Orders of the Day — Coal Industry (Finance)

Part of the debate – in the House of Commons at 12:19 am on 27th July 1981.

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Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian 12:19 am, 27th July 1981

The Opposition listened carefully while the Minister outlined the orders. It is appropriate that both orders should be debated together because, to some extent, they marry into each other. We are not surprised that the orders have been presented. As the Minister said, not only were we aware of the tripartite discussions between the National Coal Board, the trade unions and the Government, but the Secretary of State for Energy announced to the House on 16 June that he would present the orders for parliamentary approval.

My right hon. Friend the Member for Leeds, South (Mr. Rees) established from that statement that the cash limit had been increased by £231 million. The Secretary of State confirmed that. My right hon. Friend said that he thought the figure was too low to implement the "Plan for Coal."

The Secretary of State replied: That view was not expressed by the unions and the board when I met them this morning."—[Official Report, 16 June 1981; Vol. 6, c. 868.] I have checked that statement with the trade unions. The feedback was different from the Secretary of State's interpretation. The unions expressed their view in three different ways. They said that it was a sign of movement, that it did not meet the overall problem and that they reserved the right to return to the issue.

It is unfortunate that the debate is so short. It is appropriate that the unions' view should be put on the record. It is not surprising to hear that opinion when, in reality, the orders are a first-aid job. It may be a good first-aid job for the financial year, but it is a first-aid job nevertheless when the magnitude of the problems in the mining industry are fully considered. The Minister, in his opening remarks, confirmed that serious problems face the industry. I am not carping, but simply underlining what the Minister said.

Longer-term legislation is contemplated. We hope that it will deal with the discredited Coal Industry Act 1980. Many people other than hon. Members would say that the implementation of that legislation would bankrupt the NCB and the mining industry, whether or not it was designed to do so. It is appropriate to ask the Minister whether the Government are contemplating new legislation to put the matter right this time. What tripartite discussions does he intend to have with the unions and the NCB? The Minister paid tribute to the previous discussions. Indeed, the Secretary of State has paid his tribute. Do the Government intend to achieve the right balance this time? What consultation do they intend to have with the tripartite group on legislation?

I hope that we shall not return to the 1980 approach. Someone outside the House said that when the Government are dealing with the problems of the mining industry they tend to shoot first and ask questions afterwards. We all make mistakes, but I hope that the Government have learnt by theirs. I hope that there will not be a repeat of the events of February. If Britain had been gripped in an energy crisis as a result of industrial action, the Government would have had to act. The Government quickly introduced discussions and meetings to avert what would have been a serious energy crisis.

In dealing with the union's reservations, I ask the Minister about the boiler conversion scheme to coal and the £50 million that will be made available for the purpose. We are informed that there have been 800 inquiries. Will the Minister translate that response into financial assistance? The scheme had Budget implications and it was announced in March. That is my recollection. It was certainly introduced to the tripartite group in March. I am not sure when it was announced to Parliament.

The House should measure the orders by taking its mind back to March and the start of the confrontation between the miners and the Government. I do not seek to analyse those events. I think that the House must have a major debate to ascertain what provoked the crisis and to deal thoroughly with the coal industry and energy. If the orders are to be seen in the proper perspective, we must consider the proposition that the mining unions and the National Coal Board put to the Government.

It will be sufficient if I put on record the general strategy of the unions and the NCB, which was discussed prior to tripartite meetings. They wanted the Government's full support for "Plan for Coal". That meant support for the new capacity. The Secretary of State always talks about the industry wanting to be competitive. There is not a chance in hell of it being competitive unless new capacity is made available to it. When it is available we shall be able to stop talking about pit closures. That will be so under this Government or any other Government. If we have new capacity we can talk about new sinkings and a modern competitive industry that is able competitively to produce coal. The unions and the NCB agreed that there must be a commitment to "Plan for Coal", which means Government support for a new capacity.

The second point that was decided was the whole question of imports. I shall not go into detail, as the Minister has referred to that. It would be easier to state the problem than to solve it. It was so big a problem that in the mining union's strategy with the National Coal Board, they deemed that it had to go on the agenda for such a meeting of the tripartite group.

The Minister has paid tribute to the fact that exports have increased, much against the predictions that many people have made. Pit closures have also been mentioned. Although the Minister referred to pit closures he must agree that the Government and the National Coal Board agreed categorically that the list of pit closures had to be withdrawn. At the tripartite meeting all the Government Ministers were in attendance, including the Secretary of State for Employment. There was never a bigger array of Cabinet Ministers at a meeting, to try to get the problem resolved, after the problems of February. They agreed that the pit list should be withdrawn.

I could deal with interest charges in relation to the orders, as I noticed on the tape that Sir Derek Ezra has been making comments on interest charges. At that strategy meeting, the mining unions identified that interest charges were costing the National Coal Board and the mining industry £185 million. The questions of stocking aid, social grants and research and development were dealt with. The Minister referred to long-term liquefaction. He was at the conference in Jersey, as I was. There is bitter cynicism about the Government's commitment to the Point of Ayr project. The mining unions were under the impression that the Government would back the Point of Ayr scheme more strongly financially than they have backed it to date.

At the tripartite the Secretary of State said that any financial support would come out of the Department of Energy's budget. I believe that he was honest when he said that, but I do not think that he said how much would come out. To some extent, the Treasury has won in this argument. No Treasury money is going into the project. I know how difficult it is to work a Department of Energy budget. It is difficult, as different agencies want to draw on the budget. To some extent I sympathise with the Minister when I ask how we reallocate and what are our financial priorities in allocating the Department of Energy budget. We ask what we can afford and what we can spend in liquefaction.

There is cynicism and disappointment over the Point of Ayr project. The mining unions are disappointed that the Government, although they did not state the figure at the tripartite meeting, have not backed the scheme financially in the way they should. I know that the Minister believes that we must get ahead with the question of the liquefaction of coal. Time might not be on our side. We are not talking about some Walter Mitty project.

Regional grants were mentioned. Plant conversions, to which I have already referred, were mentioned. Price support to help to cut coal stocks were also mentioned. That was the shopping list, as it has been described, of the unions when they met the Government. The Government reached an understanding to examine all the problems that I mentioned and to help the industry. Those are not the precise words that the Secretary of State used, but it is a fair description of what he and his fellow Ministers said.

We are told that the orders are a forerunner of that. However, we come back to the £231 million increase in the cash limit. We should compare that with the £300 million for grant, which, as the Minister said, includes social grants. Why is there a disparity between the two figures? Bearing in mind what the hon. Gentleman said, the logic is that a cut will need to be made in capital expenditure. If that is so, how on earth will we get the new projects and new capacity? How also does that square with the promise made to the House and to the miners in "Plan for Coal"? The Secretary of State is fond of underlining the need for a competitive coal industry. We want a competitive coal industry, which is why we backed "Plan for Coal" and why we must look ahead for investment to get the new capacity. The industry has been starved of investment for a decade and a half. It annoys us that some people think that they can start coal mines and production simply by turning on a tap.

The hon. Gentleman gave a roll call of the record of production of coal. To some extent it was an indictment of how we have starved the coal industry of investment. To some extent he made a case for new investment. He told the House how new investment was paying off in increased production. The more new capacity that we introduce, the more that we shall get increased production and become more competitive with other coal industries, particularly in America and Australia. We do not need to worry about Europe. Our coal production is the best in Europe. Our industry and production is the most efficient.

The Minister may say that my judgment on the figures is wrong and that some of the points that I raise will be taken care of in the new legislation. However, we want to know what financial provision is being made, for example, for the Vale of Belvoir. It is unthinkable that the Department of Energy will allow the Department of the Environment to kill the project. One cannot at a stroke wipe out a coalfield and its miners. I know miners, and the miners there are among the best in the world. The Vale of Belvoir is not just a coalfield. It is a goldfield. It is a capital asset. It is wealth that we need to implement "Plan for Coal". Do the orders involve money to make a start this year if permission goes ahead for the Vale of Belvoir?

What about the Margam in South Wales? The new project is essential for employment in South Wales and is vital for an industry that is contracting, perhaps because of the exhaustion of reserves.

I turn to my area, Scotland. What about Musselburgh? According to the orders, will there be any money to get that started? Scotland needs a new sinking just as South Wales and the Vale of Belvoir do. My hon. Friend the Member for Edinburgh, East (Mr. Strang) and I need such measures in order to quell the hunger for jobs. If we went ahead with the Vale of Belvoir, Musselburgh and Margam they would be good investments for the nation. My hon. Friends and I attach great importance to the questions that I have posed the Minister. I hope that he will assist the House by giving some answers.