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Mr. O'Brien : I am sorry, but I have little time left, and there is a lot to be said.
I could say a great deal in support of the mining industry and miners' families, in addition to the points raised by my hon. Friends. Because time is short, and because so many other hon. Members want to speak, I shall dwell on my pit, Sharlston, which closed speedily after the President of the Board of Trade made his announcement in February.
I said then, and I repeat now, that the men of Sharlston and their families were treated shabbily by the Government and by British Coal. That pit had a proud record of producing coal : it broke its own productivity record year after year. The work force were second to none in terms of output.
8.4 pm
Mr. Alan Duncan (Rutland and Melton) : I wish to make a few observations, having watched the debate develop in the past months. One of the advantages of the parliamentary system in which we play our part is that no one is immune to the letters received directly from his constituents. All of us recall the mountain of letters that we received when the first announcement about pit closures was made last year.
I hope that the House will accept that I am trying to address the issue honestly when I say that I was well aware at the time that a raw nerve had been struck by the initial announcement. The general feeling was that it had offended a basic sense of decency. That feeling was based on a number of suspicions.
It was felt that the decision was prompted by short-term considerations ; that the price of gas, which appears competitive at the moment, might not be sustained in the long term, and that the decision had not been made in the context of an overall energy policy, as it deserved to be.
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Above all, it was felt that those working in the mining industry, who had dramatically increased their productivity rate, had been peremptorily treated.The mountain of letters followed. Our duty as parliamentarians was surely enhanced when we were forced to consider the issue in detail. That is exactly what I and many of my colleagues have done. As the House may be aware, I have experience of the oil industry, a parallel industry in the energy sector. I have seen oil traded across international markets for many years. That experience taught me that the energy sector is bound not just by domestic economics, but by international ones and by international costing. That applies equally to the coal industry.
Opposition Members may not realise that, although I represent a rural idyll, my constituency also has a deep mine, Asfordby, which has received tens of millions of pounds investment. It is set to be one of the most successful in the coal industry. I welcome its success, which I want to encourage.
In trying to wrestle with the problems that the original announcement caused, one must accept, as my hon. Friend the Member for Clwyd, North-West (Mr. Richards) graphically explained--I am sorry that his explanation was not welcomed by Opposition Members--that the coal industry is an industry in decline. We must face the realities of that decline.
It is all too sad that, as the coal industry shrinks, we fail to sing the praises of the oil and gas industries, which have risen to take the place of coal as the major electricity generating sources. The oil and gas sectors have been a tremendous triumph, but we hear far too little about the success that private enterprise has brought them. We hear far too much from the Opposition about what has happened to coal, but they fail to appreciate what is happening elsewhere in the energy sector.
Mr. Nicholas Winterton : Will my hon. Friend give way?
Mr. Duncan : I will do so, because I know that my hon. Friend holds strong views.
Mr. Winterton : Does my hon. Friend accept that using gas for energy generation is extremely wasteful, whereas its use for domestic appliances is extremely efficient? Does he also accept that we have finite reserves of gas, whereas we have almost unlimited coal stocks underground?
Mr. Duncan : My hon. Friend has beautifully encapsulated all the fallacies of his position. First, gas reserves, like oil reserves, are extensive, but both are finite. Secondly, it is not for Members of Parliament to make commercial judgments in a field in which professionals are better able to judge. The further we remove ourselves from those decisions, the better. It is not for us to judge whether gas or oil will run out. [Hon. Members :-- "It is."] I think that it is not.
There has been mention of the French interconnector. The contracts for the purchase of electricity through the interconnector were undertaken by the last Labour Government. There would be severe penalties should we withdraw. Furthermore, withdrawal would be in breach of article 30 of the treaty of Rome.
I should like to address the charge that the industry is rigged. It is self -evident that National Power and PowerGen are a duopoly for the generation of electricity. More important, they are--to use strict economic
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language--a duopsony. They are the country's two buyers of coal and, indeed, of other sources of energy. However, although they have market power, they judge that they can generate electricity more cheaply by using gas.Let us imagine what the situation would be if there were five, six, seven or even eight purchasers of gas or coal. It is probable that they would all make the same assessment. The actual structure of power generation does not in any way alter the basic fact that coal is too expensive and that the mines cannot find a market. The charge that the industry is rigged simply does not stand up to investigation. It is not right to suggest that developments are having a detrimental effect on what would otherwise be the fair play of the market.
In my view, the Government are right in trying to alleviate the difficulties created by the transition of an industry that is in decline by reason of other sources of energy generation. They are doing the right thing in trying to pave the way for privatisation of the mines that remain and can produce coal effectively and efficiently.
However, I seek an assurance that some money will be made available to assist the Union of Democratic Mineworkers in what I hope will be an effective management and employee buy-out, so that the work force, who have been so effective in improving productivity, may have a chance to show what they are capable of. I hope that, in this regard, my hon. Friend will be able to give me some comfort.
I look in vain for any specific Labour commitment to keeping mines open, to shelling out the enormous amount of money that would be involved. It has been argued today that so much money has been poured into the mines that they must all be kept open for fear of losing the benefits of the subsidies. That is an extraordinary argument. If it is proved that mines can survive only with continued enormous subsidies, it is better to close them now than to pour good money after bad and cause unemployment in the gas and oil industries. I hope that, on reflection, people will realise that the Government's decision, though difficult, is the right one, and that no purpose will be served by efforts to hold on to an industry that is in decline and cannot be sustained without the investment of many billions of pounds that could be better spent elsewhere.
8.14 pm
Mr. Kevin Barron (Rother Valley) : I spent a few minutes pondering which part of the speech of the hon. Member for Rutland and Melton (Mr. Duncan) had been passed to him by the Minister's Parliamentary Private Secretary. At first, I thought that it was the reference to a coal industry in decline--something that was mentioned earlier in what resembled a GCSE economic history paper. Conservative Members ought to talk about the British coal industry in decline, for the industry throughout the world is not in decline. Indeed, there is expansion in Asia, Africa and elsewhere. The percentages are in double figures, and that situation has prevailed for many years.
Let me give the hon. Member for Rutland and Melton some information about the French interconnector. The contract was signed in 1981. I do not know how good the hon. Gentleman is at figures, but he should be able to work out that 1981 was two years after 1979, when the Concservative Government were elected. But there is a point that is often overlooked. The French interconnector
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contracts were renewed this year, following the debate about what was happening to to the British coal industry. At that time, the Government knew that the equivalent of 6.5 million tonnes of coal, in terms of electricity generation, was being imported. To my knowledge, only one regional electricity company decided not to participate. If there had been some Government action in respect of the French interconnector, the pit closures that have occurred since the end of March might not have been necessary.I made a speech in the House last October, following the announcement that the two remaining mines in my constituency would be subjected to changes. Kiveton was to close altogether, and Maltby was to be mothballed. Since then, it has been announced that Maltby is to be put on a development status basis. The Minister, having replied to an Adjournment debate that I initiated on this subject, will know that in the past two months 700 men at Maltby have been made redundant, despite the fact that it is one of the most profitable mines in Britain.
The Government's amendment to the motion indicates that they will offer to the private sector pits that they do not themselves want to keep in production. The Minister knows that that is not true. The Maltby work force, together with people in the City and others in the private sector, have been trying to make a bid so that the mine might be kept in production, but have come up against a point-blank refusal. In fact, the Minister refuses even to meet the people concerned.
About 150 people are left, but they are not producing coal any more. The bonus scheme that was related to the level of production has ended. Information that I have received from British Coal contradicts that, but it is a fact that people now working at the mine do not have a chance to earn bonuses. Thus, they have suffered in terms of weekly income, despite assurances that they would be protected.
My interest in the Kiveton colliery is shared by my hon. Friend the Member for Derbyshire, North-East (Mr. Barnes), as two mines were amalgamated many years ago. Kiveton is one of the 12 market-tested pits. I have spoken to men and management a number of times since the term "market-tested" came into vogue. What has it meant for the workers? The machine shifts have been reduced in number from nine a day to six, as was announced two weeks ago. On that basis, 50 jobs have disappeared.
The mine's market amounts to only one third of its current production. It is selling into a market that is being supplied by one of the mines that the Government are offering to the private sector. Anyone interested can have a go at the coal mine, but not at the market that used to go with it. It is quite clear that, unless something happens with regard to future contracts with the electricity supply industry, Kiveton, together with the others on the list of 12 market-tested pits, will close.
What is the reason for this? Currently there is a contract for the supply of 40 million tonnes, including 8 million tonnes from open-cast mines. This time next year, the quantity will be 30 million tonnes, of which 7 million tonnes will be from open-cast mines. The implications for the deep-mine industry will be severe, as must be clear to anyone who takes the trouble to study the situation. Today, the Secretary of State for Employment repeated something that the Minister has said occasionally : that the answer is to contract more coal by the use of subsidy.
What is happening about introducing subsidies? At the last Department of Trade and Industry Question Time, on 23 June, in answer to a question about how many requests the Minister had received from British Coal for a portion of the subsidy for expanding the coal market, the Minister said :
"My right hon. Friend and I have not received any specific requests for subsidy from either British Coal or private sector producers."--[ Official Report , 23 June 1993 ; Vol. 227, c. 295.]
I received a letter five days later from the chairman of the British Coal Corporation, who said :
"We made a very competitively priced offer to the generators for additional sales. This has been rejected by National Power who say they will reassess the market for coal in the autumn. And, while we await a formal response from PowerGen, the public statements of both generators have offered little comfort, suggesting that they would be willing to buy more coal, but possibly not a great deal, probably not until some months have elapsed, and then only at very low prices." That is another of Mr. Clarke's more morale- raising speeches since he has been appointed chairman of the British Coal Corporation. The Minister and the chairman of British Coal Corporation cannot both be right. The chairman cannot have made a competitive offer to the generators while no one has asked for a subsidy from the Minister--or can he? I want the Minister to tell us when he winds up the debate. My information is that the rules with which people must comply before receiving a subsidy mean that they do not know how much subsidy they will have before they make a formal approach to the generators and receive a formal contract in return. They must agree provisional terms before going back to the DTI and asking how much subsidy they can have. It is an absolute sham and the Minister knows it, because he is part of the conspiracy by saying that nobody has asked for a subsidy, while British Coal says that its offers have been rejected.
The Government have the power to do something about the current crisis in the deep-mined coal industry. They must know that, by this time next year, when nearly 25 per cent. of current contracts will come from opencast coal mining, there will be a massive reduction in deep-mined pits. They tell us that they are holding discussions with the generators about coal stocks. If they wish, they can act now to ensure that that does not happen.
However, I doubt whether they will do so because, since the introduction of the White Paper in March, their actions have been consistent with the view reported to them in 1991, when they appointed N and M Rothschild, a merchant banker in the City, to look into the privatisation of the British coal industry. That first report, which was leaked to the Opposition and denied by Ministers, said that in some 12 months' time we would be down to 14 deep mines. I predict that that will happen if something is not done to stop it. I am fed up with seeing people stand up and wring their hands about the problem. Privatisation does not come into it. In 14 months' time there will be no industry to privatise because the deep-mine industry will have gone, and the Government will have been a major part of the conspiracy to get rid of it.
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8.23 pmMr. Jim Lester (Broxtowe) : I agree with the hon. Member for Rother Valley (Mr. Barron) about opencast mining. The prospect of new opencasting of green field sites has become unacceptable at any price, whether environmental or in terms of the need for deep-mined coal. Although our coal industry has declined, many of us feel that it should not become extinct because it is in the national interest that we should retain a four -fuel potential well into the next century. I have made speeches on the White Paper and shall not repeat all that I said then because it is all on the record, but the problem remains the same : how do we retain a short- term market in order to retain a deep-mine potential for the future?
My right hon. Friend the Secretary of State spoke about a freer market for coal. What he said is true but it should be a freer market in the sense of putting on the market those pits which British Coal does not need. However, if the market is the same in terms of where we sell the coal, I see no point in anyone wanting to buy a pit unless they have a contract to sell the coal. If the amount of coal about to be burnt is exactly the same, it is not a freer market but simply a different market for exactly the same amount.
We now realise that the generators, not the Government, control our energy policy. That concerns me considerably. In the near future, little more than the core contract will be required, and it will take at least 18 months before we can see what coal stocks are likely to be required. As and when coal is sought, it will be sought not on a contract basis but on the stock price that we want at the time. That is no way to get people to invest in the industry or to look to the future.
In the short term, the Government must concentrate on the question of stock. I welcome the fact that my hon. Friend the Minister is currently negotiating stocks and discussing import substitution. My main concern, which I have discussed in previous debates, is about the relationship between coal-fired power stations and research and development. However much we discuss the short term, unless we have a policy on coal-fired power stations the coal industry has no future.
The over-capacity of generation, which has come about through the building of new gas-fired power stations and the successful operation of nuclear power stations, has caused that pressure on older coal-fired power stations. Of those, a capacity of 500 MW has already been closed and we hear of more closures to come. Another problem for coal-fired power stations is emission control, which must involve research and development if they are to have a future.
In the previous debate I spoke about the need to retain intermediate power stations. I have discussed with my hon. Friend the Minister the High Marnham and Cottam power stations in Nottingham. Those intermediate 2,000 MW power stations would be ideal for refitting and for using the new technology, which is not necessarily market oriented because it rarely is. We have offered to fund some new technology through extending research and development for the next three years, but it is not a sensible basis for investing in new technology, research and development, if at the end of that time there is no use for the product. We will be unable to fit the topping cycle--the
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latest technology--or anything on which Britain has worked for centuries. We have the best coal burn technology in the world. I remember going to the United States before 1979, when I was interested in energy and the United States was consulting our technology to see how best it could burn its coal. That technology has now been developed in the United States and if we want it we must buy it back from them. The last thing we want is the same thing to happen to the topping cycle, which is the ultimate in terms of coal burn and using gas for clean emissions.I desperately want my hon. Friend the Minister to say whose responsibility it is to declare an overall strategy and policy for coal-fired power stations up to the year 2,000, which is not far away, and beyond. Where do research and development fit into that overall picture? Unless we act, we are simply whistling in the wind when we discuss the coal industry, production, costs and so on, because there will be no market for them. I am convinced that we need to retain the potential for a deep-mine industry in this country. I have no mines in my constituency, but I speak because I have an interest in Nottinghamshire and coal, which has a role to play. We must ensure that it fulfils its role.
Unless the Government are able to concentrate on the short-term stock levels, the estimated coal burn over and above the core contract of the 16 million tonnes that we are prepared to subsidise, a strategy for coal-fired capacity and the need to refit and modernise before the year 2000, I see a bleak immediate future for miners. The future is bleak at a personal level- -of which hon. Members can speak graphically--and, more importantly, in terms of the long-term balance of fuel supplies.
When my hon. Friend the Minister replies to the debate, I hope that he will respond to those salient points--the short-term prospects in the next 18 months and the energy burn and coal-fired strategy for which the generators are not responsible. The generators have a business to run and they are seeking to do so as best they can, but the four-fuel policy is the Government's policy and the Government must be able to provide an overall strategy for coal-fired generation.
The youngest station was completed in 1974, which is a long time ago. None of us can envisage a new coal-fired power station being built in our lifetime, but we can envisage utilising the capacity of existing power stations, and refitting and modernising them to take us into the next century and ensure a future for Britain's deep-mined coal industry.
8.32 pm
Mr. Paddy Tipping (Sherwood) : It is 102 days since the Government published the White Paper on coal, and 98 days since the House had the opportunity to discuss it. In the space of four days, the Government put together a quick fix to persuade people to vote with them. That political fix is rapidly becoming unglued.
The Government promised a subsidy that would keep 12 collieries open while they were market testing. The Government have been unclear about the length of time that that market testing should take. Since March, four pits have closed in Nottinghamshire. There are grave concerns at Rufford, Bilsthorpe and Calverton about the future of those mines as market-testing pits.
The House knows that the men at British Coal have decided to close Rufford colliery. Last week the Prime
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Minister said that that decision was taken for two reasons : first, there were geological problems and, secondly, the men had voted to close the colliery. He was wrong on both counts. If, 12 weeks ago, that pit was fit to be kept open, what has changed geologically since then? The answer is that there has been a recognition within British Coal that its marketplace is so limited that, although it is technically possible to keep the colliery open, there is not the financial strength to do so.There are 600 men at Rufford colliery, but only 226 of them voted for the closure. Rufford is closing because of British Coal's vindictive tactics. The men at the colliery were told that, if the pit was not closed before December, they would lose £10,000. I am not criticising people for taking tough decisions. The Minister for Energy should give a clear response tonight and help the industry. His colleague, the Secretary of State, talked about compassion being shown not just on one side. If the Minister has compassion, he should state tonight that, following consultation with the chairman of British Coal, he will extend the period beyond December. That would give people confidence.
The men of Rufford were also told that, if they did not take the money now and the pit was not closed before the autumn, they would not have the chance of another job. They were told that, if the pit was closed now, they would be transferred. That was held out as their hope for the future.
That is how miners in Nottinghamshire and across the country have been treated. The miners have done everything asked of them and more. Let us consider the record. They have increased productivity by 150 per cent. over the past five years. They are producing coal at half the cost of Germany. In the past six years, the price in real terms of coal from the pithead has not increased. Is it any wonder that all across Europe people think that we are crazy for closing our collieries?
The hon. Members for Clwyd, North-West (Mr. Richards) and for Leeds, North- West (Dr. Hampson) talked about their collieries such as Point of Ayr and Selby. They said that those collieries had a secure future. I beg them not to be taken in by guile because the logic of the marketplace speaks for itself. The contract with the generators is for 30 million tonnes next year. If we take off opencast mining--possibly 10 million tonnes--we will be left with a good period of closure over the next six to 18 months. I believe that that closure period will reduce the number of collieries to, at best, 15, and perhaps even to 12--there will be consequences for privatisation. We would be left with a rump of collieries. Conservative Members who argue for splitting that group are talking about slitting the throat of the rump of the industry because the energy market is a tough market. We need groups of pits of three, four or 12 to ensure that the industry survives. The call for privatisation sounds the death knell of the industry.
It may well be right to talk about the strengths of the Selby coalfield, but I make a prediction. Given the rate of extraction at Selby, the fact that there is a danger of flooding in the Vale of York, the pressures in the ground at York, and the fact that the overheads at Selby are split between a group of collieries, it is possible that, instead of being the pit of the 21st century, Selby will be closed by the year 2000 or 2005.
There has been talk about additional new contracts with the generators, but such events will not happen for a
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long time. The facts speak for themselves. National Power holds 19 million tonnes of coal and PowerGen holds 14 million tonnes. What is at issue is not the price of coal being offered for the new contracts, but the volume of the contracts.People have talked about the recent hot weather. If I had a fridge full of lager cans and someone knocked at my door saying that I could buy cut-price lager, but I had no place to store and cool the lager, I would not buy it whatever the price. That is the position in which the generators currently find themselves. It is clear that no additional contracts will be forthcoming. At best, if the Government use their best endeavours, the additional contracts will be small. The future of the deep-mined coal industry in this country looks extremely bleak. If the Government care about the future and do not want to rat on the commitments that they have given the miners, they must do something about the problem. First, they could move quickly on the nuclear review. Earlier this year, the Minister for Energy promised a nuclear review and said that he would announce its terms before the recess. Will he repeat that statement tonight? Will he confirm that the nuclear review will be announced and will take place quickly? The coal industry will survive only if space is made within the energy market.
It is clear that gas has many advantages. It is fascinating that gas can be subject to a 15-year contract but coal has one of only five years. It was astonishing to hear Conservative Members argue the case tonight for opencasting, because decisions about that should be made locally. It is obscene to tear up fields, pull down hedgerows and knock down trees, when the need for coal can be supplied from the deep-mining industry.
What is the Minister doing about creating a European energy market, and discovering the element of subsidy in EDF--the French company? It is clear that we do not have open access to the European market. The Minister must act quickly to save what remains of the British coal industry.
The Minister probably knows the real hostility that is felt over the Government's backing of British Coal on the pension fund issue. British Coal employees think that it is obscene that, as they see it, they are paying from their pension fund the cost of their own redundancies. That is not right or proper ; it is immoral, and it will be challenged in the courts. I hope that the challenge will be successful.
We want more than anything else a coal industry that is successful, and in which people are rewarded for their efforts.
8.40 pm
Mr. Michael Alison (Selby) : Although there was a sombre hue to part of the speech of the hon. Member for Sherwood (Mr. Tipping), I am glad to follow him, because he sought to move some of the cloud of doom from Nottinghamshire to Selby, which I have the honour of representing.
In the light of the hon. Gentleman's remarks, I will place on record comments that I hope will restore the perspective. They were made by my right hon. Friend the President of the Board of Trade in the House on 19 October last year :
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"After the contraction of the industry that we are contemplating, British Coal will still be the largest contributor to electricity generation in this country. I confirm that the Selby group is a core part of the future of the British coal industry. We have invested £1.3 billion in that group of pits, which has played its part in securing the improved productivity upon which the long-term viability and, therefore, the future of the industry depend."--[ Official Report, 19 October 1992 ; Vol. 212, c. 214.]Perhaps I may, without embarrassing him, sound a note of agreement with the hon. Member for Rother Valley (Mr. Barron), while disagreeing with something said by my hon. Friend the Member for Rutland and Melton (Mr. Duncan). I do not believe that coal is in decline ; the hon. Member for Rother Valley is right when he says that it is a fuel with a future in the international dimension. I believe that it is a fuel with a future also in Britain, quite apart from having the lion's share of electricity generation that it has traditionally enjoyed.
Gigantic sums have been invested in pits such as the Selby group. When the hon. Member for Normanton (Mr. O'Brien) made his challenging speech about the British coal industry's future--from the point of view of someone like yourself, Mr. Deputy Speaker, who spent a lifetime in the pits--he was at pains to itemise the enormous increase in productivity that British Coal has achieved over the past decade. He said that the figure had increased from 2.3 million tonnes per man shift 10 years ago to 8 million tonnes per man shift today. I believe that the exact figure is 7.86 million tonnes, which must be a record average.
When one places that against the figure of more than 30 million tonnes per man shift that is regularly achieved at Selby, one sees the dividend from the unprecedented scale of investment made there by this Government and since the end of the war. One sees also the dividend from manpower productivity that such investment secures. One must agree with the hon. Member for Rother Valley that there is a future for the coal industry in Britain, based on pits such as Selby where there has been huge investment and staggering productivity is being achieved, which can challenge and beat any importer and even dumped coal, if we are allowed to have our way. The hon. Member for Normanton, who is a near neighbour of mine in Yorkshire terms, made a plea for the coal industry in general and for his constituency pits in particular. That is the dilemma. Given the productivity achieved at Selby as a result of massive investment, it is self-evident that if the entire British coal industry is to have a future, investment and output must be concentrated on the pits where productivity is on the Selby scale. That means facing a continuing contraction of less productive, less effective pits in different parts of the country and concentrating on those such as Selby. That is not simply a self-interested, constituency point, because a large proportion of those employed at the Selby group come not from my constituency but are miners who were redeployed from pits in south and west Yorkshire. The logic of concentrating coal mining on high-productivity pits such as Selby is that it offers a genuine prospect of continuing employment in coal mining for those who want it. Even within the Selby complex, a number of miners were attracted by voluntary redundancy terms. In recent years, we lost 3,000 workers voluntarily, which has helped to increase the group's productivity even more dramatically.
If one combines the scale of support for relocation, retraining and re- employment that the Government
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manage to provide through British Coal Enterprise Ltd. and by other means with the corresponding huge investment in modern pits such as Selby that has been seen since 1979 and even more dramatically since the 1984 strike, one gets the best of both worlds. One achieves a world-beating British coal industry with prospects for the future, redeployment of manpower, and the sustaining of the old coal mining communities.The Government have pursued an acceptable and rational policy. They made effective use of the huge amounts of money that they poured into the industry, and have tempered the winds of redundancy for those who will be displaced from older pits. I urge my hon. Friend the Minister to continue with that double-barrelled approach of rational, if costly, investment resulting in a high-productivity, low-cost industry, and of offering hope to miners of redeployment in other industries or of being drawn to areas such as Selby, where many miners have already been redeployed.
8.49 pm
Mr. Eric Illsley (Barnsley, Central) : The right hon. Member for Selby (Mr. Alison) spoke about the mining complex in his constituency. I remind him that it was the last Labour Government who provided the investment for that complex under their "Plan for Coal" between 1974 and 1979 when a market of 150 tonnes was planned. The right hon. Gentleman shakes his head, but if he checks he will find that that is the case.
We are beginning to see the level of the deception perpetrated by the Government on the public and the mining industry since last October when the decision to close 31 pits was followed by a tremendous public outcry. That showed that people were sick to death of what the Government were doing to the industry. In October, dozens of Tory Members ran to the press saying that they would not vote for the measure unless more than 20 pits were saved. With one or two notable exceptions, all those hon. Members backed off and supported the Government's proposals.
The White Paper was published in March, but it was basically a worthless document, designed simply to placate Conservative Members and decieve the country into believing that some parts of the industry were to be saved and some collieries reprieved. It was a quick fix to get the Government out of a hole. As my hon. Friend the Member for Sherwood (Mr. Tipping) said, only 12 weeks after the proposals were published, collieries that were supposed to be reprieved are being closed. Production has already ceased at about 20 pits and the reprieved pits are again in line for closure. In addition to three that have closed already, another three in south Yorkshire seem to be under threat.
Not a penny of subsidy has been paid by the Government to support the industry. The extra tonnage due to be sold to the generators has not been sold to them. The aid to the industry suggested in the White Paper was a complete sham. Some of the collieries not even mentioned in October or referred to in the White Paper, the safe 19 collieries, are also under threat. Some of the 12 that have been reprieved or put out to market testing might be saved at the expense of some of the collieries which at that time were said to be economic. That shows that there is no economic case for the closure of any of those collieries.
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Comparison of the performance of one colliery against another, profit comparison, is futile. The Government are trying to reduce the amount of coal being produced because there is no market for it. It was wrong for the President of the Board of Trade to speak on a number of occasions about uneconomic pits, because it is simply a case of taking out lumps of the market.The arguments that my colleagues and I have advanced since October, especially in March when the issue was debated, have proved to be correct. There is no economic case for closure ; the Government are simply removing tonnages and the White Paper failed to address the problem of the market for coal. We have said that time and again, but that market could be addressed if the Government had the political will to do that. They have not done anything to increase the market for coal.
The Government have not done much for the coal industry since 1974, the days when the Government of whom Baroness Thatcher was a member were forced out of office because of the coal strike. In October, Lord Parkinson reiterated the philosophy that the Government have attacked the industry since 1974 because they blame it and the National Union of Mineworkers for their loss of office at that time. Most of the coal industry's problems arose from the privatisation of the electricity supply industry and the creation of a rigged market. The creation of the duopoly of National Power and PowerGen gave those companies the opportunity to buy coal from any source. That followed lobbying by Lord Marshall of Goring, the then chairman of the Central Electricity Generating Board, who made no secret of the fact that he wanted to buy coal from other than British Coal. He told a Select Committee on Energy that the CEGB took 85 per cent. of its coal from British Coal and that that would have to change. He did not advance any economic or diversity arguments for that but simply said that it had to change.
The privatisation of the electricity supply industry gave the go-ahead for the dash for gas. There was such a flurry of applications that British Gas had to increase its price by 35 per cent. in respect of stations not already contracted. Killingholme gas station opened on 19 April with a staff of 35. It is completely false for Conservative Members to say that jobs in oil and gas will be lost. Some 19 GW of gas-fired generation are likely to come on stream ; that is equivalent to about 30 million tonnes of coal, which--surprise, surprise--is the contract for next year's coal market. Gas-fired generation from stations that have not yet even been built could totally eclipse the contract market for British Coal. No jobs have been lost as the stations have not yet been built and, in any case, 35 people are required to man one such power station. For years the Government have refused to implement any sort of sensible energy policy. Their only policy is to leave it to the market. The Government have totally rebuffed all opportunities for coal. The Select Committee on Energy, which is now disbanded, took evidence on clean coal technology, about which some hon. Members have spoken.
There is no way in which the Government will back such technology. They closed the pressurised fluidised bed combustion plant at Grimethorpe and have no intention of looking at any advanced technology using clean coal. The operations of our competitors, especially Texaco in America, are far in advance of anything that has been done in this country. It is the old argument, which was also
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advanced in respect of the fast reactor, that we do not want it here and will not spend on it, but we will buy somebody else's technology when it is up and running and everybody else has bought it.Hon. Members have spoken about how the market for British coal can be improved. Despite the damage to our balance of payments, we have the capacity to import millions of tonnes of coal which is dumped, sold at less than its cost of production, by other thriving coal industries.
My hon. Friend the Member for Normanton (Mr. O'Brien) spoke about the new coal terminals. On 23 June, the Financial Times carried a photograph of the Portbury dock at Bristol, which is one of the biggest terminals in the country, with the capacity to handle 7 million tonnes of imported coal a year. On the day that the photograph was taken, a 37,000-tonne ship was unloading coal for National Power. Gladstone dock on Merseyside will open later this year and will have a capacity to handle 5 million tonnes a year. That is nothing new : we have been talking about it for years during debates on the Associated British Ports (No. 2) Bill. When the Select Committee on Energy looked at the coal industry, it warned of the effect, and the conclusions of the Select Committee on Trade and Industry are nothing new, although the hon. Member for Leeds, North-West (Dr. Hampson) referred to them as if they were set in concrete. The Energy Select Committee issued those warnings years ago.
I have already mentioned the threat from gas and the 30 million tonnes that could eclipse the coal industry altogether, but gas-fired generation is not cheaper than the existing coal-fired generation. On the contrary, it is more expensive. The gas-fired generators are also bidding to the pricing pool at a negative price, so they are, in effect, submitting a contract to give their power away. Due to the workings of the pool price mechanism, those gas-fired generators take the marginal cost into the pool and take the highest cost capacity. Bidding with a negative bid and taking out the highest cost capacity, they say, "Thank you very much," and make a profit.
Last week, it was announced that the subsidy to nuclear power for the year was £1.35 billion. Nuclear power has a guaranteed market, but privatisation exposed the sham of the nuclear power industry--it is far more expensive. Other factors to be considered are that 93 per cent. of opencast sites are on green field sites and that power prices have increased by 32 per cent. in the past year, an increase into which Professor Littlechild requested an investigation. Blue Circle Cement complained that the price--
9.2 pm
Mr. Winston Churchill (Davyhulme) : It is a matter for regret that my right hon. Friend the President of the Board of Trade cannot be with us for the debate. I know that I am not alone in wishing him a full and speedy recovery.
My right hon. Friend the Secretary of State for Employment made some powerful points about the 353 pits closed by Labour Governments, from 1964 to 1970 and from 1974 to 1979, with the attendant loss of 185,000in the House.
Those prospects look decidedly bleak. The market for coal has effectively collapsed. The generators are clearly abusing their joint monopoly. Having challenged the Government on several points, the generators have won the day. They seem quite determined not to commit themselves to any new purchases before October or November ; even then, they will not sign for long-term contracts, but propose to buy in parcels of 200,000 or 300,000 tonnes under tender. That will surely make the United Kingdom price collapse to below world market levels.
The generators know how that policy of buying short wrecked the United States coal industry in the 1960s and evidently they are seeking to emulate it over here. In May, British Coal offered the generators coal at 93p per gigajoule delivered to inland power stations. Even at that price, it was unable to find purchasers. The generators want to close capacity at their older coal-fired stations. Some of those stations are 30 years old and have no gas cleaning. None the less, the owners are refusing to sell at a true market value ; instead, they are demanding the replacement value for those antiquated assets because they do not wish for competition. Although there is a gross surplus of plant and of input fuels, the price of electricity does not go down. Where is the regulator? Where is the Monopolies and Mergers Commission? Where are the Government to hold the ring where patently there is no free market?
The British mining industry is in better condition today than it has been at any time this century. British coal can be produced at 80p per gigajoule, yet viable pits are being closed. Silverdale pit, into which £90 million was invested five years ago and which has a new drift, with 30 years of life, is to be closed. Both Rossington and Markham Main pits have seen £6 million to £7 million pounds worth of equipment buried. It is difficult to describe that as anything other than institutionalised vandalism.
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