Orders of the Day — Wales (Nationalised Industries)

– in the House of Commons at 3:19 am on 7 February 1983.

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Photo of Mr Raymond Powell Mr Raymond Powell , Ogmore 3:19, 7 February 1983

I have listened to a number of speeches today; and most have proved informative, especially those in the debate on shipbuilding initiated by my hon. Friend the Member for Jarrow (Mr. Dixon). Nevertheless, to begin one's speech at 3.19 am, having attended for Welsh questions at 2.30 pm, must seem to those outside this building to be bizarre, to say the least.

I hope that the Minister will try to answer my questions and not treat the debate with the contempt with which the Secretary of State treated Welsh questions earlier in the parliamentary day. It is no joke to stay up all night waiting for one's debate to be reached. Because of the importance of the subject, because it concerns thousands of jobs in Wales and our basic essential industries, and because there are 180,000 unemployed in Wales, I hope that these matters will receive attention and that the Minister will respond positively and will persuade his colleagues within and outside the Cabinet to act more responsibly.

The Consolidated Fund Bill is a very short, one-page Bill. Clause 2 refers to issuing to Her Majesty for the service of the year ending on 31st March 1984 the sum of £35,955,985,500. That is a colossal sum. We are debating the Government's expenditure plans for 1983–84 to 1985–86. Volume 1 of the White Paper costs £5·10 and volume 2 £9·75, so I doubt whether many of my constituents in Ogmore or indeed many people in the Principality will have purchased copies, although it directly affects their lives.

The White Paper also sets out the Government's plans for 1984–85, although I cannot understand why they should wish to go beyond June this year, which I hope will be the end of their term of office. According to the index, Government lending to nationalised industries is dealt with on page 26 of volume 2. There we discover exactly what the Government have to offer—a blank page and a reference to part 3. Careful study of part 3 enables one to determine the expenditure on fixed assets. The table shows that in 1977–78 under the Labour Government the capital requirement of the British Steel Corporation was £502 million. In 1982–83, under the Conservatives, it was reduced to £183 million, and for 1983–84 it is estimated at £270 million. For 1984–85 and 1985–86 the figures have yet to be determined, but the House may be assured that with the return of a Labour Government the amounts will be substantially increased.

I shall not go into all the details contained in the documents. First, I wish to examine briefly what Government policy since 1979 has done to our great steel industry. Since "slim-line" was introduced in 1979, the manpower employed has been reduced from 166,000 to 85,000 in 1982. All over Britain iron and steel works are silent, and good, healthy, trustworthy, hard working men are idle, helpless, hopeless and searching for a job. Those who are left are realising their fate and are expressing total opposition to any further cuts and reductions. Manpower and steel production has fallen faster than anywhere in the Western world.

In Wales, there has been a rapid decline since 1979. In Ogmore, where thousands of my constituents worked in the Port Talbot steel works, demanning has caused devastation. Unemployment escalated, coal demand dropped and other industries supporting Port Talbot, Llanwern, Shotton and Ebbw Vale steel works caught the backlash, resulting in massive unemployment.

That unemployment was not phased, nor were jobs sympathetically trimmed down. The steel industry was just butchered by MacGregor, the right hon. Member for Pembroke (Mr. Edwards) and the then Minister for Industry, planned and manipulated by the biggest problem in the steel industry—the occupier for the short period left of No. 10 Downing Street, the right hon. Member for Finchley (Mrs. Thatcher). Her policies have cut manufacturing by a fifth; caused record bankruptcies; cut manufacturing investment by a third; destroyed more than 3 million jobs; pushed manufacturing imports up by a fifth and encouraged overseas investment. Apart from the misery caused by these policies, they have all cut steel demand.

For example, the car industry now needs only 15,000 tonnes of steel a week, whereas in 1979 it required 21,000 tonnes. The Tory slump in 1980 and 1981 caused the industrial sector to drop demand by 30 per cent. and even more for 1982. In Europe, steel unemployment is 5·3 per cent., but for the same period in the United Kingdom, job losses have amounted to 11·7 per cent. How many more jobs will we lose, and when will those who remain be content with any sort of job security?

This should be the plan for steel—emergency action under article 19 of the General Agreement on Tariffs and Trade to prohibit damaging imports from non-EC countries; an immediate review of trade balances with EC countries and the introduction of restrictions where the gap is unacceptably wide; BSC powers to move massively into stockholding and to take a tighter grip on the trade; and a Government commitment to keep energy prices to industry to the general EC level, thus putting the BSC on a competitive footing. But, more importantly, we want a Government committed to a crash economic expansion programme through construction, investment and producer goods, all of which will require increased steel making.

My last word on this subject relates to the press rumour that this butcher of the steel industry might be pushed over to make a further disaster area of the coal industry. I hope that that attempt will be dismissed, because putting the lid on pits will be much more difficult than slashing the steel industry.

The south Wales coal industry has also suffered at the hands of the Government's mad monetarist policies. I hope that this essential industry will have better treatment in the years ahead than it has received in years past. I have witnessed the ghost valleys left after pits have closed, with little, if any, help provided. I have read the list of pits on the danger list. I hope that my suggestions will be taken in train by the Minister, the Government and the NCB.

I was pleased to learn recently that the mine workers in South Wales decided to abandon the strike action called for 17 January, having been promised a meeting with officers of the NCB. That meeting took place with the chairman of the NCB and other officers, and an undertaking was given by the NCB that the proposals for future investment in the South Wales coalfields would be seriously considered, and that the regional officers in South Wales would meet miners' representatives to discuss certain aspects of the proposals put forward by the National Union of Mineworkers at area level. Those meetings are taking place, and firm promises on some of the proposals have been made by the NCB. I hope that the meetings will continue, and that they will be fruitful.

I shall summarise the NUM proposals both at national level and for South Wales. It wants major replacement units at the Glyncastle new mine and the Margam new mine. It wants major extension and reorganisation of existing unit plants — the Ancit replacement at Aberaman, the new drifts at Aberpergwm, and Nantgarw, washery and coal preparation plant reconstructions at most major units, east side development at Betws and lower measures development at Abernant. It wants exploration surveys in the Glyncastle-Whitworth area east of the Neath valley; in the deep measures of the anthracite reserves especially around Trimsaran, Blaenhirwaun-south, Pantyffynon — Wernos south, Betws-south, Cwmgwili and Abernant; on the southern—central rim of the coal field from Margam to Llantrisant; of the deeper measures to the north of the Garw, Ogmore and Mon valleys. It wants the NCB to deal with the association problems requiring urgent capital investment on recruitment, general replacement and updating of powered supports and pit machinery, including shield support faces where possible.

I want to discuss two of those proposals in detail—first, the proposed new mine at Margam and, secondly, the Aberaman Phurnacite plant. I initiated a debate on 14 December 1981 on the issue of a new mine at Margam. Indeed, it appears that the Government and the NCB are burying their heads in the sand and not recognising the benefits that could accrue if that mine was developed. For a number of years the NCB has considered sinking a new mine at Margam. The reasons for not doing so are that the NCB is not receiving sufficient money for investment and that it is starving South Wales of urgently needed improvement. It prefers to use its admittedly inadequate resources in other regions. The Government are starving the NCB of money to modernise the industry to enable it to provide a solid energy base for the future. The Government are showing a pathetic, narrow-minded, typically Tory attitude to the needs of the coal industry, especially in Wales. Britain will regret that in the next and future decades.

According to the NCB's experts, the proposed new mine at Margam would provide 50 million tonnes of high quality coking coal. The NCB has considered extracting 1 million tonnes per year. The main obstacle is investment. High interest rates plus the £160 million to £200 million capital cost and the low level of international prices mean that the NCB cannot be sure of an operating profit in today's circumstances.

The new mine could be viable if, at today's costs, the NCB did not incur interest charges or if the United Kingdom cost increases kept below future increases in world coking coal prices. However, the cash limit constraint on south Wales could militate against new investment at Margam, even when the NCB was satisfied with its viability.

That is where far sightedness by the Government is essential. They must take account of the longer-term strategic interests of the coal mining industry, rather than base investment decisions that are crucial to south Wales in the 1990's and the next century on financial returns from and during a period of recession. The new deep mine at Margam would make available 50 million tonnes of prime coking coal, employment for 1,000 people during construction and employment for 1,000 people when it is operational. Moreover, it would probably inject about £12 million each year into the local economy.

How much would it cost the Government to attract that number of jobs through their regional policies? How certain can we be that, the nation having spent considerable sums of money on attracting that number of jobs, they will still exist in 10 years' time and that the enterprises will make valuable sources of energy available to Britain to the end of this century and well into the next one? Nobody can doubt Wales's need for 1,000 new jobs. The Government should take that important factor into account when they evaluate the Margam project. They should also seek additional financial support for the project from the European Community.

I should like now to deal briefly with the Phurnacite plant at Aberaman. It produces smokeless fuel by the Dista coke process. It is an old plant that is subject to creating severe environmental problems through air pollution. They arise from the out-dated process and are made worse by its being in a valley. Two million pounds has been spent to ease its detrimental effect on the people who live nearby and on the environment generally, but circumstances are still far from satisfactory. The clean air inspectorate says that the works are still by far the worst source of air pollution in the district, and possibly in the country. The design of the process is such that no addition to the layout as it is can cure or even make a satisfactory improvement in the environment.

It is considered that the only satisfactory solution is to introduce a new process—Ancit—to replace Dista coke for the production of Phurnacite. That would mean rebuilding the whole plant. The cost of rebuilding and introducing a modern process is estimated at £35 million. In June 1981, the Government refused to give the NCB any assistance and it was unable to proceed. The Government's decision was taken on narrow, short-term financial considerations. They must re-examine the subject and take a wider look at the troubles that a new Phurnacite plant would solve and the benefits that it would bring to the environment, the NCB, the coal industry and employment in the valley where unemployment is now at a rate of more than 18 per cent.

The NCB wants to retain the Aberaman plant—without it, the market for smokeless fuel would collapse. The plant employs 1,000 men and 4,500 miners who produce the dry steam coking coal that the plant needs.

That is what the Government need to take into account in deciding on the aid for the NCB for updating the Aberaman Phurnacite plant—not narrow commercial considerations, but the improvement of the environment, a powerful consideration in itself, the safeguarding of the market for domestic fuel and the 5,500 jobs involved in an area of extremely high unemployment.

The escalation of unemployment in Wales was caused by demanning in the steel industry and the rundown in the coal industry. The Opposition constantly warned the Government and expressed great reservations about the action that the Government were taking in their first months of office. We were accused of over-indulgence in condemnation. However, in three and a half years, what has happened to the economy of Wales? What has happened to unemployment there?

At Welsh questions today the Secretary of State for Wales replied to a question that I asked about the number of people out of work in 1979 in comparison with January 1983. On 13 January 1983, unemployed claimants in Wales totalled 180,664, an increase of 134·1 per cent. over the May 1979 figure of 77,177. In my constituency there were 6,061 unemployed in January 1983, but there were no comparative figures for May 1979. The number of people employed in Wales in June 1982 totalled 877,000, a fall of 145,000, or 14·2 per cent., since June 1979.

Those figures alone are a condemnation of the Government's policy and purpose. The regional impact of unemployment in Wales needs to be seriously considered. Nationally, more than 1 million people have been on the unemployment register for 12 months or more, just about the same as the total number of people who were out of work when the Government took office. More than 32 per cent. of the unemployed have been out of work for more than 12 months. That alone is an indictment of the Government's bizarre monetarist policies.

Wales's figures are worse than the national figures. The Minister might take time to tell us of the remedies that he has to offer, not for increasing unemployment but for reducing it without the aid of his unfrocked chartered accountants.

Under the Labour Government, more than 25,000 apprentices were taken on. Under the present Government the figure fell to 15,000 last year and the current estimate is no more than 9,200 apprentices for 1983. That represents a 63 per cent. devastating fall since Labour left office. Despite that pathetic attempt by the Government to recruit new apprentices, month by month more than 200 at a time are declared redundant as closures and redundancies escalate around us. The effects on the Principality are more devastating.

There are 6,100 unfilled vacancies in Wales and 180,664 people out of work. It means that 17·5 per cent. of the population is without a job. If the 6,100 vacancies were filled there would be still 174,564 people without a job.

I have taken part in numerous debates on unemployment since the Government took office three and a half years ago. We have highlighted the impact on communities of the closure of pits and factories and the massive demanning in the steel industry. It has been a waste of time, effort and energy to listen to all the promises made to Welsh and Scottish Members and to Members from other regions. The Saatchi and Saatchi campaign during the last election published posters depicting rows of unemployed people and promises that something would be done. What have the Government done? They have trebled the figures, and to rub salt in the wound the Government talk hypocritically in the House about their anxiety and compassion for those whom they have made jobless. However, they do little about curing the scourge and the cancer.

There are 6,000 people out of work in my constituency, and there are 100 jobs available. There is a 60-to-one chance of obtaining work. What hope do those people have for the future? Many of them have been out of work for two to three years. Those aged 50 or over accept that they are destined never to work again.

They are not working for any financial reward now; they are working for the early return of a Labour Government. They know that that is the only answer to their problems, and that Labour is the only party with Positive plans to solve the unemployment problem. They know that Labour must win if they are to be taken out of the pit of deprivation, degradation and despair.

I do not know why the pollsters do not ask the 3·5 million people who have been pushed out of work how they will vote at the next election. Even if they have been deprived of their dignity by being thrown on the scrapheap, they have a vote still. Who will vote for a Government that caused such massive unemployment and degradation?

Those people still in work are becoming fewer week by week. Whose job is safe with redundancies escalating, factory closures announced daily, company liquidations rising by 35 per cent. in 1982 to a new record of 11,131, which is over 200 a week? If the job is safe now how long will it continue to be safe? If it is essential, how long will it remain so under this Government? Who is left that the Government have not fought? They have fought the Health Service workers, railwaymen, transport workers, miners, steel workers, shipyard workers, shop workers, local government workers, tax inspectors, many others, and now the water industry workers. How many of those people will vote for the Government at the next election?

They have support from the City, the Stock Exchange, the bankers and some of their friends who have been protected by the Government's fiscal and monetary policies, but they are insignificant compared with the millions of people without jobs or who are paid miserly wages and are thus among the 6·5 million people who live on or below the poverty line. That represents one out of every eight British people. The pollsters should contact those people to obtain a more accurate opinion of the Government's handling of this depressing matter.

Where have the jobs been lost that we could and should replace? Social services have been cut to the bone. The list is endless—home helps, meals for the aged, sheltered accommodation, hospitals, hospital services, schools, school meals, sewers, housing, housing repairs, roads and railways. But all that is needed is the opportunity to throw out the Government and change their policies to those of a caring, sharing Government who will alter finances to create jobs, not to destroy them and escalate unemployment. The day of that decision is long overdue and I, with millions of others, await the opportunity with eagerness.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Flint West 3:51, 7 February 1983

The hon. Member for Ogmore (Mr. Powell) directs our attention at 3.50 am to important matters, and he has treated us to the speech that he will no doubt deliver, with the minimum of corrections, to his management committee when he returns to Ogmore tomorrow.

Of course the problems are grave, but they require altogether more serious consideration than the hon. Gentleman gave them in a highly partisan speech. Every one of us is worried sick about unemployment in the United Kingdom, and the even worse unemployment in Wales. If we are to consider those problems, we must do so in a world context, which was notably absent from the hon. Gentleman's speech. We cannot have the escalation in oil prices that has taken place in recent years, and the transfer of world purchasing power to the oil-producing states, with their restricted use of such funds to create world employment, without immense repercussions on employment in this and every other industrialisd country. It would be much more helpful if those factors were taken into account by hon. Members on both sides of the House.

I agree with the hon. Gentleman that Government policy towards the steel industry, in obliging the British Steel Corporation to keep open the Ravenscraig works, will—although I understand their reasons and I am sure that the Labour party would have made the same decision—imperil the continuance of steelmaking at Port Talbot and Llanwern. If I believed for one moment that the Government intended to consider seriously the highly theoretical options outlined in the Serpell report, which would involve the closure of most railway lines in Wales, I would be among its most vociferous opponents. But of course the Government will do nothing of the sort. The whole incident shows the great danger of thinking aloud.

Much of the danger in Wales stems not from the Government's policies, but from the conduct of some public sector unions. The outlook for the steel industry in Wales is much grimmer than it would have been but for the senseless strike two years ago. That was not even a strike to save jobs—it was a strike to try to force the nationalised steel industry, which was and is still massively subsidised by the taxpayer, to give a large wage rise to those workers. The result was the only possible one—a derisory wage increase and a massive loss of jobs in the industry as one consumer after another switched to foreign suppliers and did not switch back again to British steel. Mr. Ian MacGregor had to be called in to save what could be saved; and that he could do only by the most drastic and painful surgery.

The picture in the coal industry is superficially a little different. Mr. Arthur Scargill would dearly love to lead the miners into the same type of suicidal strike that took away the jobs of the steel workers. But time after time he has been disowned by the miners he purports to lead; and now he, too, sees his nemesis fast approaching in the shape, I hope, of the redoubtable Mr. MacGregor. But even the diminished Mr. Scargill has so far been able to hold up the process of concentrating resources on the most economic mines, without which there can be no long-term hope of jobs for the Welsh miners. If only the Government will give Mr. MacGregor—if it is to be Mr. MacGregor—rather firmer backing than he got in his efforts to concentrate steel making in the most profitable steel mills, there could be a real future for Welsh coal mining and for new pits using the newest techniques such as the liquefaction of coal at the Point of Ayr.

What the hon. Gentleman really objects to is that the Government are forcing the nationalised industries to live in the real world in the same way that private industry has long had to do. Many of these industries are monopolies, just like the nationalised utilities of water, gas and electricity. If the unions in those industries are to use their industrial power to push up wages higher than in private industry, they will find that the consequences are exactly the same as they would be in private industry—that the bottomless purse of the Exchequer is no longer there to bail out their jobs, that higher wages will mean fewer jobs even if, in the end, that does entail a real reduction in service.

Wales's special misfortune is that she has been for too long too dependent on old-fashioned nationalised industries. With unemployment at its present terrifying level, it is tempting to try to hold on grimly to the jobs we have, even if they are in dying industries. For that reason, I would have found it hard to withhold some sympathy for the steel workers' strike if it had been a strike to keep jobs. But it was a strike to destroy them and, as such, it was highly successful. Need we go through any more such traumas before we learn the inescapable truth that one cannot fight industrial change; one has to welcome it.

It is not by freezing present industrial patterns, or by banning imports of goods which are being made better and cheaper elsewhere that we will get and keep the jobs we need. If we try to ban the import of foreign motor cars, we may by that very process of banning deal the death blow to the British motor car components industry. It is by beating the foreigner at his own game, by rooting out inefficient work practices on both sides of industry, by refusing to accept wage increases that rob our industry of its competitive edge, by constantly moving up market and into service-based industries that we can win the Welsh jobs that we so desperately need.

Photo of Mr Michael Roberts Mr Michael Roberts , Cardiff North West 3:58, 7 February 1983

I should like, first, to congratulate the hon. Member for Ogmore (Mr. Powell) on being successful in the ballot under the new arrangements for the Bill. I am particularly pleased that he has introduced a debate on the nationalised industries in Wales. These industries are important. No one can be unaffected by their activities, and their performance has a major impact on the economy.

I have listened with interest to the points that have been made. I understand the hon. Gentleman's deep interest in the subject. I understand, too, why he chose to concentrate on some industries rather than on others. What I cannot understand or accept is the argument that we have somehow failed the nationalised industries and that the solution lies in greater subsidy and investment, regardless of viability and the rate of return.

The nationalised industries must be allowed to compete for investment and priority of resources on a se sensible economic and efficiency basis. They must be allowed to compete, but they cannot be shielded from the effects of the market and world conditions. If they are shielded they will lack the right incentives to improve the supply of goods and services while containing the cost of supply and the price to the consumer. Of course, there is a separate area of social obligation. Where grants are required for social purposes, such as British Rail's public service obligation, they have been paid by this Government as by others. British Rail's public services obligation, which stood at £702 million in 1978, has risen in real terms to £926 million in the current year.

The hon. Member and others of his persuasion are keen to put a ring fence around United Kingdom industry, including the nationalised industries. Such artificial barriers just do not work. Let us have a bit more faith in the ability of our nationalised concerns to meet international competition. Certainly if that competition can be shown to be unfairly subsidised there is cause for complaint. But let us not forget the extent to which the nationalised industries in this country are supported. Since external financing limits were introduced in 1976–77, they have averaged nearly £2½ billion a year. The total external financing limit for 1982–83, as set out in the recent public expenditure White Paper, is £2·25 billion. The forecasts for the next three financial years to 1985–86 are £2·67 billion, £2·26 billion and £1·8 billion.

Those figures clearly indicate that the Government have a very substantial commitment to the nationalised industries. The Government have not been starving the nationalised industries of cash. Equally, it is not realistic to demand levels of investment for Wales outside the context of national investment priorities and for projects without a viable basis. The hon. Gentleman has once again demanded immediate substantial investment in a new pit at Margam. I well understand his concern and the arguments in favour of such a project, but the essence of any decision must be whether the NCB assesses it as economically viable at this time.

All the nationalised industries, as I have said, must be exposed to competitive forces. Where and when appropriate there is a role for the private sector to take over in whole or in part. Obviously the hon. Gentleman would like to say that he does not agree, but he wanted to debate the effects of our policies in Wales, so he must not ignore the scope within privatisation for bringing a more effective, responsive and economic service to Welsh consumers. Our determination to pursue this policy is clear. The Telecommunications Bill is now in its Committee stage and we can anticipate the progress that British Telecom will be able to make when freed from the constraints of nationalisation. Wales will benefit along with other parts of the United Kingdom.

I come now to the detail of the hon. Gentleman's remarks. Of course the rundown in the steel industry has had a serious effect on jobs in Wales in recent years, but steel is not a pensioner to be kept going by subsidies. It is an industry which, after facing serious and deep-rooted problems, is being shown the way to recovery and the ability to compete. Years of heavy investment—

Photo of Mr Raymond Powell Mr Raymond Powell , Ogmore

I refer the Minister to page 95 of the White Paper which sets out the Government's expenditure plans and the capital requirements for the nationalised steel industry. We are talking, not on a Principality basis, but about the British Steel Corporation's capital requirements. The table on page 95 shows that the capital requirement for 1982–83 was £183 million, whereas in 1977–78 it was £502 million. The provision has been reduced from £289 million in 1979–80 to £183 million this year. It is estimated that next year it will be a mere £217 million.

Photo of Mr Michael Roberts Mr Michael Roberts , Cardiff North West

The hon. Gentleman has referred to this issue previously, and I shall deal with it.

As I was saying, steel is not a pensioner to be kept going by subsidies. It is an industry which, after facing serious and deep-rooted problems, is being shown the way to recovery and the ability to compete. Years of heavy investment resulted in far too much steel-making capacity being available. The problems were recognised by the Labour Government. They closed the steel-making works at Ebbw Vale and East Moors, in Cardiff, but although they understood the nature of the problem, they failed to react with the determination that the circumstances required. BSC was left with the major task of closing outdated plants, and both Llanwern and Port Talbot were included in the "slimline" operation that started in 1980. Further demanning continued under BSC's 1981 corporate strategy. One result, as the hon. Member said, was the severe reduction in employment in Welsh steelworks. By the middle of 1982 BSC's manpower in Wales stood at 21,000.

He has looked at only one side of the coin and has failed to mention that those reductions led directly to massive improvements in productivity and eventually in morale. By example, productivity at Port Talbot rose from 6·2 to 4·8 man hours per tonne of liquid steel, and at Llanwern from 4·7 to 4·2 man hours per tonne, between May 1981 and May 1982. Those figures are illustrative of the improving performance at most of the Welsh plants. If the hon. Gentleman wants to take account of our policies in Wales he should consider these figures carefully. We believe that the effect of our policies, together with Mr. MacGregor's management, has produced a genuinely competitive public sector steel industry in Wales, and our improved reputation for productivity stands us in good stead throughout the world.

Of course, BSC still faces substantial difficulties as a result of the continuing effects of world recession. My right hon. Friend the Secretary of State for Industry outlined the problems in his statement to the House on 20 December. He made two crucial points, which I want to repeat now. First, we have made it quite clear to our European partners that we have taken stronger steps to put our house in order, and it is now their turn to do likewise. Secondly, with the prospect of an improvement in steel demand this year we believe that it would be wrong at this time to take irreversible decisions on future capacity. Clearly, this leaves a degree of uncertainty, but the hard-won performance of Welsh plants should stand them in very good stead when an increase in business comes.

As to investment prospects, we intend to make an announcement about Port Talbot's request for a £135 million hot strip mill modernisation scheme as soon as possible. The Government's record of investment in the Welsh steel industry is very good. The three years from 1979–80 have seen a total investment of over £240 million. This includes some important schemes such as the continuous casting plant and the new Morfa coke ovens at Port Talbot, a new coil inspection line at Llanwern and the updating of the five-stand cold mills at the three tinplate works of Ebbw Vale, Trostre and Velindre.

Predictably, the hon. Gentleman's speech contained much about the coal industry. For our part, just as my right hon. Friend the Secretary of State has made known his strong desire to see a viable Welsh steel industry within a viable United Kingdom steel industry, so too, do we want a strong and viable Welsh coal industry within a national context. But clearly there are major differences between the hon. Gentleman's proposals for a large, production-orientated, massively subsidised and inherently vulnerable industry and the Government's plans for a cost-effective industry in line with the market demand for coal.

The hon. Gentleman knows very well that all pits eventually reach the stage where they can no longer be supported. Why else were 46 Welsh pits closed between 1960 and 1979? The economic realities of an extractive industry do not change from one Administration to another. I understand why the hon. Gentleman calls for huge new investment, but he must understand that the South Wales coalfield is being supported with very substantial amounts of taxpayers' money just to cover deep mine losses—£95·9 million last year and possibly over £120 million this year. Investment funds have been made available to the NCB for those projects which it believes to be economically sound.

In the two years to 1981–82, capital investments in the South Wales coalfield totalled over £75 million. Investment this year will be at about the same annual rate. The hon. Gentleman should remember that these levels of capital investment must be seen together with the support given to cover losses. He will remember, no doubt, that Oakdale, for example, in south Wales is receiving £22·3 million for reorganisation and access to new reserves. In North Wales, at Point of Ayr—this was mentioned by my hon. Friend the Member for Flint, West (Sir A. Meyer)—a new drift is being developed at a cost of about £16 million. At Lady Windsor, Abercynon, a new skip winding scheme represents an investment of £5 million. At Trelewis, a new drift mine represents £9·8 million. At Merthyr Vale the development of new reserves means £3·5 million. At Marine, £2·5 million is being invested in new winding gear. At Abernant £0·7 million will go on underground manriding. AT Blaenant, new service blending plant will amount to £0·5 million. At St. John's, improved coal handling facilities represent £0·4 million. Therefore, we are investing in our coalmines in South Wales.

Earlier I briefly mentioned the Margam project. Because of the hon. Gentleman's obvious interest—he has, I know, raised the subject often in recent years—I want to say a few more words about it. I have outlined the approach that the NCB takes on investment decisions—and those decisions, incidentally, are a matter for the board and not for the Government. My right hon. Friend the Secretary of State has had discussions on a number of occasions with the chairman of the NCB about Margam. We have therefore kept in touch with the prospects for Margam and we understand why the NCB does not wish to proceed at this time.

As the hon. Gentleman will know, the NCB has undertaken a thorough survey at Margam. This has established that the coal seams lie very deep and therefore to mine here would inevitably be a high-cost operation. At the same time, the NCB has to pay regard to its future markets and that is as true for Margam as for any other prospect. But the coke market has declined in recent years and a market for Margam's coal is thus by no means secure. The point is that the NCB could proceed with the Margam project only if the costs were right, if the market were right and if it made sense within its overall investment plans. The hon. Gentleman must consider those three points.

No coalfield can expect an automatic right to an arbitrary level of investment. That investment must be relevant to the industry as a whole and medium-term market expectations. During his interview with the South Wales Echo last week, the Secretary of State was asked about investment. He said It really would be odd and very eccentric if investment was distributed proportionately, because the simple fact of the matter is that the Welsh coalfield is making a huge chunk of the NCB's losses. He went on to say: I think the pattern in Wales is going to be that there is going to have to be continual closure of loss-making pits for which there isn't a future and relevant, worthwhile expenditure in the pits which have a future. That means that the NCB must, under the agreed arrangements, continue to assess very carefully the future of pits which are serious lossmakers and show no prospect of recovery. At the same time, it will be looking at the case for investment. Several pits have received valuable funds recently and important schemes are in operation, which I have mentioned the most important. More will follow, and other important developments are in hand.

I well remember the hon. Gentleman and his hon. Friends insisting that the NCB should invest in the Ancit process in 1979. At that time the process had not been fully tested and it would have required a substantial subsidy from the Government. A decision to proceed then would have been wrong, but I hope, that the hon. Gentleman has taken note that the NCB is now ready in principle lo go ahead with the scheme on a properly secured technical and financial basis. The announcement last Thursday will be very welcome to the work force and the inhabitants of that part of the Cynon valley. I recognise the pollution that has been caused by the phurnacite plant there.

I hope, too, in case the hon. Gentleman still doubts our commitment to the future of the coal industry, that he remembers the support that is being given to the NCB's proposals for a coal liquefaction pilot plant at Point of Ayr. We all hope that this investment will lead to major new markets for coal in future generations.

The Government hope that the rail network will continue on a healthy and efficient basis. My hon. Friend the Member for Flint, West raised this matter. It is also the Government's duty to ensure that the taxpayer gets value for money. It is unwise of the hon. Member for Ogmore or anyone else to accuse the Government of failing to support the railways. In fact, British Rail is absorbing large amounts of public finance—about £926 million this year alone. We have reached the stage where we can no longer continue in the present inefficient way.

Last Thursday my right hon. Friend the Secretary of State for Transport made clear where the responsibility lies for the current state of affairs on the railways. At the same time, he welcomed the Serpell report. My right hon. Friend explained that the network options set out in the report were not closure plans. The report, however, did raise questions as to what is the most cost-effective way of meeting transport needs. The Government's intention is to consider the long-term future of the railways in the light of all the facts and the public debate following this report.

Hon. Members can be assured that in all this the Secretary of State and I will look very carefully at the needs of Wales, particularly in the rural areas. However, as the Secretary of State for Transport explained to the House, the taxpayers' contribution to British Rail has risen steadily in real terms over the past five years. For example the public service obligation contribution which enables British Rail to maintain the network in Wales and elsewhere, at constant 1982 prices, has risen considerably. The figures are: £664 million in 1977, £702 million in 1978, £768 million in 1979, £774 million in 1980, £891 million in 1981 and £926 million in the current year. In real terms, there has clearly been a steady climb in Government social support for the passenger railway. We have now reached the point where the value of our support exceeds the total revenue from fare-paying passengers.

British Rail's investment picture in Wales is by no means gloomy. For example, in May last year a new HST service linking south Wales with Birmingham and the north-east was introduced and, as recently as January, the service was strengthened by an additonal HST in each direction. The main line stations in south Wales are the subject of a major refurbishment programme, with work in hand at Cardiff and with work at Swansea planned. A new freight line to service Coed Bach washery is at an advanced state of planning and since we came to office the Welsh Office has grant-aided the provision of freight handling facilities and wagons in Anglesey and south Wales. Several more schemes of a substantial nature are currently in the pipeline and these should help to preserve rail freight carryings, while at the same time protecting the local environment.

The hon. Member for Ogmore, not for the first time, raised the issue of unemployment, especially as it affects south Wales. I wish that he had the generosity of mind to appreciate that concern is not limited to himself or to the Opposition. He selected demanning in the steel industry and the continued rundown of the coal industry as the two important escalaters of unemployment.

I have already mentioned the fact that it was a Labour Government who closed East Moors in Cardiff and Ebbw Vale. The years between 1964 and 1970 were a peak period in which 39 pit closures occurred in south Wales, with 17,754 miners losing their jobs. I do not blame the Labour Government. It would be possible to conduct a more realistic appraisal of the problem if we stopped pretending that it was an act of the Government that caused every economic catastrophe in south Wales.

Few people, are prepared to maintain that the steel industry would be surviving today at Llanwern and Port Talbot if essential demanning had not taken place. Most steel industry experts ask why the nettle was not grasped earlier to ensure that the industry became more competitive and able to secure international and domestic markets.

The hon. Gentleman asked what the Government were doing about unemployment. We are trying to make the nationalised industries highly competitive and efficient. Only in that form can they survive. We are trying to build an infrastructure in north and south Wales that will attract new industries. We are building roads and factories at a record level. There is every evidence to suggest that a number of important new technology industries have come into south Wales, attracted by the infrastructure that we have provided. Mitel, AB Electronics and Inmos are recruiting labour.

I recognise that, at a time of world economic recession, we are not making up completely for the ground that has inevitably been lost through coal closures and the demanning of the steel industry. These were not the acts of a Tory Government alone. Governments of both political parties were inevitably engaged in them. If only the hon. Gentleman would see that people who do not share his political ideology and who take a different view of society share with him concern for the unemployed we would be much nearer a solution to some of the problems in south Wales.