House of Commons Hansard Debates for 23 Jun 1993

Mr. Hamilton : I am a great personal supporter of the British brewing industry. This evening, I shall attend the launch meeting of the all-party beer group and would welcome the presence there of as many hon. Members as possible to enjoy the wonderful product, unique to this country, which offers so much enjoyment and so many employment opportunities to so many people.

Mr. Fatchett : When the price of beer has gone up above the rate of inflation, when consumer choice is still restricted and when many tenants are being pushed out of their home and business by the practices of companies such as Grand Metropolitan, why have the Government taken such a soft line with the brewers? Is the real explanation that the brewers have always been large donors to Conservative party funds and that Sir Allen Sheppard, the chairman of Grand Metropolitan, is a member of the management committee of the Conservative party? Is not this another case of the Government standing against small businesses and in favour of the vested interests that contribute to their funds?

Mr. Hamilton : I think that it is the hon. Gentleman who sounds as if he is under the influence. I doubt very much whether his evaluation accords with that of the brewers, who certainly do not think that the Government have let them off lightly. As the hon. Gentleman would know if he bothered to examine the facts, in many respects there is more competition in the industry today than before the supply of beer report. The development of independent pub chains in the industry is significant and is a consequence of the Beer Orders. Does the hon. Gentleman know, for example, of the significant reduction in the amount of beer sold through tied pubs and that recently the wholesale price of beer has diminished significantly? Perhaps one reason why the retail price of beer has increased is that pub chains and, in particular, breweries that have maintained tied pubs have greatly increased the facilities available on their premises, the costs of which must be recouped.

Mr. Ian Bruce : Having tried to implement the Monopolies and Mergers Commission report that suggested that our former regime was anti- competitive for beer, in trying to help the small brewers, surely my hon. Friend realises that the small brewers do not think that our intervention has been helpful. Will he reconsider whether

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we should simply remove the Beer Orders and allow the brewers, including the small brewers, to run the market as they did previously, when it was more competitive?

Mr. Hamilton : The best thing that the Government can do for the time being is nothing. The brewing industry has been through a period of convulsion, which, as far as I can see, has not been welcomed by any party. Consequently, I am not in a position to announce that we shall review the Beer Orders. They became effective fully only last November, so it is too early to determine the full consequences. We now need a period of stability to allow the industry to settle down. In due course, further inquiries will be instituted by the European Commission when the review of the block exemption for tied pubs comes along in a few years' time. These issues will not go away, but it would not be right for the Government to stir things up yet again at this time.

Coal Subsidies

10. Mr. Etherington : To ask the President of the Board of Trade how many requests he has received from British Coal for a portion of the subsidy for expanding the coal market.

The Minister for Energy (Mr. Tim Eggar) : My right hon. Friend and I have not received any specific requests for subsidy from either British Coal or private sector producers.

Mr. Etherington : Does the Minister accept that that is likely to be the position for the foreseeable future? Does not he understand that, in effect, this subsidy was offered merely as a panacea to Tory Back Benchers who objected to the pit closures? Was not the White Paper whose proposals included the subsidy based on efforts to thwart the many positive aspects of the Select Committee's report, which had widespread support among the population?

Mr. Eggar : The hon. Gentleman seems conveniently to ignore the Select Committee's major recommendation--that the Government should make a subsidy available to bridge the gap between the cost of British-produced coal and world import prices. That is exactly what we did. My understanding is that, at present, independent coal producers and British Coal are having discussions with the generators about the possibility of agreeing additional contracts for the sale of coal. It is clear that, until those negotiations are at an advanced stage, it will not be appropriate for the Government to get into the business of handing out subsidies. We cannot do that in an open-ended way.

Dr. Michael Clark : Does my hon. Friend agree that, following publication of the White Paper, adequate financial provision was made to assist the British deep-mined coal industry? Does he share my disappointment that none of this funding has yet been called upon? Can he assure the House that the two major generators, which are major users of fossil fuel, are not abusing their dominant position and are aware of their national responsibilities?

Mr. Eggar : I very much agree with the sentiment behind my hon. Friend's question, which concerns the clear national responsibility of generators. During the coal review, the generators made it quite clear to my right hon.

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Friend and me that they believed they would be in a position to contract for additional supplies of coal. We look to them to fulfil that indication. It is clear that, at a time when they have large stockpiles--coal burn is normally low at this time of the year--it is difficult for them to contract for supplies. However, we hope that they will enter into serious negotiations in the very near future.

Mr. Caborn : Will the Minister be honest with the House and the country and admit that the Select Committee's recommendations were totally ignored in terms of the central point that the President of the Board of Trade made on 13 October--unless the market for coal is enlarged, there will be no extra sales? The Government negated their responsibility. They gave a fix to Back Benchers and deceived the country by failing to address the central question of a larger market for coal.

Mr. Eggar : The hon. Gentleman simply cannot get away with rewriting the Select Committee's report, although he tries to do so time after time. The Select Committee did not recommend a restriction on gas stations ; nor did it recommend the closure of Magnox stations. The hon. Gentleman should not go around misleading the country about what the Select Committee said ; he should refer to the words of its report.

Mrs. Peacock : Is my hon. Friend aware that the two generating companies are refusing to negotiate any further contracts with British Coal unless the price is well below 80p a gigajoule? Is not that ridiculous when world prices are around 120p a gigajoule? The companies are looking for huge Government subsidies. Would not those simply transfer taxpayers' money into the companies' profits?

Mr. Eggar : The issue of the exact level of the world price is very complex. [ Hon Members :-- "Oh."] There is no point in the refusal of Opposition Members to recognise the marketplace. They cannot simply pluck a figure out of the air and claim that it is the market price. It was precisely because there are different perceptions of the world market price that, about 10 days ago in the House, I answered a question by saying that we were inviting from British Coal and from the independent coal producers indications of their production costs and of what they thought the world price was. Once we have received their responses, we shall be able to enter into discussions about the appropriate level of subsidy.

Mr. Robin Cook : Does not the Minister know that, since March, British Coal has been offering extra contracts at 40 per cent. below the core contract price? At that knock-down price, the generators can produce electricity more cheaply than they can from gas, nuclear power or even imported coal available on long-term contracts. Does not the fact that the generators would still rather ask consumers to pay for electricity produced from more expensive sources provide the final proof, if any were needed, that the market is rigged against coal?

Why does not the Minister admit that the White Paper was a fraud and was never intended to save the jobs of miners at the 12 pits, but was intended to save the jobs of Ministers in the House?

Mr. Eggar : Why does not the hon. Gentleman, for once, make his position clear? Does he want to close down

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the nuclear industry and the North sea oil industry and stop the development of gas-fired stations? Where does he want jobs to be lost?

Mr. Cormack : Is my hon. Friend aware that there is widespread feeling in this country that British Coal has not been as zealous in protecting the industry over which it has charge as it might have been?

Mr. Eggar : I hear what my hon. Friend says. It is because of the point made by my hon. Friend the Member for Batley and Spen (Mrs. Peacock), both today and previously, that the Government have determined, and British Coal has agreed, to go forward with the sale and lease of pits to the private sector that British Coal does not wish to continue to operate. It has already advertised nine such pits for leasing, and I understand that there has been a degree of interest from the private sector in examining further the possibility of taking them on.

Polly Peck

11. Mr. O'Hara : To ask the President of the Board of Trade if he will make a statement about recent discussions between his Department and the administrators of Polly Peck.

Mr. Neil Hamilton : My officials have in the past held, and continue to hold, long meetings with the joint administrators of Polly Peck International plc and their legal advisers in respect of matters arising in and aboutthe proceedings under the Company Directors Disqualification Act 1986 currently being brought against various persons involved in the management of Polly Peck International.

Mr. O'Hara : The Minister will be aware that the rise of Polly Peck began in stolen orange groves in occupied northern Cyprus. I know from a previous answer that his Department does not keep statistics of trade with northern Cyprus, but is the Minister aware that, according to recent statistics from the so-called Central Bank of Northern Cyprus, no less than two thirds of exports from that area were to the United Kingdom and that no less than 60 per cent. of those exports were agricultural produce from a subsidiary of Polly Peck? Will the Minister make it clear to the administrators of Polly Peck that those so-called assets of Polly Peck in northern Cyprus belong not to Polly Peck, or to Asil Nadir but, legally, to displaced refugees, such as those from Morphou? Will the Minister at last do something to stop the illegal trade between northern Cyprus and this country?

Mr. Hamilton : It behoves all Members of the House, by virtue of the great latitude that parliamentary privilege gives them, not to abuse that privilege and hence prejudice the outcome of any current criminal proceedings. To prejudice those proceedings could result in a failure to convict the guilty.

Mr. Anthony Coombs : I appreciate what my hon. Friend has just said, but does he appreciate that many of the assets held by Polly Peck and regarded as its own were actually illegally acquired from Greek Cypriot owners as a result of the Turkish invasion in 1974? Is there not a very strong case, given the recent behaviour of the Turkish

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Cypriot regime, for the British Government to toughen trade sanctions against the illegal regime in northern Cyprus, particularly on citrus fruits and tourism?

Mr. Hamilton : I think that we have strayed a little from the affairs of Polly Peck. I put my hand into the middle of a hornet's nest, which I had not anticipated. My only concern is to ensure that the administration of Polly Peck is conducted as quickly and efficiently as possible, so that creditors of the company are paid out and those who have committed offences are brought to justice as a consequence.

Mr. Robin Cook : Is the Minister aware that for the guilty to be convicted, they must first be charged? It is now two years since the administrator discovered seven separate donations to the Conservative party. Can the Minister tell us whether Companies House, the Department of Trade and Industry investigation unit or the Serious Fraud Office have investigated why none of those donations was disclosed in Polly Peck's accounts? If they have been investigated, can the Minister tell us why, in the two years, no charge has been brought for such an obvious breach of the Companies Act 1989?

Mr. Hamilton : I can easily explain that to the hon. Gentleman. Whether he will understand is another matter. As he is aware, criminal proceedings are currently outstanding against a number of the directors of Polly Peck. If Asil Nadir returns to this country, he will be subject to charges. As a consequence of being convicted of those charges, it would be possible for the court to disqualify him as a company director for a period of 15 years. As a bankrupt, he is currently disqualified as a company director. As a matter of course, my Department does not seek to impede the way in which the Serious Fraud Office carries out its investigations, because that might prejudice the outcome of proceedings. If we did as the hon. Gentleman suggested, we would prejudice the possibility of bringing Mr. Nadir to justice, because if we were to embark on disqualification proceedings against him at the same time as the Serious Fraud Office, he would inevitably apply to the court for a suspension of proceedings on grounds of prejudice. That could well delay the possibility of bringing the main action against him on which greater and more draconian penalties could be imposed.

Mr. John Marshall : Does my hon. Friend agree that it is most unfortunate that Mr. Nadir said that he would co-operate with the administrators of Polly Peck and then sought to frustrate them at every turn? Is not it equally unfortunate that he says at press conferences that he wants justice and then flees from it? Is not it high time that he came back to Britain and faced the music?

Mr. Hamilton : I entirely agree with my hon. Friend. Mr. Nadir should put up and shut up, and I commend that last piece of advice to the hon. Member for Livingston (Mr. Cook).

Coal Industry

12. Mr. Corbyn : To ask the President of Trade what recent discussions he has held with British Coal on the future of the coal-mining industry.

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Mr. Eggar : My right hon. Friend and I meet members of the board of the British Coal Corporation as necessary to discuss a range of issues.

Mr. Corbyn : Will the Minister confirm that, in those discussions, he has talked to British Coal about the principle of market testing the 12 pits? Does he agree that market testing is a cruel con and a deception because the Government have already ensured that there is not a market for that coal and that there is a rigged market against the coal industry? What they are trying to do, and have been trying to do since 1979, is punish miners by closing pits and destroying the coal-mining industry, when it could be a safe and secure source of energy for the next 300 years.

Mr. Eggar : The hon. Gentleman would not recognise a market if he fell over it. He simply does not understand that British Coal has to find customers for the coal that it is producing. Currently, about 45 million tonnes of coal is stockpiled, either with the generators or with British Coal. If British Coal is to get additional sales--it has told us that there are additional markets available for coal--it must be able to compete with other forms of electricity generation. Surely the hon. Gentleman recognises that.

Dame Elaine Kellett-Bowman : Will my hon. Friend remember in all the discussions with British Coal, that gas, nuclear and oil-producing communities are just as important as coal-mining communities? Will he accept that I am grateful for the robust comments that he made earlier, and may I ask him to obey the instruction on my badge, "Don't bash gas"?

Mr. Eggar : I always pay close attention to whatever my hon. Friend says.

Mr. O'Neill : The Minister said that the difficulty in selling coal to the generators is attributable in part to the summer weather and high levels of stocks. In order that the collieries can sell coal and benefit from the subsidies that

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he is apparently still prepared to provide for some time, will he be prepared to extend the enhanced redundancy arrangements so that collieries are not closed prematurely before 31 December, when the agreement expires?

Mr. Eggar : Clearly, we extended--partly in response to points that the hon. Gentleman and his hon. Friends made--the period up until 31 December. It is too early to say what the future for those terms will be, but we want to allow a proper opportunity for market testing to take place and we want the private sector as well as British Coal to be able to enter into serious discussions with generators. I recognise that we have to give that a reasonable amount of time.

Mr. Oppenheim : Bearing in mind that, for decades, British Coal was protected from low-cost imports, that, for decades, it was protected from competition from gas-fired generation and that for decades, the Government insisted that it should be given cosy, Government-inspired contracts with generators, if the market has been rigged, surely it has been rigged in favour of coal. Everyone is concerned about miners' jobs, but should not we remember that there are consumers as well as producers of coal and that if we further rig the market in favour of coal, we will lose jobs in other sectors of the economy that rely on cheap energy?

Mr. Eggar : My hon. Friend makes a very good point. The basic core contracts that have been agreed between British Coal and the generators contain a subsidy from British consumers directly to the British Coal Corporation of about £500 million for every year of the contract, making certain assumptions about world prices. In addition, since 1979, some £18 billion of taxpayers' money has gone into the British Coal Corporation on restructuring and other grants. It simply is a complete misrepresentation of the situation to pretend that the market has been rigged against coal. In fact, a considerable subsidy has been available to it for a number of years, both from the Government and the consumer.

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