[Relevant documents: The First Report of the Trade and Industry Committee of Session 1992/93 on British Energy Policy and the Market for Coal (HC 237), and the Second Report from the Employment Committee of Session 1992/93 on the Employment Consequences of British Coal's Proposed Pit Closures (HC 262-I and -II).]
A number of hon. Members may well be disappointed at not being called today. Therefore, I am now appealing most firmly for voluntary restriction on length of speeches. I have no alternative but to limit to 10 minutes speeches made between the hours of 6 and 8 o'clock.
I beg to move,
That this House approves the White Paper 'The Prospects for Coal: Conclusions of the Government's Coal Review' (Cm 2235).
Let me remind the House of the opportunities for British Coal that I announced last Thursday. I followed very carefully the arguments put forward by the Select Committee on Trade and Industry. There were three themes to my proposals. The first was to create a wider market for coal. The second was to provide British Coal with a tapering subsidy to give it the chance to seize the opportunities of the enhanced market. The third was our determination to press ahead with our plans to privatise the industry.
Let me start with the wider market for coal. There are considerable differences of view as to the likely demand for coal. They reflect uncertainty about the longer-term demand for electricity. If the demand should prove to be as high as many commentators, including the Select Committee, expect, coal has every opportunity to take advantage of it. Within the existing firm forecasts, everyone agrees that we should help British Coal to secure the market that is currently filled by imports. That is why, on behalf of the Government, I am offering hundreds of millions of pounds to bridge the gap between British Coal's cost of production and world-related prices.
No one I know disputes that there is significant tonnage to go for, although, as I have told the House, there is considerable disagreement among the Select Committee, independent consultants, British Coal and the electricity generators as to the likely size of that market. I think that everyone understands that no amount of forecasting creates a marketplace; it is customers who create a marketplace. However, the Government are putting British Coal in the most favourable position to add these supplemental tonnages to the core contracts which, I am pleased to tell the House, have been announced today.
I have also told the House of the various ways in which I acted on behalf of the Government to increase the market for coal. The importation of orimulsion is to be reduced to the minimum contractual level for the foreseeable future. British Coal told the Select Committee that it believed that opencast production would decline from 16 million tonnes to 12 million tonnes. Last Thursday, my right hon. and learned Friend the Secretary of State for the Environment issued a statement of interim guidance to planning authorities on opencast coal developments. We intend to renew our dialogue as soon as practicable with the French Government about the use of the interconnector.
I have, of course, published a summary of the legal advice which confirms beyond doubt that unilateral action by the Government would leave us open to very considerable risks. The outgoing French Government told us that they expected the present imports to decline and they confirmed that we are able to use their national transmission system to export electricity to France and to third countries beyond. As confirmation of that, a £100 million contract has been signed for electricity to be exported from the United Kingdom to France over the next eight years.
I have announced that, with the Director General of Electricity Supply, I shall enter into discussions with large users to examine the circumstances in which they might bypass the pool and whether demand-side bidding would improve the workings of the electricity market. In addition, the Government are reviewing the current regulation of on-site generation, which could offer large users an alternative source of electricity. They are all ways in which the demand for electricity could be increased, and that in turn means greater opportunities for British Coal.
I am grateful for the various measures that my right hon. Friend has announced but, at the very moment he was standing at the Dispatch Box making a statement last Thursday, a representative from British Coal was briefing the unions in Nottingham—the National Association of Colliery Overmen, Deputies and Shotfirers and the Union of Democratic Mineworkers specifically—on the prospects, as British Coal saw them. It told them bluntly that there was no additional market for coal to justify retaining the 12 pits beyond the period of the subsidy and that, furthermore, if there was to be any hope of survival, it would be by reducing their costs to the point that they could displace one of the 19 pits which at present has an assured future. That would seem to be directly sabotaging my right hon. Friend's statement and assurances.
My hon. Friend raises a most serious situation, which I have discussed with the chairman of British Coal this morning. I shall deal in a minute or two with the precise points that he has raised.
The Secretary of State has been outlining what the Government are prepared to do to fulfil the statement made last Thursday. Is he prepared to assure the House that there will be a level playing field for the coal industry compared to the gas and nuclear industries? That is very important to the 700 men who work at the Sharlston pit in my constituency. The pit is doomed to early closure, as outlined by the Secretary of State last Thursday. May we be assured that there will be a level playing field and that the reserves at Sharlston will be worked? Unless the Secretary of State can assure us of that, the debate is meaningless.
The hon. Gentleman asks many questions. I must point out to him that the decision to close a particular pit has to be taken by British Coal. British Coal can take that decision only when it has gone through a process of consultation which takes into account all the issues that are raised in such a process. I cannot today—and no Minister ever could in such circumstances—anticipate what the outcome of the consultation will be. The hon. Gentleman should listen carefully to what I have to say because it will apply to a large number of other pits—indeed, to all other pits—as well as to that to which he referred. A significant number of things that I have said, and which I shall be able to repeat in my speech, are relevant to the pits that may face closure.
The problem with what the Secretary of State has said today, what he said the other day and what was said on 13 October is that the figures for the contracts for coal to the power stations were 40 million tonnes last October plus 30 million for the four successive years. Last week he said that the figure was 160 million tonnes. It is the same amount—40 million tonnes followed by four successive years at 30 million tonnes. If he does not alter those contracts upwards, those 19 pits—[HON. MEMBERS: "Of course he cannot."] That was what he was supposed to do. That is what the review was all about. If he and British Coal do not alter those contracts, the 19 pits that still exist, the 12 pits that will stay open for two years, the six that have been mothballed and the pit at Maltby will all be scrambling for the same amount of coal. He can talk until he is blue in the face, but he must alter those basic contracts with the power stations, otherwise we shall not save any of the pits that he talks about.
I do not know about talking until I am blue in the face. The hon. Gentleman usually talks until he is red in the face if he is running into difficulty. However, if he had waited until I had made further progress with my speech, he would have seen that, in addition to explaining the additional opportunities that I have been announcing to the House since last Thursday, I am now about to come to the essence of the recommendation of the Select Committee's proposals: that we should help British Coal to gain some of the enhanced markets by subsidising its production costs.
Will the Secretary of State explain how it is possible to make a decision about the future of the coal industry in isolation? He has agreed, in the White Paper, to bring forward the nuclear review, but that will not be until later this year. A decision on renewables will be taken later this year. The planning guidance on opencast mining will be issued, presumably, later this year—there is interim guidance already. The decisions about orimulsion by Her Majesty's inspectorate of pollution will not be made until later this year. The Secretary of State gives the impression that he is trying to buy a few votes to get him over the hurdle of Back-Bench opposition tonight. The strategic decisions about Britain's energy policy will be put off into the future when, one by one, each industry will have a decision taken separately. He will have washed his hands of the coal industry by selling it off.
The hon. Gentleman must know that the first imperative was to secure the signing of the contracts that have been announced today. They are due to run out on 31 March. Without them there was no contract at all for British Coal. I then agreed with the Select Committee all the items that it was to consider and all the items that I was to consider, as I was not prepared to come back to the House and have it suggested that we had both not looked at all the items of common interest. There has been immensely constructive work together to secure those ends. I then took the principal recommendations of the Select Committee which relate not to core contracts, but to supplemental contracts.
It is those supplemental contracts which are now capable of being negotiated because of the decisions that I am announcing today and the decisions announced last Thursday. In addition, the market itself can be widened because of the various decisions that I have already announced. A significant number of decisions have already been taken. But—and this is the critical point from which the Select Committee cannot run and from which I cannot run—in the end it is not for Governments just to forecast or to say what they would like to happen. Customers have got to come forward and sign the contracts.
Does my right hon. Friend accept that there are thousands, if not hundreds of thousands, of firms throughout British industry which, during the downturn in the economy, have been struggling to maintain their markets and to become more competitive? They have done that—all honour to them—without any subsidy from the taxpayer. Does my right hon. Friend further accept that the miners are exceptionally fortunate to have been given this opportunity to win back more markets if they can? They are now on their own; it is up to them to win back the markets, and they will not do so if they go on strike.
My hon. Friend has raised some important points.
Ever since I became responsible for this policy subject, I have been deeply concerned about the problems facing the mining industry and particularly about the mining communities that are dependent upon that industry. That is one of the reasons why I was able to persuade my right hon. and hon. Friends to secure a significant redundancy package—which is not in any way equalled by those received by the vast majority of people who lose their jobs in the recession—and to make my announcement about the regeneration package about which I shall say something in a few moments.
The House is well aware of the problems that face tight-knit communities when the principal industry on which they depend declines or has to be closed. That is not a new phenomenon: the problem has faced this country as long as I have been in politics and has not been restricted to the coal mining industry.
Let me now deal with the subsidy that the Government will make available to meet the difference between British Coal's cost of production and the world market-related prices. I have accepted the principal recommendation of the Select Committee that I should provide a subsidy to enable British Coal to compete with imports, which are currently running at about 8 million tonnes. Some people have claimed that the subsidy is only for two years. That is not what we say in the White Paper.
The subsidy is there to help British Coal become world competitive over a period of time. The Government's policy, therefore, is that the subsidy should be reduced, over the period to privatisation. Yes, as I said on Thursday, we are committed to privatisation at the earliest practical opportunity. It is the only way of enabling the industry to take full advantage of the opportunities that the market offers. Privatisation may well come in two years' time. I myself would very much like that to happen. If it does not come then, the subsidies can continue. If it does, negotiations about the financial terms become part of the sale process. I must emphasise that we have made it clear that we are prepared to embrace the range of figures put forward by the Select Committee on Trade and Industry.
It is important that the House should hear a complete section of my speech at a time so that it can take these matters on board.
We have made it clear that we are prepared to embrace the range of figures put forward by the Select Committee on Trade and Industry. The Government are prepared to follow the central proposal that emerged from a thorough and careful review. I have not been able to accept every aspect of that reveiw, but, in the main, I have consistently praised the work of the Select Committee. It should be remembered that we have based our response to the House on the work and conclusions of an all-party Select Committee of the House.
Finally, I have guaranteed—and the chairman of British Coal has announced—that no pit threatened with closure will be closed without the private sector being given the chance to operate it. In that context, I am prepared to offer the private sector equivalent subsidy arrangements, subject to the relevant EC provisions, if it can demonstrate that it can secure a genuinely additional market.
Has not the Minister now given the whole game away? The subsidy is to encourage privatisation. [HON. MEMBERS: "Rubbish."] Of course it is. Everyone in the mining industry knows that, if a pit is mothballed and offered to the private sector, the private sector will get the benefit of the subsidy and offer to re-employ some miners—some—at lower wages and in poorer conditions than they had before. That is why the Minister's statement last week was simply not believed by anyone. We did not think that he wanted to save jobs; we thought that he wanted to put the mines back into private hands. That is what this is all about.
Talk of giving the game away is rich coming from the right hon. Member for Chesterfield (Mr. Benn), who announced the connector with France without signing up on the details. If anything was given away, it was Britain's mining industry by the right hon. Gentleman.
We will press ahead urgently with our plans to privatise the industry. On any calculations, British Coal, as a private company, would be one of the world's largest coal companies.
I made it clear last Thursday, and I have made it clear from the beginning, that I cannot offer a guarantee about the size of a future market. In deciding not to specify the number of pits for the future, the Select Committee clearly recognised that and agreed with the point that I am making. As the chairman of British Coal said today:
I welcome the fact that all collieries have an opportunity to compete for a market that was not available at the outset of the coal review.
The subsidy arrangements will therefore enable British Coal to do that. The chairman has made it clear that his
company will do all in its power to seize the opportunities that the White Paper makes possible. There is, therefore, now a significant new market to go for. These opportunities are above and beyond those provided by the core contracts.
I listened carefully to what my right hon. Friend said about the chairman of British Coal. Statements apparently came from British Coal this weekend which gave the clear impression to some people that a number of the 12 pits would not remain open for more than about nine months and that, among those that did remain open, some might well be substituted for the 19 that are not at present on any list. I should be most grateful for any assurances that my right hon. Friend can give on those points.
I am grateful to my hon. Friend. He heard what I have just said about the pits on the list of 12 and those on the list of 19. The chairman of British Coal has made it quite clear, and I could repeat the words, if my hon. Friend the Member for Staffordshire, South (Mr. Cormack) would like me to—[HON. MEMBERS: "Answer."] I will. As I said, the chairman of British Coal said today:
I welcome the fact that all collieries have an opportunity to compete for a market that was not available at the outset of the coal review.
That is the point that I am trying to put to the House. The subsidy arrangements will enable British Coal to compete for that market which was not available. The chairman of British Coal has made it absolutely clear that he will do all within his power, as will his company, to seize the opportunities that are now available as a result of what the White Paper has made possible.
As I was saying, those opportunities are above and beyond those provided by the core contracts. It is not British Coal's intention that the future of the 12 pits will be secured at the expense of the 19 pits which were outside the scope of the present review. The opportunities for the 12 pits are those of the additional market.
The Government are, as I said in response to an earlier intervention, well aware of the very serious impact of pit closures on mining communities. We have made available to British Coal one of the most generous packages for voluntary redundancy currently available. In October, a substantial package of regeneration measures of about £180 million was announced. I augmented that in my announcement of last Thursday to bring it to around £200 million.
As the House will know, Lord Walker has been appointed to pull together the activities of all the Government Departments and agencies and he has already visited many of the areas that might face closures. The training and enterprise council programme has been agreed in principle by my right hon. Friend the Secretary of State for Employment. Those contingency plans make provision for some 25,000 additional people to be retrained and helped.
British Coal has made it clear that it will act quickly to reclaim sites for development. Enhanced assisted area status has been promised to Doncaster, Barnsley and Mansfield.
In October, I announced that the Government would consider enterprise zones for those areas most affected by closure, should closures be determined by British Coal. I can now go further than that. If there is a substantial reduction in employment at mines in the vicinity of Easington in County Durham, the Dearne valley or Mansfield as a consequence of the proposals announced by British Coal on Thursday, we intend that enterprise zones should be set up in each relevant area. Thus, there could be up to three new enterprise zones.
The zones are intended to provide a focus for regeneration over a wide area. They are expected to generate several thousand new jobs and attract significant new investment over the next 10 years. Their aim is to stimulate the construction of new manufacturing and commercial premises and promote economic diversity by introducing new enterprises. We have promised further help for those areas affected by closure proposals through extension of the regional enterprise grant scheme for small firms in areas not already benefiting.
Last week, I announced financial support for the new east midlands regional development organisation which, among other things, will promote inward investment to the region. Additional money will be available to regional development organisations in the north-east, Yorkshire and the west midlands. English Estates has put together a provisional programme of about 1·5 million sq ft of business and industrial space and acquisition and servicing of 600 acres of land. The programme will support some 18,000 jobs.
I can well understand the anxiety of communities faced with the need to change from their present reliance on coal. I know, as do many hon. Members on both sides of the House, how successful such change can work out to be. The fact is that, during the 1980s, we have seen change introduced and we have seen the results.
One matter of anxiety in the coalfields which the Minister has not yet touched on is the question of safety in the mines. On several occasions in the past six months, the Minister and the Secretary of State for Employment have referred to the desirability of dismantling the safety regulations. The right hon. Gentleman will be aware that that is a matter of enormous concern to the National Association of Colliery Overmen, Deputies and Shotfirers, which sponsors me in the House and which has made an immense contribution to maintaining both safety and production records in the pits. Does he recognise that, if he goes ahead and dismantles safety in the mines, lives will be lost—and it will be on his conscience and that of his colleagues.
When I joined my Department and examined the political issues facing coal, the first thing I said was that I would do nothing to deteriorate—[Interruption.]
I sometimes wonder what people who must go down the mines feel when they see the response of the Labour party. The hon. Member for Wentworth (Mr. Hardy) asked a serious and important question to which I was about to give an unequivocal answer. I made it clear that I would do nothing to prejudice safety standards in the mines. That was the first thing I said, and I have remained consistent in that position, although the House fully realises that these matters are, rightly, for the Health and Safety Executive.
As the House knows, we are consulting over the 1908 Act. I give the House an assurance that no decision will be taken in my Department which prejudices safety in the mines. I hope that that is as categorical as I can make it. We have seen changes take place before. In many ways, Lord Walker changed the economic opportunities in south Wales. His contribution was proverbial, and Labour Members know exactly how much he did.
When the steel industry faced closure in Shotton, some 7,000 jobs went. But 10,000 new job opportunities were created in the 1980s.
I had to help with the problem of Corby when the British Steel plant faced closure, with a loss of 3,500 jobs. With enthusiastic support—I say it—from the local Labour council, the new town corporation and my hon. Friend the Member for Corby (Mr. Powell), 11,000 new jobs have been created in that part of England.
On the jobs issue to which my right hon. Friend is addressing himself, will he give an assurance that if, at the end of the consultation process for Trentham and perhaps some of the other pits, Trentham was privatised, it would have full and free access to all coal purchasers so that it could run its affairs properly, in line with the market forces that my right hon. Friend has considered? Will he please give me an assurance, especially about Trentham, on that point?
My hon. Friend will understand the difficulty of intervening in the statutory procedure for consultation. However, I made it clear to him that any pit —obviously, that includes Trentham—which British Coal determines to close after consultation will be made available to the private sector. I have made it clear this afternoon, and I have said earlier, that if any private sector organisation can find a genuinely additional market for the coal, I shall be prepared to offer a subsidy along the lines of what I have announced so that it can sell the coal.
There is nothing to stop such a private sector organisation approaching the generators in the electricity supply industry. However, my hon. Friend will understand that we are talking about a genuine additional marketplace. Therefore, it would be misleading if I did not say that I would not regard access to the core contracts which have been announced today as a genuine additional marketplace. That would merely have the effect of closing down pits in other parts of the country. I have given my hon. Friend a wide-ranging answer which applies in general terms to other pits which might face closure.
In truth, two fundamental differences of approach have emerged continuously in the debate about coal on the Floor of the House. First, the Labour party, with the significant exception of members of the Select Committee, has refused to engage in any serious discussion of the options. It has set aside any attempt at reasoned arguments, often those of its own members of the Select Committee.
The Labour party has argued that there is an opportunity for massive intervention in the marketplace that would protect the coal industry from competitive pressure. That is the first distinction between the arguments of the Opposition and those of the Government. The Government believe that energy policy is a matter for a competitive marketplace in which a diversity of supply is on offer to a wide range of customers who, in the exercise of their discretion, will exert a downward pressure on price and continuous pressure for efficiency.
The second gaping divide is the almost unbelievable contrast between the policies Labour Governments have pursued in practice and the pretence which the Labour party now offers about what it believes that we should do. I begin with the concept of the visionary plan which the Labour party tells us about. It could not be more clearly stated. In 1974, the "Plan for Coal" opened with the following ringing sentences":
Coal's major role and new importance in the entirely changed energy situation facing Britain is clearly presented in the National Coal Board's Plan for Coal. It is the most ambitious forward strategy ever prepared by the mining industry, calling for £600 million of new investment, first to stabilise and then to expand the nation's coal-mining capacity over the next decade.
On page 9 the vision was quantified.
As always, the hon. Member has forgotten the figures, but I shall remind the House of them.
In 1973–74, the market of 133 million tonnes was to increase to 150 million tonnes by 1985. To achieve that, the plan was quite specific—new investment of £1·4 billion in the 10 years to 1985. That was the plan, the vision and the certainty. The only thing that has changed is that the hon. Member who had so much to do with the plan has forgotten what he put in it. At best, it was gross naivety and at worst it was a great confidence trick.
I have the figures for 1985. Far from achieving the forecast increase to 150 million tonnes, the figure was down to 118 million.
Order. First, that is not a point of order but a question of debate and perhaps the hon. Gentleman would care to debate it if he catches my eye. Secondly, I cannot accept his remark and must ask him to withdraw it, and not to waste the time of the House further in this serious debate.
When I gave the figures for 1985, the right hon. Member for Chesterfield observed that the Tories were in power then. At last, I have found something on which I can agree with him. I had anticipated the Pavlovian reaction of Opposition Members. I realised that if I mentioned 1985 it would occur to them that it was all the fault of the wicked Tories. Their broad theory would be that if only we had got on with those plans and had allowed all the good work put in place by the Labour party to continue, as they had intended, all would have been well.
I took the liberty of checking the facts. In 1973–74—when the Tories were certainly in office, as the right hon. Member for Chesterfield will remember—output was 142 million tonnes. In 1978–89, the output achieved under Labour was 119 million tonnes. Far from an increase, far from a plan for coal, all Labour managed was to decrease output by 16 per cent.
Your curiosity will have stretched to what happened to the bills, Madam Speaker. Labour promised to invest £1·4 billion in 10 years, but the actual cash invested was £5·7 billion. The cry will go up—perhaps the Opposition have learnt their lesson as the cry did not go up. All that dramatic increase in investment would have been under the Labour party.
I believe that I heard what I thought was an unparliamentary remark, in which case I must ask the hon. Member for Bradford, South (Mr. Cryer) to withdraw it.
Order. The hon. Gentleman understands that he is using up, as I have said before, very precious time in the debate. I do not want to exchange words with him about the word "clever". [Interruption.] Order. I shall use the authority that the House has given me if the hon. Member for Dover (Mr. Shaw) continues to interrupt in that way. I am sure the hon. Member for Bradford, South will take the matter seriously and withdraw the remark.
Order. I need no qualification; I need a withdrawal. The remark was withdrawn. I hope that hon. Members will watch their language in this debate, and any other debate.
I am sorry that the facts of Labour's record should so offend the hon. Member, but it is important that the whole House should understand exactly what they are.
As I have said, the Labour party promised £.1·4 billion; the actual cash invested up to 1985 was £5·7 billion. Of course, the suggestion could be made that all of that had been invested before the Labour party left office. I have checked the figures again. Between 1974 and 1979, the investment in British Coal was £1·5 billion—
I think that the public may feel that the record of the Labour party is relevant to the discussion today. The great claim of the Labour party is that it has backed British Coal, but we have established that it actually ran down production. Its next great claim could be that it invested more than the Tories did in British Coal, but it cannot square that with the fact that when it had its five years, under the "Plan for Coal", it invested £1·5 billion and in the five years when the Tories had control, up to 1985, the figure was £4·2 billion. What we saw was Labour presiding over a declining market and rising costs.
What else should the Labour party have done? It could, of course, have cut back on nuclear power, but the Trade and Industry Select Committee said no to that idea, and the Government also said no. The House may think that I am talking about a Conservative Government, but I am not; the Labour Government said no. They said no on 15 May 1978, when the Labour Government decided:
After three years of discussion, the Government believe that the nuclear component is necessary for the energy policy of the United Kingdom; that a Windscale expansion of the kind proposed is necessary for that nuclear component to develop properly."—[Official Report, 15 May 1978; Vol. 950, c. 177.]
Who said it? The right hon. Member for Chesterfield.
This should cause the House—even Opposition Members—no surprise, because on 25 June of the same year the same right hon. Member said:
All the forward forecasts, which go to the first quarter of the 21st century, indicate a growing role for nuclear power.
He was referring to the 20 per cent. about which I reminded the House last Thursday.
What are the facts? We have still not reached 20 per cent. dependence of nuclear power, yet the Labour party, despite its forecasts, is trying to back off. The fact is that the Opposition knew; they had the forecasts; and the only other qualification that they conspicuously possess is a remarkably short memory for the facts.
I need not detain the House long on the interconnector with France. I explained the position comprehensively last Thursday. So careless were the Labour Government with our national interest that they approved the multi-million pound project and authorised the Central Electricity Generating Board to proceed. Does the right hon. Member for Chesterfield want to tell the House that he did not know that the treaty of Rome was in place when he made the announcement? Or were the Labour Government so keen to announce jobs before the forthcoming general election that they sold the principle and left the critical details to the generosity of the French negotiators? Even for the right hon. Gentleman, that seems to be carrying the international brotherhood of man a shade beyond reasonable caution.
Of course, the Labour Government also knew about gas. They could have refused to allow so rapid a development of the North sea. They were the ones with a plan for coal. What was their policy on gas? On 8 December 1975, they said:
Our objective, as a Government, has been to seek to do all we can in the national interest to develop gas and oil resources in the North Sea and to secure the situation for the future. That is the basis of a great future of this country." —[Official Report, 8 December 1975; Vol. 902, c. 163.]
On a point of order, Madam Speaker. Did I not hear you say that speeches should be short? Does not that apply to Ministers and Front-Bench spokesmen as well as to others who might be lucky enough, if there is still time when this Minister has finished, to be called? Would you bring the Minister to order and remind him of the time factor?
I have deep sympathy with that point, Madam Speaker. I have given way to a large number of hon. Members, and I believe that I should report to the House the views of the Labour Government on gas, because one of the most important criticisms levelled by Labour—but not by the Select Committee on Trade and Industry—contains the idea that we should cut back on gas. So let me tell the House what the Labour Government said about it.
On a point of order, Madam Speaker. The motion that the President of the Board of Trade moved related to the White Paper, which is meant to be about the future of the coal industry. Will the President deal with the future and not give us lessons that we, and above all the mining industry, know about the past?
All Members are responsible for the arguments that they put here. If we could make some progress, I might be able to call other Members to put the opposing arguments.
The hon. Member for Southwark and Bermondsey (Mr. Hughes) must surely be aware—if he is not, his hon. Friends will remind him—that the Select Committee report extensively discussed the issue of gas. It must be relevant to our decisions and our discussions whether the Labour party believed that there was an alternative to cutting back on gas. Let me tell the House what the view of the last Labour Government was about gas. Then we can judge the validity of the criticisms that Labour Members are now making. They said:
Our objective, as a Government, has been to seek to do all that we can in the national interest to develop gas and oil resources in the North Sea … That is the basis of a great future of this country. As we move towards the 1980s, we shall be an energy-strong country. We shall be the most important country, in energy terms, in Western Europe, and one of the most well-based in the world.
At that point, an intrepid hon. Gentleman asked, "At what cost?", to which the response was:
That is a concept for the faint hearts of the Conservative Party to ponder."—[Official Report, 8 December 1975; Vol. 902, c. 163.]
Who announced that bold policy of allowing gas its head? It was not, this time, the wild optimism of the right hon. Member for Chesterfield; he is guiltless of that statement. It was a then much more humble figure—the Minister of State, Department of Energy, our old friend, the Leader of Her Majesty's Opposition.
On a point of order, Madam Deputy Speaker. Is it not the case that the more rope the President of the Board of Trade is given, the more likely he is to hang himself? Are we not meant to be discussing future energy policy? Is it not the case that he will be consigned to the history books, just as he is now talking about policy of 20 years ago? What matters is now.
The House will have listened to the debate and to the exchange that we had on Thursday and a wider audience will have listened to the way in which the Labour party has abandoned all that it did when it was in power as though there were a simple way forward.
I recognise your ruling, Madam Deputy Speaker. The fact that Lord Marsh should say that the social devastation of what happened under a Labour Government, when he was a Labour Minister, should not be forgotten must rank as a serious part of the discussion about how one judges the integrity of the Labour party.
It is not that the Opposition disagree with me, Madam Deputy Speaker; it is that they do not want the facts paraded. The Labour party cannot stand the facts because they do not square with the argument that it puts forward today. However, we shall reveal just what the Labour party did when it had the power to deal with these matters.
On a point of order, Madam Deputy Speaker. The Secretary of State is talking to us about facts. I faxed a letter to the right hon. Gentleman at 7.30 last night in which I asked him to clarify the statement that he made on Thursday, which put 800 miners in my constituency out of work. They were producing some of the cheapest coal at one of the most modern coal mines in the world. I ask the right hon. Gentleman to answer my questions. Must I listen to a diatribe that has nothing to do with the well-being of miners?
Does my right hon. Friend recall that in October 1992 I asked him about the inbuilt discrimination against coal in the Electricity Act 1989, the measure which privatised the electricity industry? He gave me an assurance that he would consider that "inbuilt discrimination" as part of his review. Has he done that? If he has, and has found the discrimination that I believe to exist, why is he not acting to produce a level playing field between coal, gas and nuclear power?
My hon. Friend must be fully aware, as the Select Committee determined and as I have made clear, that we are considering an immensely complex range of options. I have listed the areas in which we are helping British Coal, both with a subsidy to help it bid for markets and by widening the market for coal. It is a naive interpretation of what has happened to believe that British Coal has not received subsidies over recent years. There is about £1 billion a year of subsidy over and above world market prices in British Coal's current costs, and there was about £18 billion-worth of investment in British Coal in the 1980s. I cannot accept what my hon. Friend has said.
We have provided British Coal with the opportunity to earn additional tonnage through supplemental contracts. We have given it the opportunity to compete. We have provided it with a wider market. Without Government action, that market would not be there. What has been the response of the National Union of Mineworkers? It wants to call a strike. Does the hon. Member for Livingston (Mr. Cook), the Opposition Front-Bench spokesman, believe that the NUM serves its interests by going on strike? What will the customers of British Coal think if they see the industry going on strike at the very time when we are giving it a chance to compete in larger marketplaces?
We have made it clear that the best hope for British Coal is to take advantage of the opportunities that we have provided and to move towards the private sector. We have seen privatised industry after industry move on to the world stage and win new markets. That has been the success of the 1980s. We want British Coal to seize the opportunities that are there.
All we have from the Labour party——
From the Labour party we hear only references to the past and to subsidies. It continues to look backwards. That is all that it does. The House has heard its message, which has nothing to do with a viable and competitive British industry. I am sick and tired of listening to Opposition Members telling me what their fathers thought, what their grandfathers thought, and what their great grandfathers thought. We are concerned about what their children will think if we do not make the economy competitive. We are not trying to build a land for the fathers of Opposition Members but we are determined to build a land for their children.
I beg to move, to leave out from 'House' to the end of the Question, and to add instead thereof:
'declines to approve the White Paper, The Prospects for Coal, on the grounds that it fails to provide a long-term future for any of the 31 pits announced for closure on 13th October or to secure a contract for a single extra ton of coal above those contracts available on 13th October; notes that the reduction in contracts for coal is a product of the distorted market created by Her Majesty's Government on the privatisation of electricity and regrets the failure of the White Paper to open up the electricity market to fair competition from coal; records its surprise that despite a new subsidy on the purchase of coal Her Majesty's Government has not obtained any commitment from the generating companies to purchase more coal; is concerned that the White Paper will impose severe hardship on the communities around the 19 pits to be closed immediately and the further 12 pits liable to close within three years; recognises that the British Coal industry is the cheapest and most efficient in Europe; congratulates the management and workforce of the 31 pits on their achievement in doubling productivity within eight years while reducing the price of their coal; and calls for a balanced energy strategy that maintains existing volumes of coal production.'.
I understand why the President of the Board of Trade did not spend the bulk of his speech talking about his White Paper. Having read it, I think that he was probably right not to do so. I also think, however, that on this occasion he could have spared the House his portrayal of a pantomime villain. I have shadowed the right hon. Gentleman for long enough to know that he plays it for the boos and the hisses—that that is what gives him his high. Hon. Members should not misunderstand me; there is a place for pantomime villains. As a child of 10, I loved to boo and hiss them as much as the next person. But the place for a pantomime villain is on the pantomime stage, not on the Floor of the House introducing a report that seals the fate of a major strategic industry and the jobs of 30,000 grown men—men of dignity and courage, who deserve better of the right hon. Gentleman than his vamping performance today.
The right hon. Gentleman has spent five months on his review, being as self-indulgent as his performances in the House. The critical reason why he has failed to come up with a long-term solution to the problem of the pits in Britain is simple. Why has he not produced a White Paper that gives a future to those 31 pits? Has he never thought that he was wrong in wanting to close them in the first place?
I thought that, after Thursday's statement, the hon. Member for Teignbridge (Mr. Nicholls) asked the most penetrating and revealing question of all. He asked the President of the Board of Trade to confirm that his conclusion was
that the economic analysis that my right hon. Friend made last year was right then and is right now.
Modestly, the right hon. Gentleman replied:
my hon. Friend is right."—[Official Report, 25 March 1993; Vol. 221, c. 1250.]
I shall give way in a moment.
We could not have had a clearer answer. The thousands of people who wrote to Conservative Members last October were wrong; the quarter of a million who marched to Hyde park for the miners were wrong; the 1 million who signed petitions for the pits were wrong. They had all got it wrong. The right hon. Gentleman knew better than they and was not going to change his policy.
If the hon. Gentleman had gone on to remind the House of the rest of the exchange that he quoted, hon. Members would recall that I said that we had taken care of the social consequences of an economic analysis that had not changed.
While the hon. Gentleman ponders on that, may I ask him a question? Will he repudiate strike action on the part of the miners, or does he actually believe that it expands the market for coal?
I shall have something to say about strike action in a moment. [HON. MEMBERS: "Answer!"] I shall answer the hon. Gentleman in the course of my speech, but let me say first that we did not come here to debate the social consequences of closing pits; we came here to debate how those pits could be kept open. [Interruption.]
I shall not answer the hon. Gentleman's question; I shall answer the President of the Board of Trade, who asked the same question. His question deserves an answer.
The right hon. Gentleman's statement last October did for Arthur Scargill what none of us believed possible: it made him more popular than the current Prime Minister. His statement last week has now achieved something that Arthur Scargill himself never achieved: it has persuaded the Union of Democratic Mineworkers to ballot for industrial action. That is the scale of the betrayal felt by those who work in the pits—not just members of the National Union of Mineworkers, but UDM members. [Interruption.] Conservative Members are barracking, asking from a sedentary position whether we support such action. If they support us tonight in defeating the White Paper, there will be no need for a strike.
The President of the Board of Trade has spent five months on his review and in that time he has learnt nothing.
With respect, I have already answered it. I fully understand and share the anger of those who were led to believe that there would be a solution and now find that there is none.
The President of the Board of Trade may have learnt nothing in the course of those five months, but at least he started off knowing rather more than his Prime Minister, who accused me on Tuesday of wanting to fossilise coal. I hate to admit that I have ever been beaten to action, but I must tell the Prime Minister that 1,000 ft of pressure have beaten me to it by 1 million years. How can we take seriously a review of the coal industry's future from a Government who still do not understand that they are dealing with a fossil fuel? We cannot take it seriously, because the right hon. Gentleman has not come up with one extra bag of coal to be bought from the pits that he claims to have saved.
Let us be objective and let us be fair to the President of the Board of Trade. That was the test that he set himself and put to the House repeatedly: his task was to secure an extra market for coal. In his speech, he asked what those who go down the pits will think of Opposition Members. Let me point out that they do not include him, for he has not been down a single pit in the course of his review. When I asked him, during Question Time last week, why that was, he replied that his presence was more important where those who can enter into contracts with British Coal may be found.
That was the test that the right hon. Gentleman set himself: where could he find extra contracts for British Coal? According to that very test, his White Paper is a failure. It does not contain a single contract for a single extra bag of coal.
They told him what they felt on 13 October, when he announced precisely the same core contract as he has announced this week. There has not been an advance of as much as 1 million tonnes on the contract that justified his decision to close the 31 pits. Now, five months later, we are asked to accept that the same tonnage will save 12 of those pits.
No; I want to finish this section of my speech.
The problem with that logic is that the output of the 12 pits exceeds the total volume of imports. In the year now ending, they have produced 13 million tonnes. Next year, Britain is expected to import 9 million tonnes for electricity generation. Contracts have already been signed for 2 million of those tonnes, leaving a balance of only 7 million tonnes. Even if the output from those pits displaced every last tonne of imports for which no contract has yet been signed, there would be room only for 7 million tonnes, or the output of half the 12 pits that the President of the Board of Trade claims to have saved.
That is the position this year; next year will be worse. Next year, the core contracts go down from 40 million to 30 million tonnes. In that year, British Coal will have to find extra output not just for the 13 million tonnes from the 12 pits, but for the additional 10 million tonnes lost on the core contract. That is a total of 23 million tonnes. Yet, in that year, the total volume of imports expected is only 10 million tonnes. How will a subsidy help British Coal to find the other 13 million tonnes? If it does not find them, how will the 12 pits stay open beyond next April? I will give way to the President of the Board of Trade if he will answer that question.
As well as asking that vital question, will my hon. Friend ask another? What credence can we give to the process of consultation about the 10 pits that are not even included in any of the figures? If my hon. Friend's figures are right, what hope or belief can there be in the integrity of the whole inquiry and consultation process, which could save Taff Merthyr and other collieries among the 10?
There has been no offer to privatise them; it has been a clear-out sale.
The President of the Board of Trade has had time to think of his answer, so I shall give way to him. Now that we have demonstrated that the output of those 12 pits exceeds imports, can the right hon. Gentleman explain to us where the market is for their output? Who is going to buy the 13 million tonnes?
It is apparent that the hon. Gentleman has not read the Select Committee's report. Its whole essence pointed to a range of ways in which there would be a larger market. I have followed the Select Committee's principal recommendations, to enable British Coal to meet that marketplace.
The principal recommendation was recommendation 17. The President of the Board of Trade is right, but recommendation 17 did not simply say, bring in a subsidy. Recommendation 17 said, bring in a subsidy and make it conditional on the electricity companies purchasing the additional tonnage. The right hon. Gentleman, in a negotiation process that would stun any union leader, has given the subsidy to the electricity companies, which they have taken, but in return they have made no commitment to buy one bag of coal.
I should have more respect for the hon. Gentleman's question if British Gas could guarantee a supply of gas to domestic gas consumers. British Gas has entered into interruptible contracts with the power stations, which means that they can interrupt the contract for gas for 55 days a year. Those 55 days will be during the winter, when British Gas needs gas for domestic consumers. I do not see why we should allow British Gas and independent producers to back us into a national energy strategy which would mean that for 55 days in the winter we were vulnerable to disruption of supplies.
Arithmetic is plainly not the right hon. Gentleman's strong point. We have still had no answer from him. Where will the extra tonnes go? For that matter, where did the figure of 12 pits come from? If the President of the Board of Trade has not identified the market for those 13 million tonnes, how did he arrive at the figure of 12 pits saved? I think I have a clue which provides the explanation. The clue was provided by the Under-Secretary of State for Corporate Affairs, the hon. Member for Hatton—[Interruption.] I apologise. The hon. Member for Tatton (Mr. Hamilton). Tatton, I am bound to say, sounds much more appropriate to the hon. Gentleman.
Last Tuesday, the Minister for Energy was due to address the World Coal Institute. Last Tuesday, the Minister had other things on his mind, so he sent his hon. Friend the Member for Tatton, who was introduced as having a background in coal and opencast mining, which interested the rest of us. As he left, the hon. Member for Tatton was doorstepped. He was asked about the prospects of success for the White Paper. His reply was, "We are mining a rich seam of support on the Back Benches."
I suspect that in that reply there was more truth than we heard in an hour today from the President of the Board of Trade. The figure of 12 pits has nothing to do with the consequences of the subsidy, or with any calculation of what the market is for extra output. The calculation behind the figure of 12 pits is, simply, what is necessary to get Tory Back Benchers into the same Lobby as the Minister. It is a figure that owes nothing to Boyds, or Caminus, or to the other consultants. That figure was chosen by the Patronage Secretary and expresses his total knowledge of the mining industry. It is the figure that he needs to turn rebels into loyalists. I urge those loyalists not to be taken in by that. The Government are not mining a seam of support on their Back Benches; they are digging a pit for their Back Benchers to fall into, because one year from now none of those 12 pits will be open.
On the subject of rebels, the hon. Gentleman calls in his amendment for existing volumes of coal production to be maintained. That implies that the Connah's Quay power station will not get the go-ahead and that the several thousand jobs tied up with that power station will not be realised. Is the hon. Gentleman telling his hon. Friend the Member Alyn and Deeside (Mr. Jones), whose constituents stand to benefit from some 2,000 to 3,000 jobs, that he should vote against the creation of those jobs and should support his party?
I have already had correspondence with the management in charge of the Connah's Quay project. I have said to them that I see no reason to disagree with the proposal to use sour gas, which cannot be used for domestic heating.
No, I am not splitting hairs. Our concern is that gas, which is perfectly capable of domestic use, could more efficienty be used for domestic purposes than turned into electricity.
If any of the rebels are in doubt, I urge them to look at the White Paper. It does not talk about saving 12 pits. The White Paper, crafted by civil servants, is more honest than the President of the Board of Trade has been with the House. Paragraph 13.8 says:
The Government has therefore concluded that there is a case for enabling British Coal to phase the inevitable closures needed … More pits will be kept open for longer in the interim.
There is not talk there of a permanent solution—only of phasing and only of the interim. If the President of the
Board of Trade and the House really want to provide a long-term future for those pits, what they have to do is what the right hon. Gentleman has failed to do: tackle the rigged market, which is squeezing coal out of the chance to compete.
The President of the Board of Trade was good enough to quote from British Coal's press release when he made his announcement last Thursday. It is a pity that he did not quote from the following paragraph, which said:
In its evidence to the Department of Trade and Industry inquiry"—
that is, to the right hon. Gentleman—
British Coal made clear its view that only a radical transformation of the market would affect the prospects for collieries threatened with closure.
That was British Coal's view: that only a radical transformation of the market would do that.
It is no good the right hon. Gentleman saying to us that it would be wrong to intervene in the market. This Government intervened only four years ago to create the rigged market. What is wrong now with intervening, when we see how it is working? [HON. MEMBERS: "It is not working."] The President of the Board of Trade could have done a number of things, had he wanted to correct the market.
No, I am not going to give way to the hon. Gentleman. I gave way to him last week, and it turned out that he did not even know the unemployment figures for his own constituency. My advice to the hon. Gentleman is that he should return to his constituency, spend some time there and, when he is knowledgeable enough, come back here and then intervene in debates.
The biggest failure in the White Paper is that the President of the Board of Trade has not accepted any of the recommendations of the Select Committee about how to change the rigged market. That, I presume, is why the Government have not tabled a procedural motion that would have enabled us to vote on the amendment in the name of the Chairman of the Select Committee. In that way, the House would have had the opportunity to endorse those recommendations which the right hon. Gentleman has ignored.
Does the hon. Gentleman agree that the President of the Board of Trade's attempt to suggest that the White Paper effectively follows the Select Committee's recommendations is a misrepresentation and a fundamental divergence from the Select Committee's recommendations? The hon. Gentleman has already said that the White Paper does not allude to the rigged market. In addition, the Select Committee's recommendation that there should be a subsidy for coal is conditional upon securing extra contracts. The President of the Board of Trade's White Paper has not made one iota of difference. He has done nothing to secure those contracts.
The hon. Gentleman has made his own point and I hope that he will speak later in the debate. I agree very much with him.
As for the Select Committee's recommendations which the President of the Board of Trade has ignored, he could have accepted the recommendation that the nuclear levy be paid to an independent trust. Then we would know that it had been set aside for decommissioning costs and that it was not being used to cover Nuclear Electric's current costs. If Nuclear Electric can compete, fine; good luck to it. But it is not entitled to a subsidy five times larger than the right hon. Gentleman's subsidy to the coal industry. Nuclear Electric's subsidy is so large that if it were given to British Coal, it could deliver almost half its coal to the power stations free of charge. The most extraordinary feature of this subsidy is that we pay it to the French as well. That is why we are now importing so much electricity from France, more expensive electricity from France than from British Coal or British Gas. The electricity companies buy it only because they can claim the subsidy that goes to nuclear power on French imports.
The President has once again today tried to explain that this is all the fault of my right hon. Friend the Member for Chesterfield (Mr. Benn). The President is only here at the Dispatch Box to carry out the policies left in place by my right hon. Friend the Member for Chesterfield—a commitment to continuity in energy policy which I had not hitherto suspected of the Government. I will therefore give the House a brief history of the interconnector.
As the right hon. Member for Honiton (Sir P. Emery) was good enough to tell the House last week, the interconnector began life in negotiations under a Conservative Government. What happened in 1978 was that my right hon. Friend gave capital borrowing consent for the interconnector. The President's charge is that my right hon. Friend had not wrapped up the details of the contract. Hardly surprising, because there was no contract. The President has deposited in the Library a summary of the legal advice that he has received on the interconnector. Its opening paragraph explains when the contract came into being. It says:
The framework for the operation [of the interconnector] is governed by a Protocol entered into on 16th June 1981.
My right hon. Friend the Member for Chesterfield has an alibi for his whereabouts in June 1981. It was impossible to go to any meeting of 10 people in the Labour movement in 1981 without finding my right hon. Friend addressing it —he was not negotiating with the French over a protocol for the interconnector.
Nor, may I say, is that the real problem with the interconnector. The turning point of its history does not come until 1989, the year when the Government gave Electricité de France the right to qualify for the nuclear subsidy. The Government, having given that subsidy, could have accepted the recommendation of the Select Committee to remove it. To be fair to the President, he sent the Minister of State across to Paris to talk to the French and explore the problem. I have here the press release which he issued that day and I shall share with the House the very first sentence, the thing that the Minister of State felt was most important and should go at the beginning of his press release:
I made it clear that the Government recognised that it was not legally possible to prevent the importation of French-generated electricity via the link.
Picture the scene, Madam Speaker. We have a Minister who is sent to France to negotiate for British interests. What is the first thing that he does? It is cheerfully to tell the French that he has not got a legal leg to stand on. I have tried hard to picture the same scene in reverse. I have tried to picture a French Minister landing at Heathrow
and, as he lands, saying that he recognises that it is not legally possible to get what he is asking for. I have failed to capture this picture in my mind's eye.
The President told me last week that I was blaming the French. I do not blame the French Government. The French have a Government who stick up for France and good luck to them. I just wish that we had a Government who stuck up for Britain.
But the biggest reason why coal is being squeezed out of the market is not nuclear, it is not the French; it is because, since privatisation, these Ministers have licensed a whole new generation of gas-fired power stations in the full knowledge that every time they signed a licence they were shutting three coal pits. On their plans, five years from now Britain will generate more electricity from gas than from coal. That is why the Select Committee floated the recommendation that the outputs from those gas power stations should be changed to mid-merit and to peak rather than following baseload.
I am glad that I have the support of the hon. Member for Davyhulme (Mr. Churchill) on this point.
On energy grounds, that is very attractive. When it comes to energy strategy, it is daft to put gas through power stations to turn it into electricity for baseload. The most sensible thing is to pump it directly to heat homes and factories. The most wasteful thing to do with it is to put it through a power station first, because that way one loses half the heat, not heating factories or homes but heating cooling towers. It would make sense when it comes to our national resources as well.
To achieve this massive switch from coal to gas, we shall divert one third of the output of North sea gas into electricity generation. There is one clear consequence of that: North sea gas reserves will run out one third faster. When they do, we will be dependent on imported gas to keep the light bulbs burning. Gas on the international market comes from countries which are by-words for political instability, such as Algeria and Russia. A key event occurred in the course of the energy review which should oblige the President to rethink this strategy. Two months ago Russia increased the price of the gas that it exports to Germany by one third.
There is a danger that we are repeating the errors of the 1960s and early 1970s when we relied on imported oil because it was cheap; when we became reliant, it was no longer cheap. When we find that we are reliant on imported gas, we will find that it is no longer cheap. But we need not become reliant on imports of gas if we conserve our own fuel assets and that should be the concern of a Secretary of State for Energy. The cost of his White Paper will be the loss of half our present coal reserves. That is what is at stake. The most revealing figures in the Boyds report are that half the coal reserves to which we have access are in the 31 pits at risk. There is a cost to the nation that should concern the Secretary of State with responsibility for energy.
No. I have explained my position already: when the hon. Gentleman has done his homework and comes back to the House, we will let him in.
The right hon. Gentleman is also Secretary of State for Industry. There is another cost here that should concern
him. His White Paper has just put under the hammer another slice of manufacturing industry. Because Britain has the largest coal industry in Europe, it has the best mining engineering industry, too. It is a big export earner for Britain—£400 million in contracts won by the mining engineering industry last year. It, too, is at risk now. The Association of Mining Equipment Companies warned on Friday that
a sizeable and stable home market is essential for continuing international success.
The industry will no longer have it and the association expects that jobs in the mining equipment industry will shrink from 22,000 to 13,000. Factories in places far away from coalfields, in places that will not see any of the measures which the right hon. Gentleman announced today to help the coalfields, will be affected.
There is a final cost that should concern the right hon. Gentleman as President of the Board of Trade. Next time he sits as President of the Board of Trade—possibly in lonely splendour because, as far as we can work out, there has never been a meeting at which anyone else has turned up—he should reflect on the cost to the balance of payments of the White Paper. Five years ago this country was self-sufficient in carbon fuels. The damning indictment of the Government's lack of an energy strategy is that by the first quarter of next century we will be importing three quarters of our primary fuels—this is an island built on coal which could still be surrounded by gas if hon. Members on the Government Benches were not so anxious to hurry up the burning.
The rest of Europe must think that we are mad. If any of them had the coal reserves that we have, none of them would be shutting down those reserves. They would be regarded as a national asset. [HON. MEMBERS: "They are."] Conservative Members say that they are. On the figures in the White Paper, in the next four years Germany, which has smaller coal reserves, will have a bigger mining industry than Britain.
No, I want to finish.
Here I come to the point for which I find it most difficult to forgive the right hon. Gentleman. He is closing not just some of the largest coal reserves in Europe, but some of the most efficient pits in Europe. I have seen them. They are pits which have had millions of pounds invested in them, investment that will now be left to buckle under pressure and be buried under roof fall. They are pits where miners have doubled productivity in the past eight years. They are pits where we have reduced the price of coal by one sixth in the past five years and could reduce it by one sixth in the next five years. How many other industries have doubled productivity and cut prices in the past five years?
The right hon. Gentleman is fond of accusing us of running Britain down, yet here is one of the best success stories of British industry, and he is running it down. He is running down not only the pits but the communities around them, communities which were built there only because the coal was found there, communities whose only economic purpose is to provide coal for the nation, communities which will be shattered if that purpose is taken from them.
It is not only members of the Opposition who know that—some Conservative Members know it. Many of them gave promises to those communities last October. Today is the day they have to deliver on those promises, not at the end of the year when the first of the 12 pits closes and not next year when the last of the 12 pits closes. It will be too late to save those communities then. The time to save them is tonight.
The right hon. Gentleman has taken five months to find a solution to give real hope to those pits and he has failed. The House now has five hours in which to record its verdict on the White Paper. I beg hon. Members of all parties not to fail those communities, as the right hon. Gentleman has done, and, when the vote is called, to reject a White Paper that betrays those communities and betrays Britain's coal industry.
I intend to be brief, so I hope that colleagues will forgive me if I do not give way very often, if at all.
As the first member of the Select Committee on Trade and Industry to be called in the debate, I must make it my first duty to convey our thanks to all the staff who worked so very hard to produce the report which is before the House and whose conclusions have been taken so seriously by the Government in the White Paper.
We had a daunting task to perform, under considerable pressure of time. It is a great tribute to the experts helping us and to the staff of the Committee who made our work possible that we produced a report in such a coherent form in such a remarkably short time. At the same time, I must say that there are passages in the report—other members of the Select Committee will possibly agree—where our conclusions did not carry the stamp of detailed and lengthy consideration. Parts of the report are, by nature, in the form of a communiqué rather than of a report. There are forms of words evolved late at night, on the last night available to consider them, because we had to formulate an agreement to disagree.
I am glad to have the agreement of the Chairman of the Select Committee. It is important that the House knows where the agreements to disagree are and should not put excessive faith in some of the forms of words in the report.
I am in no way dissenting from the main drift of the report, any more than the Government have dissented from it. We formulated the proposition that there should be a subsidy. [Interruption.] I am sorry that the hon. Member for Durham, North-West (Ms Armstrong) disagrees with that idea, but the most important point is that the industry should have time—if necessary, time should be bought for the industry—to try to solve the problems that the House had identified and which it wanted solved, but it is an exaggeration to present the report to the House as it if were a carefully knit, coherent set of 39 separate recommendations, every one of which had to be accepted or the whole would fail. I deal briefly with one or two of the report's recomendations.
The Select Committee recommended that
the Government consider financial assistance to contracts undertaken in the non-ESI market up to a maximum level of 3 million tonnes per annum for five years.
In response to that recommendation, in paragraph 16.15 of the White Paper, the Government rightly state:
British Coal made it clear in its evidence to the Review that it is likely to continue to be constrained by insufficient supplies of the grades and quality of coal required by the non-power sector. It does not expect price to be an obstacle to selling the relevant types of coal.
On that basis, and understandably, the White Paper states:
The Government has, therefore, concluded that a subsidy would be unlikely to increase British Coal sales to the non-electricity generation market.
It is important that that fact is recognised, and it was recognised in the Select Committee's report. The reason the recommendation appears in the final version is that some members of the Select Committee perceived a need for the extra market to be presented as being as much as 19 million tonnes.
May I refresh the right hon. Gentleman's memory about that debate in the Select Committee? I think that the 3 million tonnes came out of the original debate on 21 October during an intervention by the hon. Member for Leeds, North-West (Dr. Hampson) on the President of the Board of Trade. Great play was made of the fact that Leeds city council, a Labour authority, was buying Colombian coal. If the right hon. Gentleman remembers, we scratched below the surface in the Select Committee and said how ridiculous it was that local authorities, and indeed health authorities, were having to buy imported coal because, if they did not buy the cheapest coal, the district auditor would be on their backs, telling them that they were acting illegally. We took an objective view of that and said that, even though the Government had placed those constraints on the authorities, we could assist them and assist the mining industry to find the larger market for coal. That was the logic behind the 3 million tonnes.
It may have been the argument, but it was not necessarily logical. It may have escaped the hon. Gentleman's memory that we did not test the proposition by calling evidence on it. British Coal's statement that it did not regard price as a constraint on the selling of non-electricity supply industry coal is contained in the review and must be accepted. It is necessary for some of the exaggerated expectations——
I accepted the report which said that the Government should "consider" the recommendation. I deliberately prefaced my remarks with the comment that it was a form of words, evolved under pressure at the last minute in an effort to pretend that there was agreement. I do not wish the House to be misled about the strength of the structure of those words. Labour Members put more strength on the structure than it will bear.
In an article in The House Magazine, the Chairman of the Select Committee uses the extra 19 million tonnes as the minimum expectation in relation to the additional market that is to be secured. We were talking about what additional market there might be; we were not making promises. We had not tested the projections by asking the generators whether they would buy, or by asking British Coal if it thought that it could sell——
No, there is a limit to the extent to which the debate can become an argument among members of the Select Committee. I have a strong suspicion that other hon. Members also want to participate, which is why I want to be brief.
The article to which the Chairman of the Select Committee put his name is misleading, because it suggests that British Coal's market could be expanded
beyond the additional 19 million tonnes.
It is especially unwise to have used as an argument to support that the proposition that using combined cycle gas turbines
as mid-merit or peak capacity
was something on which the Committee had agreed and which would achieve that purpose. I shall deal with that point next.
At paragraph 23, the Government respond to the Select Committee's recommendation that
The Government should explore the possibility of some of the CCGTs being used as mid-merit or peak instead of baseload capacity.
The important words are "should explore". No member of the Select Committee objected to the Government exploring the possibility. However, no member of the Committee had sufficient evidence on which to base an expectation of what the result of that exploration would be.
At paragraph 250(iii), we cite as an option
Restricting the operation of CCGTs, so that they are not permanently on baseload.
We then make the important point that
There is a cost involved, which we have not been able to assess.
On the basis of pressure of time, we recommended that
The Government should explore the possibility of some of the CCGTs being used as mid-merit or peak instead of baseload".
We had had no evidence on that subject, and we had no costs to put before anybody. It is important that the House should have some opportunity to know what costs may be involved. I asked Enron, one of the companies that gave evidence to the Select Committee, as the Chairman will recall, whether it could help on the matter. Enron's reply says:
The costs of not running CCGT plant in the most efficient way would fall in some combination upon four groups.
The groups are listed as the consumer, who would be forced to buy higher-priced electricity from less efficient coal-fired stations, the generator, the gas supplier and the gas processor. All four would have in some degree to bear a cost. Enron quantifies its view by saying:
If 10,000 MW of CCGT were affected the annual cost of a reduction in load factor to 75 per cent. could exceed £250 million.
I doubt whether, if the Committee had had that evidence before it, it would have framed its recommendation in precisely the way that it did.
I am grateful to my right hon. Friend for his careful and revealing explanation of where one of the recommendations came from. Did the Select Committee take into account the loss of confidence that might apply to companies investing in the North sea if it was felt that contracts that had been freely entered into were to be overturned as a result of the recommendation?
I cannot speak for every member of the Select Committee. However, I can assure my right hon. Friend that that consideration was very much in my mind and in the minds of a number of my colleagues. None of us——
I am sorry to say that I will not. I am reasonably confident that the hon. Gentleman will be called, so I shall take a chance on that. I ask him to be patient.
I am fairly sure that we should not have accepted the recommendation if we had known that the costs involved, in financial and in psychological or economic terms, were likely to be what they can now be seen to be. I should be surprised if even Opposition Members would have been prepared to sign up to such a recommendation.
I hope that we have been of help to the House in our report, but I point out that there are areas that should still be approached with caution. There was a need to have more work done than was possible because of time pressure. In that respect, I commend the Government's response in the White Paper because it deals with matters in a careful and reasoned way.
Some of the accusations of indecision and delay which have been levelled against my right hon. Friend the President of the Board of Trade are thoroughly unjustified. The Select Committee had no chance to call the coal generators before it and to ask what they would do if they had the opportunity to buy subsidised coal, how much of it they would buy and how long they would negotiate about it.
No one, least of all the hon. Member for Livingston (Mr. Cook) who has so much experience of negotiation, should be surprised that the process should have been protracted, and that an answer should not have been arrived at until the very last minute. For the hon. Member for Livingstone to accuse my right hon. Friend of wasting time entirely reveals his ignorance of what is involved. It was critical that there should be signatures on contracts, and it was necessary and inevitable that it should take that length of time to secure those signatures.
The other very important recommendation made by the Select Committee is the emphasis on improved productivity and working practices. I regret that we had to place so much emphasis on those matters, because they should have been dealt with years ago. There can be no possible excuse for the antiquated and antediluvian working practices that restrain productivity in so much of mining, except where safety is involved.
If safety is not involved—we received clear assurances on this from British Coal and others—the improved working practices should have been secured years ago. If they had been, I have little doubt that the strength of the industry and the markets it could command would be infinitely greater than they are today. It is the attitude of the reactionary and politically motivated unions as much as anything else which has prevented the industry from realising its true potential.
The important thing is to look forward, and to recognise that there is now an opportunity for the coal industry to be saved by the exertions of those who work within it. It will involve management, which requires the infusion of privatised ability and privatised motivation, because British Coal alone cannot be relied on to do what needs to be done. It will involve labour. I hope and believe that many miners still believe in their industry and will welcome the opportunity that privatisation can give. Above all, it will involve those who want to sell coal. If British Coal cannot be confident of meeting and beating foreign competition, it is a sad day for the industry.
This has been a long drawn out and painful process for the House and for all those involved. I commend my right hon. Friend on the way in which he has dealt with these difficult matters. I commend him for the conclusions in his White Paper, and I believe that the House should give those conclusions its full support tonight.
I join the right hon. Member for Woking (Sir C. Onslow) in expressing appreciation for the work of the staff of the Select Committee. They did a sterling job, and their dedication and professionalism were shown admirably during the very long hours involved. No member of the Select Committee had a gun held at his head to make him sign the report. All members signed of their own free will, and those who wanted to abstain were able to do so. The report was carried nem con.
I shall pick up one or two of the points made by the right hon. Member for Woking, who seems to have rewritten the Select Committee report. The right hon. Gentleman referred to the combined cycle gas turbines. The figure of £250 million having been lost by the gas generators—I have not seen the letter to which the right hon. Gentleman referred—was arrived at on the basis that coal was by far the cheapest way in which to generate electricity. To paraphrase: "They would, wouldn't they?"
The figure of 19 million tonnes of coal for which we suggested support could be provided was based partly on the ESI market and partly on the non-ESI market. We made that recommendation against the background of the fact that, when the regional electricity companies came before our Committee, a number of them said that, within the ESI market, there would be a market for between 15 million and 20 million tonnes beyond the coal contract. That is on the record for all to see.
Finally, on the productivity of our pits, my hon. Friend the Member for Livingston (Mr. Cook) has said that productivity in British mines has increased partly because of our superb engineering skills. The suppliers are now producing about £1 billion-worth of engineering goods, of which £400 million-worth is exported. They tell us unequivocally that their export capability will be lost if they do not have a home market of sufficient size to enable them to develop the best range of mining equipment in the world. When we talk about improving our manufacturing base, we ought to remember that some of the best technology and engineering goes into our mines and that that will be lost to British industry if, over the next few years, the critical mass falls to the level that is predicted.
The Government's White Paper and the Select Committee report are both published by HMSO, but that is where the similarity ends. When the President of the Board of Trade announced the pit closures last autumn, he said that they were necessary because there was not a market for British deep-mined coal. We therefore considered ways in which to open the market for coal. Unfortunately, however, the right hon. Gentleman's White Paper looked for a way out of a political row. In 90 days, under full public scrutiny, 11 Members of Parliament—six Conservative, four Labour and one Liberal Democrat—found a future for coal. In nearly twice as long, and in near-total secrecy, all that the President of the Board of Trade found was a new way to manage the closure programme.
We should not find that surprising, bearing in mind the fact that, last October, the right hon. Gentleman warned us that the reprieve would be temporary and that any changes would be at the margin. He has certainly kept that promise. In the meantime, however, he has broken faith with the House and with the mining industry. If he never intended to do anything more than stave off some of the closures, he should have had either the courage to withstand the storm from his own side or the honesty to phase the closures there and then. He should not have subjected taxpayers to an expensive charade lasting five months and costing millions of pounds, and he should not have played a game of cat and mouse with the miners, whose families and communities depend for their livelihoods on decisions which, after months of prevarication, are being rushed through the House this evening.
In all fairness, I think that the hon. Gentleman, as Chairman of the Select Committee, will accept that we tended to fudge a number of critical issues ourselves. It was extremely optimistic to suppose that there would be no imports from France. Even if we could restrict such imports, we would be unlikely to get the figure down to nought—a 6·5 per cent. difference.
I agree with the hon. Gentleman that we might like to think of adding the subsidy on the industrial side, but it is sulphur emission controls on industrial plants that are tightening the market on the industrial sector for coal. The hon. Gentleman should accept that most of our options were based on the most optimistic expectations.
Whether they were optimistic or not, may I suggest that perhaps the most accurate and objective information and data before the Select Committee were those provided by the National Grid Company. We followed its predictions about the market for coal. We received a lot of information, and many people had axes to grind, but I do not believe that the carrier of electricity —the National Grid Company—had any axe to grind. The President of the Board of Trade refers to our being at the top end of the market. He should discuss that matter with the National Grid Company, because it is that company that gave us the figures on the basis of which we have made projections regarding the market up to 1998.
The Government have gone to some lengths to suggest that the White Paper is consistent with the Select Committee report. Indeed, I read this weekend that the White Paper adopts eight of the Select Committee's recommendations. Perhaps the President of the Board of Trade will elaborate on that, because my reading of the White Paper suggests that our proposals to open the market for coal by creating a level playing field in the energy market have been rejected almost without exception.
In case anyone should doubt that, I would point out that we recommended increasing coal sales to the electricity market by extending the RECs' franchise. That was rejected. We recommended extending coal sales to industrial and domestic markets; increasing coal stocks; using some gas for mid-merit and peak; curbing French imports; restricting and curtailing orimulsion beyond the levels that the President of the Board of Trade has specified; reducing opencasting; reforming the nuclear levy; achieving a balance between energy capacity and demand; ensuring that the regulator considers the long-term interests of the nation; and establishing an energy commission.
All those proposals were rejected. They were the main proposals in answer to the central question: "Is there a larger market for coal?", and, in rejecting those proposals, the right hon. Gentleman has rejected a strategy that would have laid the foundations for British Coal's survival and future prosperity, and the framework within which a balanced and secure energy policy could flourish. In short, those recommendations would have provided the answer to the question that the hon. Member for Macclesfield (Mr. Winterton) asked of the President of the Board of Trade—which, unfortunately, the right hon. Gentleman did not answer: how can a balanced, secure energy policy be developed up to and beyond the 21st century?
Instead, we have a White Paper that hardly takes us an inch beyond where we were last October. In fact, the drafting of the White Paper could have considerably worse implications for the coal industry than the announcement of 13 October 1992. What we have is a change of tactic rather than a strategy—a scheme that swaps a redundancy big bang for the prolonged pain of closure. We have a device which may save the Secretary of State's face but will not save a single coal face, and which will result in the remaining pits facing even greater and more unfair competition than at present.
I respect the way in which the hon. Gentleman chaired the Select Committee inquiry and compliment him on it, but is he not being a little unfair in saying that the Secretary of State has rejected every recommendation of the Select Committee? Many of the recommendations have been included in the report. It is a travesty for the hon. Gentleman to say that we are no further forward than we were last October. It may be that all of us on the Select Committee would like to see more pits kept open, but the fact that 12 are to stay open, whereas last October none was to stay open, is something that the hon. Gentleman should not ignore.
I did not say that all the recommendations had been rejected—merely that the core recommendations on the central question that was posed to the House on 13 October and 21 October last year—"Is there a larger market for coal?"—have been rejected by the Secretary of State. I say genuinely to the hon. Gentleman, who is well respected in the energy industry, that my honest belief is that the way in which the White Paper has been drafted will give a green light for licences that have been given out like confetti by his successor.
On CCGTs, we shall be moving from the projected 30 million tonnes of coal equivalent that we suggested would be around in 1998. That figure may nearly double. I am now very fearful that the White Paper will give the green light, and that the dash for gas will continue and accelerate. That is one of my concerns about the way in which the White Paper has been drafted.
Surely the hon. Gentleman is forgetting the evidence that was put to the Select Committee on that subject. The majority of people who have been concerned with what he calls the dash for gas said quite clearly that there is now over-capacity in generating, and that it is most unlikely that there will be any increase in gas-fired stations in the foreseeable future. That was made very clear to the Committee.
On a point of order, Madam Deputy Speaker. We have now heard three interventions and two speeches from members of the Select Committee. I had hoped that we would have a balanced debate on a White Paper dealing with the future energy requirements of this country. I venture to request that we try to achieve that balance, so that we may reach a fair judgment of the situation and try to defend our constituents' interests.
On a point of order, Madam Deputy Speaker. I hope that we can rely on your protection, and that those of us who served on the Select Committee and hear accounts of the Select Committee that bear no relation to what we recognise shall be entitled to intervene in the normal way.
I will try to keep my remarks as brief as possible. However, I must respond to the point raised by the hon. Member for Bournemouth, West (Mr. Butterfill). What he said was true in the context of the position when the Select Committee took evidence. However, the White Paper has inevitably changed matters.
The White Paper has downgraded the coal industry; it has not upgraded it as we expected it to. It has not answered the essential question whether the Government can, through political will and legislation, create a larger market for coal. Unfortunately, that is the area of the Select Committee report which the Government have not acknowledged. Indeed, they have walked away from that point. That is my view as a Back Bencher and the view that I hold having spent long and laborious hours as a member of the Select Committee. I am entitled to my own point of view on that.
Twelve pits are to be closed immediately, and six are to be mothballed, at an unknown cost and to a doubtful standard, if the care and maintenance programme carried out at the pits closed last October is anything to go by. One pit is for development, at least until it is privatised. According to the Government, the remaining 12 pits are to be reprieved. However, according to British Coal, even those 12 pits are likely to close by the end of this year.
That point is on the record.
The promised subsidy is entirely dependent on British Coal securing sales that exceed the 40 million tonnes already contracted. Bearing in mind the fact that the Government failed to secure a single extra tonne during the five months of wrangling, it is highly unlikely that British Coal will succeed where they failed. Even if it does, British Coal says that it is unlikely that the 12 reprieved pits will survive this year.
My analysis shows that all 31 pits—I believe that this is substantiated by many outside commentators—will close within two years at a cost of more than 32,000 jobs and around £2 billion. Eighteen pits will close almost immediately, throwing more than 18,000 miners on the dole.
The closure programme will cost the taxpayer more than it would cost to keep the pits open. Three hundred years of coal reserves will be lost for ever. We will become even more dependent on gas—which is not simply a less efficient electricity producer, but also a more expensive one —much of which, as my hon. Friend the Member for Livingston said, will have to be imported.
According to a Rothschild report in September 1991, because the Government have refused to create a level playing field in the energy market or to restrain the dash for gas, in five years' time we will be left not with 19 pits, but with 12 to 14, instead of the present 50. We will also be struggling with a vast over-capacity problem.
The Government's sole strategy is privatisation. The President of the Board of Trade says that he will intervene to set the industry free by privatising. He says that competitive markets provide the best means of ensuring that the nation has access to secure, diverse and sustainable supplies of energy in the forms that people and business want and at a competitive price.
How can the right hon. Gentleman say that? What possible basis does he have for that claim? It was the privatisation of electricity and the model used by the Government that thrust us into the coal crisis. The right hon. Gentleman says that he cannot help coal, because he does not have the power to intervene in the market now when the industry is in the public sector. What will happen if there is a major imbalance in the market, prices begin to escalate or we become over-dependent on foreign energy supplies? As my hon. Friend the Member for Livingston said, we might re-run Britain's energy problems of the 1970s and early 1980s.
If there was ever a case for it, this is one in respect of which the President of the Board of Trade should act on his own advice. As the right hon. Gentleman wrote in his book, "Challenge of Europe: Heseltine 1989"—
responsible Government has a duty to recognise the international circumstances which make a mockery of open competition … intelligent politicians should stop pretending that industrial support is a doctrinal intrusion into the workings of the market place.
If the coal industry is to be subjected to market forces, it should at least be given a fighting chance in a fair market. There is simply no excuse for privatising without adjusting the current market, which is rigged against coal.
There is no reason to believe that we will be any better served by coal privatisation, and the frankly absurd way in which the Government have approached the coal sell-off suggests that there will be more chaos on the horizon. One does not need to be a City whiz kid to realise that we do not get a decent price or a decent buyer for an industry that has just received a Government health warning.
The taxpayer will get a rock-bottom price, possibly below the asset value of the pits. Few buyers can be expected to invest in an industry whose market is declining. There will be a field day for asset strippers. The taxpayer will have to pick up the pieces and the bill for the redundancies, benefit payments and knock-on job losses, while the new pit owners will cream off the coal subsidy.
Let me remind the House that the Trade and Industry Select Committee is Conservative-dominated. Whatever the vote tonight, the truth is that, when the Committee considered whether a larger market for coal was feasible, whether the Government had powers to create such a market and, crucially, whether the Government should act, the clear and unequivocal answer to those three questions was yes.
Sadly, hon. Members will not be given the chance to support the Select Committee's recommendations today, because the Government have refused to accept an amendment based on the Committee's recommendations. I can assume only that that means that the Government recognise the rationale and power of our recommendations and fear that they could not win the vote tonight if the House were given the choice between the White Paper and the Select Committee's recommendations.
Before anyone reminds me, as the right hon. Member for Woking did last week, that I do not own the Select Committee—that is absolutely true—I would like to say that, in speaking today, I did no more than support in the House the report that I signed in the Select Committee. I do no more and no less than that.
We all understand the desire to back our parties and the pressure that can be placed on us to do that. Despite that, when the Committee members set aside party political interests and honestly considered the issue with an open mind, they backed a package of reforms that would not only secure British Coal's medium to long-term security, but also lay the foundations for an energy strategy that could take us into the next century. There is nothing in the White Paper that lives up to the commitments that the Select Committee members made when they signed the report on 29 January 1992.
I am grateful to you, Madam Deputy Speaker, for calling me, and I will try to be brief, as I know that many other hon. Members want to speak. I wish to make only a few points.
I welcome the statement made by my right hon. Friend the President of the Board of Trade last Thursday. In particular, I want to say how grateful we were that the views of the Select Committee were taken into account so carefully in all that the White Paper has to say.
That does not mean that my right hon. Friend the President of the Board of Trade accepted all the recommendations, as the hon. Member for Sheffield, Central (Mr. Caborn) has just said. However, my right hon. Friend considered all our recommendations and acted on those on which he was able to act, bearing in mind the fact that a Select Committee is a Committee of Back-Bench Members which makes recommendations with the best intentions; different from Government who have to implement practical proposals.
I have a reservation about the White Paper, and I am pleased to be able to voice it to my hon. Friend the Minister for Energy, who is currently at the Dispatch Box. Many members of the Select Committee had hoped that we would be able to get a better deal in respect of the interconnector with France. We have followed everything that my hon. Friend the Minister has done, and we congratulate him on going to France and returning with a deal of sorts. The deal is certainly in the right direction. We will have improved exports to France, and we have an indication that imports from France will probably halve over the next six or seven years. That is certainly a move in the right direction.
We had hoped that the interconnector would be used once again for the purpose for which it was originally established—to balance demand between the two countries when we have different peak loadings, and bearing in mind the fact that our clocks are set at different times and therefore there is a chance to even up the loading in the two countries. The legal advice which the Government received shows that it would be a breach of the treaty of Rome for France to be prohibited from exporting to the United Kingdom. There are too many one-way streets in the European Community. It is a shame that this is not a two-way street and a two-way interconnector. That is my single reservation.
Compared with the situation in October, we have come a long way. I am not ashamed to say that I voted against my Government in October because I believed that it was right and proper for us to campaign as far as possible to save as much as we could of the coal mining industry. While we hoped that we might have been able to save more pits than the 12 plus one in development which we will save, at least we have 12, plus six mothballed. That is more than we had in October.
Let me simply say this to some sections of the coal mining industry: to save the markets for those pits, industry needs to have confidence in the product—coal. To have a strike on Friday will do nothing to generate confidence in the industry or to persuade people that coal is the product of the future. Coal is an important commodity, but that message will not be sent to industry if there is a strike of all the pits on Friday.
I shall come to that in a moment—I would have done so anyway, so I hope that my hon. Friend will allow me to get there. I am trying to be as brief as possible in order to allow other hon. Members to speak.
Let me refer to the 12 pits in a different sense. Twelve pits will be saved as a result of the White Paper. The Select Committee wanted to find a market for 16 million tonnes of coal. I am happy to join the Chairman of the Select Committee in saying that I supported the recommendations of the Select Committee and that I was pleased that we had been able to propose a scheme which showed how an extra 16 million tonnes of coal could be sold.
Let us accept, as my hon. Friend the Member for Leeds, North-West (Dr. Hampson) did a few moments ago, that Select Committees try to be optimistic in such situations. We would be remiss if we were not optimistic. It is not for a Select Committee to study a situation and propose a pessimistic scenario which will then be beaten by the Government. It was up to us to set out the best possible case for saving the coal industry. Having chosen every optimistic case, we should not be too surprised that the Government's White Paper falls a little short of our wishes. It does not mean that we do not wish for more. We must present an optimistic case, and the Government must find out what can be done in practice. I shall give the House an example.
Does the hon. Gentleman agree that the reason for the 16 million tonnes and the transitional financial support was set against the background that we expected legislation? On three occasions, the President of the Board of Trade was asked whether he was prepared to legislate. That was coupled to the franchise market for the regional electricity companies. It would be no good subsidising coal without back-to-back arrangements with regional electricity companies, generators and the Coal Board. We said that the franchise should be extended to five years to bring that stability to the market. I am sure that the hon. Gentleman agrees with that.
I do not disagree that that was the debate, and I do not disagree that that was our recommendation. Of course, the hon. Gentleman would not expect me to disagree with it: he is absolutely right. The Government must examine the ramifications of the recommendation. If they decide that electricity would be more expensive as a result of legislation, they might decide that they do not want to disadvantage British industry or, indeed, householders by giving them more expensive electricity.
I will not give way, because I am in the middle of comparing the Select Committee report with the White Paper. In table 25, we chose to examine the amount of coal required for electricity generation from a table supplied to us by Southern Electric, which was based on figures supplied by the national grid. The hon. Member for Sheffield, Central referred to that a moment ago. We did so because the figures for power generation were good.
Equally, we could have chosen the figures in table 6, which were supplied by British Coal. If we had done that, we would have found that the amount of coal required for power generation in each of the next four years would have been 4 million tonnes less. If we had chosen that table, we would not have recommended 16 million tonnes of coal: we would have recommended 12 million tonnes, which is close to the figure which the Government decided on in their deliberations. I use that as an example to show that it is right and proper for Select Committees to be optimistic. However, it is not surprising if the Government take a more realistic stance.
Does my hon. Friend accept that our hope that we might be able to achieve that market depended crucially on matters such as the interconnector? Our central recommendation was that the Government should agree to subsidise coal to the tune of 16 million tonnes, if necessary. The Government accepted that in its entirety.
Perhaps you will agree, Madam Deputy Speaker, that the only hon. Members who sought to intervene on me were the Chairman of the Select Committee and one Select Committee member. Since I have given way to the two hon. Members who sought to intervene, I cannot be held responsible.
No, I will not give way.
My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) referred to the fact that the Select Committee asked for a massive subsidy for coal. That has been agreed to in the White Paper. For some years, British Coal has been saying that, if it could receive support through to 1995, it would be able to mine coal and sell it at world market prices. In 1991, British Coal said that it could survive into the long term if it had three years of support until 1994. In 1992, it said that it could survive into the long term if it had three years of support until 1995, In 1993, it has been given two years of support, so it will survive until 1995. British Coal has got what it sought—it has massive support for two years.
I am disappointed, therefore, that, over the weekend, some jeremiahs in British Coal talked about the fact that some extra pits will close before Christmas. Such comments have not been made by the chairman of British Coal, but he has not repudiated them, either. I wonder why? [HON. MEMBERS: "It is true."] I have another theory. I think that some of the management in British Coal are seeking to contract the size of the British Coal industry so that, when it is privatised, it will be privatised as a small and profitable industry. Management will then seek a management buy-out. The managers of British Coal will be able to buy into an industry which has a future, and they will make capital gains.
I therefore say to my hon. Friend the Minister for Energy and my right hon. Friend the President of the Board of Trade that, as I fear that some of the management of British Coal do not have their hearts in their job and are more interested in contracting than expanding the industry, a statement should be made that a management buy-out of British Coal will not be permitted. If and when British Coal is privatised, let it be privatised through flotation or a trade buy-out, but not through a management buy-out, because the managers of British Coal are far too interested in the future of a management buy-out than in running the industry properly now. If we removed the opportunity for a management buy-out, the managers might be a little more interested in protecting their jobs now than in protecting their bank balances in the future.
My third and final point, Madam Deputy Speaker—[Interruption.] I beg your pardon, Mr. Deputy Speaker; I had been looking with my right eye and not with my left. I say to hon. Members, especially Conservative Members, who are opposed to the White Paper that it is incumbent on the Government to do their best to protect jobs in all industries and all energy industries. I believe that the Government have gone about as far as they can to protect jobs in the coal industry without jeopardising jobs in other sectors of the energy world—whether the North sea, the nuclear industry or opencast coal mining.
Hon. Members—especially Conservative Members—who oppose the White Paper have an obligation to come forward with specific points and specific markets. They must say where those markets are and how they can be obtained, rather than simply saying that they do not agree with the White Paper. They must say why they do not agree with the White Paper.
The deal that we have now is the only deal on the table.
I am in the middle of my concluding remarks, and I shall not give way.
The only deal that we have on the table is the deal to save 12 pits, put one pit into development and mothball six others. If we vote against the deal tonight, we shall put ourselves back to precisely where we were last October, with the closure of 31 pits. That is why I shall support the White Paper and vote for it tonight.
On a point of order, Mr. Deputy Speaker. The hon. Member for Rochford (Dr. Clark) would not allow interventions from non-members of the Select Committee on the Opposition Benches. He said that he supported the White Paper, which includes the introduction of more licences for gas-operated stations. Opposition Members have been informed that the hon. Gentleman has been offered a consultancy by British Gas. The consultancy will not be announced until after the debate. The hon. Gentleman should tell the House whether that is the case and whether he has refused the consultancy.
Further to the point of order, Mr. Deputy Speaker. It is correct to say that I was approached last autumn and asked to be parliamentary adviser to British Gas. I declared that to the Chairman and members of the Select Committee. I also declared to them that I would not take on that position until the Select Committee report was completed. That is declared in the Register of Members' Interests. I offered to step down from the Select Committee if the members wished me to do so. They wished me to remain on the Select Committee. I feel that I have done nothing wrong.
I am proud to represent a mining constituency in which it is believed that all the pits will close. Some 100,000 jobs and whole communities are at stake. I have been a Member of Parliament for 43 years and I held the post of Secretary of State for Energy for six of those years. The only reference that I shall make to the speech of the President of the Board of Trade is to say that I have never in my life heard from any Minister such a cynical speech backed up by such disreputable arguments which will convince no one outside the House.
The solution proposed in the White Paper is intended to motivate the Conservative party to back the privatisation of coal. That is where the money is to go. If the President of the Board of Trade had wanted to save the 31 pits, he could have done so without the Select Committee report. He could have checked coal imports. How can British miners compete with the slave wages of South African miners or with seven-year-olds in Colombia? Have they also to accept slave wages? Must we send children down the pits as they did in the 19th century?
Much was made of the interconnector. But the President of the Board of Trade declined to quote my answer in the House, which was that the purpose of the interconnector was to sell coal by wire to France. He signed the contract. My belief is that he signed the contract for imported nuclear energy from France as part of the build-up to the miners' strike which the Government were preparing. That was what it was all about. The Government provided the nuclear subsidy in 1989 because they wanted to subsidise the nuclear industry here and the treaty of Rome required them to extend the subsidy to French nuclear generators.
Of course, on environmental grounds one could justify cutting opencast mining. If local authorities were allowed to decide for themselves whether to allow opencast mining, most of it would not take place. As for gas, of course we stimulated its discovery. But we were also strict about its use. Britain puts fishermen out of work to conserve fish and similar conservation of gas so that it is not wasted in gas-fired power stations is a logical part of energy policy. The nuclear industry is subsidised up to the hilt. As has been said, if the Government moved some of the subsidy from the nuclear industry to coal, they could give away coal costing £50 a tonne to people who burn coal in their grate. The Government's argument is disreputable. It is all about privatisation.
In 1921 the Sankey commission under Lord Sankey recommended the public ownership or nationalisation of the mining industry. That recommendation was accepted by the coalition Government of which the Conservative party was a part. I have quoted the figures on safety in the privately owned mines in the 1930s, but I do so again because safety is highly relevant. Between 1927 and 1934, 7,839 miners were killed and 1,200,042 were injured, including 199,000 lads aged under 20.
The record of the pits under private ownership was such that the demand for public ownership was taken up and argued correctly. It was Churchill, of course, who nationalised the coal royalties in 1942. But let us be clear that at the beginning of the last war in 1938 British pits under private ownership had increased output by only 13 per cent. since 1913, compared with 101 per cent. for the Dutch state-owned pits. So do not let us have any nonsense that privatisation is all about creating an efficient mining industry. The privately owned industry was unsafe, inefficient and dangerous. That is what the President of the Board of Trade is all about.
It is no part of my purpose to go over the record of the Government of which I was a member in self-justification. But, by God, I am proud of what we did. I am proud that we authorised the sinking of the Selby coalfield. I am proud of the Drax B coal-fired power station. I am proud that we brought the unions into every discussion about the future of the industry. I am proud that we reduced the age of retirement for underground miners from 65 to 60. I am proud that we hugely increased the money available for pneumoconiosis grants so that in a few years 64,000 successful claims were made.
I am proud of that record, and that is not self-justification—at my age, how can anyone care what is said about what they did 15 years ago? But if there is going to be a line-by-line argument, let us consider the figures. In 1979, when Labour left office, British Coal had a subsidy of 50p per tonne, German coal had £2·60 per tonne, French coal had £13 per tonne and Belgian coal had £15 per tonne. Even by narrow financial calculations which disregard human factors, that was a record to be proud of and I am proud that we defended 300 years of coal reserves, or 1,000 years if one includes the Barnsley seam which goes under the North sea and which will one day be brought ashore.
I am also proud of the fact that I offered a veto on pit closures to the National Union of Mineworkers. The union was prepared to close pits when they were dangerous, if working conditions were bad and when reserves were exhausted. The present pit closures are not about efficiency but about carrying on a long battle with the NUM. Thank God the union is taking action on Friday. If the Government can close pits for ever without any consultation, what is wrong with miners withdrawing their labour for one day to draw attention to the importance of the Government's actions?
Our oil, coal and gas reserves are of priceless value to this country and they must be publicly owned so that there can be planning. Industrialists in Chesterfield who supply equipment to the gas industry have told me that because of the private ownership of gas there are no long-term investment plans and everything has gone berserk. We want a planned, publicly owned energy policy, which brings unions and representatives of the work force in with the management and the community, to ensure that we do not throw away our most valuable asset. When Labour left office our country was self-sufficient in energy.
The first industrial revolution was built on coal and the future recovery of this country—which will not come under this Government—will come when we use coal, turn it into oil, use it as a chemical and develop it in every possible way. The policies pursued by the Government have destroyed our present and our prospects for future recovery.
I listened to the right hon. Member for Chesterfield (Mr. Benn) with considerable interest, but it is my responsibility to put the White Paper in perspective. Perhaps the right hon. Member will listen.
In western Europe, the Netherlands closed its coal mines several years ago, Belgium closed its mines in 1992, Germany's production was 72 million tonnes but will shortly be down to 38 million, France produces under 9 million tonnes, and Spain 19 million. Ruhrkohle, the principal producing company in Germany, is going to phase out 20,000 miners' jobs and reduce its production substantially. Germany is running down its production of deep-mined coal not because it wants to, but because other, more competitive fuels are available and, realistically, we should consider that when we study the situation in the United Kingdom.
Let us glance at the table for United Kingdom coal consumption on page 19 of the White Paper. In 1960, the electricity market took 26 per cent. of our coal, the domestic market took 28 per cent. and transport took 6 per cent. By 1992, electricity had increased its share from 26 per cent. to 79 per cent., and all other markets had decreased their share from a maximum of 28 per cent. to a maximum of 8 per cent. Steel industry coal consumption has dropped from 11 per cent. to 8 per cent. There is virtually no market for coal other than electricity, and we must recognise that.
I have here a little document from the Trades Union Congress on how we should find additional outlets for our coal. On page 10, it lists about 13 recommendations, which are all at the expense of other industries: we should curb French imports; reduce opencast mining; increase coal sales to the electricity market; extend sales to industrial and domestic markets; curb the dash for gas, and so forth.
There must come a time when an industry is past its former glories and must be reduced in size. I fully sympathise with many of the miners who will not be in there doing their allotted tasks tomorrow, but it is happening all over the world. The TUC's recommendations would simply transfer unemployment from one industry to another. Does that make sense? Does it make sense to transfer unemployment from coal mining to the gas or nuclear industries? Does that add up?
May I make a recommendation? In the pits which will be kept operating, the Government are giving the miners a chance. Sterling recently devalued and, as coal is priced in dollars, the world price is rising fast. It is therefore surprising that more coal cannot be exported to foreign markets. A recent issue of Coal UK states:
Sterling's continued decline against the US dollar has eliminated the advantage that imported coal holds over British Coal's output in all but the Thamesside power stations.
In other words, coal is becoming inernationally competitive. If, for the first time, British miners can become aggressive and secure markets, then we might be able to gain an advantage. I am not suggesting that that will be easy—it will be hard. For example, because
devaluation tends to be in their favour, production in the United States of America may fall in comparison with British production.
Obviously, it is no good producing coal that cannot be sold, and if it cannot be sold, it simply accumulates. When I visited Drax recently, I found a huge accumulation of coal stocks. Coal stocks now are as much as 45 million tonnes, which is twice the national requirement. I dare say that Opposition Members would recommend that coal stocks be even higher, but do they realise the cost of accumulating coal, and that, once exposed, the coal will begin to deteriorate? It does not make sense. The English public are beginning to recognise that an industry into which we have poured £17 billion of subsidies—we now intend to pour in more money—must limit its share of our national resources. Surely common sense must shortly prevail.
I mention another matter which will be of concern to the Government. They have their own proposals for VAT, but I do not feel very comfortable in saying that that is one way in which to deal with carbon dioxide emissions. We are now fixed in Europe and if a carbon tax should be extended to the United Kingdom, it will cause further anxiety, because it will make coal even less competitive, here and in all international markets. That would be a great pity, but it should be taken into account.
The public, who will be the jury in this particular case, will recognise that, of generating costs of new plant in the United Kingdom, Sizewell C will be the cheapest, followed by the gas plants—the CCGT—combined cycle gas turbine—plants, the AGRs and finally large coal-fired power stations. Coal will thus not be competitive with the other fuels.
The costs of existing plants show that Magnox stations are the most competitive. The nuclear AGR—advanced gas-cooled reactor—is extremely competitive, specially in comparison with large coal-fired power stations, particularly where they have FGD—flue gas desulphurisation —units.
The public recognise that they must pay such costs through their electricity bills. Do they want to pay higher prices in order to keep people continuously in the mines when we have been told it might be advisable to reduce the numbers to bring a balance to the economy? I simply say that we are not the jury; it is the public who are.
I am not suggesting a referendum. We are here to decide a certain matter, and we can decide it.
If the industry becomes uncompetitive, it must be adjusted to the right size to meet the right requirements. I hope that the Opposition will recognise that what I have suggested is common sense. Many have a vested interest —of course they have—but surely common sense must prevail in the national interest.
It is hardly a reasonable proposition for the hon. Member for Bedfordshire, North (Sir T. Skeet) to condemn the coal industry as he has when he does not recognise the enormous public assistance that the Government have given to the nuclear industry over the years. If we are to argue rationally in Parliament, let us at least start by arguing for equal treatment between the different sectors of the energy industry and not retain the distortions, as we have done for so long.
The question before us today is whether we endorse the White Paper. For the benefit of those few Conservative members of the Select Committee who may not be finally decided—and perhaps some other Tory Back Benchers —I argue that they should withhold their support from the White Paper. They should refuse to endorse the White Paper because it does not provide answers to the questions which the country asked Parliament to deal with when the people said no to British Coal in October last year when it started to break the law by closing pits without going through proper pit closure procedures. At that time the Library of the House produced a research note entitled, "British Coal Pit Closures: A leap in the dark." Five months of consideration by the Government followed. The White Paper was originally meant to be published in January, then February, and we have now seen it only at the end of March. There may have been a leap in the dark in October, but, sadly, there has been a long walk in the dark since then. The Government do not appear to be any less benighted now than they were in October.
My colleagues and I have put our cards on the table. We submitted evidence to the Government's consultation process—unlike the Labour party—and, unlike Labour, we have produced an alternative White Paper. We have set out our stall in the amendment on the Order Paper today.
On a point of order, Mr. Deputy Speaker. I have been to the Table Office and to the Library to get a copy of the answer to the written question of the hon. Member for Brentwood and Ongar (Mr. Pickles) about emphysema and bronchitis, but I have been unable to get one. I believe that that hon. Gentleman has shown the reply to one of my hon. Friends. All I can get is a press release from the Minister. I believe that Madam Speaker has made it quite clear that if a question is tabled it should be tabled on behalf of all of us. The press release was issued at 4.10 pm; it is now 6.25 pm but I still cannot get a copy of the written answer despite the fact that I have a vested interest in emphysema and bronchitis, which is important to my old miners.
I hope that I am given injury time for that, given that I have only 10 minutes in all.
We have set out our stall, and the fundamental argument is that if we make decisions tonight, or any other night, about the future of the coal industry, they need to be made in the context of our energy industry as a whole. I would ask the House to say that we cannot do that tonight, because, as I suggested earlier to the President of the Board of Trade, we are being asked to make decisions about coal today when we will be asked to make decisions about the nuclear industry, renewables, opencast mining and orimulsion only later this year. It is a quite unreasonable proposition to argue now that we have to condemn, potentially, 18,000 people to lose their jobs when there could be, if we address this subject in a strategic context, an opportunity for a much more secure coal industry in the years ahead.
A second fundamental argument is that we really must not continue the presently proposed rundown of the coal industry when, at the same time, we have been bailing out its direct competitors in the energy market. The Government and the President of the Board of Trade talked about creating an opportunity for coal—about time too. In the past decade the coal industry has had no such opportunity. The Government took on the job of privatising the electricity industry and gave a protected position to the generators—not real competition at all. They took on the job of privatising the gas industry, and it is only now apparently that the Director General of Ofgas realises, and is prepared to say so, that in the gas industry there is not any real competition at all. We also know that there has been no competition for the nuclear industry because it has been artificially protected all this time and the subsidy will not be removed until 1998.
No, I will not. I have got only 10 minutes. The hon. Gentleman was on the Select Committee and his Government have had plenty of time to deal with this issue, but without any White Paper about energy being previously produced from when they came to power in 1979 until they were bounced into producing one by the events of last autumn. It is no good complaining, if they are now asked to help the coal industry, that they cannot do that and be consistent with their market principles. They have been intervening in the market in all the other sectors. Coal is now asking for its fair share of assistance.
The House was asked whether it would endorse, and what view it took of, the 39 recommendations of the Select Committee. I pay tribute to my party's representative, my hon. Friend the Member for Gordon (Mr. Bruce), and to all the work of the Select Committee. The Select Committee report is a compromise document—the House knows that—but it is far better to accept the compromise that united hon. Members across the House as a prospect for the coal industry than the White Paper, which gives no security in terms of contracts above the 40 million tonnes negotiated and signed today, and gives no security in terms of supply when it proposes the reduction of stocks to only 10 million tonnes in the future. What security does that offer the country in the eventuality that stocks from abroad cost more, or that we cannot obtain them, or that we have several hard winters? We cannot base a decision today on these unknowables. The Government make no specific proposals—at least, nothing different from what was on offer in October—in terms of guarantees for the industry.
I was at the TUC rally in my constituency this afternoon and I know that the country is still behind the miners and the coal industry, and has not changed its view since October. What the country, the coalfield communities and the House want is a long-term energy strategy that guarantees security of supply and diversity of supply. We cannot have either of those things without securing a long-term future for the coal industry.
It is sometimes argued that a large sector coal industry is incompatible with environmental objectives. That is not true. It would be possible to produce 60 million tonnes a year for the next five years and at the same time adequately meet the best emission targets to which we are internationally committed. I ask colleagues who have not looked carefully at the issue to see how we and others have squared the circle—experts and party political figures alike —showing that it is possible to be both environmentally sound and sound in energy terms, as well as sane in employment and economic terms too.
We are not even debating 10 pits today. If we endorse the White Paper we are condemning them, even though the Boyds report said that two of them were viable and even though it is clearly arguable that Betws pit selling to the domestic market is also viable. We are asked only to debate the 21 pits; and of them the chairman of British Coal and others have now made it clear that the so-called saved 12 of them may also close because they are fighting for the same market as the others whose future is apparently secured. The Government are merely asking us to give them time to get over the next few months, until they can get their privatisation legislation into the House. That is not good enough, because the evidence of the past 13 or 14 years is that the privatisation process itself will, certainly in the short term, make life more difficult for the industry.
Leaving things to a rigged market while giving no thought to the strategic objectives means condemning the coal industry to an extremely difficult and lesser future. Eighteen thousand jobs are at risk in the House's decision tonight. If we condemn the coal industry tonight we will spend, according to the Select Committee, about £2 billion trying to rehabilitate skilled workers who do not want enterprise zones tomorrow, because they want work today. I ask the House to judge the evidence of the Select Committee, to prefer that evidence to the White Paper, to reject the White Paper and then to enter into a proper debate on a strategic energy future for Britain that guarantees a place for coal.
I sometimes wonder whether I live on the same planet as some of those who have spoken this afternoon. I will not preface my remarks by saying how brief I intend to be—I will just be brief. And I do not apologise for being a member of the Select Committee either.
I concede that when I embarked on this investigation I knew little about the energy industry in general and coal mining in particular, and I came out at the other end of the investigation possibly none the wiser but infinitely better informed. I am enthusiastic about voting for the White Paper, however, because it errs on the side of realism.
We must be realistic about this industry. I remind the Opposition that it is not the only industry to have suffered from reductions in numbers and orders. I come from a shipbuilding town, as does the hon. Member for Gordon (Mr. Bruce). On Saturday I will have to attend a meeting in the town which, a few years ago, employed 25,000 people in the industry. That number has fallen to 1,200 today. So I do not want to hear any lessons from Opposition Members about communities that face these problems.
The north-east has suffered in this way. The Government certainly have a responsibility in the affected areas—a responsibility to help the north-east and south Wales. One has only to look at the south Wales coalfield to see what should and what will be done.
We have heard today that 18,000 jobs are in jeopardy —as if the people concerned were suddenly going to be thrown on the scrap heap. That is just not true; it is a static view of what has happened in this country in the past 25 or more years.
I do not understand why other members of the Select Committee are concerned about the White Paper's strategy. The central thrust of that strategy is that there should be a tapered subsidy to allow British Coal to do what it has said it wants to and can do—that is, to reduce the price of deep-mined coal, over time, to world prices. The Government have accepted that central strategy, and it will be put into action.
One of the reasons why I did not sign the Select Committee report was that one of my hon. Friends said that it was the duty of a Select Committee to be optimistic. I beg to differ. It is the duty of a Select Committee to be as realistic as possible. Hon. Members may be interested to hear how we arrived at the figure of 19 million more tonnes which we decided could be found by British Coal. The answer is: a bit of good, old-fashioned, political horse trading. At 10.30 pm Tory Members were sitting there saying one figure was realistic as an extra tonnage, and Labour Members were saying that they wanted more. We sat gazing at each other, and for the sake of a unanimous report—or at least, one against which no one would vote we picked a figure in the middle, and then added, for good measure, 3 million non-electricity supply industry tonnes. There was not a slide rule in sight, nor a reference to the available evidence.
We shall see. I happen to believe, on the evidence available to the Committee, that the more likely figure for extra tonnage is in the region of 12 million tones—but I was willing to go a bit higher for the sake of unanimity. I could be wrong; I hope that I am. The Government, however, are giving the industry and the work force the chance to find out whether the figures are feasible.
Everyone is talking as though the 12 pits being saved will disappear within the next few months. That is possible, certainly, but if British Coal is genuine when it says—I have no evidence to the contrary—that it can bring prices down to world levels in three or four years' time, well and good. But there can be no guarantee. How could we expect the President of the Board of Trade to give a guarantee? I would not believe it even if it were given.
Even at the levels proposed in October, this industry would be the fourth biggest coal industry in the world. Let us see it in proportion, therefore. Let us give British Coal the chance to see whether it can do what it says it can do, and then we can settle down to a more stable and prosperous future for the industry. Without this White Paper, 5,000 people on Deeside, in the Wirral, on Merseyside and in north Wales would not have the opportunity to work at Connah's Quay. And at least another 3,000 permanent jobs would not have been available to people in that part of the world without this White Paper. That is the compassionate way forward.
We would not be here today debating these problems if the Government had not privatised the electricity supply and generating industry in the way that they did. I thought, when the privatisation proposals were first made, that there would be a third competitive force against the duopoly of National Power and PowerGen, using coal as a production fuel. Instead, the third force inserted by Lord Wakeham was not a body able to build small, coal-fired power stations at the coal fields but one using natural gas.
I shall deal now with one of the pits in the list of 10 that will not be saved—Betws, which produces anthracite. The Boyds report said that Betws was not economically viable using the long wall method of mining. That poses an interesting question. When considering whether pits can be economically viable, one must take all sorts of factors into account. Betws is not economically viable given that, for 15 years, British Coal has mined one of the main veins—the red vein—by means of the long wall method. There is little coal left there now, but the purpose of the original investment was to amortise, over about 15 years, the cost of the equipment necessary for long wall mining. Now, the coal left in the seam, and underneath it as a result of some developments, cannot be mined economically using the long wall method. There would be no point in doing so.
Boyds—I make no criticism on that ground—was not asked to look at anything else such as the future, or different methods of mining. Even so, it concluded that Betws could be profitable. I went to see the Minister of State, Welsh Office and I thank him for the reference to Betws in the White Paper. It says that it has reserves which could be exploited and that profits could be made from developing Betws. I know that that is the case.
A second point of interest, to me and those from the anthracite coalfield area, is the debate, which has been going on for years, about the best way to mine anthracite. There are those who say that the long wall method with the huge equipment that is used by British Coal—it has done a good job and produced a lot of coal in the anthracite coalfield—is the best method. However, as Boyds makes clear, the equipment used in that process costs a great deal, whereas the coal produced, because of the way it is mined, contains at least 30 to 40 per cent. duff—the lowest-priced product on the market. Therefore, British Coal has invested huge sums in the production of anthracite, but the product has been the lowest priced on the market. Many would argue that that is not the sensible way to go about things. Instead, we should reduce the cost of production and produce the higher-priced product—the larger lumps of coal.
Whatever happens when we vote after the debate, whether or not the Government win, the anthracite coal of west Wales will be mined only by private owners. Even if it were to be done by Britsih Coal—it will not be—it would be a privatised British Coal. Instead, other private companies such as Ryans will try to mine the anthracite.
I have three further points to make. First, it is no good Tory Members, especially the right hon. Member for Woking (Sir C. Onslow), saying that we are being reactionary and antediluvian when we talk about safety. The Government should recognise the history of all this—the tradition, the problems, the awful communal and family history of the failure by private owners to provide proper safety standards in the coal mines. The Government must set people's minds at rest and ensure that, when the industry is privatised, the high safety standards and working conditions which, whatever criticisms we have of British Coal, we must acknowledge it maintained, are continued. That is in everybody's interest, including those who may want to invest in the anthracite coalfield, because without that, people will not work for them and we shall not get the economic benefit of developing our resources.
My second point may be small, but it is still important. Apart from a few that are surreptitiously in private hands, all the plans and geological surveys lie somewhere in the vaults of British Coal. I do not know where they are— perhaps Nottingham or Derby—and why they should be there I do not know. The plans, which go back to pre-nationalisation days, should be returned to the state, to the Welsh Office, the Department of Trade and Industry or the Welsh Development Agency, so that any potential investor can obtain them and have all the available information when deciding whether to invest. There is no reason why British Coal should keep the plans. It has left the anthracite coalfield and has no more to give it.
Thirdly, as the future of the anthracite coalfield is, I am sorry to say, going to lie with small, private firms, we should set up a marketing co-operative along the lines of the successful French farmers' co-operatives. We cannot look for a large investor in the anthracite coalfields, so we shall have small producers, who will need back-up and help. This may sound ridiculous, but, just as Welsh lamb has been, Welsh anthracite should be marketed as a prime product. It has not been one because much of it has been sold to power stations as duff. I do not know how that will be achieved—perhaps through Government help, although we may not need it—but a co-operative should be set up to enable the producers to produce a quality product and ensure all the safety standards and conditions that go with it.
I am not romantic about the anthracite coalfield of west Wales, but it can make a contribution to an area which finds it difficult to attract investment because it is on the periphery of both the M4 and Europe. Furthermore, it is an indigenous fuel. A partnership between the smaller producers and the Government will be the best way forward for my community and my constituency.
I have some sympathy with the amendment, partly because of the long history of pit closures in my constituency and partly because of the pretty appalling way in which the original announcement was made. Giving people a few days to redundancy is no way to treat them, especially bearing in mind the massive productivity gains in the coal industry in recent years.
I also have some sympathy with the argument that nuclear power is unfairly subsidised—a point to which I shall return—and with the opposition to the French link. That is especially so given that a report in 1990 by the general administrator of the Commissariat a l'Energie Atomique criticised Electricity de France for building too much generating capacity and pointed out that exports are being priced at a loss.
The mining industry has, rightly, a unique place in society. There is great respect for the skill that miners show in winning coal, often in difficult conditions, and for the huge productivity gains of recent years. The industry has a heroic quality that is rightly admired by many people. But that admiration should not be debased into sentimentality.
Britain generates more electricity from coal—70 per cent.—than all our other major competitors. France generates only 8 per cent. from coal, Germany only 53 per cent. and even the United States—the land of cheap coal—generates only 55 per cent. We pay more for our coal than almost any other nation in the world. The cost per tonne is £43 in Britain whereas the import price is £33 and the OECD average is £26. The French pay £26 per tonne and the Italians £33. Prices in Australia and the United States are as low as £15 and £18 respectively.
Much has been said about British Coal being the lowest-cost——
I shall not give way. Time is too short. I apologise to the hon. Gentleman.
It has been said that British Coal is the lowest-cost producer in Europe and much comparison has been made with Germany. If the Germans follow a mistaken policy, why should we follow suit? The costs to Germany are huge. The usually quoted cost of £1 billion must be more than quadrupled to £4·5 billion when the coal penny is taken into account. That is the subsidy that is paid to the industry by users of large amounts of coal.
Nor is there a cosy consensus in Germany. Indeed, there is a great deal of controversy. This was evidenced by the bankruptcy of a major steel company—Klockner— late in 1992, which was the result of high coal prices. Recently, the Germans announced 20,000 mining redundancies and over the next decade the bulk of the coal industry in what was West Germany will close.
The French, the Belgians, the Dutch and the Italians have already largely closed their coal industries. They have recognised what many in the United Kingdom have not: that in many instances the thickest and easiest seams were worked out in Europe long ago. Geology is too often against us despite our skills in winning coal in difficult conditions. In the United States and Australia, there is access to huge amounts of easy-to-get opencast coal in areas that are not especially environmentally sensitive. When it comes to deep mining, their seams are often a great deal thicker than those in Europe.
Why turn what has been an asset to the United Kingdom in the past into a millstone round the rest of industry when cheaper coal is available in world markets? It would be sheer protectionism not to buy cheaper coal. To put it simply, the Government would be putting the interests of one group of workers above those of others by taking that course.
There have been many calls this evening for an energy strategy to be directed by Government. For most of the period following the war we had a state-directed energy strategy. It had two planks, the first of which was nuclear power. In 1965, advanced gas-cooled reactor technology was ordered because the Government wanted it, despite the fact that pressurised water reactors were less complex, proven and cheaper. That was part of a national energy and industrial strategy to build up an advanced British nuclear power generating capacity.
By the early 1970s, all the five AGR stations were in deep trouble. In 1974, the Central Electricity Generating Board chairman, Arthur Hawkins, called it
a catastrophe which we cannot repeat".
He urged that we should go with American-designed PWRs. The same year, however, because of Government intervention, we went ahead with another British design,
the steam-generating heavy water reactor. Three years later the project was abandoned on cost and safety grounds and two more AGRs were ordered.
The result of Government intervention and the state-directed energy policy was that after 40 years of massive waste of resources and money we had some of the most expensive nuclear generating capacity in the western world. The cost of it was not even known until the electricity generating industry was privatised.
The other plank of the energy strategy was coal. That was characterised in the decades after the war by cosy guaranteed contracts between the generators and the National Coal Board. No imports of coal were allowed. Similarly, no gas-fired generation was allowed. That puts into perspective the claims that are made now by members of the coal lobby that the market is rigged against coal. The result of the policy was that industrial consumers paid far too much for electricity. That was illustrated by the report of the Monopolies and Mergers Commission in 1981 on the CEGB. There was a massive and additional ongoing subsidy from the taxpayer to the industry. The system did not help miners, who found themselves working in a high-cost, low-productivity industry. They were relatively low paid until recently.
Even so, the industry still lost jobs. In Amber Valley, 10,000 mining jobs were lost in the 1960s and 1970s under Labour Governments. The redundancy payments amounted to no more than a pittance. Meanwhile, every job that was preserved in the mines was at the cost of jobs elsewhere in industry. We were left over-dependent on expensive coal while other countries benefited from diversity and cheap imports. So much for a state-directed energy strategy.
A much-used argument is the one that turns on the need for energy security. We are told that imports are unreliable. It should be rememberd that the bulk of our coal imports come from the United States and Australia, which are hardly unreliable countries. So-called cheap foreign coal from Russia, Poland and the third world is often sneered at by Opposition Members because they say that those countries are unstable. Clearly, those countries will become more unstable if richer countries, such as the United Kingdom, do not allow them to export what they can best produce. No one suggests that we should rely on Russian coal, but it is extraordinary for those who call themselves socialists to refuse to buy coal from poorer countries. That attitude does not sound much like the brotherhood of man to me.
In any event, to refuse to import energy and to deplete domestic supplies, as is proposed by Opposition Members, would lead to less security, not more. If we cut ourselves off from the huge international energy market, which is competitive and diverse, we shall ultimately penalise our industry and our consumers.
Those who have argued that some pits must close and that customers must decide which sources of energy they wish to buy have often been told, "You are hard-hearted and you don't care." Surely there is nothing soft-hearted in taking easy, short-term options which mean keeping one group in jobs at the expense of others elsewhere. Thai is an example of short-termism which state-directed energy policies were supposed to avoid. There is nothing soft-hearted in the attitude of a party that led to the closure of a pit every week in the 1960s and 1970s. The same party was responsible for the worst mistakes in nuclear policy during the same period. It has argued against the imposition of value added tax on fuel, but has happily sanctioned higher fuel prices for the less well-off if that is the price to pay for protecting the coal industry.
The Labour party's spokesman, the hon. Member for Livingston (Mr. Cook), had the cheek to say on television yesterday that British Coal was a success story. Yet his party opposed the pit closures in the 1980s, which at least pulled British Coal back from the brink. That is not caring, nor is it big-hearted. Rather, it is the worst type of fraudulent opportunism and should be recognised for what it is.
The debate is reflecting already views and attitudes that perhaps are to be expected. Some of the members of the Select Committee on Energy, who took up primary time, seem to be divided. They seem to wish to move away from the report to which they agreed.
It was to be expected that Conservative Members would seek to use the phoney formula that the President of the Board of Trade has presented to bring about the death knell or demise of the mining industry as we know it. We on the Opposition Benches seek to protect and preserve what we consider to be a priceless national asset—coal. It will give us hundreds of years of energy security if used wisely, and inexpensively, to produce the type of energy that we need to make available for industry and business generally.
I do not want to read the report. I am the self-assigned chairman of the organisation that seeks the abolition of all Select Committees. They are a waste of time and money. I have no problems or scruples about that.
Opposition Members, along with the mining unions, the industry generally and industrialists, have always argued for a fair and honest playing field, which would enable proper plans to be made for a fuel policy that would bring rewards for all industries.
The Government have never had an energy policy. On Thursday, the Secretary of State went back 20 years in talking about plans for coal, but I remember what was happening in those days, when I was a young mining apprentice and fitter. I remember the great Schumacher reports, and the days of large subsidies for the coal and steel industries. I remember the days of Mr. Spaak, and others of that character. In those days, there was at least a recognition that the British mining industry had a part to play: it had come up with the goods during the second world war, and—inevitably, at a total loss—had supplied the British steel industry to the tune of £2 a ton. That is an instance of the miners' patriotism; we need no lessons about their contribution from Conservative Members.
Why do the Government hate intervention? The Secretary of State wears many different hats nowadays: we never know what his view is. At one point, he was the arch-protector of market forces; now he is masquerading as the patron saint of intervention. I have met the right hon. Gentleman on five occasions, three times with the miners' parliamentary group and twice with the all-party "10 pits" group. On all those occasions, he said, "I am not doing this; it is British Coal. I cannot intervene: my hands are tied." He says that he has pleaded on bended knees with all the regulators and power generating boards, and that he has done his very best, but no one believes him.
The House does not believe what the right hon. Gentleman has said today about this phoney formula. Some members of the Conservative coal group do not believe him; obviously, the mining unions do not believe him. Has he any credibility left? The formula is not just a quick fix; indeed, it is not a fix at all. It will not fix the right hon. Gentleman's Conservative colleagues who will not vote for the White Paper. All that it will fix is the demise of the British mining industry. As the arch-privatiser, the right hon. Gentleman intends to use the bits and pieces that are left of the industry to maximise not productivity, but profits. That is what privatisation is about.
Time and again, I have pointed out to the right hon. Gentleman that £1,270 million a year goes into the nuclear levy to protect the aging Magnox stations. They are 30 years old, and potentially unsafe; nevertheless, they are eating into subsidies that were never meant to be used for such a purpose. As is clear from the international coal report, the right hon. Gentleman is responsible for ensuring that the fossil fuel levy is spent wisely, prudently and fairly, according to the rules. The report
blows apart one of the great misconceptions about this levy on fossil fuel which is that it is used to fund the decommissioning of nuclear stations".
Only the Secretary of State believes that misconception. The report makes it clear that, of the £2·46 billion invested in 1990–91, only £20 million was spent on decommissioning.
Where has the rest of the money gone? It has gone to privatised nuclear electric companies, which have used it as liquidity. It has been invested in the building of the Sizewell B power station; it has been used in all the ways in which it was never intended to be used. That returns us to the question of fairness and accountability: state money is being poured into an industry that is being deliberately propped up.
The cash flow will cease. I hope that the next report does not take five months to produce. Everyone will want to know why the miners voted to strike, but the answer is simple: they were told that the report would be forthcoming in a short time. First, we were told that the Secretary of State would issue it in January; then it was February; then it was March. Their impatience is understandable, and it has been manifested democratically in a ballot.
Let us examine another aspect. Who has ever established the true cost of opencast mining? What about the ravages suffered by the environment? Some years ago, when he was coal Minister, the present Secretary of State for Wales answered an Adjournment debate in which I spoke. As he will recall, the largest opencast mining planning application in western Europe amounted to 4 million tonnes, 15 years' development and five years' reclamation; 15,000 properties were affected by noise, dust, intrusion, transport costs and other environmental problems. It is a disgrace that an area should be blighted for nearly 20 years.
My hon. Friend the Member for St. Helens, North (Mr. Evans) will deal with the Parkside issue. I am not hinting, as I know that the list of speakers will already have been compiled, but I think that it is an important issue.
I believe that this phoney formula is simply an excuse to get the Secretary of State off the hook that he has deliberately created. It is an attempt to pretend that opportunities can be opened up, presenting British Coal with a future. That is not what British Coal believes; this weekend, it made it clear that it considered this a short-term fix. The Secretary of State is in a crisis. Politicians can see through his position, as they have done before. The right hon. Gentleman is blowing the bugles of advance to cover his retreat. He has failed the nation and the mining fraternity by his inability to use the necessary hindsight and insight, and to restore the dignity of the British miners, their families and their industry.
During the debate on the closure of coal mines, it has become obvious to me that, somewhere along the line, a decision was made that would completely redirect Britain's energy policy. We have heard a lot about the past, but I am not sure that we have put a date on that decision. It may have stemmed from the disastrous and crazy coal strike of 1984–85, but the privatisation of electricity that took place in 1990 has now redirected Britain's energy policy away from coal.
The White Paper published last week—and, I suggest, my right hon. Friend's insensitive announcement that he had that day given the go-ahead for three more gas-fired power stations—confirms that redirection. Britain's energy supply has been totally distorted by the way in which we privatised the electricity industry and by the incompetence of the industry regulator. By allowing two main power generators to control the market, we left the door open for regional electricity companies to look for alternatives—hence the so-called dash for gas.
The regulator has failed Britain. He should have demanded a break-up of the power generation duopoly and its control of the market; he should also have recognised that, although nuclear electricity may have the lowest marginal cost, it has the highest true cost. Unforgiveably, the regulator and the Government have failed to notice that we do not just have a dash for gas on our hands. I believe that the gas has already escaped and almost blown away coal altogether.
Unless we take immediate, positive action, we will not need the coal industry at all after 2005. That was confirmed by the list of gas-fired power station capacity given in last week's White Paper, to which we have now added three more stations. Perhaps I could digress for a few moments and ask who in his right mind would allow the development of a power station in the beautiful Vale of Pickering when we could continue coaling in areas such as south Yorkshire and Nottinghamshire, where industry and coal mining have always lived side by side. They have existed together for a long time in those areas.
I am one of those hon. Members who, as a small child many years ago—I shall not say how many—saw coal coming along the canal in barges to the mills. That was the foundation of our industrial heritage. Without that supply of coal, we should not have had our industrial revolution.
The premise of the White Paper is that we have lost the battle for coal and that we should organise an orderly retreat and a dignified and respectable burial, albeit with massive subsidies on offer. I congratulate my right hon. Friend and the Minister for Energy on having made some progress in the last few months. Some of my colleagues think it outrageous that these massive subsidies should be on offer, as they have not been offered to other industries. I suspect, however, that many of those subsidies will never be used. Many parts of the coal industry do not need a subsidy. Very cheap coal is being produced. All that the coal industry needs is a fair crack at an equal opportunities market. We hear a great deal nowadays about equal opportunities, although they are not usually directed towards the coal industry.
What we have heard today of who did what, and when, in the past does not matter to me, if we are serious about the future. That is what we are here to talk about. The only way to organise an orderly retreat, if British Coal cannot and does not want to run some of these pits, it to privatise them quickly and efficiently, but—and this is a big "but"—with a very careful eye on health and safety. That is most important.
The industry will have to be split up into competing companies. I do not want British Coal under just another name; that would not do. Privatisation would get rid of regional offices, Hobart house, excessive administration costs and, I hope, the chairman as well. As the Ernst and Young report said, that would immediately wipe over £50 million off the cost of the coal industry, which in itself would considerably reduce the cost of coal.
The miners have already shown that they could improve their productivity. They can improve it still further. As has happened in many of our other industries, many of the miners listened to what was said and fulfilled their commitments. Productivity can be further increased by changes in working practices and technology. Pithead coal can be cheap and, as I have already said, in some cases it is already cheap. The decentralisation of marketing and administration will ensure that even cheaper coal is delivered to the user.
We should ensure that any pits that are closed can be licensed for private operation. It will create true competition and, I hope, will help to fill the niche markets for coal. That might prevent a crazy situation. The closure of Grimethorpe colliery might lead to the Monckton Coke and Chemical Company in Royston, some five miles from Grimethorpe, having to import its coal from Poland. British Coal says that it cannot supply coal, other than from Grimethorpe, so would this company please import coal from Poland. That is outrageous. By the time the Polish coal arrives, it will not be very much cheaper than something from down the road.
Any industrial reorganisation takes time and costs money. Time must be provided for that to happen before closures take place. The White Paper provides money, in the form of a subsidy, but I have already said that I do not believe that much of that money will be used for this purpose. There must be some changes in working practices. Many of our textile mills and engineering industries have experienced changes. They have had to change in order to compete in the world market. I do not suggest for one moment that we should not expect the coal industry to do the same.
We are always complaining about the fact that a level playing field does not exist in Europe for our manufactured goods, but in this country we have a very uneven playing field. I am sure that we should like to do something about that. The Caminus report suggested that more coal will be used in 1997 and 1998. That is marvellous. We welcome it. If, however, we are talking about some pits closing by the end of this year, there will be a gap before there is a demand for that coal. British coal will not then be available and we shall probably have to import even more coal.
The dash for gas has not slowed down; it has accelerated. Steps should be taken to prevent the future development of excess gas-fired capacity. I would never suggest that we should save jobs in one British industry at the expense of another. I have suggested all along that we should help to preserve British jobs and our own energy requirements. I am not too concerned about jobs in Europe. I am quite sure that Europe is not concerned about jobs in my part of Yorkshire.
As for the French interconnector, it should be two-way. It is absolutely nonsensical to have this one-way track. I welcome the fact that moves are to be made to try to make it two-way. As the new French Government may be protectionist, we shall have to insist upon it being two-way. Alternatively, perhaps we should hold up the Maastricht treaty until we get some sense out of the French. If we cannot obtain agreement on basic issues, I am not so sure that there will be agreement on more important issues.
I realise that I cannot possibly say all that I wanted to say in the time allowed to me. When I came to this House, almost 10 years ago, I was a committed Conservative. I remain a committed Conservative. However, I have always had an overriding problem. I see my right hon. and hon. Friends on the Treasury Bench nodding and saying, yes, they know that. I am an independent-minded Yorkshire woman. My constituents expect me to be an independent-minded Yorkshire woman; they would be very disappointed if I were not. That inevitably guides my star and my decision-making. Consequently, I cannot support the motion on the Order Paper.
I am willing to be converted on the road to Damascus, even up to the last minute when the Minister winds up, but the small print—I spent most of yesterday going through it—does not lead me to believe that it addresses the problem of equality in the market. I accept that some conditions may not be easy to change, but when we had our debate last October I hoped that we could look forward to some help. I welcome what has been done, but I am not sure that there is enough political will to move far enough along the way.
We need a future market for coal. All our other industries—textiles, engineering and so on—have had to change and the coal industry is no exception. To go on strike does not help the industry. To do so would push to one side all our arguments about the industry being reliable in the future. Strike action, therefore, would not help to secure the industry's future.
The President of the Board of Trade ranted on for an hour. Apart from giving us a lesson in what the Labour Government did or did not do 20 or 25 years ago, he told us nothing. Back Benchers have only 10 minutes in which to put their case. I am very proud of the fact that I have this opportunity to speak on behalf of miners and their families at Parkside colliery in my constituency—one of the 10 pits which has been on the hit list since October of last year. Sadly, it appears that it has now been joined by two others.
If Parkside colliery closes, 850 miners will lose their jobs. At least twice that number of jobs will be lost in related industry and commerce in the St. Helens area. It is a grievous blow to Newton-le-Willows and St. Helens because male unemployment in my constituency is of the order of 17 per cent.
That figure masks two even more important figures. The first is long-term male unemployment. I remind the House that miners will join a group of men who have been unemployed for a very long time—men who were employed in the glass industry and who lost their jobs seven or eight years ago after the modernisation of the industry. Long-term male unemployment in St. Helens stands at 37 per cent.
Another equally important figure concerns unemployment among males under the age of 25, which is more than 34 per cent. One of the few industries in which young people in my area had any opportunity of finding a job was the mining industry. Sadly, another door is about to be closed in their face. I met the union representatives at Parkside colliery yesterday. The trade union committee expressed its outrage at the short time which has elapsed between the introduction of the White Paper and this debate. Its members feel that it is a disgrace that they had no opportunity to see the White Paper, read it and, much more important, consult their members about its contents.
The Secretary of State talks about consultation. Surely the trade union officers should have had the opportunity to consult their members. They believe that the White Paper and its presentation by the President of the Board of Trade is simply a cynical attempt to confuse the British people who are still angered by the original proposition to close 31 collieries and throw 32,000 miners out of work. They maintained to me that they saw it as a cynical bribe on the part of the Secretary of State to buy off his Back Benchers.
Like other hon. Members, I pay tribute to the hon. Member for Batley and Spen (Mrs. Peacock), because it appears that she at least has the bottle to carry through her original intention. I wonder how many of her hon. Friends will join her in the Opposition Lobby tonight.
While I am on the subject of consultation, I will remind the House of what the Secretary of State said to me last week when I asked him about consultation, about the 10 pits and why he had not mentioned them:
He will also be aware that the reason why I did not mention the 10 collieries in my statement is that they are subject to the procedures of consultation and it would be wholly inappropriate for me to refer to them".
Let me make it clear to the President of the Board of Trade that, while there have been three or four meetings with various union representatives at national and regional level, the meetings have taken the form of British Coal telling them why it intended to close the pits. There has been no meaningful consultation whatever about any aspect of the closure or the viability of Parkside colliery. As an example of the attitude of the employers towards consultation, notice of one meeting was not even sent to the union representatives; it was posted up in the pit lamp room. The subject of that meeting was the filling of the
colliery's shafts—a subject which was hardly likely to breed confidence in the miners that they would have meaningful consultations.
In the same answer, the President of the Board of Trade said,
The hon. Member will be aware that 30 per cent. of the miners from Parkside have already accepted since last October the redundancy terms that we have made available to them."—[Official Report, 25 March 1993; Vol. 221, c. 1245.]
It was as if he was suggesting that the miners were deserting their colliery. When one considers the psychological pressure that the miners have been subject to since October last year when the colliery was taken out of production, when one recalls the fact that the vast majority of these men have lost at least 50 per cent. of their wages during that time, and when one appreciates that only a few months ago the nearby Parsonage colliery had its shafts filled and sealed within 72 hours, it is hardly surprising that some miners have left the colliery. Indeed, the only surprising thing is that 70 per cent. of the miners have actually stayed on the books of British Coal.
I want to reiterate the statement that I made in the debate on 21 October last year. Parkside colliery, which is the last colliery in Lancashire and which was sunk in 1964, is a profitable colliery. It is an outrage that British Coal should seek to close it because of a loss in the first six months of the financial year 1992–93, when the colliery made substantial profits in the preceding five years. The colliery lost money last year because it had embarked on development work and the opening of a new seam which has never gone into full production; yet the miners themselves have said that if that seam was put into full production it would make Parkside colliery a highly profitable enterprise.
The point to bear in mind about Parkside is that its market was, and would still be, assured. Fiddlers Ferry power station, only six miles from the colliery, took 700,000 tonnes, 80 per cent., of Parkside's annual production of high quality, low sulphur and low ash content coal, by a direct rail link. The remaining 20 per cent. went to other domestic market customers. There is no stockpile of coal at Parkside. The colliery also has more than 24 million tonnes of classified and unclassified reserves which will be lost if the pit closes.
Fiddlers Ferry still requires coal. Where is it to come from? PowerGen plans to expand the South Gladstone terminal at Liverpool. Obviously it is not proposing to export coal. It will import even more coal through that terminal, and much of the imported coal will replace what should have come from Parkside. The docks are more than 30 miles further from the power station than Parkside is, so there will be increased road transport costs as well. There will be exchange rate fluctuations. There will be the capital cost of the dock expansion scheme, and the local authority is rightly imposing planning demands to reduce pollution.
That is why the miners of this country say that there is no such thing as a level playing field, because no one has taken into account costs such as I have described. The miners of Parkside ask for that level playing field and a chance to compete fairly which they have never been given. The Government say that it is a question of market forces and that they cannot regulate or interfere with those mythical market forces, but the miners of Parkside pointed out to me the double standards that operate. Last week they learned from The Guardian, via a question asked by Lord Spens in another place, that in 1991 the Bank of England had established a lifeboat fund to bale out banks and financial institutions faced with collapse in the wake of the Bank of Credit and Commerce International scandal. It is suggested that the operation cost over £1 billion. There was no problem about subsidies or taxpayers' money being spent in this way, and Parliament was not even informed of the situation.
If the miners of Parkside, like the rest of the miners of this country, are given an equal chance to compete fairly, there will be a great chance for the coal industry. That is what the miners have been denied. It is time the House gave them that opportunity.
The White Paper is undoubtedly the most fundamental and authoritative study of the British coal scene by Government for many years. I begin by paying tribute to my right hon. and hon. Friends the President and the Minister of State for their hard work and commitment. They have been available to colleagues at all times to explain and argue the contents of their White Paper and I very much appreciate that opportunity. I also pay tribute to the chairman and members of the Select Committee on Trade and Industry for their work. Their study is also a fundamental one and, because it is backed by expertise on which Select Committees can call—expertise at the highest level—it is equally authoritative.
The real question for the House today is how far the Government have taken or should have taken on board the conclusions and recommendations of the Select Committee. Certainly, we have moved a long way from last October when it was announced that there was no alternative to shutting down half of what was then our coal production. If the House had agreed to that, our largest indigenous energy resource would have been all but destroyed, with horrendous results for the national economy, for the balance of payments, for unemployment in mining communities in a time of deep recession, and for a fine and proud industry.
We now have the review and the Select Committee study and both documents confirm that the electricity market is rigged against coal, with privileged access to it granted to other sources of supply.
At last we have a White Paper that recognises that the private sector has a major part to play in the development of the coal industry. That should have been recognised before and coal privatisation should have taken place before electricity privatisation. I do not believe that a private sector coal industry would have got us into the position we were in last October or would have handled the closure programme or the mothballing announcements in the way that we have heard about today. There is an enormous amount of expertise in the private sector which is efficient and not top heavy with administrators as nationalised industries are bound to be. The private sector is keen to get on and develop markets.
The belated decision to allow the private sector to take on closing or mothballed pits may be too late to save those pits, including Bevercotes colliery in my constituency. To imagine that seams will continue to be worked and that new seams will be developed as necessary with roughly the same work force in the several months that it will take to get the private sector running those mines is not realistic.
Current legislation would prevent that through restrictions on the numbers who may be employed. Perhaps relevant legislation is in progress, or perhaps my right hon. Friend plans some, but I must tell the House, if it does not already know, that the shenanigans of the Maastricht rebels make it highly unlikely that we shall have any new legislation in time to save some of the pits.
Some of the privatisation prospects seem a little more apparent than real to members of mining communities. Today I saw the chairman of British Coal's statement about privatisation. He said that British coal is committed to offering collieries that it does not intend to keep in production to suitable private sector operators, but he added that that must not be allowed to result in better long-life collieries being put at risk and must not jeopardise the viability of the core business. He may have a point, but that is not allowing the private sector to compete in the coal industry.
Even if pits are to be sold to the private sector, what guarantee is there that British Coal, which will be the vendor—the Government will not be selling the pits—will sell the pits at a fair and reasonable price and will be selling them in such a state that work can be carried on from day one without huge further investment? There is enormous scope for British Coal to stifle the private industry. I seek an assurance about the operation of the private sector and the restrictions that may be imposed on it.
I am sorry. I hope that my hon. Friend will forgive me if I do not give way, but I am subject to a very strict time limit. I hope that he can speak to me later or, if I conclude my remarks early, perhaps he can intervene.
Much has been said about the French connection and I support what has been said. I am no longer a practising lawyer and was never an international lawyer, but I cannot believe that, because the right hon. Member for Chesterfield (Mr. Benn) arranged a deal in 1978, we are stuck with it for ever. If it had been a deal to sell this country baked beans, could it seriously be argued that we had to take French baked beans for ever, despite the consequences for our own baked bean industry and its employees? I do not believe that article 30 of the treaty of Rome would apply had this involved anything other than coal. Therefore, the passage on the French connection is deeply disappointing. Six pits would have been saved. I urge my right hon. Friend to get the issue unscrambled, even at this late hour.
Last Thursday, my right hon. Friend said that, in any event, a restriction on imports of electricity would put the Government in breach of the indemnity given to the National Grid Company at the time of electricity privatisation. I know that he was not the Minister responsible for energy at the time and that many nasties have slipped by the House under the guise of legislation doing something else, but the undertaking should never have been given. If it had to be given, it should have been made absolutely clear to the House that it was being given and what the effect would be.
With hindsight, it is the lack of competition due to the privatisation of the electricity industry which has brought us to this pass. We have two generators and a subsidised Nuclear Electric, which were brought about through a change in the law. I was looking to the White Paper to state that we can unscramble the problem by changing the law, but no such course is proposed.
We have excess capacity in power stations, but a raft of gas-fired plants is proposed and in the pipeline. They are being built not because they offer cheaper electricity or because they are needed but because the market is rigged to ensure that higher cost electricity is being sold while lower-cost coal-fired power states are likely to close. I regret that, in his statement to the House on Thursday, my right hon. Friend declined to exercise his powers to withhold further planning consents. If, as he says, it is a commercial matter—and it may be—why does application have to be made to him in the first place? Let the applicants get on with it. If he has a say, I ask him to exercise his power most urgently. He should realise the consequences of his decision for employment in the coal industry.
I conclude that, in the White Paper, the Government have not been able to do all that they could or should have done to provide the wider market for coal, which the Select Committee and those in the industry urged. I spent the morning at Bevercotes colliery in my constituency. I could not say to the people there that, because the market is rigged against them, I must go to the House of Commons and vote for the White Paper which will throw hundreds of them out of work. I could not do that because the heartbreak and uncertainty in north Nottinghamshire is too much. I cannot vote for that, so I fear that I cannot support my right hon. Friend.
Many hon. Members have been going down memory lane, which has caused me to reflect on the six years that I spent as an Opposition Front-Bench spokesman on energy. It was an interesting time for me in personal terms. The six years left me with an abiding impression of the way in which our energy debates were determined by the modern day equivalent of a bunch of barons. There was Baron Rooke of British Gas versus Baron BP or Baron Shell. There was Baron Marshall of the nuclear power industry and the Central Electricity Generating Board versus Baron Coal.
One thing that all the barons had in common was the fact that they controlled the information given to the House and, I suspect, to the Government. I certainly saw the manipulation of information to the Opposition when it suited Baron Rooke to oppose the Oil and Gas (Enterprise) Act 1982 or, when it suited him, he did an about-turn and choked off any information when he had done a deal with Lord Walker to privatise British Gas. That has been repeated in energy matters for decades.
I therefore approach all White Papers with enormous scepticism. I recall vividly the meetings with Baron Marshall when he ran the CEGB. When we asked about the decommissioning costs, he would tell us that they appeared in the annual accounts. That was until he had to sign a potential balance sheet when, suddenly, the real books were revealed and we ended up with a £1·2 billion levy for the nuclear industry. We have good reason to be profoundly sceptical of all the figures and projections.
All that the privatisation of energy has done is to multiply the barons. We now have a group of lesser barons who run the regional electricity companies. The Secretary of State does not know about people's feelings. Hon. Members should imagine the feelings in communities such as mine. The jobs of thousands of valley customers of the South Wales electricity company may be destroyed because the South Wales electricity company is investing in a new gas-fired plant on Teesside. Will those captive customers be allowed to use the one power source that they should have? Will they be allowed to get an alternative source of electricity to light their homes? They will not be able to do so. They are captive customers to a new group of barons who already show all the symptoms of the larger barons in jostling for power and position.
I recall sitting in the House in the 1966 Parliament when the Labour Government published a White Paper on fuel. Its simple, basic, unchallenged assumption was that we should create electricity mostly by burning oil which would cost only a few cents a barrel for ever and a day. Dozens of pits were closed on the basis that such economic and financial assumptions were accurate. We now know that, as a result of one week's skirmish in the middle east in 1973, all those assumptions were destroyed.
The lesson to learn is that we should not become dependent on imported supplies which are supported at cheap prices. We must be aware of the speed at which we forget the lessons that we should have learnt. We are already forgetting the lesson that we should not become dependent on imports of coal or on any other imported form of energy wherever possible. We should maintain flexibility and diversity. We shall not do that by closing the reserves of coal for ever and a day.
I now make the case on behalf of my pit, Taff Merthyr. Other hon. Members have asked where the markets are. The only market for Taff Merthyr pit is the collection of power stations at Aberthaw and Uskmouth, 15 miles down the road. The coal goes by rail from Taff Merthyr 15 or 16 miles straight into the power stations of south Wales. Welsh coal supplies Welsh power stations to provide Welsh electricity. At the moment, demand is down. If the Aberthaw-Uskmouth combination of power stations get back to their normal consumption—we hope that that will happen when we have a viable economy—they will require about 4 million tonnes. That could come from the Tower colliery, from private licensed mining in south Wales or from opencast mining. It should come from Taff Merthyr.
If the market picks up, the unbelievable alternative—the power stations are designed to take low volatile coal—is either Vietnamese or Russian coal. Such coal would be imported at Bristol Avonmouth and carted across the estuary to a power station 15 miles away from pits that had been closed. When there are doubts and worries, and when we are talking about long-term trends, why would anyone make such a crazy decision which will destroy opportunities and jobs? [HON. MEMBERS: "The Government would."'] Let us hope and pray that the Government will not make such a decision and that, at the last minute, they will decide to see sense. I say that especially to the Secretary of State for Wales.
At various times, the Secretary of State and I have collaborated to promote what his Department calls the "Source Wales Initiative", which is a major effort to encourage people to buy Welsh products so that by a form of import substitution we can create new jobs in Wales. What a joke it is for us to spend all our time promoting the "Source Wales Initiative" while the Secretary of State is party to the closure of the one source of energy available at present, which is next door to a Welsh power station which needs the coal to produce electricity for Wales.
I beg the Secretary of State not to stand behind the fig leaf of consultation or of privatisation. It is a cruel hoax to tell people at Taff Merthyr that a private investor will come to take over. As my right hon. Friend the Member for Llanelli (Mr. Davies) said forcefully, that is a possibility for Betws. However, he and I know that the future of Taff Merthyr is tied into the power station argument and into the contracts between the present barons. I hope that the Secretary of State will not try to pretend that that is a future option for Taff Merthyr.
Unless the Secretary of State for Wales gets better assurances, he should not pretend that there will be real consultation. We do not know about that, although I have asked him repeatedly, including personally last Thursday, what consultation will take place. The Taff Merthyr lodge has asked only for professional mining engineering advice to be taken. Such mining engineers know the seams, the industry and the area well and they believe that future reserves can be mined economically. All that we have asked is that our case be heard before an independent review inquiry, which is part and parcel of the industry's rights. That has been denied us from day one.
The Secretary of State says that Taff Merthyr was saved from closure last August. The workers there did not concede closure, although there was a sense of resignation and disbelief. People have not left the pits. Since October, they have clung to the belief that some common sense would prevail with British Coal, with the Government and with the Secretary of State.
I have had the privilege of speaking in most of the coal debates since I was elected in 1983. I am delighted to have the opportunity of doing the same today. My constituency had three pits in 1983; it has none now. However, it has the headquarters of the Selby coalfield and the headquarters of Yorkshire Electricity. I declare an interest in that my law firm acts for many companies involved in energy, and for their customers and their suppliers. In common with all hon. Members, I have the ultimate interest that all constituents are consumers of electricity.
I have always argued that there must be a balanced and diverse energy policy. The precise mix of fuels must be a decision for the marketplace. It has to be determined ultimately by customer choice and by competition. The first dividend of that policy after privatisation is the cuts in charges by the electricity companies, which are being announced.
I have no doubt that coal can compete effectively in that environment, provided it plays on a level playing field. Unfortunately for coal, it has not had and does not have a level playing field. Everyone else in the energy sector is out in the private sector, with the freedoms that that involves and with the additional opportunities for marketing. Coal alone is still stuck with the constraints of public ownership.
If coal had been privatised in the 1980s along with electricity generation, as I believe it should have been, there would have been a different shape to privatisation, with coalfields and coal-fired power stations being put together to sell electricity directly to consumers. Instead, coal was left with the problem of being able to sell insignificant quantities only through the generators. That is the root of the current problems. I hope that the privatisation process announced in the White Paper will give the opportunity for restructuring in the industry which will be the best guarantee of the long-term success of the coal industry.
If the coal industry was a competitor with the generators for selling electricity, their attitude to buying coal would be very different. Unfortunately, that could not happen in the 1980s, because of the militancy of the National Union of Mineworkers. It was obvious that the privatisation of coal in the 1980s would have run into severe difficulties. In a very real sense, the NUM was the creator of the myths about closure in the 1980s, and was the author of its own misfortunes, because it prevented the coal industry from being privatised alongside electricity generation.
I still believe that coal can catch up on lost opportunities. I was not prepared to accept the statement last October, for a number of specific reasons. I could not accept the arbitrary closure of viable pits. Most people in the industry to whom I spoke and whose advice I trusted suggested that there were between 10 and 15 viable pits in the industry.
There was no independent review of pits or of their prospects. There was no opportunity for private sector involvement. Pits were to be closed without the opportunity being provided for others to purchase them. The timetable given in October was that dictated by the generation contracts due for the end of this month. This meant that there was no linkage between those decisions and the nuclear review, or the question of import substitution, or the review of mineral planning guidance for opencasting, or the question whether orimulsion was desirable, or the question of the French link.
Those issues have been addressed in the White Paper. Of the 10 to 15 viable pits, 12 are to be retained. In addition, Maltby is to be put into development and Betws will clearly find an acceptable buyer in the free market. The opportunity for private sector involvement will be very substantial indeed. Already, many companies are expressing an interest in buying pits. They will now be given the opportunity to do so, because it is quite clear that no pit can be shut down without an opportunity being provided for others to buy it and operate it successfully.
The Boyds report and the Select Committee report have given us a valuable basis of information for decision making which was not available last October. Above all, the provision of the subsidy has given——
The £700 million-worth of subsidy—the range of subsidy spoken of in the Select Committee report—will give us the opportunity to keep open the viable pits while the nuclear review takes place. It will give the opportunity for import substitution. There is already a welcome change in the weighing of the priorities under the mineral planning guidance, so that opencasting in green belt sites is unlikely to be granted planning consent in future. Orimulsion is being cut.
Moreover, I am quite sure that we shall find ways of redressing the balance on the French link, although all the information that I have suggests that, if the French link were closed down, a large part of the saving would not come to coal, because the southern electricity companies would want to reopen oil-fired power stations in the south.
I have already said that those issues have been addressed in the White Paper, and the White Paper now deserves support in a way that the October statement did not. Nevertheless, there will be forces in British Coal that will do their best, in the weeks to come as last weekend, to undermine the process.
My hon. Friend the Member for Rochford (Dr. Clark) suggested that those elements wanted to buy the industry themselves on the best terms available. I suggest that there is a simpler explanation—that many people in British Coal simply do not want to face up to a competitive environment. Marketing has hardly been a conspicuous success of British Coal, and I believe that many independent companies, given an opportunity to mine coal on a much larger scale, will find markets that British Coal has been quite unable to find for itself.
I would not support indefinite subsidy. I have never believed that we should swap jobs from one industry to another, which is what indefinite subsidies amount to. Nevertheless, I believe that there is a valid case for providing the funds to enable British Coal to make the transition to the private sector and to give it the opportunity, which I believe it can grasp, to survive and prosper in the private sector.
The NUM militancy this weekend—in the form of the announcement of the strike on Friday—is a gesture, and I hope that it will be seen as nothing more than that. It should nevertheless act as a considerable warning to those who work in the industry that, henceforth, they have to look to their customers rather than to the entrenched attitudes of the past. If the coal industry is to have a future, as I believe it will, that future will depend not on silly gestures but on its satisfying its customers that it will be a reliable supplier.
The Government have looked at all the options. They have adopted many of the Select Committee's recommendations. I commend the recommendations in the White Paper to the House, and congratulate the Government on having moved so far since their statement in October.
The crisis in the coal industry relates to the botched privatisation of electricity, the architects of which—Lords Parkinson and Wakeham—are in the other place. That privatisation left a ticking timebomb, which exploded in the face of the President of the Board of Trade on 13 October last. Instead of doing something radical about it, the right hon. Gentleman stood there like a cartoon character, blackened by the blast.
Our coal industry is a world-beating industry. It is the most sophisticated and safest deep coal mining industry in the world and produces the cheapest deep-mined coal in Europe. Nevertheless, the White Paper does nothing whatever for the industry. It takes us no further than the statement of 13 October. If anything can be said about the White Paper, it is that it is a masterly deception. I remind the House that, in paragraph 23 of its report, the Select Committee observed:
Classifying pits in this way is far from easy. Not only does the performance of individual pits vary, but British Coal has a very flat supply curve … Thus a small change in production costs or price can transfer a large number of deep mines from profit to loss or vice versa.
In other words, a slight change could alter the fortunes of all the 31 collieries now scheduled for closure within one to two years.
I would also refer the House to paragraph 266 of the Select Committee report, which contains a menu of options that could have widened the market significantly. It is sad that the Secretary of State has not taken any of them on board. We refer to the displacement of imported coal or oil subsidies. We talk of removing the non-leviable status of electricity imported from France; we talk of requiring flue gas desulphurisation for stations burning orimulsion, proposing that that could be provided by moneys from the nuclear levy; we talk of restricting combined cycle gas turbine stations from operating permanently on baseload and of how higher stock levels could be controlled; we talk of reducing opencast mining.
That menu adds up to 36·5 million tonnes of coal on top of the contracts that have already been signed involving 40 million tonnes and subsequently 30 million tonnes per year. In other words, there is a substantial market for coal. I find it sad that Conservative Members who put their names to the Select Committee report now seek to distance themselves from it. I have heard hon. Members say today that the form of words in the report gave the drift of the Committee's conclusions, but, because of the lateness of the hour, did not express very clearly what its members thought. Yet our conclusion was clear. We said that many of our recommendations would provide opportunities for a larger market for coal beyond that which we were advocating for subsidy and we advocated that price support should be given to 19 million tonnes of coal within that much larger market.
At the same time, however, we said that that price support should be tapered so that, as British coal prices came nearer to world market prices, the subsidy would taper and eventually disappear. The evidence to the Select Committee showed clearly that British Coal was on course to becoming fully competitive within two or three years. It showed also that once British Coal reached full competitiveness, the price support would disappear.
No, I am sorry. There is a strict time limit and I want to be brief.
Let us consider what the White Paper does not do. It rejects the reform of the nuclear levy, curbing French imports and restrictions on the use of orimulsion. It also rejects the reduction in the output of opencast coal. It also rejects increased coal subsidies to the electricity market for retaining the regional electricity companies' franchise. Conservative Members must accept that we are talking in terms of subsidising 16 million tonnes of coal for the electricity supply industry within the context of the franchise market.
The franchise market is extremely important. The regional electricity companies will agree to back-to-back contracts. We suggested that the franchise should be extended until 1998. That would have given the coal industry great stability during the period of change as it moved to full competitiveness.
We also referred to removing market discrimination against coal. That proposal was also rejected by the White Paper. Similarly, the White Paper rejects curbing the dash for gas. That is intriguing because there are two references in the White Paper to gas being more expensive than coal. However, the President claims that he cannot intervene in the market to ensure that we restrict gas in the way suggested by the Select Committee.
The Select Committee suggested that priority should be given to sour gas projects. We also suggested that the next priority should be combined heat and power projects. We also suggested that gas should be restricted from baseload generation. No other country in the world uses gas for baseload generation. That is extremely important because gas is much more flexible for follow loading than baseload.
The menu of options amounted to a total market of 62 million tonnes. However, the President has not entered into the market that we provided. He has rejected all our proposals. As a result, the collieries that he talks about surviving for two years or so will disappear because there is no market for their coal. The right hon. Gentleman has provided no opportunity in the market for the 12 collieries that are to be given market testing.
What did the President mean when he referred to development status for Maltby? Will Maltby's work force be made redundant? Will the drivages be handed over to contractors? At the end of the day, when Maltby is ready to produce coal, will the work force be brought back to mine the mineral, or will the contractors receive the contracts to mine the coal? If the latter is the case, the right hon. Gentleman should come clean and say that that is what he intends.
Clearly, the White Paper does not, in any way, meet any of the Select Committee's recommendations. As I have said, it takes us only a very little way from the position at 13 October last year. Anyone who has had any connection with the mining industry will be aware that its privatisation will do nothing for the industry except return it to the bad old days. The Opposition oppose that rigorously. Privatisation will not help coal mining.
We can understand how the miners feel when we consider the day of action on Friday. Over the past five months, the delay has been orchestrated deliberately to spin miners off into redundancy. There is no doubt that the extension of the redundancy terms to 13 December is also designed to spin miners away from the 12 collieries for whose coal there is no market. We know that those collieries will eventually close in a year or so.
I support the miners' day of action and I understand how they feel. They feel that they have been badly treated, left with no hope for five months and, at the end of the day, that the White Paper simply proposes the closure of the industry.
It is a privilege to take part, very briefly I trust, in another debate on the coal industry as I have taken part in and and responded to such debates in the past.
Whenever there is a discussion about the coal industry, no matter on what side of the House one sits, there is an anxiety about the fact that we are dealing with an industry which is changing. Indeed, for many years that change has meant decline. As my hon. Friend the Member for Bedfordshire, North (Sir T. Skeet) said earlier, two charts in the White Paper sum up that change most vividly.
The chart on page 19 of the White Paper reveals that there was a take-up of 200 million tonnes of coal in 1960. Electricity generation took 26 per cent. of that; industrial consumption accounted for about 21 per cent. and the domestic fuel market took up 28 per cent. When that chart is contrasted with the one directly below it on page 19, it is clear that today the industrial and domestic markets have shrunk to 7 per cent. or less while the percentage dependent on generation has increased to about 80 per cent. The volume of take-up in 1992 was 101 million tonnes.
That is the base problem. Although enormous environmental and security of supply pressures have undoubtedly played their part in the reduction of the industrial use of coal, the main changes have probably arisen as a result of offers of other energy sources. They include oil and subsequently gas from the North sea and the development of nuclear power which now comprises 18 or 19 per cent. of generating energy. Those sources have entered a field where none existed before.
That has occurred although amazing efforts have been made to sustain and develop the coal industry. There has been huge investment causing great productivity. Volumes are now approaching 100 million tonnes from some 20 pits. Although there has been a massive reduction in manpower and consumption, the efficiency of British Coal-produced products at the pithead has steadily improved.
How can we react to the present situation and the calls in October for further immediate closures? I am bound to say that I have some sympathy with those who believe that the privatisation of electricity is part of the problem. I suspect that if my right hon. Friend the Secretary of State for Wales, who is on the Front Bench now, had had something to do with it, it would have turned into rather a different animal. However, there is a huge duopoly in electricity generation, and there is no doubt that a duopoly is no substitute for a competitive market.
I was puzzled by paragraph 10.44 of the White Paper, which reads:
The DGES made a further report on 23 February. Although the Director General sees possible scope for future improvements in RECs' purchasing practices and in the regulatory regime, this report confirmed that he found no basis for concluding that the RECs had breached their economic purchasing conditions.
Of course, the economic purchasing conditions require them to buy their fuel at the cheapest possible price. However, paragraph 10.45 states:
The Director General did, however, record that he was not convinced that the costs associated with producing electricity from coal fired plant were sufficient to justify contract prices as high as those offered to the RECs by National Power and PowerGen.
It is not good enough to allow a duopoly of this sort to produce prices which are extremely doubtful as far as the director general is concerned. I sometimes wonder why the director general cannot take to the Monopolies and Mergers Commission earlier than 1995 a reference to the generators, which is included in paragraph 10.48 of the White Paper. Pressures should be placed on the market for the generation and supply of electricity which would even out the problem which, I suspect, was created with the privatisation of electricity.
With the present position, and with the arrangements which are contained in the White Paper, at least there are two or three encouraging prospects. The first must be that the President of the Board of Trade has recommended bringing forward the nuclear review to start in 1993. In that review, the need for a levy may well be discounted. I should like to see the nuclear levy removed as soon as possible, in so far as it affects the costs of decommissioning. There is no reason why it should be lumbered on top of present coal industry costs.
There is the prospect—amazingly, from the Government—of a subsidy on the tonnes of coal to try to close the inevitable gap between the world price for coal and the price for domestically produced coal. That has been a difficult problem for the coal industry to crack in the past 10, 15 or 20 years, but there is an opportunity for it to be done. The closer the gap becomes between the domestic price and the world price—which is the imported price—the better the chance of turning some of the 6 million tonnes which are imported for steam-produced electricity into a United Kingdom coal-produced product. That is an encouragement.
The second encouragement is that I suspect that there will be a measure which will get more interest into British Coal in terms of marketing the product in markets other than simply the domestic one. If coal which is produced in the United Kingdom reaches the world price, there is no reason whatever why the product cannot be marketed in Germany, even at the transported price, and undercut German electricity generation.
Over the years, I suspect that British Coal has lacked a management thrust which is market oriented. When Mr. Malcolm Edwards worked for British Coal, we certainly got a real thrust on selling more coal for more uses within the United Kingdom. I am surprised that British Coal is less evidently a marketing company than it should be in the present circumstances.
There is a call for an energy strategy to be published. I note from the White Paper that there is to be an annual energy statement. I should like to know whether it will be a genuine audit or simply a state-of-play report. If there is to be a case for taking energy from all sources into the position of being able to influence how the market develops, it should be a proper strategy document. It should be able to deal with all energy resources, it should be updated yearly, and it should become a benchmark for the development of what I hope will be a competitive industry—although on a different basis. With all that, I suspect that there is a chance that the decline will not continue as it has in the past. Equally, I have no doubt that the ultimate decision on whether the industry survives depends on the price of coal which is delivered to consumers.
I speak with 39 years of experience in the industry before I became a Member of Parliament. I sometimes find it amusing when people ask me what I did when I worked. When I worked, I was a miner.
If the ill-considered statement made by the Board of Trade in October announcing the list of 39 pits threatened with closure did anything at all to advance the interests of the nation as a whole and the coal industry in particular, it can be seen only in the flurry of interest in energy issues and the embarrassing decision, after universal public pressure, for the Government to back off from the original recommendations and try to salvage the reputation of the President of the Board of Trade by producing a White Paper which reads like a less reputable second-hand car salesman's handbook—promising much but delivering little.
I was intrigued by the British Coal press release dated 25 March:
British Coal has discussed with Government the conclusions reached in its Coal Review White Paper on the market for coal and considered the consequences for the size and structure of the business. It welcomes the decision to make available transitional financial assistance, with the objective of enabling the electricity generators to buy additional quantities of British coal, and the opportunity this can provide to secure the future for a larger number of collieries.
That is an intriguing press release when one refers back to the British Coal press release dated 21 January 1993—this is 18 press releases before the one which I have just quoted.
On 21 January 1993, the chairman of British Coal, Mr. Neil Clarke, said:
We hear and read a lot about possible solutions to the public demand for a fair deal for coal. What would clearly be no solution would be some kind of fudge. What counts in the end is the amount of coal which is burned as part of the energy mix in our power stations. And for us, of course, how much of that is British Coal.
It has been suggested that our coal needs a massive subsidy to stay in the market. That is nonsense. We have not sought a subsidy and it is mischievous to plant the notion that very large amounts of electricity users' or taxpayers' money is needed to featherbed our minds.
Who can trust British Coal when it makes two different comments publicly?
I would prefer to trust what was said by the British Association of Colliery Management:
Mere tampering is insufficient. Without radical changes in the commercial environment in which the UK coal industry has to operate, there can be no radical change in the number of collieries originally scheduled for closure.
That is nearer the truth than the comments made by British Coal today.
The White Paper highlights the record of the Government's attempts to use mining industry issues to destroy the National Union of Mineworkers, betray their erstwhile friends in the Union of Democratic Mineworkers and, ultimately, create conditions for the remnants of the coal industry to be sold off to their friends for a pittance.
Privatisation, as the ultimate aim, has overshadowed all of the events of the past few months. Although the general impression is that the introduction of legislation some time in the future—the President of the Board of Trade mentioned two years—will dispose of a vital industry which has been owned by the British people for 46 years, the truth is that action has already been taken in introducing private contractors into the mining operations of British Coal, and is a major step towards privatisation. A Bill to denationalise the industry will only finalise the process which has been taking place for some time.
Ellington colliery in Northumberland, where many of my constituents are employed, is an example. Development work and surface installations are already in the hands of private contractors. The coal production section of the mine is to be handed over to private operators. I understand that it is probably the first time that that has been done in the United Kingdom. Such back-door privatisation is taking place up and down the coalfields, and the White Paper is the next progression towards the final disposal of a valuable national asset.
How does the White Paper respond to public and political demand for a viable coal industry which is fully equipped to produce coal at dramatically improved output levels and rapidly reducing costs, able to take its place as an important primary source of energy, allowing Britain to be less reliant on foreign sources of energy and potentially able to be the bedrock for an expanding manufacturing industry—which is in decline at present, sadly, because of the Government's policies—with the possibility of recovery with proper Government support?
The White Paper produces no answers whatever to those problems. The distorted market remains. The private electricity industry operates a cosy monopoly in its part of the market. In a press report dated November 1992, an inspector suggested that five of the ancient Magnox stations in the heavily subsidised nuclear generating industry are at risk and should probably be closed down. If the stations are closed down, what will replace nuclear generation? It must be coal.
It has been maintained that the famous French link is a quid pro quo arrangement, whereby France tops up Britain's energy supply at peak times and Britain supplies France at peak times. However, the system has never worked as intended. When I inquired last year in a written question, I discovered that the flow was heavily in one direction. That has apparently been going for some years. The figures showed that, in 1990, the ratio of electricity supplied to France to that supplied from Britain was 255:1. In 1991, it was 1,091:1.
The President of the Board of Trade said today that a programme was under way to halve the ratio in eight years. So in eight years, the figures for delivery from France to Britain will be down to 500:1. That is not a bad target. In 16 years, we might have electricity flowing both ways. That is yet another case of clear commercial interests superseding national interests.
If the ratio had been balanced the other way, the French Government, whatever their political complexion —there has just been a change of Government—would have taken action. They would not simply offer vague promises for the future. I have been a member of the Council of Europe for four years, so I have some experience of dealing with the French, as have some of my colleagues. In dealing with the French, we should never trust them as far as we could throw the whole French nation.
We must consider another aspect of the issue. We talk about the generating industry as the main consumer of coal, but there are other consumers to consider. My hon. Friend the Member for Livingston (Mr. Cook) talked about the gas reserves. He said that they were finite and likely to run out fairly soon. How long fairly soon might be remains to be seen, because we do not know how much gas we have. He also said that, when it runs out, we may need to import gas. Then someone else would fix the price.
I have been here for the whole debate tonight, but no one has mentioned the production of gas from coal. The technology has been developed and used in Britain. I visited a plant in Scotland some years ago. The technology has progressed fairly well. However, I have recently read a document form Texaco in which it says that it has produced gas from coal for 30 years. Four plants around the world have produced gas efficiently and economically for 30 years. If we close down coal mines and decimate our coal industry, where will we obtain coal if we need to produce gas from coal at some time in the future? The mines will be closed. I look particularly at the north-east of England.
As the House will know, I am sponsored by the National Union of Mineworkers. My section of the union, the colliery officials and staffs association, has members at every colliery in Britain. That gives me an interest in the future of each and every mine. The members of my section are specialists, and their morale has not been improved by the content of the statement on Thursday or the White Paper.
The White Paper merely produces some limited short-term answers to long-term problems. Too many questions are left unanswered not by the disastrous proposal to write off huge coal reserves in the pits which are to close—for which future generations will condemn us —but by the proposal to mothball six mines. Two of the pits to be mothballed are Westoe and Easington in the north-east. They are both working reserves under the North sea.
My long experience in the coal mining industry has shown me clearly that it is possible to mothball mines in the short term—for perhaps one or two months—but that beyond that there are tremendous difficulties. I have practical experience of the deterioration of mines. One can go into a mine on Monday morning and find that, over the weekend, some of the equipment has become unworkable. The roof has pressed on the mechanical chocks which support the roof, and it is necessary to detonate explosives to blow them out. That is merely after a weekend.
After a long weekend or a holiday weekend, the problem is exaggerated. After a fortnight or three weeks' holiday, it is exaggerated even more. I have experience of circumstances in which three days of production have been lost in getting the mine working again after a holiday. What will happen when the mine is not worked for perhaps months or a year? The mines will not be mothballed for that period: they will be closed.
Westoe and Easington mines in my region are both under the North sea. They are both prone to water ingress. I have had experience of the North sea coming into the mine. One cannot keep that back unless one is King Canute. Those are the problems which arise from mothballing. So it is with some pessimism that I say to anyone who is involved in the pits which are to be mothballed, "Forget about them ever opening again. They are gone." Not only the mines which are on the list to be closed, but those which are to be mothballed will be lost. That is a sad thing to say to anyone with whom I have been associated in the mining industry.
Anyone with practical experience of deep mining operations will know that the high cost of maintaining roadways, roof conditions, water pumping operations, ventilation and machinery is prohibitive if there is not production to pay for it. The Minister might like to respond to a question put to me by a miner: what arrangements are to be made to cover redundancy payments after December 1993 to miners involved in maintaining the mothballed mines if a decision is made to close them in 1994 or 1995?
The Government should understand that, if they abandon a significant proportion of our coal reserves, the country will see it as a largely irreversible decision of historic significance to the United Kingdom. The Government will not be forgiven for their folly.
I am pleased to speak in the debate as a Member for a Nottingham constituency and someone who has lived the whole of his life in Nottinghamshire. From sheer contact, I have a great respect for the mining industry, the key industry in our country, and, indeed, for the contribution that it makes, has made and hopefully will make in the future to meeting Britain's energy requirements.
I have always believed, largely for the reason given by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), in a four-fuel policy for Britain. I also lived through the time when we decided that oil would be the fuel and closed many coal mines in Nottinghamshire. I was serving in local government at that time, as chairman of the finance committee of Nottinghamshire county council. We combined with Derbyshire to redevelop the Erewash valley to replace mining jobs. I thought then that we had learned the lesson that a Government of any persuasion should be wary of going for a particular fuel
Therefore, I believe that we should have a four-fuel policy, and that deep-mined coal should play an important part as that fourth fuel. I also feel that, in Nottinghamshire, the Union of Democratic Mineworkers has proved itself again and again. It is supportive and has much higher productivity figures than other coalfields, pit for pit and seam for seam. It deserves the support of the Government.
I agree with both Conservative and Opposition Members who have suggested that the current problem has occurred as a result of the way in which electricity was privatised. There are those—we have heard them speak from the Conservative Benches—who believe that the market is the master and should be the ultimate arbiter of everything. I happen to be a different sort of Tory. I believe that the market should be an important mechanism by which judgments should be made, but that it should not be the master and the arbiter.
I disagreed with some of the remarks by Opposition Members about the market. One must accept that the way in which electricity has been privatised means that the market is currently the master of our energy policy. It was not certain that the core contracts, however much Opposition Members may deride them, would be signed. There was no reason why the generators should have signed the core contracts. They have every ability to sit on their coal stocks.
There is almost one year's coal burn on the ground. The generators could use that £1 billion-worth of stock and import coal at a lower price than that produced in Britain. So it was not a certainty that the core contracts would be signed. I am glad that they have been signed, because that enables us to continue to the next stage.
My concern all along has been what will happen in five years. The original core contract of 30 million tonnes in five years' time does not represent the production of the deep-mined coal industry in Britain. At worst, 30 million tonnes from all sources could mean about 20 million tonnes of deep-mined coal and between 10 million and 15 million tonnes of opencast coal and that does not represent a core industry—an industry of a size that can be regarded as an industry. That has been my concern and I have submitted that evidence to the Trade and Industry Select Committee and to the inquiry.
As far as the White Paper is concerned, if we accept that the Secretary of State has certain powers, he has done everything that he possibly could within them. He has persuaded the Government to agree to a £500 million subsidy and has got a couple of hundred million pounds for the redevelopment of certain sectors. The hon. Member for Mansfield (Mr. Meale) is present and he knows what happened in Mansfield and other areas when the last group of pits was closed. Additional money is helpful. As it happens, Nottinghamshire is fortunate, as it is on the M1, it is a centralised area and it has an adaptable work force. My right hon. Friend the President of the Board of Trade has also done many other things which, in the interests of time, I do not intend to list.
The White Paper and the vote tonight are not the end of the story. It is not a case of either-or, and when the vote is taken it will not be the end of the Government's commitment or involvement, nor will it be the end of what they need to do.
It has already been said that we have already made a move in the right direction on opencast mining. I agree with Opposition Members who mentioned the true cost of opencast, which is very high indeed for people who often have to suffer 10 or 15 years of blight. More needs to be done, based on the statement from the Department of the Environment. In particular, more needs to be done to protect green-field sites, wherever they may be, from opencast mining. I am not convinced that we have finished with opencast and I see no reason why the amount should not be reduced.
Secondly, I am pleased that the nuclear review has been brought forward as there is a lot to play for and I agree with my hon. Friend the Member for Pudsey (Sir G. Shaw) about the nuclear levy. The nuclear industry also wants to play its part in supplying Britain's energy requirements and one can visualise that there could be a trade-off between closing Magnox stations and opening another pressurised water reactor. All those who have been interested in the energy scene recognise that PWRs are the only way to generate nuclear energy competitively and there could be a trade-off by closing Magnox stations, to increase the coal burn in that way.
In my judgment, it boils down to how can we increase the market for coal, as recommended by the Trade and Industry Select Committee and accepted by the Government, with the help of the subsidy which is to be made available. Power stations are the market for coal. When the electricity generating industry was privatised, 32 coal-fired power stations were handed over to the generators on 1 December 1992. In terms of modernity and wearing out, they range from power stations built in 1957 to those finished in 1974. The same applies to power stations run by National Power and PowerGen, except that PowerGen's latest power station, Fiddler's Ferry, was completed in 1971.
First, we must realise that many old power stations are mothballed and are not being used. The House and the Government should seek to ensure that we concentrate on the power stations that are desperately necessary to maintain coal production from deep-mined pits at about 30 million tonnes in the long term. I understand that only eight of the 32 are essential, and those are large, long-life power stations located close to long-life, low-cost mines. The list includes West Burton, Eggborough, Aberthaw B, Rugeley B, Drax, Ferrybridge C, Ratcliffe on Soar—the closest to my constituency—and Cottam. Another seven coal-fired power stations need to be retained if we are to encourage and to find the contracts necessary, over and above the core contract. They include: Thorpe Marsh, Ironbridge, Didcot, High Marnham, Drakelow C, Kingsnorth and Fiddler's Ferry.
I suggest to my colleagues that to encourage, support and assist British Coal, it is surely possible to negotiate one of the special contracts mentioned in the Select Committee report, which states that
British Coal and the generators should explore alternative forms of contract of the types suggested by our witnesses and British Coal should seek to obtain contracts for part of its output extending beyond ten years.
It does not seem to me to be beyond the wit of man to negotiate for one of the power stations in the first or second list and to refit it with the sort of technology that the hon. Member for Wansbeck (Mr. Thompson) mentioned—combined heat and power from coal in which one uses a gas burn as well as coal to increase efficiency, which is environmentally clean—and to fix a contract with subsidised coal. That would seem to be a useful way to use the subsidies that the Government are providing for an additional contract—over and above the core contract— for one of those power stations. In return the station would be brought up to standard and up to date with one of the new technologies which was invented in this country. The countries that we exported it to are now offering it back.
I am under a voluntary 10-minute rule.
Tonight's vote is not the end of the story and there will be other opportunities which we must utilise. We must go in the direction of new technology.
If we are not able to protect the coal burn and coal-fired power stations, it will not matter what price we mine coal at as there will be no market for it. Because of my background and my commitment to my county, my heart is very much with the miners and I understand their problems, but my head is concerned with how we can best ensure the long-term future of Britain's energy supplies and, the deep-mined coal industry, and the part that it should play within that future.
Earlier in the debate, there was some criticism of the miners and it was said that they should not contemplate strike action. It is a sign of miners' anxieties and their deep concern that even the traditionally moderate Nottinghamshire miners are balloting for strike action on Friday. It has also been said that the problems of the deep coal industry are the fault of the miners, who have not been flexible enough.
It is important to stress that miners in Nottinghamshire and throughout the country have done everything asked of them and more. During the past five years, they have increased productivity by 150 per cent. and they are producing coal at half the cost of German coal. The price of coal from pitheads throughout the country is the same as it was six years ago, yet our electricity bills have increased by 65 per cent. The British coal industry is the best and the most productive in Europe and, given their productivity record during the past five years, miners are entitled to ask what the President of the Board of Trade has been doing during the past five months.
Miners say—and they are right—that the White Paper has not produced one extra tonne of coal. It is a mouse of a White Paper and not a lion and it contains no energy policy for the nation, save that that policy will be dependent on market forces. It is important to define clearly the terms and consequences of the White Paper, because some hon. Members have said that it will save pits. As a result of it, however, 12 pits will close immediately and six will be mothballed. There is a strong feeling among the managers and workers in the industry that those pits will never reopen. There is also much scepticism about whether the 12 pits, the market testers, will survive for long.
The debate is about the market, but the Government have said exactly what they said in October. The only job that is saved by the White Paper is that of the President of the Board of Trade. Today, he has said, "I told you so" and been keen to justify his actions.
The core contract offered by the White Paper is for 40 million tonnes of coal next year and 30 million tonnes for the year after. I view the notion of the supplementary contract with suspicion, because, even this afternoon, the President of the Board of Trade was most unclear about its origin. The idea is that those contracts will force out imports, so that the price of British-produced coal falls below that of imported coal. Today, it has already been admitted, however, that only 8 million tonnes of imported coal is bought each year and only 6 million tonnes of that is steam coal for electricity.
It does not take 12 pits to produce 6 million tonnes of coal. When one considers that we have 45 million tonnes of stockpiled coal, the supplementary contract, however it is subsidised, will not work. The 12 pits, the market testers, will therefore not last long. There is great concern in the industry that market testing may last only while the present redundancy terms are on offer—to December this year. People in the coal industry, who have done so much for the country, are keen to know what reassurances the Government can give about that, but I suspect that none will be forthcoming.
As a consequence of the White Paper, the current number of pits will be reduced from 50 to 20, perhaps by Christmas. That is the real issue behind the White Paper and for that reason coal miners are being forced, in desperation, to look to strike action.
We have been told that the Government have been anxious about this matter and that a great deal of thought has been devoted to it. As a result of that concern, an extra £200 million will be made available to regenerate the coalfield communities. I challenge anyone to deny that the White Paper means that a further 4,000 miners' jobs will be lost in Nottinghamshire in the next two years. The knock-on effect of that will mean the loss of another 4,000 jobs. The effect on the local economy will be extremely severe, because £225 million will no longer flow into it. The loss of such spending power will hit north Nottinghamshire. In the past two years unemployment has gone up 70 per cent., but as a result of the White Paper, it will go up by another 100 per cent. What are the Government offering? Just £200 million nationally against a loss of £225 million in Nottinghamshire alone. The Government money will be spread over five years, so we are talking about £40 million against an instant loss of £225 million.
The people of Nottingham do not want the palliatives that are appended to the White Paper. The talk of a regional development agency based in Nottingham is fine. I was involved in discussions with the private sector five years ago to get such an agency off the ground. The idea for that agency developed in the east midlands; the only announcement that the Government have made about it, just last week, was about whether it should be based in Nottingham or Leicester. Such is the size of the prize offered to our area.
There is also talk of a major business park. I hope that it will be developed and I know where it will be located. The planning for it has come from the local authorities, although I accept that the finance may be raised in association with the private sector. What is on offer, however, is of little help to Nottinghamshire in its quest for a new future and a new vision.
In his peroration, the President of the Board of Trade spoke of looking to the future and our children. We want a new future in Nottinghamshire, one in which there is investment in infrastructure, training, people and jobs. We want investment in our future. The White Paper sells us out.
The context of the debate is that the House is being invited to confirm the closure of 18 pits with the loss of 20,000 mining jobs and 50,000 jobs overall. By any yardstick that is a grave matter.
I begin by congratulating the Chairman and members of the Trade and Industry Select Committee on their excellent report and the wealth of detail that it contains. I also pay tribute to my right hon. Friend the President of the Board of Trade for his hard work and the way in which he has always made himself available to colleagues, often at short notice, for consultation. That has been greatly appreciated.
I welcome the fact that my right hon. Friend has accepted the principal recommendation of the Select Committee, the short-term subsidy to displace immediately the volume of imports. That has been agreed in the clear hope that it will enable our pits to produce coal at world market prices, at which point they will have a viable future, because they will continue to be able to displace at least the anticipated volume of imported coal.
I appreciate the other important steps that my right hon. Friend is proposing. I particularly welcome the decision that the closed and mothballed pits will be made available to the private sector. For some pits that will change nothing, for others it will mean a brief lifespan, but for yet others I believe that it will mean that they will continue large-scale coaling. That I welcome most warmly.
I welcome the fact that my right hon. Friend has agreed to bring forward the nuclear review and that he has also agreed to high-level negotiations with the Government of France about the imbalance on the interconnector. I especially appreciate the prompt way in which he responded to my request for a meeting, just a week ago, on behalf of our major energy users, including such companies as ICI, Allied Steel and Pilkington. That meeting was held on Monday and, by Thursday, as a consequence, my right hon. Friend had included a relevant passage in the White Paper. I was delighted to hear just this morning from those involved that they expect to place a contract for seven years or more for the supply of 5 million tonnes of British coal a year. They will obtain power at a more favourable rate, by bypassing the pool, as a consequence of the arrangements that my right hon. Friend has made for them.
I very much regret, however, that by no stretch of the imagination can this White Paper be called an energy strategy; nor does it represent any meaningful levelling of the playing field. The market is heavily stacked against coal in the years ahead.
I recognise the restrictions under which my right hon. Friend had to operate. They also affected the Minister of State, who has played an important role. The shape of the energy market for the mid to late 1990s was decided in the late 1980s. Conscious decisions were taken then by industry and Government in the wake of the miners' strike of 1984–85 to turn away from coal. If there is one person more responsible than any other for the fact that significant numbers of pits are closing in the 1990s, he is none other than Arthur Scargill. No single factor more directly propelled the Government towards the dash for gas than the conviction that British coal and British mines could no longer be relied on. That was tragic.
While Sizewell B will displace about 3 million tonnes of coal when it comes on stream in the next 18 months, the new gas stations that are in the pipeline will displace 30 million tonnes. Between them, that equates to 31 pits—hence the logic behind the infamous announcement of 13 October.
As a result, base contracts are falling between now and 1 April next year from 65 million to 30 million tonnes. No wonder British Coal doubts whether new markets can be found, apart from on the margins. I accept that this is not of my right hon. Friend's making; he inherited the situation. His room for manoeuvre has been severely limited and I do not doubt that he has strenuously exerted himself.
My right hon. Friend speaks of competition in the energy market, but he knows very well that the future of that market is heavily rigged against coal. If the miners produced coal at the pithead and gave it away for free, the market for coal would still inevitably and drastically contract. If that is not a rigged market, I do not know what is.
Nuclear energy has guaranteed access to the market for every kilowatt that it produces. Gas has privileged access, given the cosy relationship between the independent power producers and the regional electricity companies. So does EDF, through the French interconnector. The contract with EDF is an enormous scandal. We are exempting the French from the fossil fuel levy, even though much of the electricity that they send us is produced by fossil fuel. Furthermore, we credit the French back with that levy, in effect giving them a subsidy for their coal and nuclear industries. For that privilege, we are accepting the highest-cost electricity on the United Kingdom market —the Select Committee identified the cost as 3·4p per kilowatt—and we are closing down six pits. That is entirely unacceptable to me and, I venture to think, to the country. I am glad that my right hon. Friend has undertaken that this will be considered at the highest level of Government with the new Government of France.
My right hon. Friend makes great play of the scale of the subsidy—yesterday he referred to £300 million or £400 million. Given that one third of the 31,000 jobs threatened last October are to be saved, however, this is precisely the sum that will be saved from the £1·2 billion package of redundancy pay offered by the Secretary of State last October. So the net cost to the taxpayer of this subsidy, taking account of what is saved in redundancy money, is nil.
The subsidy, without a market, equals stockpiles. We already have stockpiles of 45 million tonnes. What is needed much more than subsidy is markets. I absolutely acknowledge my right hon. Friend's sincerity in saying that the purpose of the subsidy is to give the 12 reprieved pits prospects for future viability——
I am sorry, no.
I have grave doubts about whether the measures announced will be enough to provide a market to sustain the reprieved pits and to stave off further major closures, even in the next two years. If the market for coal is not to collapse, the Government must deal with the two factors that impinge on it most directly—the EDF link, which they have already agreed to deal with, and, principally, the gas stations.
The greatest weakness of the White Paper is that it fails to cover what will happen in the next three years, when there will be a 40 per cent. surplus in generating capacity. It is clearly impossible for all the stations to operate on baseload continuously. A nuclear station can operate in no other way and coal cannot operate economically in any other way. Gas can be switched on and off and is therefore ideally suited to load following. Nuclear power not only enjoys a £1·2 billion subsidy, but it has guaranteed access to the market, and gas has privileged access. Coal has neither.
Left to market forces in this heavily rigged market, the large coal stations will inevitably go to the wall. Meanwhile, electricity consumers will be invited to pay the full capital and operating costs of the new gas stations, a burden that is as undesirable as it is unnecessary.
In consequence of this policy, the Government will be adding to the burden on the consumer; they will decimate the market for coal and with it the mining industry. They will burn gas reserves 50 per cent. more quickly than before. The United Kingdom is already a net importer of energy and within a generation we are likely to be running short of natural gas. The impact on the balance of payments could be devastating.
I must ask the Government to look again at this whole issue. The President says that he cannot break contracts and with that I agree. But I believe that he can restrict the gas stations to operating at 70 or 75 per cent. and offer the regional electricity companies the sweetener of an extension of their franchise, by way of compensation, at the 500 kW level. The consequence of that would be to provide an additional market for coal of 10 million tonnes on top of the 6 million tonnes that will result if a neutral flow is established across the interconnector. That, more than any other action, would positively underpin the hopes of my right hon. Friend for the future of the 12 pits. If he can agree to do that, I shall willingly support the Government in the Lobby tonight. Without such an assurance, I shall be unable to do so, as I would not wish to lend my support to a policy that could lead to the closure of some of the 12 pits within two years and, for some of them, even before Christmas.
Thank you for calling me, Madam Deputy Speaker. I represent a constituency containing two of the pits that are threatened with closure and an area where four are under threat. I was beginning to wonder whether I had become invisible, as I was not called in the last debate and have only just managed to get in in this one.
On two occasions I have sat through the rantings and ravings of the President of the Board of Trade. I have heard nothing new—he has just got louder and louder. Since the announcement of the Government's pit closures on 13 October last year, endless technical issues have been fought over. Reports have been made and plans have been drawn up. Today, we are debating what amounts to a sham introduced to buy off the Tory Back-Bench rebels. Since last Thursday, we have seen them fall one by one, save for a few hard liners, who may even vote with the Opposition tonight.
We have debated the future of the gas, coal and nuclear electricity industries and yet we still seem to be no further on than we were five months ago. In spite of the Government's grudging and temporary concessions over the future of some of the threatened pits, they have yet to address the concerns that lie at the heart of the problem or recognise that cost has more meaning than a profit and loss account. The cost of their programme of closures goes far beyond the industry and affects the wider local and national economy and society as a whole. They have yet to recognise that the cost of throwing 30,000 miners on the dole will be greater than keeping open the pits, many of which are profitable, and many more of which could be viable if only the Government would show a little common sense.
The Government have failed to recognise the true economics of the situation. The Select Committee on Trade and Industry has said that closure of the pits will cost £1·3 billion in 1993–94 and over £500 million in 1994–95. The TUC has estimated that the cost of closing the pits will put £10 million per pit on the public sector borrowing requirement.
The future of Hatfield and Bentley collieries in my constituency still hangs in the balance and Doncaster as a whole will lose Rossington and Markham Main, which lie in the constituencies of my right hon. Friend the Member for Doncaster, Central (Sir H. Walker) and my hon. Friend the Member for Don Valley (Mr. Redmond). The overall cost to the region and to the Exchequer will be massive. Unemployment in Yorkshire and on Humberside is already costing £2·3 billion a year.
The President of the Board of Trade has told us that the case for closure is unanswerable. I believe, as do many right-thinking people and Members of Parliament, that the only unanswerable case is the one that argues for a strong and productive mining industry, with the 31 pits being kept open, mining coal for Britain's power. Let us take the examples of Hatfield and Bentley collieries in my constituency. Between them, they employ more than 1,200 people. Last year, they both proved profitable. Bentley made £6 million and Hatfield made £2 million. In an area where unemployment is well above the national average of 10·7 per cent., at 13·8 per cent., any news of further job cuts is devastating.
The Government clearly do not understand how difficult it is to create jobs in coalfield communities such as Doncaster. The industrial base of the area is narrow, which means that mining is central to the local economy, being one of the most important employers as well as an important buyer of services in local firms. The existing service jobs generally depend on the mining and manufacturing industries, both of which have been decimated in the past 14 years. The economy has remained substantially tied to the coal mining industry, in spite of heavy redundancies in the 1980s.
Businesses locally will be affected by the economic squeeze that the closures will undoubtedly bring. A survey conducted by the Doncaster chamber of commerce has suggested that the knock-on effect to local companies could be 4:1 and that 220 local businesses could be affected. I have already been contacted by the local market traders association and federations representing small businesses. Many of them can remember the difficulties that they faced during the 1984 strike and the debts and hardships that they experienced. They do not want to return to those lean times. They know that that would be a disaster for them and for the Doncaster economy.
Almost 3,000 jobs will be lost at the four collieries in the Doncaster area. In the past, miners have had the option of taking jobs outside that area, but that is no longer the position. Many miners will be made compulsorily redundant. Many other members of the British Coal staff will lose their jobs. There will be job losses in Doncaster, where several administrative functions have been centred.
Jobs may also be lost at the Thorpe Marsh power station, which is in my constituency. It takes coal from local pits. When those pits have been closed, how long will it be before the power station is closed?
Unemployment problems in the area will be especially difficult because all four local collieries that are under threat are in self-contained communities. In each of those communities the colliery is the principal employer. That makes retraining even more difficult, but it is necessary to give people the chance of a new career. Every effort must be made to create new jobs. There are fewer firms in new industries that are capable of absorbing those who have been made redundant.
Since 1984, nearly 10,000 men have lost their mining jobs in Doncaster. The measures that the Government have proposed to ease the impact of closures in Doncaster were much needed even before the new job cuts were announced. Doncaster has been attempting to gain development area status for some time. I hope that the Department of Trade and Industry will now see its way clear to implementing the pledge that was made on 13 October, and again today by the President of the Board of Trade, to upgrade Doncaster so that it secures development area status.
Estimates of the potential consequences of the closures on employment are worrying. Between 5,000 and 10,000 people are expected to lose their jobs if all the pits close. Even more people will be pushed into poverty. Unemployment in the Doncaster travel-to-work area now stands at about 14 per cent. It is expected to rise to 20 per cent. if the pits close. In some parts of Doncaster the unemployment figure is even higher.
The closure of collieries is already ripping the heart out of many local communities. Unemployment, financial hardship, poverty and disadvantage are putting a strain on welfare, housing, and social and health services. Lack of opportunity will turn young people away from their homes and community vitality will be hit. Youth unemployment in Doncaster is already about 3 per cent. higher than the national average.
Unemployment causes stress, social isolation and the loss of a sense of purpose and dignity. The cost can be measured in concrete financial terms as well as in social terms. The costs of closures have been massive, and the costs of the proposed closures will be devastating. People feel undervalued as decisions are taken above their head. There is a callous writing-off of their skills, resources and investment. Human costs are immense.
The President of the Board of Trade likes to suggest that there is no alternative to the closures. He takes the view that if an undertaking does not make a profit, it must go. However, the Select Committee on Trade and Industry proved in its report that options exist. We need a Government who are far-sighted enough to examine the options, act on them and keep the pits open. In the long run, that will save money. Such an approach will also save hardship, suffering and an unnecessary waste and decline in both human and material terms. There are options and we must address them rather than dismiss them as the Government have chosen to do.
Many of the threatened pits do make money; many more could be viable if the Government had a sensible and economical energy policy that looked to the future rather than just to the next balance sheet. If the Government really cared about the communities that will be affected, they would have to invest only a part of those millions in making the coal industry a more viable prospect for the future, thus ensuring the future of the industry, the jobs of its workers, the integrity of the coal communities and the future of all those within them.
The Government had a chance to be positive in the White Paper; instead, they have remained negative. They had a chance to do something, but they chose to do nothing.
The hon. Member for Doncaster, North (Mr. Hughes) mentioned the Hatfield colliery. That leads me directly to one of the two aspects of the White Paper that has disappointed me; I endorse all its other aspects, in the context of the Select Committee's suggestions.
First, I understand that the Hatfield colliery no longer produces coal for the electricity generation market. In my view, the White Paper dismisses the potential of the industrial market in too cavalier a manner. There are huge difficulties, especially in terms of the sulphur control limits on British industry; however, it is clear from the ICI plant in Huddersfield, which uses low-cost technology to clean sulphur, that a breathing space is needed to assist the non-electricity market, just as much as a breathing space is needed in the electricity market, as we have argued both in the White Paper and in the Select Committee.
It is possible that not much tonnage will be involved, but even so a couple of million extra tonnes are important. I suggest to my right hon. Friend that it is worth extending the subsidy provisions beyond the electricity market and into the industrial market, to allow the new technology to come in and to help British Steel to use our coal—poor as it is—not coking, but for a direct injection into blast furnaces, which involves new technology.
My second disappointment relates to a matter that some of my hon. Friends have mentioned. I am disappointed by the nature of the electricity privatisation with respect to the regulator's inability to do other than moan about the profit margins of the two main generators. The Select Committee recommended that the regulator be given powers not to control profit—which is discussed in the White Paper—but to control prices. If we could use the same approach to generators' prices as we have used in other cases, the position would be very different. As the price of coal has significantly fallen, the price of electricity has not begun to match it, but the generators' profits have shot through the roof. Something must be done about that.
It is simply not true that—as the hon. Member for Barnsley, West and Penistone (Mr. Clapham) suggested —the Government have ignored the main recommendations of the Select Committee. It is also not true that, if the Committee's proposals had been adopted, there would be a huge extra tonnage. He talked of another 36 million tonnes on top of the 40 million, but our report's main table makes it clear that by 1996 the present figure of 65 million will be down to 46 million.
The Government are reducing orimulsion levels and are reducing opencast mining to almost exactly the levels that we recommended in our report. We also need to make different assumptions from those made by the Committee on the French connector and the fact that, for no particular reason, we threw an extra 5 million tonnes into the second year. If those assumptions—for which there was no evidence—are changed, the figures for extra tonnage in the electricity market, which the Select Committee was discussing, if we are realistic, are about 10 to 12 million.
We decided collectively to go for the maximum. We decided that, if everything was stretched, a figure of 16 million tonnes was possible. Opposition Members—including the right hon. Member for Salford, East (Mr. Orme), a previous chairman of the Labour party, and the hon. Member for Barnsley, West and Penistone—signed up to the basic truism that there is a severe limit to how much extra coal could be taken into the electricity market.
Clearly, the major short-term problem has been imports. We cannot duck the fact that, if British Coal had achieved earlier the levels of productivity improvement that it has had in the past five years, and if it had not had the history of militancy of the 1970s and 1980s, two things would have happened. First, the price would already be lower than that on offer. Therefore, the generators would be more ready to buy coal. Secondly, the generating companies and the regional companies would have been less willing to go for gas had there not been disruption on account of the over-domination of coal in the electricity market. Militancy encouraged the dash for gas, as well as the new turbine technology.
Opposition Members cannot duck two harsh facts. First, the price of gas-generated electricity is cheaper than the price of coal-generated power. That is what the Select Committee says. Secondly, there is a world glut of coal. The oil crisis led to the opening of opencast pits all over the world. They will continue to be opened all over the world, particularly in the southern hemisphere.
The market has always been rigged on behalf of coal. When we privatised the electricity industry, coal was protected for three years. The electricity industry took high tonnages of coal—70 million tonnes to 65 million tonnes—at very high prices: 1·86p per gigajoule. Three years later, it is 1·51p—a tremendous improvement. If that had been the price earlier, there would have been less of an incentive to go for coal imports and for gas.
The price will come down even further. The price of coal imports from all these vast, opencast pits and from eastern Europe—not subsidised and not mined with slave labour, as the Opposition claim, and mostly from the United States of America—is between 1·15p and 1·30p at the power stations. That is the harsh reality which British Coal has to face.
What the Select Committee tried to do, and what the Government have tried to do in the White Paper, was to offer subsidies. The Government are offering huge subsidies so that there will be cheap power. There is headroom in the market. I suggest that the regional electricity companies probably need about 10 per cent. more than they have already signed up for. There is the prospect that during the transitional period, with the subsidies providing a breathing space, British Coal will be able to improve productivity, through improved working practices, to the point at which costs will come down. It will then have a chance to sink or to swim in the open market. Most of the 12 pits will, I believe, swim. Most of them will improve their productivity. There is a market for coal, but we have to be realistic about the scale of that market.
I come from the heart of the south-west Durham coalfields. Too many Opposition Members are disparaging of the Government's efforts to bring new types of jobs to coalfield areas. When five pits closed around my town after the war, Hugh Dalton created new trading estates. When the railway wagon works closed down, new, diversified industries came to the area. A huge responsibility will fall on Lord Walker and the Government to ensure that those mining areas which face pit closures get all the help that they need to create new jobs in the years to come.
The hon. Member for Leeds, North-West (Dr. Hampson) said that coal is cheap, but for the last 10 years, unfortunately, this country has lurched from economic crisis to economic crisis. The fundamental weakness of the British economy is our balance of payments deficit. Nevertheless, the Government would wipe away the coal industry and make us absolutely dependent upon imported coal, at a cost that the country would be unable to afford.
During the past few months the Secretary of State has been repeatedly interviewed. I heard him refer to a £1 billion subsidy. What he meant was that if the electricity industry had gone on to the open market and bought at the Rotterdam spot price, the lowest possible price that might be available, the price of British coal would have been substantially undercut. What he never took into account was that if we had gone on the world market with £1 billion with which to buy coal, the inevitable effect upon international coal prices would have been substantial.
The main purpose of my brief intervention is to press the Secretary of State a little further regarding his assurance this afternoon about mine safety. He gave me what was almost a categoric assurance about mine safety. I have already heard in this debate three or four hon. Members on the Government Benches demanding changes in statutory regulation and working practice. The Conservatives cannot have it both ways. They cannot deregulate mining safety, and give Opposition Members assurances such as the Secretary of State sought to give this afternoon, and as he has given to some extent in the White Paper.
I hope that the Secretary of State for Wales will wind up the debate. British Coal has for the past three years sought to abolish the role of the colliery deputy and replace the deputy with an underground supervisor with no statutory responsibility for safety. In the new set-up that some people in Hobart house want to develop, there would be a foreman underground, and if he saw something that was hazardous his job would be to find someone to whom he could eventually report it.
By all means let us see the enormous improvement in productivity maintained, but I trust that the Secretary of State means what he said to the House in giving his assurance this afternoon and will not abolish the statutory responsibility which has been exercised by friends of mine very effectively in my association in contributing to maintaining Britain's mining industry, which is not only highly productive but is the safest mining industry in the world.
The mining industry certainly has an important role to play in the mining equipment industry, and no fewer than 250 jobs in my constituency depend on the industry. I saw these people last week, together with management and union representatives, and they asked me to make one or two points in the debate.
There is no doubt that the mining equipment industry, employing 22,000 people, 250 of them in my constituency, is in the forefront of the world in providing this kind of equipment and has export achievements of which we should be proud. No fewer than £400 million worth of exports every year are achieved by the mining equipment industry out of a total turnover of £900 million.
To give an indication of the effect of this on foreign markets, I point out that no less than half the roof supports and face conveyer equipment in the United States market are made by British mining equipment companies; 80 per cent. of the Mexican market is provided for in that way, together with 80 per cent. of the South African market and 90 per cent. of the Australian market. It means that those markets have been able, with British mining equipment, to reach very high levels of productivity—in Australia in the region of 2 million tonnes per face, against an average of 1 million tonnes per face in the United Kingdom.
The Association of British Mining Equipment Companies and a company in my constituency, Parsons Chain, anticipate and have experienced a loss of jobs in the past few years as a result of the inevitable contraction of the coal industry. Although I think that their projections for further reductions are over-pessimistic, because I believe that the newly privatised area of the coal industry will wish to invest in mining equipment, it is important that the Government give the mining equipment industry the kind of transitional help that they anticipate giving to the mining industry as a whole.
Although I am delighted that, over the five years or the appropriate period, there will be special transitional measures for the mining industry, and although I am pleased that some areas will be given enterprise zone status, I do not necessarily think that that will apply to the mining equipment industry, although certain companies in the industry may be heavily affected. Therefore, I would like to put three points briefly to the Government, particularly given the important effect on mining equipment exports.
First, export credit guarantees ought to be improved, particularly given the fact that, in many of the countries they export to, those areas are particularly important. Mexico, Poland, the Ukraine, China and India are all important.
Secondly, some of the benefits of enterprise zone status, which we award to geographical areas, should be given to mining equipment companies. That would include allowances on rates and capital allowances for five years.
Thirdly, as ABMEC has made clear, there should be some changes in the United Kingdom's coal mining support regulations to improve the market into which mining equipment is sold, thus improving productivity in the mining industry here and abroad and creating a larger market at home for mining equipment.
Those measures would have an important effect on an industry that employs 22,000 people, 250 of them in my constituency at Parsons Chain. I urge the Government to accept them.
I had intended to speak for only five minutes, and I shall be brief and to the point.
Last October, 2,000 miners in my constituency were put on notice that their jobs would end this week, at the end of March. They have been waiting for the White Paper and probably had the worst Christmas that anyone could have had. They and I believed that the Government had listened to what the country said last October and had gone away to find for British coal a larger market than that which led to the announcement of the closure or mothballing of 31 pits.
After last Thursday's statement, I returned to my constituency and visited Kiverton colliery, my interest in which is shared by my hon. Friend the Member for Derbyshire, North-East (Mr. Barnes). That colliery is one of the 12. I had a meeting, which had been pre-arranged on another matter, with the senior management arid the workers' representative. Listening to the screams and howls of delight in the House last Thursday, one would have thought that the people at the colliery would be delighted by the announcement, but they were not.
The reason is simple. They know that, without contracts with the electricity generators and without the generators having contracts with regional companies, it means nothing for the Government to say that they will subsidise additional tonnes of coal, especially when there are already 45 million tonnes of coal in stock and the generators have made it plain that they do not want to add to that stock. The people know that and they have been waiting apprehensively, with only one timetable in mind —December of this year when the redundancy payments run out. They know that there will be pressure to leave before December. If they do not leave, it will cost individual families thousands of pounds.
I also visited Maltby colliery, my old colliery, which I left to come to the House in 1983. It is a super pit, which is receiving £200 million of investment under the Labour party "Plan for Coal" to which the Government have added. Having spoken to senior management and workers' representatives there on Friday, I last night faxed a letter to the President of the Board of Trade, asking him if he would make it clear today what last Thursday's announcement meant.
The Government announced last Thursday that they were giving that pit development status. Coal News, which was printed overnight, said that retreat mining would be used at the new Parkgate seam. The people at the colliery said that it was likely that between 700 and 800 men would be finished and that production would cease within four weeks. Many of those people moved to Maltby from neighbouring pits in the belief that they had some long-term security in a shrinking industry.
At last Tuesday's consultative meeting, the management showed the work force's representative a slide illustrating that in the previous week 38,000 tonnes of coal had been mined at a cost of £1·1 a gigajoule. Do people realise that if we brought foreign coal into the power stations for which Maltby now produces coal, it would cost between 20 and 25 per cent. more than Maltby's coal?
The plan to develop retreat mining for the new seams is well in hand. The first retreat mine in the new Parkgate seam should start this October. I put it to the Government and to British Coal that that is not only sabotage of a workplace; it is a national disgrace that our taxpayers' money has gone into such a pit with a threat to the jobs of 700 or 800 people. It does not make sense to cease production at that colliery.
I hope that the Secretary of State for Trade and Industry will answer at some stage the letter that I faxed to him yesterday and that he will clarify why hundreds of people will go on the dole when they produce not only the cheapest coal in Britain but some of the cheapest deep-mined coal in the world.
My hon. Friend the Member for Rother Valley (Mr. Barron) speaks with great and personal authority on these matters and I know that his remarks strike a chord with all of us who have mining interests in our constituencies.
It is a matter of personal regret that many of my hon. Friends have been unable to get into the debate this evening. It is a sad reflection on the Government's commitment to open government and to full debate that they have failed to table the motion that would have allowed us to have a full debate and would have allowed all hon. Members to be called. They are also not allowing the amendment tabled by the Select Committee to be voted on. It is a shame that the Government did not allow that amendment.
There is no spectacle more nauseating than politicians who have trumpeted their principles and paraded their consciences suddenly deciding that it is inconvenient to hold those principles any longer. That is precisely what we see today. Last October, a chorus of Tory Members told us how unacceptable it was that the British coal industry should be destroyed. Despite all the bluster and histrionics from the President of the Board of Trade earlier today, the White Paper would destroy our coal industry just as surely as his statement of 19 October would have done. The men and women who defied his logic last autumn have no reason other than the imperative of party politics to change their minds today. However, they have changed their minds and when the House divides tonight, there can be no doubt or uncertainty: a vote for the White Paper is a vote for a short-term political fix.
The hon. Member for Batley and Spen (Mrs. Peacock) is apparently still undecided. She has said that she cannot support the White Paper. She referred to herself as an independent-minded Yorkshire woman. It is no good being independent minded if one is not strong willed. Abstention tonight is no option. No credit will be gained tonight by those who settle for unprincipled abstention or for those——
Much as I should like to give way, time does not allow it. At least the hon. Members for Elmet (Mr. Batiste) and for Rochford (Dr. Clark) have implied that they have been bought and that they will stay bought. Their votes will now be secured in the Government Lobby.
Last October, when the President of the Board of Trade described the case for closure, he said that the case "in economic terms" was unanswerable. Nothing in the White Paper shows that his thinking has changed. The basic assumption remains. If the coal industry is to survive, it must live in the rigged market conditions created by the Government. Those rigged market conditions remain. Despite last Thursday's short-lived euphoria in the entourage of the President of the Board of Trade, everyone understands that the closure programme will continue with, at best, 12 pits being given a short-term stay of execution, perhaps for 12 months, but certainly for no more than two years.
John Meadse, the general secretary of the British Association of Colliery Management, has added his authoritative voice, even in the short time that the Government have allowed for evaluation:
Despite claims that it has saved 12 of the 31 collieries previously scheduled for closure, no meaningful action has been taken by the Government to obtain markets for their output. At present, British coal is frozen out of more than half the elecricity generation market, whatever its cost or price. The truth is that a few pits may continue for the next 12–18 months; but beyond that, the future is bleak.
The whole House knows and understands that the crisis now facing our coal industry is of the Government's own creation. Last Thursday, the President of the Board of Trade said of his White Paper:
I have done all that I reasonably could, consistent with economic realities and legal constraints"—[Official Report, 25 March 1993; Vol. 221, c. 1231.]
Those economic realities and legal constraints are a direct consequence of the way in which the Government's own policies rigged the markets at the time of the electricity privatisation. They cannot now disclaim responsibility for the job losses and social and economic dislocation that will follow the implementation of what is proposed in the White Paper as surely as night follows day. Why will not they acknowledge the central fact that the energy market as currently organised does not allow fair and free competition?
Get back to the bar.
The Select Committee on Trade and Industry, in its excellent report—I add my congratulations to those already given to my hon. Friend the Member for Sheffield, Central (Mr. Caborn)—made it perfectly clear that that is the central question to be addressed. What the Government have done—and support for the White Paper will endorse their approach—is to offer no way forward.
One of my responsibilities is to reply to the debate. There were some 20 speeches and I hope to reply to many of the points that have been raised. It clearly would not be possible to give way to all those to whom I wish to refer. Nevertheless, I shall give way to the President of the Board of Trade.
I am extremely grateful to the hon. Gentleman. He has attacked my hon. Friend the Member for Batley and Spen (Mrs. Peacock) and has been extremely rude about her performance. I should have thought that he could at least do her the courtesy of allowing her to make a response. Will the hon. Gentleman give way to my hon. Friend?
The Government have admitted that there is a problem, but they offer no solutions. The energy market is riddled with inconsistencies. The dash for gas continues with competing generators building gas-fired stations despite the fact that the electricity that they produce is more expensive.
Gas is a more limited resource and it will be exhausted in less than a lifetime. As the Select Committee pointed out, it is also more expensive. We already have the coal-fired capacity to meet our needs. Government subsidies—[HON. MEMBERS: "Order."]
The Government subsidise nuclear fuel to sell electricity which is not only uneconomic, but environmentally unsound. How can that possibly be justified when the principal argument for pit closures is that coal is uneconomic and has to compete on the open market? What can be the sense in closing viable British pits because they cannot compete with illegally subsidised French electricity via the interconnector?
The British Association of Colliery Management hinted at the answer when it claimed:
For both miners and management the hallmark of the Government's lack of courage is its abject failure to address these problems.
The Select Committee specifically referred to that matter, but we will still allow that overpriced electricity to displace 6·5 million tonnes of British coal.
Major environmental concerns exist about orimulsion, heavy fuel oil and the extension of opencast mining. However, because we do not have a coherent energy policy, they will continue while the colliery closure programme goes ahead. None of those central questions has been faced.
Of course, if one denies that the Government have a role and the need for a national energy policy, one must ignore those questions. The President says that the market must decide. Secure energy supply cannot be left to the short-term vagaries of the markets. Governments do intervene and plan when they choose so to do. It is a matter of political will. This Government lack the political will to give us a national energy policy. The cost of that failure will be the colliery closure programme——
In the Lobby.
The Trade and Industry Select Committee estimates a financial cost of nearly £2 billion over two years while the Employment Select Committee concluded that
the financial cost of resulting unemployment should have been a significant part of the equation when deciding the future of the pits".
However, it was not and nor was the annual £1·3 billion cost of our non-oil energy trade deficit.
On 21 October, the Secretary of State for Wales told us that
we must look to the future."—[Official Report, 21 October 1992; Vol. 212, c. 524.]
Under this policy, we have a future without a £2 billion industry, with a national asset irrevocably lost, dependent on expensive fuel imports, with higher costs to industry and the domestic consumer and, above all, with communities with large-scale unemployment.
After all the sacrifices, commitments and collective effort of British miners, they and their industry. Their families and communities are now to be betrayed. As a result of their efforts, British miners have made British Coal the most efficient and cost-effective coal industry in Europe. Figures from the Trade and Industry Select Committee show just how well they have performed. Between 1985 and 1990, productivity increased by nearly 88 per cent. in British pits. That is nearly twice as high as Australia which has 45 per cent. Canada managed 32 per cent. and South Africa had 29 per cent., with 2 per cent. for the rest of Europe.
The 1992 Conservative party manifesto promised:
We will support the efforts of British Coal and its work force to improve the industry's performance.
That manifesto promise is betrayed by this White Paper. It is betrayed like the men, the families and the communities who will pay the price in direct and personal terms for the Government's failures. I do not think that they can comprehend the savagery of the social and economic costs of the proposed closures.
In Taff Merthyr on the edge of my constituency and in the constituency of my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), nearly 500 men will be put out of work. The loss of their wages alone will cost the local economy more than £8 million. Independent estimates put total job losses at 1,400, once indirect job losses have been taken into account—[Interruption.] This is injury time. British Coal estimates that a further £4 million will be lost to local contractors.
At the last count, male unemployment in the Merthyr and Rhymney travel-to-work area was more than 23 per cent. South Tyneside, which is facing the loss of Westoe colliery, has more than 28 per cent. male unemployment. Doncaster, which is facing the loss of Bentley and Hatfield, Markham Main and Rossington, has male unemployment of more than 18 per cent. Mansfield, which is facing the loss of Bilsthorpe, Clipstone, Rufford and Shirebrook, has nearly 18 per cent. male unemployment.
I have no doubt that the Secretary of State for Wales will tell us about all the jobs which he has created. He will tell us about his predecessor, now Lord Walker, and his valleys initiative. During that initiative, we lost 22,000 jobs in Wales and only 2,000 jobs were created. Throughout the length and breadth of Britain, people know the value of Tory promises.
We have a Government who were elected on deceit. Ministers are more concerned about their public image than about the national interest. The Select Committee on Employment urged that the true national cost should be taken fully into account. The Government have not done that and they do not deserve the support of the House for the White Paper.
That was a disgraceful and discourteous speech. Towards the end of his speech the hon. Member for Caerphilly (Mr. Davies) asked for injury time. The injury time that he should have given was to give way to my hon. Friends the Members for Batley and Spen (Mrs. Peacock), whom he abused, and for Davyhulme (Mr. Churchill). In this debate, both my hon. Friends expressed serious concern and reservations about import issues, yet the hon. Gentleman chose in an arrogant way not to give way and not to give them an opportunity to intervene. All I can say for the Labour party is that the hon. Gentleman should have seen the stony faces on his Front Bench, because I am sure that the majority of hon. Members deprecated the way in which he conducted his speech.
I have been present, as has the hon. Gentleman, for all the 29 speeches in the debate, just as I was present for all the 28 speeches in the previous debate on this subject. Many years ago I was one of those who were instrumental in setting up the departmental Select Committee system. This debate has been a great testimony to the wisdom of that Conservative innovation.
We have heard several speeches from members of the Select Committee. Although I reckon that the Chairman, the hon. Member for Sheffield, Central (Mr. Caborn), was perhaps guided a little too far by party politics, the Select Committee has been a model for the way in which Select Committees should respond to situations of this nature.
I continue my tribute to the Select Committee.
My right hon. Friend the Member for Woking (Sir C. Onslow) was right in saying that Select Committees do not expect the whole House to accept every recommendation in the reports that they present to the House. As he said, the 39 recommendations are not 39 articles of faith. They have been a helpful background to the debate.
I fully accept what the Secretary of State says, but would it not have been right for the House to have the opportunity to vote on the amendment which several members of the Select Committee tabled? If he genuinely believes that Select Committees have a role to play in our parliamentary system, the House ought to have the opportunity at least to vote on the 39 recommendations.
It was perfectly open to the Labour party to table an amendment in those terms. Instead it tabled an amendment which negatived several of the recommendations.
My hon. Friend the Member for Rochford (Dr. Clark) had it right. The Government have produced a White Paper after carefully considering many of the recommendations. The White Paper sought to respond to the two central questions asked by the Select Committee: first, can there be a market for coal over and above the base contracts with the electricity generation industry; secondly, can assistance be given to British Coal for only a transitional period to make a larger proportion of its output competitive? The Chairman of the Select Committee will agree that those were the two central questions posed by the Committee.
As my hon. Friend the Member for Rochford said, the Government have said five things: first, British pits should have the opportunity to sell as much coal as the market will take, with extra tonnage subsidised to world prices; secondly, no pit will be closed without first being offered a chance to find a future in the private sector; thirdly, there will be no changes to the gas and nuclear electricity sectors; fourthly, coal will remain the main fuel for electricity generation; fifthly, there will be a regeneration package for mining areas. That has been increased to £200 million.
Agreement has to be made on the potential subsidies with the European Economic Community under article 95 of the treaty of Rome. Will agreement be reached or not? At the end of 1993 the current agreements run out and negotiations will have to take place. The House has not yet discussed the possibility that the European Community will not accept what is in the White Paper.
I want to give way to hon. Members, so I shall endeavour to write to every hon. Member—there were 29 speeches—who raised a point which I do not have time to cover.
To answer the hon. Member for Derbyshire, North-East (Mr. Barnes), proposals have been submitted to the European Commission, preliminary discussions have taken place, and we are optimistic that the Commission will grant approval.
In my experience, the hon. Member is a fair gentleman and I hope that he will acknowledge that I have been underground in many more pits than most hon. Members and I know what mothballing means; it means care and maintenance to keep the capacity until the market expands to allow the pit to resume coaling. It is a well-known expression, and I am happy to assure the hon. Gentleman that that is what it means.
The White Paper gives an opportunity for the coal industry to expand its markets—in response to the Select Committee, which asked for that opportunity to be provided—and a subsidy of hundreds of millions of pounds to ensure that it can do so.
Earlier, the hon. Member for Livingston (Mr. Cook) wriggled and wiggled and avoided answering an important question: does the Labour Front Bench support the strike action called for by Arthur Scargill on Friday? My hon. Friend the Member for Davyhulme (Mr. Churchill) pointed out that a strike will damage the coal industry, and the right hon. Member for Chesterfield (Mr. Benn) said during the debate, "Thank God they are going to strike on Friday." What is the answer from the Labour party?
I am stunned by the complacency on the Opposition Benches. Opposition Members still think that they can criticise the Government without suggesting any realistic proposals of their own. They have become so used to being in opposition that they do not know what taking decisions means.
The poor hon. Member for Livingston said that France had a Government who are standing up for the French people—he meant the socialist Government. The message from France is that they have got rid of socialism.
The Secretary of State may have heard my contribution, in which I reminded the House that, unlike the Labour party, we submitted evidence to the Government review and we have published an alternative White Paper. After tonight, if people outside this House support the miners on Friday or any other day, does the Secretary of State accept that they will do so because they perceive that whereas the Government artificially protect other energy sectors, such as electricity, gas and nuclear, the coal industry does not receive the same support?
First, coal has received a subsidy and support of £18,000 million since 1979. Secondly, would the hon. Gentleman have a word with his hon. Friend the Member for Gordon (Mr. Bruce), who is sitting beside him, and ask him to explain why he signed the Select Committee amendment as well as a totally opposite amendment tabled by the Liberal party?
The story of this debate is that my right hon. Friend the President of the Board of Trade has eaten the Labour party for breakfast, for tea, for lunch and for dinner. I reckon that he will get up tomorrow and do it all over again.
In Wales, the post-coal revolution has taken place. We have provided new jobs for mining communities, but the message of the White Paper is that there is life for coal in prosperous times and recession. Industry is always changing. It must change with the times and circumstances to survive. I believe that the White Paper is giving the industry a chance, an opportunity and a head start in winning for itself a similar position in the future.
|Division No. 214]||[10 pm|
|Abbott, Ms Diane||Davies, Ron (Caerphilly)|
|Adams, Mrs Irene||Davis, Terry (B'ham, H'dge H'l)|
|Ainger, Nick||Denham, John|
|Ainsworth, Robert (Cov'try NE)||Dewar, Donald|
|Alexander, Richard||Dixon, Don|
|Allen, Graham||Dobson, Frank|
|Alton, David||Donohoe, Brian H.|
|Anderson, Donald (Swansea E)||Dowd, Jim|
|Anderson, Ms Janet (Ros'dale)||Dunnachie, Jimmy|
|Armstrong, Hilary||Dunwoody, Mrs Gwyneth|
|Ashdown, Rt Hon Paddy||Eagle, Ms Angela|
|Ashton, Joe||Eastham, Ken|
|Austin-Walker, John||Enright, Derek|
|Banks, Tony (Newham NW)||Etherington, Bill|
|Barnes, Harry||Evans, John (St Helens N)|
|Barron, Kevin||Ewing, Mrs Margaret|
|Battle, John||Fatchett, Derek|
|Bayley, Hugh||Faulds, Andrew|
|Beckett, Rt Hon Margaret||Field, Frank (Birkenhead)|
|Beith, Rt Hon A. J.||Fisher, Mark|
|Bell, Stuart||Flynn, Paul|
|Benn, Rt Hon Tony||Foster, Rt Hon Derek|
|Bennett, Andrew F.||Foster, Don (Bath)|
|Benton, Joe||Foulkes, George|
|Bermingham, Gerald||Fraser, John|
|Berry, Dr. Roger||Fyfe, Maria|
|Betts, Clive||Galbraith, Sam|
|Blair, Tony||Galloway, George|
|Blunkett, David||Gapes, Mike|
|Boateng, Paul||Garrett, John|
|Boyce, Jimmy||George, Bruce|
|Boyes, Roland||Gerrard, Nell|
|Bradley, Keith||Godman, Dr Norman A.|
|Bray, Dr Jeremy||Godsiff, Roger|
|Brown, Gordon (Dunfermline E)||Golding, Mrs Llin|
|Brown, N. (N'c'tle upon Tyne E)||Gordon, Mildred|
|Bruce, Malcolm (Gordon)||Gould, Bryan|
|Burden, Richard||Graham, Thomas|
|Byers, Stephen||Grant, Bernie (Tottenham)|
|Caborn, Richard||Griffiths, Nigel (Edinburgh S)|
|Callaghan, Jim||Griffiths, Win (Bridgend)|
|Campbell, Mrs Anne (C'bridge)||Grocott, Bruce|
|Campbell, Menzies (Fife NE)||Gunnell, John|
|Campbell, Ronnie (Blyth V)||Hain, Peter|
|Campbell-Savours, D. N.||Hall, Mike|
|Canavan, Dennis||Hanson, David|
|Cann, Jamie||Hardy, Peter|
|Carlile, Alexander (Montgomry)||Harman, Ms Harriet|
|Chisholm, Malcolm||Harvey, Nick|
|Clapham. Michael||Hattersley, Rt Hon Roy|
|Clark, Dr David (South Shields)||Henderson, Doug|
|Clarke, Eric (Midlothian)||Hendron, Dr Joe|
|Clarke, Tom (Monklands W)||Heppell, John|
|Clelland, David||Hill, Keith (Streatham)|
|Clwyd, Mrs Ann||Hinchliffe, David|
|Coffey, Ann||Hoey, Kate|
|Cohen, Harry||Hogg, Norman (Cumbernauld)|
|Connarty, Michael||Home Robertson, John|
|Cook, Frank (Stockton N)||Hood, Jimmy|
|Cook, Robin (Livingston)||Hoon, Geoffrey|
|Corbett, Robin||Howarth, George (Knowsley N)|
|Corbyn, Jeremy||Howells, Dr. Kim (Pontypridd)|
|Corston, Ms Jean||Hoyle, Doug|
|Cousins, Jim||Hughes, Kevin (Doncaster N)|
|Cox, Tom||Hughes, Robert (Aberdeen N)|
|Cryer, Bob||Hughes, Roy (Newport E)|
|Cummings, John||Hughes, Simon (Southwark)|
|Cunliffe, Lawrence||Hume, John|
|Cunningham, Jim (Covy SE)||Hutton, John|
|Cunningham, Rt Hon Dr John||Illsley, Eric|
|Dafis, Cynog||Ingram, Adam|
|Dalyell, Tam||Jackson, Glenda (H'stead)|
|Darling, Alistair||Jackson, Helen (Shef'ld, H)|
|Davidson, Ian||Jamieson, David|
|Davies, Bryan (Oldham C'tral)||Janner, Greville|
|Davies, Rt Hon Denzil (Llanelli)||Johnston, Sir Russell|
|Jones, Barry (Alyn and D'side)||Powell, Ray (Ogmore)|
|Jones, Ieuan Wyn (Ynys Môn)||Prentice, Ms Bridget (Lew'm E)|
|Jones, Lynne (B'ham S O)||Prentice, Gordon (Pendle)|
|Jones, Martyn (Clwyd, SW)||Prescott, John|
|Jones, Nigel (Cheltenham)||Primarolo, Dawn|
|Kaufman, Rt Hon Gerald||Purchase, Ken|
|Keen, Alan||Quin, Ms Joyce|
|Kennedy, Charles (Ross, C&S)||Radice, Giles|
|Kennedy, Jane (Lpool Brdgn)||Randall, Stuart|
|Khabra, Piara S.||Raynsford, Nick|
|Kinnock, Rt Hon Neil (Islwyn)||Redmond, Martin|
|Kirkwood, Archy||Reid, Dr John|
|Leighton, Ron||Richardson, Jo|
|Lestor, Joan (Eccles)||Robertson, George (Hamilton)|
|Lewis, Terry||Robinson, Geoffrey (Co'try NW)|
|Litherland, Robert||Robinson, Peter (Belfast E)|
|Livingstone, Ken||Roche, Mrs. Barbara|
|Lloyd, Tony (Stretford)||Rogers, Allan|
|Llwyd, Elfyn||Rooker, Jeff|
|Loyden, Eddie||Rooney, Terry|
|Lynne, Ms Liz||Ross, Ernie (Dundee W)|
|McAllion, John||Rowlands, Ted|
|McAvoy, Thomas||Ruddock, Joan|
|McCartney, Ian||Salmond, Alex|
|McCrea, Rev William||Sedgemore, Brian|
|Macdonald, Calum||Sheerman, Barry|
|McFall, John||Sheldon, Rt Hon Robert|
|McKelvey, William||Shore, Rt Hon Peter|
|Mackinlay, Andrew||Short, Clare|
|McLeish, Henry||Simpson, Alan|
|Maclennan, Robert||Skinner, Dennis|
|McMaster, Gordon||Smith, Andrew (Oxford E)|
|McNamara, Kevin||Smith, C. (Isl'ton S & F'sbury)|
|McWilliam, John||Smith, Rt Hon John (M'kl'ds E)|
|Madden, Max||Smith, Llew (Blaenau Gwent)|
|Mahon, Alice||Snape, Peter|
|Mallon, Seamus||Soley, Clive|
|Mandelson, Peter||Spearing, Nigel|
|Marek, Dr John||Spellar, John|
|Marshall, David (Shettleston)||Steel, Rt Hon Sir David|
|Marshall, Jim (Leicester, S)||Steinberg, Gerry|
|Martin, Michael J. (Springburn)||Stevenson, George|
|Martlew, Eric||Stott, Roger|
|Maxton, John||Strang, Dr. Gavin|
|Meacher, Michael||Straw, Jack|
|Meale, Alan||Taylor, Mrs Ann (Dewsbury)|
|Michael, Alun||Taylor, Matthew (Truro)|
|Michie, Bill (Sheffield Heeley)||Thompson, Jack (Wansbeck)|
|Michie, Mrs Ray (Argyll Bute)||Tipping, Paddy|
|Milburn, Alan||Turner, Dennis|
|Miller, Andrew||Tyler, Paul|
|Mitchell, Austin (Gt Grimsby)||Vaz, Keith|
|Moonie, Dr Lewis||Walker, Rt Hon Sir Harold|
|Morgan, Rhodri||Wallace, James|