope that the Parliamentary Secretary will be able to cast some light on it. It is described as "Borrowings and Allowance for Seasonal Movements in Working Capital". How much of the £90 million represents seasonal movements in working capital? We should be very surprised if it is a large sum.

The Board has not, in the past, required very large sums for this purpose. Cmnd. 2624, page 6, shows that, in the last two years, the Board has required no positive sums at all for seasonal movements of working capital: indeed, it has been able to provide itself with items and finance some of its capital expenditure out of this.

From the description of loans from the Consolidated Fund on page 6 of Cmnd. 2624, it will be evident that the Chancellor of the Exchequer's estimates provide that, in 1965–66, the period we are discussing, the Board has to find whatever sum is necessary to meet changes in working capital. There is a neat line drawn in the column headed "Changes in working capital", so, on the figures I have given, the allowance for movements in working capital of £90 million must contain a very small element of working capital.

One would expect it to be quite small, because working capital is self-liquidating to some extent. Therefore, the balance of that £90 million, if a large part of it is not working capital—I do not think it can be—must be for unspecified capital investment. This is what we want to probe and this is the reason we seek to reduce the borrowing powers.

It is important and desirable that we should be told in considerable detail about the capital projects which the Board is contemplating for the future. We were told last Thursday of the large sum of £380 million which the Board proposes to finance from internal sources by colliery projects. We have been told about the £50 million and more which the Board needs to finance out of ancillary activities, but we want to know what capital expenditure is covered by this £90 million. It is something of a mystery. Is it exactly the same as the Chancellor's estimate of borrowing for the Coal Board in 1965–66 of £93 million, which is, as I said, placed in the column outlining the loans from the Consolidated Fund?

Is it the same, or is it something additional? If it is additional, the Coal Board this year are taking powers to borrow not only the £90 million set out in the White Paper but £93 million in addition which the Chancellor budgeted for in his Budget Speech. That makes a total of about £180 million, which is a very large capital sum indeed. The main question we want answered is, will the Board borrow this £90 million exactly as set out in Cmnd. 2624? When the hon. Gentleman answers that, perhaps he will note that Cmnd. 2624, in itemising the loans from the Consolidated Fund, makes it clear that the £90 million is capital to be raised from internal sources. If the £93 million specified by the Chancellor of the Exchequer in his Budget speech—as set out in Command 2624—is the same as the £90 million referred to in the White Paper as part of the sum that the Coal Board will be permitted to borrow, the amount which the Board has to raise from internal sources should be reduced by £40 million, according to the provisions of the Bill. Perhaps the Parliamentary Secretary will clear up this mystery. If he can do it satisfactorily we shall be quite happy to withdraw the Amendment.

6.30 p.m.

Photo of Mr John Peyton Mr John Peyton , Yeovil

Perhaps I may clarify and supplement the argument put forward by my hon. Friend the Member for Barkston Ash (Mr. Alison). I shall put the argument the wrong way round and deal with Amendments Nos. 7 and 8, which are also being discussed. They set out to reduce the borrowing power by £50 million. This is a very difficult Bill to amend clearly in order to show what is intended, but out intention here is to reduce the borrowing power by £50 million, that being the amount relating to ancillary investment, particularly in smokeless fuels and benzole. I do not want to go into detail on this, but I hope that the Parliamentary Secretary can tell us how much has already been invested in smokeless fuels.

The Coal Board has produced a very high-class fuel, but the price at which it is sold makes it very much of a luxury fuel. 'This is a very dangerous field of operations because there is the possibility of the Coal Board's being led on to make increasing investments in what, although an excellent fuel, is likely to be a very expensive one. This could involve losses in the future. I repeat what I said in the Second Reading debate, namely, that for the Coal Board to embark—as it is embarking at the moment—on a benzole refining project seems to be unwise. I do not want to damn the thing completely, but at a time when others are seeing fit to leave this field it could be highly unwise for the Coal Board to be so audacious as to rush in to fill the vacancies.

I do not wish there to be any misunderstanding about the Amendment. It is one on which, if the Government cannot meet us, I would certainly advise my hon. Friends to divide the Committee. My hon. Friend has already made clear—and it is made clear in the White Paper —that the Coal Board's need for capital investment over the period to March, 1971 includes £380 million for colliery investment. We are told that it is the very laudable intention of the Coal Board to generate those funds from its own activities. In other words, all the borrowing is required for ancillary activities.

We do not believe that in those circumstances it is too much to ask that the Minister should have to report progress to Parliament at a point £50 million earlier on. I shall not make a long speech, but I must tell the Parliamentary Secretary that this is a question to which my hon. Friends and I attach great weight.

Photo of Sir John Morris Sir John Morris Parliamentary Secretary (Ministry of Power)

I want to deal first with Amendment No. 6. This is the Amendment to which the hon. Member for Yeovil (Mr. Peyton) attaches substantial significance. If it were accepted, the Government would have to ask the House for further borrowing powers at a point £50 million sooner than is proposed in the Bill. If the hon. Member for Barkston Ash (Mr. Alison) will examine the proposals contained in the White Paper, he will find that after reconstruction the Board will be left with a new debt of £545 million on 28th March. I will not at this stage go into details about the calculation of the £750 million—which is the maximum set out in the Bill—mentioned in the White Paper. But such is the reasonal pattern of the Board's operations that there are substantial fluctuations in its need for capital.

As an indication of that I should say that the total borrowings of the Board fell, on this analysis, to £527 million in May, 1965. That is also set out in the White Paper. After allowing for this year's net investment the peak, which is expected to be reached in February, 1966, will be as high as £635 million. Estimating that the Board will need £635 million in February next year, if the limit of borrowing is lowered by the acceptance of the Amendment the Board will be left next year with borrowing powers up to £650 million. In those circumstances, the Government might have to seek authority for a new Order very soon after the Bill comes into effect, and certainly before the House rises for the Summer Recess. It would not be prudent for any Government to allow themselves to come so close to the maximum figure before seeking authority for further borrowing from the House.

I appreciate the hon. Member's wish to have as close a scrutiny as possible of the extension of the borrowing powers under the terms of the Bill, but, because of the point that I have made about fluctuations in the Board's need for capital, the imposition of this new restriction would be a waste of Parliament's time, because we should have to come back far too soon after the passing of the Bill to seek new authority. We have sought to adopt the principle of the last Government, which was that in respect of the presenting of an interim Order the matter should come back for the scrutiny of the House, and for a debate on the Order itself, within about three years from the passing of the original Act.

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

I am still trying to pursue this elusive, mysterious figure which the Chancellor of the Exchequer gave us at the time of the Budget this year—this £93 million in respect of capital for fixed investments. It is nothing to do with changes in working capital; it is specified as sums to be raised in fixed investment partly internally and partly by borrowing. I want to know whether it is the same figure as the £90 million referred to in page 8 of the White Paper, or whether it is additional. If it is additional, we shall be giving the Minister power to raise over £180 million in the current year. I should like to know whether these figures are in respect of the same item.

Photo of Sir John Morris Sir John Morris Parliamentary Secretary (Ministry of Power)

I do not think that the hon. Member has fully understood the position. Nothing additional is sought here. The figure of £53 million to which he referred in the Second Reading debate, which is mentioned in Cmnd. 2624, relates to the increase in borrowing from 31st March, 1965 to 31st March, 1966. The figure of £90 million in Cmnd. 2805 relates to the annual seasonal movement of working capital, largely stock movements, etc. They make up between £68 million and £70 million, but the balance, I concede, is a matter of investment.

The principle we have sought to follow on interim limits is that within the three-year period from the passing of the borrowing Measure, the Minister should seek a new Order so as to go to the final limit. Obviously, as the industry is moving through a period of reconstruction, both capital and physical, we cannot give specific assurances about that kind of period, but the effect of accepting Amendment No. 6 would be that we would have to come back to the House very soon after the passing of the Bill, which would be an unreasonable imposition on Parliament's precious time.

The hon. Member for Yeovil also asked about the £50 million for investment in ancillary activities. As he knows, the Board has very wide powers in regard to activities ancillary to the getting of coal, and activities connected with assets possessed by the previous owners. Primarily, it is for the Board to decide what use to make of those powers. Those assets are very extensive. They are now worth some £150 million, some of which will be written off—including £16 million for coke ovens, as set out in the White Paper. Nevertheless, the Board has very substantial interests in this field. Its coke ovens produce 25 per cent. of the nation's hard coke. It manufactures smokeless fuels. Its workshops have been referred to, and it also operates brickworks.

The hon. Member asks specifically about the Board's benzole activities. The Board's coke ovens are substantial producers of benzole, most of which in the past has been disposed of in the form of crude benzole. But with the entry of the petroleum industry into the benzole trade, with an oil-based product of higher purity, the Board must now refine to a higher standard in order to protect its own by-product market. This can be best achieved by centralising refining at modern plants large enough to operate on a commercial basis. That is the position. There is no question of the Board entering a risk venture for its own sake, and I do not see why the Board should be denied the finance necessary to carry out such an important project. The project mentioned in the White Paper is one in which Stewarts and Lloyds are entering jointly with the Board, which means that, if there are risks, they are risks which seem reasonable to private industry as well as to the Board.

The hon. Member for Yeovil also asked about smokeless fuel grades. The Board is introducing three new smokeless fuels: Homefire for open fires, Roomheat for closed or openable stoves and Multi-heat for domestic boilers and closed stoves. The money estimated to be invested in the new plant is £12 million for Coventry, when completed—of which £10¼ million has been spent to date; £3·3 million for Markham, most of which has been spent; and £0·5 million for Multiheat at Cardiff, where, I understand, the job has been completed. I think that I have dealt with all the points raised by hon. Members opposite.

Photo of Mr John Peyton Mr John Peyton , Yeovil

Whilst I could press the hon. Member a little further on the subject of smokeless fuels, I shall not do so now. I only say that I do not agree with his suggestion that it would be a waste of Parliament's valuable time to come back with this matter at an earlier date. I feel strongly to the contrary, and so do my hon. Friends. That leaves us no alternative but to divide the Committee.

6.45 p.m.

Photo of Sir John Morris Sir John Morris Parliamentary Secretary (Ministry of Power)

While I am quite willing for the hon. Gentleman to divide the Committee if he so wishes, I think that he fails to understand the principle that has been followed in other borrowing measures for the publicly-owned industries. It is a principle which the previous Government persuaded the House to accept. It was that in a borrowing Bill there should be two limits—an interim Limit and a final limit. The suggestion put to the House was that the provision should be so phased that the affairs of the industry came back to the House for examination, as to the interim limit, within three years. For the reasons

I have set out, Amendment No. 6 is quite unrealistic because we now estimate that the £635 million mark will be reached in February of next year, so that we would have to come back to the House within a very short period of the passing of the Bill. If that is the hon. Gentleman's wish, I can understand it, but it is quite contrary to what he, as a member of the last Administration, persuaded the House was a reasonable period of time.

Photo of Mr John Peyton Mr John Peyton , Yeovil

The hon. Gentleman has still not understood my major point. We are conducting a massive financial operation in writing off £415 million of the Board's capital, and it is reasonable that the House should want an early opportunity to look at it again. The hon. Gentleman's own arguments make me even more enthusiastic to divide the Committee.

Question put, That the words proposed to be left out stand part of the Clause:—

The Committee divided: Ayes 138, Noes 115.

Division No. 9.]AYES[6.46 p.m.
Abse, LeoGarrett, W. E.Mellish, Robert
Allen, Scholefield (Crewe)Gregory, ArnoldMendelson, J. J.
Armstrong, ErnestGriffiths, Rt. Hn. James (Llanelly)Milne, Edward (Blyth)
Atkinson, NormanHale, LeslieMorris, Alfred (Wythenshawe)
Bacon, Miss AliceHamilton, James (Bothwell)Morris, Charles (Openshaw)
Bagier, Gordon A. T.Hamilton, William (West Fife)Morris, John (Aberavon)
Beaney, AlanHamling, William (Woolwich, W.)Neal, Harold
Bence, CyrilHannan, WilliamNoel-Baker, Rt. Hn. Philip(Derby, S.)
Binns, JohnHarper, JosephO'Malley, Brian
Bishop, E. S.Hazell, BertPadley, Walter
Blenklnsop, ArthurHerbison, Rt. Hn. MargaretPage, Derek (King's Lynn)
Boston, TerenceHorner, JohnPalmer, Arthur
Bowden, Rt. Hn. H. W. (Leics S.W.)Howarth, Harry (Wellingborough)Panned, Rt. Hn. Charles
Boyden, JamesHowarth, Robert L. (Bolton, E.)Peart, Rt. Hn. Fred
Bradley, TomHughes, Emrys (S. Ayrshire)Pentland, Norman
Brown, R. W. (Shoreditch & Fbury)Hynd, H. (Accrington)Perry, Ernest G.
Buchan, Norman (Renfrewshire)Hynd, John (Attercliffe)Popplewell, Ernest
Butler, Herbert (Hackney, C.)Irvine, A. J. (Edge Hill)Price, J. T. (Westhoughton)
Callaghan, Rt. Hn. JamesJeger, Mrs. Lena (H'bn&St.P'cras,S.)Probert, Arthur
Carmichael, NeilJenkins, Hugh (Putney)Randall, Harry
Carter-Jones, LewisJenkins, Rt. Hn. Roy (Stechford)Rankin, John
Chapman, DonaldJones, Dan (Burnley)Redhead, Edward
Coleman, DonaldJones, J. Idwal (Wrexham)Rees, Merlyn
Corbet, Mrs. FredaJones, T. W. (Merioneth)Roberts, Goronwy (Caernarvon)
Cousins, Rt. Hn. FrankKerr, Mrs. Anne (R'ter & Chatham)Robinson, Rt. Hn. K.(St. Pancras, N.)
Crossman, Rt. Hn. R. H. S.Lawson, GeorgeRose, Paul B.
Dalyell, TarnLeadbitter, TedRoss, Rt. Hn. William
Darling, GeorgeLee, Rt. Hn. Frederick (Newton)Shore, Peter (Stepney)
Davies, G. Elfed (Rhondda, E.)Lever, L. M. (Ardwick)Short, Rt. Hn. E. (N'c'tle-on-Tyne, C.)
Davies, S. o. (Merthyr)Lipton, MarcusShort, Mrs. Renée(W'hampton,N.E.)
Diamond, Rt. Hn. JohnLomas, KennethSilkin, John (Deptford)
Doig, PeterLoughlin, CharlesSlater, Mrs. Harriet (Stoke, N.)
Donnelly, DesmondMacColl, JamesSmall, William
Driberg, TomMclnnes, JamesSnow, Julian
Dunn, James A.McKay, Mrs. MargaretStones, William
Dunnett, jackMackenzie, Gregor (Rutherglen)Swain, Thomas
Edwards, Robert (Bilston)McLeavy, FrankSymonds, J. B.
Ensor, DavidMacPherson, MalcolmTaylor, Bernard (Mansfield)
Finch, Harold (Bedwellty)Mahon, Peter (Preston, S.)Thomas, George (Cardiff, W.)
Fitch, Alan (Wigan)Mallalieu, E. L. (Brigs)Thornton, Ernest
Floud, BernardMallalieu, J.P.W. (Huddersfield, E.)Tinn, James
Foot, Michael (Ebbw Vale)Mason, RoyUrwin, T. W.
Walden, Brian (All Saints)Wilkins, W. A.Willis, George (Edinburgh, E.)
Warbey, WilliamWilley, Rt. Hn. FrederickWyatt, Woodrow
Wells, William (Walsall, N.)Williams, Clifford (Abertillery)
White, Mrs. EireneWilliams, Mrs. Shirley (Hitchin)TELLERS FOR THE AYES:
Whitiock, WilliamWilliams, W. T. (Warrington)Mr. Ifor Davies and Mr. Howie.
NOES
Alison, Michael (Barkston Ash)Gammans, LadyNoble, Rt. Hn. Michael
Allan, Robert (Paddington, S.)Gardner, EdwardNugent, Rt. Hn. Sir Richard
Allason, James (Hemel Hempstead)Gibson-Watt, DavidOsborn, John (Hallam)
Amery, Rt. Hn, JulianGiles, Rear-Admiral MorganPeel, John
Anstruther-Gray, Rt. Hn. Sir W.Gresham Cooke, R.Percival, Ian
Awdry, DanielGriffiths, Eldon (Bury St. Edmunds)Peyton, John
Balniel, LordGriffiths, Peter (Smethwick)Pym. Francis
Batsford, BrianGrimond, Rt. Hn. J.Quennell, Miss J. M.
Beamish, Col. Sir TuftonHarris, Frederic (Croydon, H.W.)Rawiinson, Rt. Hn. Sir Peter
Biffen, JohnHarris, Reader (Heston)Ronton, Rt. Hn. Sir David
Biggs-Davison, JohnHarrison, Brian (Maldon)Ridley, Hn. Nicholas
Bingham, R. M.Harvey, John (Walthamstow, E.)Russell, Sir Ronald
Blaker, PeterHawkins, PaulSt. John-Stevas, Norman
Box, DonaldHeald, Rt. Hn. Sir LionelScott-Hopkins, James
Brinton, Sir TattonHobson, Rt. Hn. Sir JohnShepherd, William
Bromley-Davenport,Lt.-Col.Sir WalterHogg, Rt. Hn. QuintinSmith, Dudley (Br'ntf'd & Chiswick)
Brooke, Rt. Hn. HenryHopkins, AianSmyth, Rt. Hn. Brig. Sir John
Buck, AntonyKerr, Sir Hamilton (Cambridge)Spearman, Sir Alexander
Bullus, Sir EricKershaw, AnthonySteel, David (Roxburgh)
Burden, F. A.King, Evelyn (Dorset, S.)Studholme, Sir Henry
Campbell, GordonKirk, PeterSummers, Sir Spencer
Carlisle, MarkLagden, GodfreyTaylor, Edward M. (G'gow.Cathcart)
Channon, H. P. G.Langford-Holt, Sir JohnThatcher, Mrs. Margaret
Chichester-Clark, R.Lewis, Kenneth (Rutland)Thomas, Sir Leslie (Canterbury)
Cooke, RobertLongden, GilbertThomas, Rt. Hn. Peter (Conway)
Corfield, F. V.McAdden, Sir StephenThompson, Sir Richard (Croydon,S.)
Craddock, Sir Beresford (Spelthorne)MacArthur, IanThorneycroft, Rt. Hn. Peter
Curran, CharlesMcLaren, MartinTurton, Rt. Hn. R. H.
Dance, JamesMaclean, SirTweedsmuir, Lady
Davies, Dr. Wyndham (Perry Barr)McNair-Wifson, PatrickWall, Patrick
d'Avigdor.Goldsmid, Sir HenryMaitland, Sir JohnWebster, David
Dean, PaulMaude, AngusWhitelaw, William
Eden, Sir JohnMawby, RayWilson, Geoffrey (Truro)
Elliot, Capt. Walter (Carshalton)Maxwell-Hysiop, R. J.Wise, A. R.
Errington, Sir EricMeyer, Sir AnthonyWolrige-Gordon, Patrick
Eyre, ReginaldMills, Stratum (Belfast, N.)Woodnutt, Mark
Farr, JohnMore, JasperYounger, Hn. George
Fraser,Rt.Hn.Hugh(St'fford & Stone)Mott-Radclyffe, Sir Charles
Fraser, Ian (Plymouth, Sutton)Munro-Lucas-Tooth, Sir HughTELLERS FOR THE NOES:
Mr. R. W. Elliott and Mr. Mitchell.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

I beg to move Amendment No. 9, in page 2, line 34, to leave out "£30,000,000" and to insert "£10,000,000".

The Government propose in the Bill to reorganise the Board's finances by wiping out the accumulated deficit of £91 million and starting with a clean slate. As the losses have doubled during the past 12 months, one can well understand the need for this. The provision in the Bill for the Board to accumulate losses of £30 million seems to be incompatible with the objective of starting with a clean slate. The Amendment seeks to reduce the amount of losses which the Board can run up to £10 million instead of £30 million.

Paragraph 2 of the White Paper refers to cost increases which the Board has suffered and which have been beyond its control. How much of these is attributable to the effects of the Government's own measures? The Budget seriously increased the costs of industry. I am given to understand that several millions of pounds have been added to the Board's deficit because of the Chancellor of the Exchequer's actions.

Paragraph 5 of the White Paper refers to the failure of the Coal Board on past occasions to increase prices, which has led to deficits. These deficits have accumulated to £91 million. When the Minister made a point of this on Second Reading, I noticed the acclamation with which his remarks were received by his colleagues on the back benches from mining constituencies who appreciate and agree with this point. I can understand and accept their point of view that a sin is being committed by allowing deficits to run up in this way. What I cannot understand and what seems totally contradictory is that the White Paper, having said that in paragraph 5, goes on in paragraph 8 to enumerate how the Government are themselves repeating the sin. If it was wrong to run up accumulated deficits in the past, surely it is wrong for the Government to do so now. Yet, by interference in the Board's normal workings in which the Government have indulged, price increases have been postponed from September of this year until next year, with the result that very serious accumulations of deficits are already ticking on the meter.

7.0 p.m.

This is a complete contradiction of policy and I would draw attention to the contrast and the nonsense that, on the one hand, the Government's own policies are increasing costs to the Coal Board and the cost of manufacture and, on the other hand, the Government are refusing to allow prices to rise. If this continues it cannot be long before the contradiction becomes so apparent that something must go. I hope that it will not be the taxpayers who will have to go in added accumulations of deficit in the working of the Coal Board.

Paragraph 7 of the White Paper says: In view of the current unprofitable operations the Government take a cautious view of the future earning powers of the Board's colliery assets. I can see some justification for that but if, having taken that into account, the Government say that they are making such large reductions in the capital of the coal industry to account for that cautious view, how can they then have to provide such large sums for deficits? Either they have wiped the slate clean and taken the cautious view and the Board must operate so as to make a small profit, or they have not done so and the Bill is a nonsense.

Is it true that they have made a nonsense and need to have the right to run up another deficit of £30 million, or have they provided this sum with no intention of calling on it? In that case I hope that the Government will accept the Amendment and will reduce the allowed accumulation of deficit to £10 million. The White Paper is quite specific that the Board does not seek, and the Government do not favour, a continuing subsidy for coal production. What is a proposed accumulated deficit allowance of £30 million if it is not a continuing subsidy for the coal industry? If we provide and specify a temporary deficit for the next few years and then say that this can run up to £30 million what is it but a continuing subsidy for the next few years?

What do the Government mean by "temporary"? Politicians have referred to Income Tax as temporary and to surcharge on imports as temporary. What do the Government mean by a temporary deficit for the Coal Board, and how long will it take to work it off? I have a feeling that in a few years the Board will have run through the £30 million and will come for more and the deficit will be greater in future years than it is at present.

Mr. J. T. Price:

I am sorry to interrupt the hon. Gentleman when he is in such good form, but when he talks about temporary deficits and the deficit at the moment which he quotes at £30 million being equal to a subsidy, may I ask whether he would say that the private sector of industry which is running a bank overdraft many times larger than the figure quoted from the Coal Board is receiving subsidies from the banks? The relationship between the two is just the same.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

I am glad that the hon. Member made that intervention because it shows how wholly he has failed to examine the case which we are making. We are not referring to the size of the overdraft. I draw the hon. Gentleman's attention to the fact that the Clause refers to the accumulated deficit on the Board's transactions and not to the borrowing powers. Any private firm borrowing from the bank has to include in its accounts the interest paid to the bank and, having done that, it does not then make a loss, otherwise it would be out of business. We say that the accumulated loss which the Board should be allowed to make should not exceed £10 million. Surely that represents a reasonable attitude.

Photo of Mr Emrys Hughes Mr Emrys Hughes , South Ayrshire

Is the hon. Member aware that recently, in the analogy of agriculture, it was said that farmers had overdrafts at the bank amounting to over £300 million?

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

I cannot understand an hon. Member who refers to an overdraft which a business may have as being connected with a loss which the business may be making. I should have thought that any hon. Member could understand the difference between having an overdraft and making a loss. One has an overdraft in order to plough capital into a business to make profits, and when one makes more profit than the cost of servicing the overdraft that is the profit of the business. To suggest that if one ploughs capital into the business by borrowing from the bank one makes a loss is the economics of cuckoo-land.

Mr. J. T. Price:

We shall have to brainwash the hon. Member.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

Since the hon. Member refers to brainwashing me, I should like to refer, without I hope being out of order, to the opportunities given by the National Coal Board for hon. Members to visit its installations.

The Deputy Chairman:

Order. The hon. Member will refer to it only if it has a direct bearing on the Amendment which he is moving.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

In this instance I think that it has direct relevance because it enabled us to see some of the activities of the Board which are relevant to its making a profit or accumulating a deficit of the size which we are worried about in asking that this sum be reduced from £30 million to £10 million. In this connection it seems to me very important that the Coal Board should not be able to separate itself from the ordinary activities of business which prevent a business from ignoring the economic situation and make it concentrate on trying to make a profit. The Government ask that the deficit should be allowed to accumulate to the sum of £30 million. Therefore, in suggesting that the limit should be £10 million, it is relevant to say that the Coal Board should be compelled to be activated by economic pressures which force any business to examine its workings carefully and thoroughly.

The White Paper refers to the Remotely Operated Longwall Face machinery. It is with this advanced mechanisation that the Board can do a great deal to improve the efficiency of the industry, but it is nonsense if one has modern machinery of this sort in one pit while in the next the miners have to walk two miles to the coalface. It is also a nonsense that one should have this sort of machinery which can do so much to reduce the Board's deficit and yet at the same time one should have a restrictive practice operating where miners are not prepared to accept this sort of mechanisation of the pits. I hope that that will be remembered.

Photo of Mr Harold Neal Mr Harold Neal , Bolsover

Is the hon. Member, with his limited knowledge of the mining industry, seriously suggesting that the R.O.L.F. machinery can be introduced into every pit?

The Deputy Chairman:

Order. We are getting very wide of the Amendment now if we are going to discuss the appropriate machinery to be employed in certain pits.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

I apologise if I have gone beyond the limits of order in this connection.

I come back directly to the Amendment which proposes that the Board's accumulated deficits should not exceed £10 million, instead of the Minister's proposal that the Board should be allowed to accumulate deficits up to £30 million. There are two final and compelling reasons why the Board should not have this money for this purpose. There are many more important uses for the nation's capital than financing additional subsidies and accumulations of loss to the National Coal Board. I should be out of order if I were to list these other purposes, the road programme, hospital building and the rest, but a clear decision on priorities must be taken between them and giving accumulated deficits to the Coal Board.

This is where we ought to draw a clear line and say that £10 million is acceptable on the sort of turnover which the Coal Board has, fluctuating between one year and another, but that £30 million for accumulated losses on a temporary basis is so large that it amounts to a further subsidy. The Minister has already said that he is taking care of this with the capital write-off provisions for the industry elsewhere in the Bill. If he is taking care of it in the capital write-offs, why does he need an additional £30 million for accumulated working losses? I am very disturbed about this proposal as it stands, and I hope that we shall have an answer.

It is utterly wrong to expect the taxpayer to scrimp and scrape, with the value of the £ falling in one year to 19s. and so many people already suffering hardship, and at the same time ask the House to vote to increase the accumulated deficits of the Coal Board from £10 million to £30 million. The Government ought to accept the Amendment or, at least, give us a far sounder explanation than we have yet heard.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

The hon. Member for Basingstoke (Mr. Mitchell), albeit unwittingly, has put his finger on an important feature of the Bill. No doubt, with his orthodox economics, he will be shocked, o hear me say that, far from accepting that the proposed level of accumulated deficit should not exceed £30 million, I regret that it is not very much more.

The hon. Gentleman rightly said that there is a question of priorities here. In considering what should be the power to run an accumulated deficit of this kind, one has to ask how capital should be deployed and for what purposes. The hon. Gentleman suggests that the Government have not got the confidence which they affect to have in their own scheme, in writing off capital and making provision for £30 million accumulated deficit. He may well be right. I should not have any confidence myself because I have not a great deal of confidence in the deployment of the whole strategy. My main reason for saying that is that I fear that the contribution which may be made by the taxpayer will fail. In this exercise, giving a right to accumulate deficit and thereby, indirectly, to use capital from the taxpayer and in the other Clauses providing for writing-off, we must ensure that what we do will work, so that, ultimately, the industry justifies itself and justifies all the benefits which are being paid back by the taxpayer.

I do not say "given" by the taxpayer. On this side of the Committee, we never forget that during the first decade of nationalisation the Government treated the Coal Board as a public service. The hon. Gentleman should remember what was done in the past when he talks about subsidies. During that period, the price of coal was kept well below the market value and the Board was, in effect, pre- vented from accumulating hundreds of millions of £s. In addition, it was implored all the time to produce every possible ton of coal, virtually regardless of the cost, and, what is more, it was forced to make a loss of over £70 million on imported coal. It is no good the hon. Gentleman using terms like "subsidy" to us on this side of the Committee because we know that the coal industry subsidised the nation.

7.15 p.m.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

Does not that reinforce my argument about the utter contradiction between saying in the White Paper exactly what the hon. Gentleman is now saying, that there were not in the past price increases when there should have been, and at the same time committing the same sin by refusing to allow the Coal Board to follow economic policies at present?

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

It is because there was this past subsidy to the nation by the Coal Board that I do not have accountant's qualms when it is proposed to allow the Board to accumulate a deficit. The nation owes a great deal to the coal industry. One reason why I say that the amount may not be enough, not that it is too much, is that at this moment the Coal Board is faced with a legitimate wage claim. I want to bring this into issue because, if we give the Board too little power to accumulate a deficit, keeping the level to £10 million instead of £30 million—I have already said that I think that it should be more —we may not allow the Board to meet any wage claim which is coming up. I emphasise those words—any wage claim which is coming up. Unless we are prepared to meet the legitimate demands of the miners, the whole operation will fail.

The Deputy Chairman:

Order. The hon. Gentleman is now going rather wide of the Amendment.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

I appreciate that, Mr. Bowen, but I think it essential, in discussing the level of accumulated deficit, to consider the priorities, as the hon. Gentleman rightly suggested we should. I am saying that the greatest priority, in the interests of the nation at the moment, is the pay and conditions of miners, and if this leads to an accumulated deficit, we must face it.

The Deputy Chairman:

Order. The hon. Gentleman is entitled to give that as an illustration of the need for accumulated deficits, but he is not entitled to develop it further.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

I shall not deploy it further, Mr. Bowen, in arguing exactly what should be done, or how much the figure should be, but, with respect, I want to illustrate the type of pressure which the Coal Board may have to overcome if this provision and the provisions of the whole Clause are to succeed. Hitherto, in the whole history of coal mining, men have been coerced by economic pressures to go down the mines. This pressure is now ended. Other Clauses of the Bill show that my right hon. and hon. Friends are not double-crossing the miners but intend to take every step possible to ensure no miners will be coerced again to work in the pits, being given every facility for redeployment of their labour, through redundancy schemes, the industrial development certificate scheme, and so on. There will be no more economic coercion. But, in these circumstances, we have to consider whether, after the taxpayer has done all that the Bill proposes, the industry could fail having regard to the existing rates of wages. I am saying that we must on no account——

The Deputy Chairman:

Order. I have allowed the hon. Gentleman considerable latitude on this point. He must now keep more strictly to the Amendment.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

I am saying that this industry cannot be regarded merely as an accounting operation. I do not myself take the view, as some of my hon. Friends may do, that we must not use the term "subsidy". If it is necessary to accumulate a loss in the industry for the benefit of the nation, why should we not do it?

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

How is an accumulated loss for the benefit of the nation? It seems the very opposite.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

Because the coal is being produced and because we have a balance of payments problem which necessitates 170 million tons a year being produced. What is the whole operation for if we do not get that amount of coal?

Photo of Mr Arthur Probert Mr Arthur Probert , Aberdare

Does my hon. Friend recall that last week £80 million was given as a subsidy to the agricultural industry?

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

That illustrates the point. Sometimes this nation has to choose what it needs because it must take account of balance of payments problems as well as of anything else. I hope that there will come a time when every mine will be closed. That is what every miners' leader in South Wales since I was a boy has been saying. We all look forward to it. Mining is a barbaric occupation. My hon. Friend the Parliamentary Secretary quoted Aneurin Bevan, who spoke about the need to have people in white overalls above ground at the mines and not down inside them.

The Deputy Chairman:

Order. What we are concerned with is the permitted accumulated deficit.

Photo of Mr Leo Abse Mr Leo Abse , Pontypool

Therefore, the nation has to choose and it may have to choose an industry working at a deficit. I believe that my right hon. Friend and the Government are too sensitive of what the accountants on the other side of the Committee will say about deficits for the coal industry. Those accountants are so concerned to see that a profit is shown and that the industry must not have a deficit that they do not take account either of national needs or of the miners' needs.

It is time that the Government shook off the attitude that it should run the nationalised industries in accordance with the rules laid down by the last Government. Even this Bill has been drafted on the basis used by the Tory Government. A lawyer is a lawyer is a lawyer and is a draftsman. But the question of principle, of how we are to run the industry, is a different matter.

I hope that my hon. Friend will not plead that there will never be a deficit of £30 million. I hope that we shall get 170 million tons without a deficit. But if it needs a deficit so that the miners can live as they should, as the aristocrats of labour, then the nation has to pay it. When the hon. Member for Basingstoke speaks of what taxpayers would say, then I ask him whether he thinks that people in Cardiff, Stockport or other places are so unconcerned with the national need?

My hon. Friends and I have some awareness of what is going on inside the industry and we think it time it was said that the nation will have to face up to the situation if it is to deal with the balance of payments problem. If we fail to deal with the balance of payments all taxpayers will suffer and the standard of living will go down. To help solve that problem we need to get the miners in to produce coal.

I hope that we shall have no more of these chirps, no more of thesecheeseparing financial experts telling us how the balance sheet should be printed. There is a wide gap between the balance sheet and reality in the coalfields. Those of us in touch with the coalfields know that it is not an accumulated deficit that we have to he concerned about but men—men who are stampeding out, largely as a result of stupid talk and irresponsible criticism when everyone should have but one concern; a healthy industry with healthy miners able to live well with a really good wage.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I resent the assumption that the coal industry can be compared with the average engineering or processing industry. When we are discussing deficits of any industry, I never hear any hon. Member opposite comparing, for instance, the agriculture industry with the motor industry. I agree with my hon. Friend the Member for Pontypool (Mr. Abse) that I would consider the £30 million permitted deficit comparatively small in face of the responsibilities placed upon the coal industry by various Acts.

Those responsibilities are far in excess of those placed on agriculture. The extracting of coal is not a manufacturing process. It is purely extractive and all sorts of exigencies and difficulties can arise. For instance, new pits can be sunk at considerable cost and no one is to blame because of a fault that could not be foretold.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

The hon. Member is strengthening my argument. The Government have taken care of the capital expense of certain pits which will not come to fruition by a substantial wipe-off in capital. We are not concerned with them. The Government have wiped the slate clean as far as they are concerned. But we say that, this having been done and the points the hon. Gentleman mentions having been taken into account, the National Coal Board should be able to operate the industry without substantial loss in future.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I agree that a great deal of old capital has been written off. This has been done because the National Coal Board inherited an industry which had been sadly run down—and I do not apportion blame for that in this debate. A lot of mines were coming to the end of their usefulness. I think, as I thought at the time, that the post-war Government made a mistake in saddling everything on the industry. Much of this should have been met by the Exchequer.

The National Coal Board will always have to face conditions and circumstances from year to year that are different from those of any other industry, because coal is an extractive industry. A man who works underground acquires a skill which, if not wanted for getting coal, is not wanted anywhere else. A man trained as an engineer can practise his job anywhere in the world but——

The Deputy Chairman:

Order. The hon. Gentleman is getting very wide of the Amendment.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I am trying to point out that the National Coal Board should be permitted to rise to a certain deficit because it has responsibilities that no other industry has. It also has a responsibility laid upon it to undertake more generous treatment to men who might be made redundant than is found in any other industry. It has to carry a higher percentage of injured men than any other industry. Would those who want to cut down the permissible deficit suggest that the Board must not employ any more injured men than the minimum of 3 per cent. that an ordinary industry is bound to employ of men wounded in the war? The coal industry has to carry a much larger percentage. It employs thousands of injured men. Do hon. Members opposite want such men dismissed in order to help keep down this figure?

7.30 p.m.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

I draw the hon. Gentleman's attention to the fact that he is arguing totally irrationally against the wording of the White Paper itself, which specifically says that the Coal Board does not seek and the Labour Government do not favour a continuing general subsidy for coal production. That being so, how can the hon. Gentleman make a lengthy speech in which he pleads for precisely that—that the coal industry should be given preferential special treatment amounting to a general subsidy?

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I am not pleading for a subsidy. Hon. Members have been comparing the coal industry with other industries, but it has to carry problems more difficult of those than any other industry. It has not only a commercial capacity but other responsibilities, given to it by previous Administrations as well as by the present Government. Do hon. Members suggest that it should abdicate its responsibilities for subsidence, for industrial diseases from which miners suffer, like silicosis? Far from being too much, this sum of £30 million is on the mean or conservative side.

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

Hon. Members opposite have missed the point of the Amendment, for they have spent the last few minutes expressing to the Committee their concern about the coal industry and the fact that capital is needed to make it effective. Nobody on this side of the Committee disputes that for a moment. All we are seeking to do by the Amendment is to ask that the Minister return to the House at a point earlier than that stated in the Bill. In other words, the Bill talks about allowing a figure of £30 million and our Amendment suggests £10 million.

Hon. Members opposite have made great play about the special features of the industry and the hon. Member for Pontypool (Mr. Abse) went to great lengths to explain that no cheeseparing methods or subjecting the industry to accounting systems should be allowed. We believe that it is an important industry, as we said very firmly on Second Reading, and we will do our best to support it, which is why we did not vote against the Bill on Second Reading.

But this does not mean that we are in favour of Liberty Hall. We do not regard the industry as a social service. It has its part to play, like many other industries, and while some hon. Members opposite may make passionate' pleas, which are no doubt very important in the areas which they represent, we on this side of the Committee also have the responsibility for reminding ourselves that we are responsible to the taxpayers —[An HON. MEMBER: "Surtax payers."]—and the Surtax payers.

Therefore, at a time when the industry is writing off—and let us remind ourselves of that—an accumulated deficit of £91 million, it is not surprising that at least we on this side of the Committee are anxious to make sure that this does not have to happen again. Hon. Members opposite are somewhat confused into thinking that what we are trying to do is to prevent the industry from having sufficient capital on which to build its future. There is no such intention. What we are determined to see is that the industry does not run into debt on a very grand scale and then expect the taxpayers to be milked to make that good.

We are asking the Minister to give us an assurance that when it comes to considering the industry's accumulated deficit there is no intention of allowing the figure of £30 million to be run up to automatically. We say £10 million because that means bringing the Minister back here and virtually means there not being any debt. I am sure that the Parliamentary Secretary would agree that we cannot responsibly allow this rickety financial structure of the industry to continue to be shored up by the taxpayer.

Hon. Members opposite have used as one of their arguments the fact that prices have been artificially low, but I remind them that only last year there were selective reductions in coke prices. On that occasion the Chairman of the National Coal Board said: This is the first time for a quarter of a century or more that there has been a reduction in the price of coal to British industry. If we are able to push up productivity sufficiently fast, our financial position will be strengthened and we shall be able to make further selective price reductions of this kind. Sixteen months later, hon. Gentlemen opposite used this partly as an excuse for the financial situation after the first six months of this year. Let us be realistic. We on this side of the Committee are determined to protect the taxpayer and we have moved the Amendment to make sure that the sort of situation which we are now facing does not arise again.

Photo of Mr Joseph Symonds Mr Joseph Symonds , Whitehaven

I had not intended to participate in the debate so early, but hearing such an outcry from hon. Members opposite about having to protect the taxpayers I have to say that I remember that last year there was such an uproar when the Minister of Agriculture said certain things. I also remember that there was no outcry about the figure of £380 million for the farmin0g community. I heard no comment about the protection of taxpayers.

In my constituency and in others throughout the country pits are being determined as uneconomic because someone has put a red mark against them and said that they are not breaking even, so that they must be closed and the men thrown out of a job. If men make an effort and are able to reduce their losses by 50 per cent. in an uneconomic pit, is it still wise to say that they have to be thrown out of work? Is not this the explanation for the £30 million deficit? Will not this deficit enable the National Coal Board to pay that amount?

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

There was no suggestion in the White Paper that the £30 million was designed to allow uneconomic pits to remain open. I do not think that that is the Government's policy.

The Deputy Chairman:

If the hon. Member for Whitehaven (Mr. Symonds) were to develop his argument about uneconomic pits he would be out of order.

Photo of Mr Joseph Symonds Mr Joseph Symonds , Whitehaven

If there is a deficiency in any miring area, this £30 million will give the Minister power to meet it when it is reported to him by the Board. This is one of the powers which he must have.

In spite of all this outcry about the taxpayers being protected, let us try to protect the miners and give them a chance to prove their worth, as they have in days gone by. I am surprised that the Minister is asking for only £30 million because the amount is required nationally and he has to see that the industry is so developed that the nation and the taxpayers benefit.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

I have listened to the debate between my hon. Friend the Member for Basingstoke (Mr. Mitchell) and the hon. Members for Pontypool (Mr. Abse) and for Whitehaven (Mr. Symonds) about the size of the subsidy; I withdraw the word "subsidy" at once—about the current deficit of £30 million.

I am talking about the deficit we have. We have powers for wider diversification, and if there is this wider diversification it means that the new industries competing against the private sector can accumulate this deficit. The more the coal industry diversifies, the less should be the need for the use of this deficit. Otherwise, new industries taken on by the Board will be allowed to accumulate a current deficit which will be at the expense of those whom they are replacing or competing with in the private sector. I hope that the limit will be kept down. I support this Amendment.

Photo of Sir John Morris Sir John Morris Parliamentary Secretary (Ministry of Power)

My hon. Friend the Member for Pontypool (Mr. Abse) put his finger on the essence of the whole argument, which is that we are concerned that the financial arrangements for the industry work at the end of the day. I have every sympathy, as I said on Second Reading, with a miner and with his claim for a proper reward for one of the most arduous occupations in the land. Our duty is to put the coal industry on a sound and healthy basis so that miners, at all times, have a proper reward. We have had some interesting contributions from the hon. Member for Basingstoke (Mr. Mitchell), who moved the Amendment. He was eager to jump into the battle, but I am afraid that in so doing he lost his sense of proportion. It was very kind of my hon. Friend the Member for Dunbartonshire, East (Mr. Bence) to come to his aid and to strengthen his case, as he said he thought he had done. I do not think that he did, and I think the hon. Member was under an illusion.

In the course of this and the previous debate words such as "sinister" and "underhand" have been used. Now we have from the hon. Member for Basingstoke the words "nonsense" and "complete nonsense". I should like to explain the importance of this figure of £30 million because he said that he would be content with a figure of £10 million as it would be acceptable on the turnover of the National Coal Board. The figure of £30 million is only just over 3 per cent. of the Board's annual turnover. We consider that the figure is a reasonable one looked at in that context. To justify my argument I use the same point as the hon. Gentleman put before the Committee. The hon. Gentleman also asked whether there was some dichotomy between the actions of the Chancellor in raising costs and the position in which the industry now found itself. It is impossible to say what has been the aggregate effect of measures of successive Governments. This is shown in the White Paper. Costs have been raising over a number of years and I am not seeking to allocate blame one way or the other. One cannot isolate this so far as cost is concerned, or the fiscal measures of various Chancellors.

In my view, it was rather sickening to hear the word "subsidy" bandied about in the course of this debate. I do not want to get outside the rules of order but we all know that the sun shone very brightly on the National Coal Board for a number of years, and in the national interest it invested in capacity. That was the reason why that investment took place. This is the prime reason that we are now reconstructing the capital of the industry. In the national interest the industry held prices in the past. Perhaps hon. Gentlemen do not agree that we should take action in the national interest, but that was the policy of Government in the past. The policy was coal at any cost, and there were very proper reasons for such a policy.

7.45 p.m.

One cannot isolate the coal industry from the general national policy. The picture we find today is quite contrary to the picture painted by the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) and I think that his reference to subsidy, when mixed up with deficit financing—which is quite different in that capital is borrowed and this is to be serviced, like any other kind of capital with interest paid on it—was most unwise.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

Is the Minister's case that the investment in unproductive pits and the over-investment in years past in order to make an over large target within the capacity of the industry is not wiped clean by this Bill? Is he saying that having wiped off over £400 million of the capital ploughed into the industry, this is not sufficient and we shall have to expect further losses ploughed back in future? If that is not what he is saying, what is the relevance of capital to the accumulated deficit in future?

Photo of Sir John Morris Sir John Morris Parliamentary Secretary (Ministry of Power)

The hon. Gentleman made his case to the best of his ability, and we respect him for it. Perhaps he will let me make mine. I have looked at the picture in the past. The measures we seek in this Bill are meant to put the industry on a sound basis. The question arises whether the figure for deficit financing should be £10 million, £30 million or some other figure. It is our intention to set a reasonable financial objective for the Board and to see that it is achieved. In the White Paper it will be seen that the borrowing limits assume a modest surplus in the period to March, 1971. The industry is extremely vulnerable to such factors as manpower and productivity problems. May I compliment the industry on its record of productivity? It has had to continue to run very fast indeed in order to stand still because of the ever-increasing costs it has had to face in the past few years.

To a lesser extent there is the weather, which is an important factor when considering the sales of the industry. Because of these matters it is the Government's view that the figure should, so far as deficit financing is concerned, be one of £30 million. Success in achieving the objective each year cannot be assumed and, therefore, a deficit financing power is needed. If one takes some yardstick such as the annual turnover of the industry, this figure is a reasonable sum. It is only just over 3 per cent. of the Board's annual turnover. I would be interested to hear from the hon. Member what kind of percentage he has in mind for this kind of industry with all its imponderable factors.

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

In view of the Parliamentary Secretary's explanation, I beg to ask leave to withdraw the Amendment.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

If I am in order, I should like briefly to make two points.

First, I think that there are those of us who are disappointed with the Parliamentary Secretary's reply. I join with the hon. Member for Dunbartonshire, East (Mr. Bence) in saying that £30 million is rather on the mean side. [HON. MEMBERS: "Oh."] Yes. Hon. Members look askance. I am sure about that, and in two minutes I will say why. It must be remembered that previous Governments assessed the production of the industry at 240 million tons. That assessment went down to 200 million tons, and now it is 170 or 180 million tons. Through the years the National Coal Board has put many millions of pounds into the industry on the basis of the higher figure, and as a result of the policy of previous Governments as well as the present one it is having to accept the obligations involved in that policy. This is not strict commercial practice, and it is rather unfair.

My second point is——

Photo of Mr Robert Cooke Mr Robert Cooke , Bristol West

On a point of order. Could you tell us, Mr. Bowen, what is the Question before the Committee, because I understood that my hon. Friend the Member for Lewisham, West (Mr. McNair-Wilson) asked leave to withdraw his Amendment.

The Deputy Chairman:

The hon. Member for Lewisham, West asked leave to withdraw his Amendment and then I called the hon. Member for Burnley (Mr. Dan Jones), who is entitled to speak in relation to this matter. The Committee has not yet given the hon. Member for Lewisham, West consent to withdraw the Amendment.

Photo of Mr Robert Cooke Mr Robert Cooke , Bristol West

Have you, Mr. Bowen, put the Question to the Committee that the Amendment should, by leave, be withdrawn?

The Deputy Chairman:

That is not necessary. The hon. Member for Burnley is perfectly in order. If an hon. Member seeks to speak after another hon. Member has asked permission to withdraw an Amendment and has not been given permission, he is entitled to do so and the Committee must have the Amendment put to it.

Photo of Sir Stephen McAdden Sir Stephen McAdden , Southend East

May I take it, Mr. Bowen, that after a Motion to withdraw the proposition has been made and has not been put several hon. Members can speak, or is it just one?

The Deputy Chairman:

Any number.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

Thank you very much, Mr. Bowen. I will come to my second point very quickly and resume my seat. The National Coal Board will similarly have to find £30 million, and this will be an on-cost factor in the industry.

Photo of Sir John Morris Sir John Morris Parliamentary Secretary (Ministry of Power)

My hon. Friend is discussing a different matter. This does not concern the £30 million for the other matters set out in the Bill. We are now discussing purely deficit financing.

Photo of Mr Daniel Jones Mr Daniel Jones , Burnley

In that case, I resume my seat.

The Deputy Chairman:

Amendment proposed, in——

Photo of Mr Patrick McNair-Wilson Mr Patrick McNair-Wilson , Lewisham West

May I repeat, Mr. Bowen, that I wish leave to withdraw the Amendment?

Mr. Deputy Chairman:

I am afraid that the hon. Member is not now in a position to withdraw the Amendment. I am not entitled now to ask whether it is the Committee's pleasure that it should be withdrawn.

Photo of Mr David Mitchell Mr David Mitchell , Basingstoke

It was my Amendment, and, having listened to the Parliamentary Secretary's explanation, and in view of the other aspects of the debate which are affected by the question of capital construction, I am happy to accept the Parliamentary Secretary's explanation and to withdraw the Amendment, if I may have the Committee's leave so to do.

The Deputy Chairman:

That has cleared up the point as to who was entitled to ask for leave to withdrawn the Amendment. I am now asked by the Member whose Amendment it was for leave to withdraw it. In those circumstances, I ask whether it is the Committee's pleasure that the Amendment be withdrawn.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.