Coal Industry (State Aids)

Part of Opposition Day – in the House of Commons at 11:26 pm on 5th February 1986.

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Photo of Malcolm Bruce Malcolm Bruce Shadow Spokesperson (Energy and Climate Change) 11:26 pm, 5th February 1986

The Minister drew attention to the objective set out in the document which was to aim for a viable coal industry in Europe able to produce coal at world market prices. The hon. Member for Midlothian (Mr. Eadie) mentioned his anxiety about taking an oversimplistic view of the market. It is important that within the EEC regulations and in this country we take account of the fact that when considering the world coal market we are not comparing like with like.

Despite some of the comments by Conservative Members, the EEC coal industry is subject to competition from coal imported from South Africa, South America and Poland which is produced by methods and at rates of pay that would not be considered acceptable within the EEC.

We are taking a rather foolish and short-sighted view of the market if we impose regulations on reasonable working conditions within the EEC while being prepared to open our doors to coal which is produced under conditions which we regard as unacceptable, and undermines our market. That is a point that the EEC and the United Kingdom should be in mind.

The Minister also said that he looked forward to the coal industry breaking even in 1987–88. There are hon. Members on both sides of the House who would like to see the coal industry break even in the right circumstances. It depends on how that is achieved. It depends on whether it is achieved by increased output, increased marketing and selling more coal and, as a result, one hopes, creating more employment and investment, or whether it is achieved by cutting the industry to the bone, eliminating everything on the margins and ignoring all the social consequences and costs. That is the kind of exercise that we are witnessing in the steel industry, which threatens to have devastating consequences for the economy of Scotland and the fortunes of the Conservative party in Scotland.

The coal strike has been referred to. I would like to think that the House could look forward rather than back. We have got over the strike and must now find a way in which to advance the industry. The decision whether to keep mines open must be based on slightly wider criteria than have been accepted by the Government. I speak as an economist. To say, within the narrow accounting confines of the NCB, that a pit is uneconomic and should be closed is foolish if two consideration are not borne in mind. The first is whether there is alternative employment which gives people a viable living and takes them off the public purse. The second is whether the uneconomic nature of the pit is due to long or short-term factors.

The hon. Member for Bedfordshire, North (Sir T. Skeet) touched on the question of the oil price. If, as some people fear, the oil price collapses in the next few months, it would present considerable difficulties for the coal industry. We would be faced with a difficult problem—whether that was a short or long-term development. It is conceivable that the price of oil could fall by $3, $4 or $10, a barrel. It is also conceivable that it might recover, depending on whether OPEC disintegrates or regroups. All of these things are uncertain.

It would be foolhardy to say that we have an uneconomic coal industry because the price of oil, which is sustained by a cartel, has fallen and that we shall close pits wholesale without taking account of the long-term implications. That is why we need a coherent and flexible energy policy. The absence of such a policy has been my consistent and major criticism of the Government. We must determine the parameters within which we want to operate, for coal, oil, gas and electricity. It is not good enough for the Government to sit back and say that they will allow the market to determine price, that they accept no resposibility for the market, irrespective of whether it is manipulated by cartels, multinationals or what I would call slave labour in Third world countries. We have a right and a duty to take account of such factors.

The document does not preclude our taking note of such factors. It says that solving social and regional problems will remain matters in which Government intervention is allowed. I have identified the areas in which there should be intervention. The Government should do more in that respect. I hope that our taking note of the document will not be used as an excuse to reduce such activity.

The hon. Member for Midlothian said that he had not had a brief from the National Coal Board. I agree that none of us has had a brief, but I tried to get some information today and, at the end of the afternoon, got a telephone call to the effect that there is nothing significant in the document, so the NCB does not have a view. It was not terribly anxious to elaborate. That is not very helpful. I should have thought that a Member of Parliament seeking information might have been given a rather more full explanation. I was genuinely grateful for the Minister's opening speech, as I needed some guidance about the background. I realise that we are taking note of a developing policy, within which we can sensibly operate. I strongly believe that the House should start to look forward. We should try to find common ground and recognise some of the wider issues. This sterile confrontation cannot continue. The Minister is committed to that objective, I know. To the extent that he acts accordingly, I shall support him. I reserve the right, however, to take issue with him when I think that he falls short of that objective.