With permission, Mr. Speaker, I will make a statement about coal.
The major financial problems which now face the National Coal Board are being urgently considered. Clearly, the cost of the settlement must be met by us all as consumers or taxpayers. The issues not only concern the industry's prospects but also affect energy policy, employment and the assisted areas. Meanwhile, the following action is being taken.
First, the N.C.B. has decided to put proposals for increases of 7½ per cent. across the board to its consumer councils to take effect from 26th March, the beginning of its next financial year. The Confederation of British Industry agrees that, having regard to the exceptional present circumstance of the coal industry, the proposals should not prejudice the observance of its prices initiative. A rise of more than 7½ per cent. might have done serious damage to the C.B.I.'s policy of price restraint.
Second, a draft order will be laid under Section 3 of the Coal Industry Act. 1971, to increase the limit on the board's accumulated deficit from £75 million to £100 million.
Third, a draft order will be laid under Section 1 of the Coal Industry Act, 1965, to increase the limit on the board's power to borrow from £900 million to £950 million.
Fourth, because the board's deficit is certain to be in excess of the increased ceiling mentioned, an emergency grant will be made to the board of £100 million by means of a spring Supplementary Estimate. This is the best forecast that can now be made of the amount needed.
Fifth, as the House knows, practically all the restrictions on the use of electricity were removed last week. A protracted cold snap could, however, lead to further cuts. In order to limit this risk, the Central Electricity Generating Board is undertaking certain exceptional operations, including uneconomic firing and additional coal imports; subject to the approval of Parliament, the Government will refund the excess cost of these operations to the C.E.G.B.
Sixth, the Government have decided that imports of solid fuels will continue on open general licence.
The Government intend in due course to introduce legislation to deal with the financial problems of the coal industry.
Will the right hon. Gentleman tell the House why he has moved in advance of the formulation of any overall fuel policy or even of a comprehensive policy for the coal mining industry? Second, is he able to give any estimate of the effect of the proposed increases upon consumption, and their effect upon employment, and, in particular, the effects upon employment in the regions of existing high unemployment? Has he taken into account the recommendations of Lord Wilberforce on regional employment; namely, that these costs should be identified and made plain, and should not be involved in the question of miners' wages and the costs of the industry generally?
Finally, will the right hon. Gentleman tell the House that the Government will give an early opportunity to discuss the whole of the Government's fuel policy, when they have one, and, in particular, the general situation of the coal industry, burdened as it now is with twice the cost of the Wilberforce awards as a result of a strike brought on, as can now be clearly seen, by the Government's action and the National Coal Board's action in making what no one could possibly suggest was other than an inadequate offer?
The four or five latter supplementary questions put by the right hon. Gentleman are clearly matters for the major study, to which I referred at the beginning of my statement. All those matters, therefore, which affect such things as the impact on consumption and employment, the effect on the regions, the whole concern about the Government's action on fuel policy, and especially the impact on the coal industry, are matters on which no immediate assessment can perhaps be made. The Government are needful of having a very much more profound study made of them in the light of the long-term impact of this whole problem. For those self-same reasons, the proposed price increase put forward by the National Coal Board is one which, in the board's judgment, is correct in relation to the major study which will have the final effect on the whole shape of the industry in the future and its finance. In the immediate term such a price increase seemed compatible with the board's market aspirations.
First, would my right hon. Friend say how much of the total increase would have had to be given to the National Coal Board, above the 7½ per cent., if its total costs incurred had not been met by other borrowing factors? If it had been placed purely on the price of coal, how much above the 7½ per cent. would be necessary? Would my right hon. Friend say approximately what the 7½per cent. will mean as an increase on the price of ordinary domestic coal per ton? Would he make it quite clear that this type of award, when it has the support of the country, has to be met somehow, and that this means being met by the consumer?
I am grateful to my hon. Friend for those remarks. On the last point, in one form or another the public will have to pay through either the price or the tax mechanism; there is no evading that whatsoever. On the price increases, 7½ per cent. is the equivalent of about £60 million in a full year, and the Wilberforce award was the equivalent of about £90 million in a full year. That does not take account of the further cost in relation to the cost of the strike to the industry. Regarding increases in domestic prices, it is likely that the effect will be slightly less than £1 per ton for bituminous coal and slightly more than £1 per ton for smokeless fuel.
Has the right hon. Gentleman observed how quickly the miners have got back to productivity against all the forecasts made by experts? Would he agree that it would be very helpful to productivity in the mines, and, indeed, to future prices, if the Government accepted with better grace the findings of the Wilberforce Report and if the right hon. Gentleman made some strictures on his hon. Friends who seem nowadays to be practising a sort of hymn of hate against miners, which is not good for the miners or the country?
I have not been made aware of any hymn of hate. On the hon. Gentleman's remarks about productivity, yes, indeed; I hope sincerely that we can look forward to a new departure on this matter and can start to match the productivity levels which were achieved until 1969 in the industry but which during the last two years have not been as substantial as they have been previously.
What will be the position of the 200 or so small, privately owned mines which employ about 2,000 people in development areas? Are they not tied to the N.C.B. wage rates and price structure? Will they receive any grant, awards or subsidy?
I am grateful to my hon. Friend for raising the case of these small private producers. They are faced with a very serious predicament. I have been made aware of it and will certainly take it sympathetically into consideration.
As these coal price rises, and possibly later a rise in the cost of electricity, will hit old-age pensioners, particularly those on supplementary benefit, will the right hon. Gentleman undertake to have a talk with his right hon. Friend the Secretary of State for Social Services to see whether he can in the intermediate period raise the standards of the supplementary benefits payable?
I reserve my more critical comments on what has been said today until the legislation—[An HON. MEMBER: "Why? "]—because I wish to be brief. First, will my right hon. Friend now tell us exactly what the effect of these increases in coal prices will be on electricity prices, because half of the output of coal in this country goes to power stations? Second, will he give a detailed reply to my earlier question suggesting that we cannot judge this position, which is complex and highly technical, unless a White Paper is laid stating the future intentions on fuel and power economics?
On the first part of the question, the total impact in money terms on the electricity generating authorities from the price increase is about £30 million. This might give rise to an increase in electricity prices of about 2 per cent., though my hon. Friend is no doubt aware that to a very large degree the big consumers of electricity have automatically to suffer a price rise from the coal price increase by the automatic interpretation of their contracts. I take note of my hon. Friend's interest in a White Paper on this subject. I am not prepared to answer that yet, but I shall consider it. At present I am not particularly inclined to issue a White Paper.
Will the right hon. Gentleman agree that fairly generous rebates are paid to large industrial consumers of coal and that, consequently, the full effect of the rise in coal prices will not be felt by the mass consumers of coal?
Yes, there will be some abatement of the total increase by virtue of discount arrangements, to which the hon. Gentleman refers. That is not entirely the case with electricity, when there is an automatic mirroring effect of coal prices in electricity costs to big consumers.
My right hon. Friend has told the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) that the National Coal Board reckoned that a 7½ per cent. price increase was about right, but did not the board tell the Wilberforce Inquiry that the market would take an increase of us to 10 per cent.? How are these two factors reconciled? Second, in what way does the £100 million special grant that my right hon. Friend announced differ from a taxpayer subsidy towards the financing of particular wage settlements?
On the latter point, the supplementary grant is a subsidy to the National Coal Board, and there is no question that this is the case. Regarding the board's assessment of what was the correct level of price increase to achieve, this is a matter which will no doubt need further consideration. But the board's immediate reaction was that 7½ per cent. was the appropriate amount to put to its consumer council.
In view of what the Secretary of State has said about unemployment and regional policies to deal with unemployment and as he projects some kind of examination leading towards a fuel policy, will he now take steps to try to influence the C.E.G.B. not to drop the burning of coal in coal-fired stations drastically below the annual average for the last three years? Can he give a reassurance concerning certain sinister rumours which are circulating about the Aberthaw power station in South Wales?
Contrary to what was said by the hon. Member for Midlothian (Mr. Eadie), this is a hymn of realism. Many of us feel that the 7½ per cent. will bridge only a very short period since there will be a running forward deficit for the full year, and, therefore, the price rise to the consumer is, obviously, heavily subsidised. Many of us on this side of the House are amazed at the lack of realism displayed by the Opposition. Not only do they not want it to be paid out of taxation but they do not want the price to go up. We would like to know where they think the money will come from.
I am continually made aware of a certain belief that a bag of gold exists at the disposal of the Government which originates neither from taxpayers' money nor from price increases.
Will the Secretary of State reconsider the Government's decision about continued coal imports, particularly in view of the high price of imported coal compared to the price of home-produced coal? Will he also look at the question of supply and demand? Will he consider both these matters particularly in view of the Government's continual talk about the effects of cost inflation?
On a point of order, Mr. Speaker. I distinctly heard the hon. Member for Bolsover (Mr. Skinner) address the comment to the Prime Minister: "taking your bloody clients away". Is this in order? [Interruption.] I am corrected by the Prime Minister; the comment was addressed to the Chair, Mr. Speaker, and, therefore is even worse. Would you rule at once that the use of the word "bloody" in this House and in this context is not only opprobrious but entirely out of order?
My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) may not have been entirely accurate in his paraphrasing of what has been said, but it was within my clear recollection that the hon. Member for Bolsover (Mr. Skinner) said: "Pick your bloody clients". That, I believe, is what was said. The hon. Member will have a chance of saying that he did not say it and that I misheard it.
I was more than a little offended because I had not had a chance to raise a question on coal prices. I withdraw my remark if it was offensive to anyone. It was not meant to be so.