Orders of the Day — Coal Industry

Part of the debate – in the House of Commons at 7:56 pm on 29 March 1993.

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Photo of Michael Clapham Michael Clapham , Barnsley West and Penistone 7:56, 29 March 1993

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.