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Column 1131Question accordingly agreed to.
That the Local Government Finance Report (England) 1994-95 (House of Commons Paper No. 179), which was laid before this House on 27th January, be approved.
That the Limitation of Council Tax and Precepts (Relevant Notional Amounts) Report (England) 1994-95 (House of Commons Paper No. 181), which was laid before this House on 27th January, be approved.-- [Mr. Lightbown.]
That the Special Grant Report (No. 9) (House of Commons Paper No. 180), which was laid before this House on 27th January, be approved.-- [Mr. Lightbown.]
Motion made, and Question proposed , That this House do now adjourn.-- [Mr. Lightbown.]
Mr. Matthew Taylor (Truro) : This is my third Adjournment debate on the subject of tin mining. My first, in 1988, started at 2.26 am. The second, in 1991, started at 1.22 am. This one is at a more reasonable hour, and we may get a better attendance than we have had previously for this subject. I notice that the three Adjournment debates come at almost exactly three-year intervals. The object of this debate and of the all-party pressure for further support for what is now Cornwall's last tin mine is to ensure that there is still an industry to debate in another three years-- when I hope, if there is an Adjournment debate, it will be to congratulate the mine on record profits.
I have no doubt that during this debate, the Minister will argue that, over the years, the Government have invested £23 million in Carnon Consolidated. That is true, and it is the best reason why Government support should not be cut off now. However, let us remember how we got here.
When the International Tin Council crashed in October 1985, it plunged the tin industry into crisis. When the tin price fell as stock-piled tin was released on to the market, mines worldwide were threatened, not least our own deep mines in Cornwall. Mines worldwide continue to operate at below the break-even level. Ours are not the only mines threatened by the present low prices.
The uprising of support in Cornwall was spontaneous. The miners took their case to London. The support of my much-missed predecessor David Penhaligon is still well remembered. Here in Parliament, the Select Committee on Trade and Industry investigated the tin crisis. Its report in March 1986 contained a number of conclusions, of which the most important, contained in the final line of the summary of conclusions, was that it believed that the Cornish tin industry was worth saving. I believe that that view is as correct now as it ever was.
Moreover, the work force more than ever deserve saving. They have met every target for productivity and cost cutting that was set. They have taken wage cuts and they have even worked without reward at times. Twice, however, the Government have let them down. In February 1991, the Government reneged on a commitment to invest the final £1.6 million of the £25 million originally promised. That was despite the fact that the company had met every target that the Department of Trade and industry had set. Indeed, it had far exceeded the cost reductions originally demanded. The result was the closure of the Wheal Jane mine in my constituency. It is entirely due to the efforts of the management and work force that the South Crofty mine and the Wheal Jane plant are still working.
I was fortunate enough to win the Adournment debate at that time. I hope the Minister has read it ; it contains some points that are relevant now. First, then as now, the costs of support were far less than the costs of closure. I said then :
"I refuse to accept that it saved the Treasury money in any respect. It may save the Department of Trade and Industry money, but it simply costs the Department of Social Security and other Departments money."--[ Official Report, 6 March 1991 ; Vol. 187, c. 432.]
Column 1133The company now employs almost 200 fewer people in what is still one of the worst unemployment black spots in the country. The jobs have just not been replaced.
Taking into account the costs and benefits and the loss of tax payment to the Treasury, that alone costs about £1.8 million a year--more than the DTI saved overall. The pollution disaster that followed is costing many millions of pounds more. The decision in 1991 broke a promise and wasted taxpayers' money.
Now that we have reached 1994, the Minister may like to comment once again on the costs of possible closure. We know what the thoughts of the Minister were immediately before refusing the company the £200,000 it believed it needed to keep going. We know that he believed the decision, because the leaked letter from him to another Minister used the words
"effectively close the last tin mine in Cornwall".
The Minister believed that he was closing the mine. Not surprisingly, news that he was planning that on the day that the announcement was due, produced the reaction that the Minister predicted in his letter as people sought to change his mind. Presumably the Prime Minister and other senior Ministers thought that that was a sensible decision, since we know that they were consulted.
I raise that matter because I have a specific question for the Minister. Given that the sum asked for amounted to £800 per employee, it was clearly less than even the short-term cost of the redundancies that the Minister predicted. Taking into acount the knock-on effect on job losses in supplying companies, the Government were being asked only for the equivalent of £400 per job at stake. Do the Government seek a cross- departmental cost-benefit analysis for decisions such as that?
In 1991, I asked the Minister at the DTI the same question, and I was told that the DTI's job was to manage its own budget. We know that the decision cost the Government far more than the DTI saved. In that case, it seems that the Minister decided to take the same risk. I do not understand why, and I think that the House deserves an explanation.
In 1991, the former Conservative Member of Parliament for Falmouth and Camborne, David Mudd, made the same point in the Truro Packet when he said :
"They have committed what in my opinion is the bleakest act of betrayal in the history of industry in Cornwall The amount involved, £1.6 million, works out at a miserly £3,800 for each of the 420 jobs forfeited. The effect of those skilled jobs on the Cornish economy and on Cornwall's unemployment, which already stands at 13.2 per cent., is too horrendous to visualise."
Mr. Mudd made the same point then that I am making now, and the question still has not been answered.
Once again, there is also an environmental impact. While the South Crofty mine is less likely to cause the scale of pollution that arose at Wheal Jane, the Minister's leaked letter suggested that there was room for concern. Has there been an environmental impact study this time on the risks of closure? Has the potential of the environmental costs been assessed?
Since the continuing Wheal Jane clean-up depends on the tailings at the processing plant, what is the impact on the National Rivers Authority clean -up programme there? I asked the Minister yesterday, and he was not even aware that there was an impact on the NRA clean-up programme at the Wheal Jane plant. Yet today, I contacted the NRA and it confirmed the impact. It said :
Column 1134"If South Crofty closes and the tailing supply is cut off, the NRA's operation at Wheal Jane would continue, but there would be a cost implication caused by the loss of tailings material." Has no one in the DTI thought to work that out? Who will make the dam safe when it is no longer used by the NRA? Who will meet the bill? There will be no company for that operation to do it, and the cost will presumably fall on the NRA as a result of the Government's decision.
I raised similar points about costs in the Adjournment debate in 1991. Then as now, I invited the then hon. Member for Falmouth and Camborne, Mr. David Mudd, to take part. He opened his comments by saying of the points that I made :
"I endorse his every word and sentiment."-- [Official Report, 6 March 1991 ; Vol. 187, c. 434.]
He could not accept the Government's willingness to sacrifice jobs then to save so little. We stood together for the mines and for the work force.
This time, the DTI's calculation of "savings" is even more ludicrous than last time, as figures that I gave in my opening remarks more than illustrate. Fortunately, the Minister may yet be proved wrong ; we may yet have a chance to save the mine and the jobs. I know that the management and the work force will do all they can to achieve that.
The day was saved by the one thing happening which the Department appeared to predict would not happen, and that was the increase in the price of tin since the company asked for the £200,000. As a result, the crisis point has been postponed. However, it has not gone. As we all know only too well, the company is still losing money, and new sources of funding are still required.
The company remains on a knife edge. The Government still have the mine's future in their hands. We now have time to work to persuade the Department to offer that help, and, we hope, time for the company to find new sources of investment.
The Minister will be aware that hon. Members from Cornwall from both sides of the House are in the Chamber today. I hope that he will recognise the united concern for the mine among people in Cornwall, which is reflected in the case that I have made today. That is why I have invited, as I did before, the hon. Member for Falmouth and Camborne to participate in the debate. The mine is in his constituency while the processing plant is in my constituency. The Minister has said no to financial aid. I hope, for the reasons that I have already outlined, that he will reconsider. Although the issue has been raised over many years by the company and by hon. Members, it seems that the Department is finally looking at ways to remove the tremendous burden of Government debt that hangs over the company. That is crucial, because, if the company is not to receive Government investment, it must have private investment to survive for more than months. Who will invest, given that balance sheet? Who will invest if the first call on profits in future will be the Government? Who will give the mine a chance if the Government will not? The mine's future rests with the Minister. The miners and Cornwall hold their breath. The Minister told me yesterday that he hoped for a decision by the end of this month. Many in Cornwall will wonder why there should be a delay. After all, if nothing is done, even the Minister does not hold out much hope of the mine staying open. However, if it closes, the Government loans will be lost anyway. By writing them off now, the DTI would be at
Column 1135least no worse off than it would be if the mine were left to close. At best, the mine would be given a real chance of survival. Why the uncertainty?
At the DTI yesterday, I was told that the Department was worried that it might be held to have acted illegally if it made funds available ; that the Public Accounts Committee might be awkward and embarrassing if loans are written off ; and--it is rather ironic that the DTI should worry about this --that the company might make it work and actually turn a profit.
I have already referred to my 1991 speech on this subject. Let me refer the Minister to the speech made by Mr. David Mudd, the former Member for Falmouth and Camborne, in that debate. He referred to the same claims and worries that have been transferred to me. He said : "For reasons that have still not been explained to my satisfaction or that of many other people, two tin mines, more than 400 jobs, countless small enterprises and the communities that lie between Camborne, Redruth and Truro are under a death threat because, if I am correct, the DTI is scuttling away from what it fears could have been an embarrassing squeeze between the Treasury and the Public Accounts Committee.--[ Official Report, 6 March 1991 ; Vol. 187, c. 435.] There we have it once again. If that is the case, I hope that Ministers will overcome their fears and that he will address that fear when he replies, so that we can be clear what he believes is happening.
There are jobs and a traditional industry to be saved. The councils in Cornwall, particularly the county council, are negotiating with the mine to discover whether there are ways in which they can help by buying land around the mine for purposes in which they are already engaged--for example, economic development, the tramways project and other similar projects.
However, anything that the county is allowed to put in cannot meet the needs of the mine for very long. The Minister can help to save the mine, irrespective of what may have been decided just a week or two ago. The opportunity is there now, because the miners are working hard in the mine, because the management and the people of Cornwall are doing all they can to help, and because politicians on both sides of the House from our part of the country will do what we can to keep the mine open. I hope that the Minister will be able to give some hope to those people who are looking for a response, in the hope that their jobs will be saved.
Mr. Sebastian Coe (Falmouth and Camborne) : I am grateful to the hon. Member for Truro (Mr. Taylor) for his courtesy in allowing me to make a brief contribution to the debate. I also recognise that he has a genuine concern for tailings dam in his constituency, as I do with the nub of the debate : the future of South Crofty in the Falmouth-Camborne division.
South Crofty is the last working tin mine in the United Kingdom. It is one of only two remaining mines in Europe--there is a similar one in Portugal. The hon. Member for Truro has described the lead-up to the events, particularly the 1985-86 crisis, as well giving a few asides, some of which lacked a little accuracy--I am sure that there could be a debate over that.
We seem to be talking about previous public money that has been invested in saving jobs and the mine as wasted money, but it is not. I fervently believe that that money has
Column 1136laid the foundations for a commercially viable operation. At the heart of today's debate is the volatility of the international market and of the international price for tin. That is the agenda that management and Department of Trade and Industry officials have set themselves.
As the hon. Member for Truro said, the main issue on that agenda involves loans. The issue does not merely consist of writing off previous debt : it also involves existing commercial contracts. Writing off Government loans in this case would mean writing off other loans from previous tripartite agreements. Those subjects are not to be debated tonight, but they require detailed discussions. I recognise that Department officials and management are tackling the problems.
Why do we seek for the loans to be written off? Simply because the price of tin is so volatile. There is no forecaster at the London metal exchange or in the commodities market who is prepared or able to put his finger on whether the price is likely to continue to rise. The price has risen £300 in the past week, but no one is able to say whether it will continue to rise or, as the market finds another level, fall back.
The importance of the removal of those loans is that it would allow Carnon Consolidated to develop third-party commercial relationships. They could bolster the industry and constitute the foundation of a commercial relationship to see the industry through the volatility that will certainly exist in the market for the next year. The mine is a viable business. It has already been said that management, work force and trade unions have all worked extremely hard to reduce overheads and operating costs. It is one of the most economic mines in the world. I recognise the volatility in the international market--Malaysia, China and Brazil are suffering similar problems--but when the price rises, as it will, I want to ensure that we maintain not only a commercial operation, but the strong psychological links that mining has for many of my constituents and on a Cornwall countywide basis.
The agenda that has been set by management and is being met as quickly as possible by Department of Trade and Industry officials should not be left hanging in the air. A decision has to be made quickly. If the management view is crystallised and it believes that public funding is officially at an end and loans can, at the very least, be reduced or, at best, be taken off the balance sheet, we must ensure that the industry can stand on its own two feet. We must ensure that it has the support of the work force, management and unions and develops fresh relationships in new pastures. We must maintain full-time, meaningful employment in the Falmouth-Camborne district.
The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Neil Hamilton) : I must first apologise for the absence of my right hon. Friend the Minister for Industry, who is in attendance upon the Council of Ministers of the European Community. However, it is not entirely inappropriate that I should answer this debate, as my parents-in-law are constituents of my hon. Friend the Member for St. Ives (Mr. Harris), who is present this evening and in whose constituency I was married.
I am a frequent visitor to Cornwall and I know the area extremely well. I am aware of the difficulties that the tin mining industry in Cornwall has been going through in
Column 1137recent years, and I have the greatest possible sympathy with those who are currently suffering the turmoil that the changes in international markets for tin have caused.
Of course I understand the concern that has been expressed by the hon. Member for Truro (Mr. Taylor) on behalf of those who work in the constituency of my hon. Friend the Member for Falmouth and Camborne (Mr. Coe). I am aware of the importance of this mine to the local community. The concern is shared by all my colleagues in the Department of Trade and Industry. I understand also the problems that inevitably arise in close- knit communities when events such as these supervene and cause the difficulties that the tin mining industry in Cornwall has endured in recent years. I know that at the mine and the treatment plant there are workers from all three constituencies--those of my hon. Friends and that of the hon. Member for Truro. It is understandable that all three of them should be here and taking such a keen interest in the debate.
I was very disappointed at the rather negative approach of the hon. Member for Truro, which contrasted with the approach of my hon. Friend the Member for Falmouth and Camborne. I refer in particular to the emphasis that the hon. Gentleman laid on the confidential letter which had been leaked by someone unknown and to which much reference has been made. If the hon. Gentleman were seriously interested in ensuring the survival of this commercial enterprise, he should not have placed such emphasis on gloomy prognostications that were never intended to be made public.
Mr. Hamilton : No. I am sorry, but time is very limited. I hope that, on reflection and in the light of local comment, the hon. Member realises that his comments and the demonstration that was staged outside South Crofty by him and other members of his party, for reasons that may not be too obscure, have been neither helpful nor wise. In fact, it is appalling to play politics with people's jobs, as he has done, and to betray confidences.
I gather that this was also against the wishes of management and the trade unions, and that it has been the subject of much local comment. I have probably said enough about it.
Mr. Taylor : On a point of order, Mr. Deputy Speaker. It is very unusual for a Minister to refuse to give way to a Member who has raised a subject on the Adjournment. However, more relevant is the fact that the Minister has made a personal attack on me. Surely that is not acceptable under the rules of the House.
Mr. Hamilton : I am not making a personal attack on the hon. Gentleman ; I am expressing great regret at the consequences of his actions in respect of those whose interests he purports to represent in this debate.
Column 1138Regrettably, the gradual exhaustion of Cornish tin and the discovery of new deposits across the world--often in alluvial deposits rather than higher-cost deep hard-rock mines--has seen a decline in the industry, so that today, whereas Cornwall was once supreme, Brazil, China, Indonesia and Malaysia now dominate.
Even as recently as the mid-1980s, there were three functioning tin mines in Cornwall--at South Crofty, Wheal Jane and Geevor. Regrettably, the last two have now closed. As the last working mine, South Crofty remains as the inheritor of the long tradition of tin mining in the county.
The importance of tin mining to the Cornish economy has always been recognised by the Government. This recognition can be highlighted by the assistance given to tin mining projects in Cornwall over the years. I regret the hon. Gentleman's remarks, which were intended to give the impression that, over the years, the Government had failed to give proper recognition of tin mining in Cornwall.
South Crofty is a case in point. It is worth spending a few minutes on the history of DTI support for South Crofty. In 1986, assistance was offered under section 8 of the Industrial Development Act 1982 to Carnon Consolidated Ltd, a subsidiary of RTZ Corporation which then owned two mines in Cornwall--Wheal Jane and South Crofty.
Assistance was offered in the form of an interest-free loan of up to £15 million, together with Government guarantees of commercial loans of up to £10 million. That finance was to assist RTZ in undertaking a £30 million capital development project over the years until 1991, with the object of reducing costs at the mines, and without it the company's future would have been in doubt. The commercial loan and the Government loan were to be repaid from the profits generated by Carnon Consolidated if the project was fully successful.
During 1987-88, Carnon Consolidated Ltd again faced serious difficulties because of the severely depressed tin price. As my hon. Friend said, that is the problem today. Agreement was reached in March 1988 for RTZ to sell Carnon Consolidated to a new company, Carnon Holdings Ltd, owned by the management and employees. RTZ made an interest-free loan of £10 million.
For their part, the Government agreed to convert their guarantee of £10 million commercial loans under the 1986 assistance into an interest-free loan to Carnon Holdings Ltd, in addition to their original £15 million interest-free loan, which remained in place. This finance, together with RTZ's finance, was to help to secure the continuation of tin mining and employment in Cornwall and enable the main elements of the modernisation programme begun in 1986 to be completed. As before, the loans were to be repaid from profits generated by the company if the project was fully successful. The form and amount of the assistance reflected the risks inherent in embarking on the project in the market circumstances prevailing at that time, the serious consequences for west Cornwall if the mines closed--640 jobs were then secured by Government assistance--and the difficulties in the wake of the collapse of the International Tin Council to which the hon. Member for Truro referred.
During the period 1986 to 1990, the Department of Trade and Industry advanced loan instalments to the value of £23.4 million to Carnon out of the total of £25 million which had been offered--a significant sum relative to the
Column 1139size of the company. However, in 1990, because of the continuing very low price of tin, the Department formed the view that the project was in jeopardy, and no further drawings of the loans were permitted.
Under the terms of our offer letter, we would have been within our rights to ask for our loans to be repaid immediately. The fact that we have not done so fully reflects our desire to help the company as far as possible.
At this point I pay due credit to the management and work force at South Crofty, who have made strenuous efforts recently to improve productivity and reduce the costs of production. Those involved in the management buy- out in 1988 prevented the closure of the mine then and have kept it going since. The company has been successful in reducing its break-even figure significantly since Government assistance was first given to it. Nevertheless, there is no escaping the fact that it is unrealistic to expect the company to be able to reduce its production costs much lower than the current level. The ultimate success of tin mining in Cornwall-- and, indeed, anywhere in the world--is predicated upon two factors which are outside the control of any mining company. First, tin is a globally traded commodity, the price for which is set by the London metal exchange and in Malaysia. As with all commodities, the price fluctuates on a daily, or even hourly, basis.
Because of its use as a raw material for industry, the tin market, like other metals and commodities, moves in response to the forces of supply and demand, and the associated economic situation in the main producing and consuming countries. Prices are also affected by speculative activity. As a consequence, prices are notoriously difficult to predict with any certainty.
The second key factor is prevailing exchange rates. Because tin is priced in United States dollars, the dollar-sterling exchange rate is also a vital factor for tin mining in the United Kingdom. A rise in the tin price can
Column 1140be negated by a change in the exchange rate. Exchange rates are similarly difficult to forecast, so tin mining has a double dose of uncertainty to contend with.
The tin price has yet to recover from the tin crisis of 1986 when the price dropped from over £9,000 per tonne to just over £4,000 per tonne. Although there was a brief rally in 1989, when the price climbed above £5,000 per tonne, prices have remained around £3,500 per tonne, and last year the price reached a 20-year low.
At the end of 1993, the directors of the company approached my Department with a request for new Government funding for the mine. After considerable thought, we regretfully had to conclude that we could not properly advance any further public money to the company. Although the company believes that the tin price will rise significantly, it is by no means certain when that will happen--or, indeed, whether it will happen at all. The Government cannot get into a position where they are spending taxpayers' money on a continuing basis--a point to which the hon. Member for Truro did not allude --to fund the running of the mine until such time, whenever and if ever that might be, as the tin price and exchange rate factors meant that the mine no longer operated at a loss. It is not proper to continue to risk taxpayers' money on the assumption that the price of tin will increase in this manner.
Looking to the future, I am pleased to see that the company is still trading. I note that the directors believe that the mine still has a future, and that they are continuing to strive to ensure its survival.
The motion having been made after Ten o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker-- adjourned the House without Question put, pursuant to the Standing Order. Adjourned at fifteen minutes to Eleven o'clock.
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