Coal Industry

Part of the debate – in the House of Commons at 9:31 pm on 26th June 1989.

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Photo of Kevin Barron Kevin Barron Shadow Spokesperson (Energy and Climate Change) 9:31 pm, 26th June 1989

I must tell my hon. Friend the Member for Mansfield (Mr. Meale) that I hope that many hon. Members on both sides will take to heart what he said about the prevailing social conditions in the Nottinghamshire coalfield, which stem from the industrial dispute of 1984–85. All of us can learn lessons from the problems that still exist in that area.

I must tell the hon. Member for Sherwood (Mr. Stewart) that he was out-jumped on the restart scheme —his claim to fame—because a few months before he mentioned it in the House, Opposition Members had already—last July—brought up restart in the context of British coalfields. If he can derive any comfort from this, we intend to look into an extension of the restart scheme to cover ex-Tory Members of Parliament in the Nottinghamshire area in years to come.

My hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) touched a nerve earlier tonight when he mentioned what the Minister's civil servant said said when giving evidence to the Select Committee on Energy two weeks ago. The Secretary of State jumped up and tried to explain in detail what the restructuring grant meant. I was present to hear the evidence, and what it meant was plain: at least 15,000, to judge from last year, when the figure given was 2,000 or 3,000 and we ended up with almost 8,000. Who knows what this year's amount will be? The events of the next few weeks will determine it.

The hon. Member for Hampstead and Highgate (Sir G. Finsberg) was quite right to read us his speech of 1947. It showed what has happened in the intervening years since the time when he worked for two years in the industry. There have been massive changes in the past 40 years. I was pleased to be part of the industry for 20 of those years —a time in which the industry, within the public sector, became one of the best respected deep coal-mining industries in the world.

These reflections shatter the arguments of the hon. Member for Tatton (Mr. Hamilton), who brought us his customary historical view of the industry—nothing in the past 40 years has been good because the industry has not been in the private sector. On both occasions this century when this country was attacked from outside, the first thing that the Government did was to nationalise the coal industry so that we could fight those who threatened our existence.

The implicit question behind the motion tabled by my right hand hon. Friends and myself is whether this country will begin once again to import large amounts of its energy supplies or whether it has learnt the lessons of the past and will support an indigenous coal industry—one that not only supplies coal securely and at the right price but protects the balance of payments and, despite the job losses of the past few years, still provides direct employment for some 100,000 people.

Throughout the world, coal producers negotiate long-term contracts with their electricity generators. Obviously, that makes good sense on both sides. If one wants to see the real world of privatised electricity, one need only go to the United States. Companies there own the generators and the coal mines. Companies will not build generators or sink mines unless they have contracts of 20 to 30 years. In this country, people thought that the privatisation of the electricity supply industry would replicate the real privatised generators of the world—and that could have happened.

British Coal was able to make an unsurpassable offer to the successor companies of 10-year contracts within the retail price index. People will remember that such a contract was sounded out in January. However, between January, when that 10-year contract was offered—perhaps the best on the energy market—and now, there has been an intervention by the Department of Trade and Industry and the Prime Minister about what was then thought to be the correct lifeline of a contract between the generators and the fuel suppliers. The Prime Minister put an end to those contracts.

It was first of all thought that the Prime Minister and the DTI had insisted that coal supply contracts should be signed for only between six months and three years. Even the generators, fighting their corners, thought that that was nonsense. The Prime Minister, however, had to be appeased, so the compromise was reached that the contracts should be between one and five years.

The Secretary of State has recently made a number of statements about the Government wanting to see free market negotiations. It is all very well for him to talk about free market negotiations, but the stipulation by a Government Department, and I understand by the Prime Minister, is that contracts should be for between one and five years. In fact, the Secretary of State said that he would not force customers into long-term contracts with British Coal. That is true, because the Government are stopping British Coal negotiating what anybody would call long-term contracts for the supply of fuel into the generation companies.

What appears to be missing from the Government's calculations is an understanding of the realities of the coal-mining industry. If contracts with British Coal should run for only five years, on what criteria could the industry make judgments about future investment? The Secretary of State and many Conservative Members have made great play of the £6·5 billion capital investment in British Coal in the past 10 years. Will the Secretary of State tell us whether any industry or the Government would have made the investment in Selby or Asfordby without a predetermined market for that coal?

What will happen in future when the only contract possible will be for five years, but it can take anywhere between five or 10 years before a fuel source is brought on in such massive mines as Selby or Asfordby? The Government's imposition of short-term contracts on the industry is to enable the fulfilment of the Prime Minister's dream of a Britain without coal mines or miners. It is to give time to those who would replace British coal—as my hon. Friend the Member for Easington (Mr. Cummings) said—with coal mined in Colombia, South Africa, Australia or Poland, and to prepare the facilities for its large-scale importation. That is the reason for the five-year contracts.

The recent fall in sterling against the dollar has meant that international coal prices are increasing. It can no longer be asserted that British Coal cannot compete in the international market, and many experts say that it could and does now. By encouraging the myth that imported coal is cheaper, the Government are doing a great disservice to the British coal industry and to the country as a whole. We know that the international energy markets are wildly unpredictable and that that can put Britain's industrial competitiveness at risk—or what is left of it since the Government came to office 10 years ago.

British Steel now imports seven out of every eight tonnes of coal that it uses. That did not use to happen. Ten years ago, it imported hardly any coal except when that was necessary. It took a determined line and now imports seven out of every eight tonnes of coal. How will the change in the pound-dollar rate affect British Steel now? For how long are its supplies assured? Are the Government prepared to allow the uncertainty of supply which results from transferring from home-produced coal to imported coal to affect the electricity supply industry in the way that it will surely affect British Steel?

Despite the Government's amendment, the Secretary of State has shown that he will take no steps to secure the long-term future of the coal industry. He was quite embarrassed today when it was revealed in the debate that 60 million tonnes is the figure for the future market for British Coal in this country. I challenge the Secretary of State now. I will give way to him if he will tell us that British Coal will be allowed to fight evenly and competitively for every tonne of coal in the market for electricity generation over the next six months. The Secretary of State will not rise to that challenge. The generators, British Coal and everyone else know that the Government are determined to take markets away from British Coal no matter how much imported coal costs. The Secretary of State's silence speaks volumes about this.

I have quite taken to the hon. Member for Gedling (Mr. Mitchell) since he became a Member of the House. I hope that he does not feel that this compliment will be followed by an attack on his local Conservative association. He made a good contribution to the debate; he referred to the positive aspects of what is happening in British Coal, and many hon. Members on both sides of the House share his feelings about them.

The hon. Member for Gedling has evidence in the Secretary of State's refusal to rise to my challenge that the Government are deeply involved in ensuring that British Coal loses its contract irrespective of the price for the 10 million tonnes or 15 million tonnes to which I have referred.

Instead of awarding the British Coal work force a Queen's award for industry for their 90 per cent. productivity increases, the Government appear to be rewarding them with the prospect of more job losses. Instead of applauding British Coal's contract, which offered coal for 10 years at prices related to the RPI—an offer which is not matched anywhere else in the world for any form of energy—the Secretary of State voted for the construction of port facilities designed specifically to import coal into this country.