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.--(1) It shall be the duty of the Authority to assist the long-term future of the coal industry by ensuring that there is adequate long-term investment in mining technology and coal utilisation research.
(2) In pursuance of its duty under subsection (1) above, the Authority shall impose a levy on all licensed operations. (3) It shall be the duty of the Secretary of State to ensure that the Authority fulfils its duty under subsection (1) of this section. (4) The Secretary of State may, out of money provided by Parliament, pay the Authority such money as the Authority requires to perform its duty under subsection (1) of this section.'.-- [Mr. O'Neill.] Brought up, and read the First time.
For many years, the mining industry had very little in the way of research and development. In fact, it was the newly nationalised coal industry which, after the second world war, developed what are the two remaining research establishments--the establishment at Cheltenham, and the technical services research executive establishment at
Column 213Bretby. Both establishments have contributed to the technological advances that have been made over the years by British Coal which have resulted in the British industry being the most efficient, productive and indeed the cheapest deep mining industry in the world.
Although the industry has contracted considerably in size, it is nevertheless essential that if this country is to produce coal at a competitive price which can be utilised in the most effective way, we should continue with the programme of research which is presently under way.
The establishment at Cheltenham has been regarded, in the words of the Parliamentary Office of Science and Technology, as a "world centre of excellence". The work that has been done there--particularly the work on clean coal technology and the coal topping cycle--when applied in major power stations will increase the thermal efficiency of generation from about 36 to 47 per cent. That would be a major breakthrough.
At the moment, the people at Cheltenham assess that they are about 18 months ahead of their American competitors, but that lead is being whittled away as a result of the amount of money that the American Government spend on research and development into coal technology, and by the commitment of the American Government, the makers of generating equipment and the American coal generators to develop clean coal technology. As with pressurised fluid bed technology, which was sold abroad at a much reduced price and incurred, as a consequence, the condemnation of the Select Committee on Energy some years ago, we are in danger of losing world leadership in the sector.
The new clause requires the Government, in conjunction with the Coal Authority, to establish a levy to fund coal research. We already have a levy to fund coal research. It is used to ensure that we are able to secure money from the European Community coal and steel fund. That means that a great deal of the work that is done in Cheltenham is funded from sources outwith the United Kingdom. We need to ensure that, in addition to that work generated from outside the UK, work is generated from inside the United Kingdom.
For those reasons, we put forward the new clause. We believe that this issue lies at the heart of the future of the British coal industry. If it is possible to develop and apply the new technologies, funding will become available for future developments and future investment.
It is not simply a matter of being in love with technology for its own sake ; it is important because the new technologies will be far more environmentally friendly. They will enable Britain to meet the commitments that we entered into at Rio. The levy would enable the continuation of research and expertise and it would ensure that the United Kingdom continued to play a leading role. That leading role would not only enable us to secure markets for coal or coal technology, but ensure that the generators were in a position to sell British equipment when they offered their services to other countries.
In recent months, much has been made about the capacity of British Gas to offer a worldwide service--to develop the gas industry in other countries. As British Gas enters world markets, its suppliers will work abroad as well. It is our belief that, even if it is in private hands, the coal industry would provide opportunities for the
Column 214development of coal equipment and coal use abroad. We believe that the research that is done in the two establishments to which I referred--research which, on occasion, has been done on a shoestring budget--should be sustained and supported. Nowhere in the Bill is any reference made to that. The new clause is an attempt to ensure that such work can be given its due place and its due recognition in the Bill.
We recognise that there are, among the prospective owners of the new coal industry, comparatively few people who will have their own research and development facilities. If they are to make use of research and development, it will be on the basis of buying in from abroad unless the money is raised at source. That is why we advocate a levy and why we have advanced our argument for research and development. The Coal Authority could redress the imbalance by ensuring that adequate long-term research is funded by the Government and private coal owners so that Britain's lead in the world is sustained.
The United States spends $163 million a year on coal research while Japan, which has virtually no coal resources of its own but imports most of its coal, invests some $177 million in coal technology and research. Britain's commitment of just $10 million has already resulted in our leading the world in the important area of clean coal technology. It would be nothing short of criminal if the House did not duly recognise that achievement and ensure that appropriate funds were available to sustain it once private ownership is established. The new clause will go some way towards dealing with that, and we hope that the Minister will look favourably at it. Nothing in the Government's ambitions or intentions for the coal industry will accommodate research and development in the technologies required, which is why we have advanced the new clause and why I hope that hon. Members will be prepared to give it the fair wind that it deserves.
Mr. Redmond : One reason why we are so opposed to privatising the coal industry is what happened prior to nationalisation, when private mine owners made no effort towards research and development. Bretby research centre springs to mind because the old area director in Doncaster, Trig Ellis, went there. Much of the research and development carried out there has brought about improvements in the industry and saved many lives. Bretby helped to cut down and, in some cases, eliminate dust, which plagued miners for years and caused pneumoconiosis.
It is important that research and development continue. I doubt whether private owners will invest in them, so some sort of levy must be imposed to enable them to continue. In the days of the Yorkshire miners summer school, Bretby researchers used to give excellent talks every Wednesday to miners at those schools.
I tabled a question to the Minister for Energy about imported coal, which has caused fatalities in France. The Minister is looking into why that happened. The amount of foreign fuel being imported is 18.5 million tonnes. It is important that the industry should know whether that fuel is safe for domestic and industrial consumption. Establishments such as the research and development stations will provide assurance in this respect.
The research stations have done such an excellent job that the country has earned a substantial amount from the export of technology resulting specifically from their
Column 215achievements. The export of technology is helping our balance of payments as well as ensuring safety in the coal mines. I hope that, even at this late stage, the Minister will accept this very modest new clause.
Mr. Dickens : In fairness to Opposition Members who want to participate in the debate, I shall make a short contribution. Our mining industry is perhaps one of the finest in the world, and we have consultants all over the world helping nations to develop their skills and their industries. This must continue, but that will happen only if there is research. Whether in respect of clean coal technology or in respect of the gasification of coal, it must be remembered that the Government do not have any money, that funds are provided by taxpayers or raised through a levy, which consumers then have to pay.
Strangely enough, in Europe and in the United States it is the oil companies that are putting money into the technology involved in the gasification of coal. British Gas, in conjunction with Lurgi, is investing a good deal and will continue to do so if it is satisfied about commercial viability. In other words, there will have to be a pay-back for all the research. This has happened with the pharmaceutical companies. Those undertakings pumped money into research, knowing what success with a drug would mean.
Mr. Clapham : Is the hon. Gentleman aware that the Americans are investing about $700 million in new coal technology ? That certainly is not being done just by private companies ; it is supported by the Government.
Mr. Dickens : The American Government are very much more wealthy than the British Government. It is up to them to make their own monetary decisions, just as we do. We have to set expenditure priorities.
I hope that all the current research projects will continue. It is desirable that, at the end of this short debate, the Minister should be able to tell us that none of them will be stopped. Let us hope for an undertaking that if private sector technologies look like becoming world winners the Government will consider providing some priming money. In the meantime, market forces must be allowed to dictate, as projects must be bankable. Banks must analyse projects and see the prospect of a pay-back.
I can envisage the gasification of coal becoming quite big, but only when gas resources have become depleted. It is at that stage that the process will become much more viable. In the meantime, the gas companies and the oil companies are investing money, and they will continue to do so. I want to see market-led research, which seems to work very well. Research and development that results in a return for individual companies and for the United Kingdom as a whole is the most healthy type.
Therefore, as I have said, it is to be hoped that the projects currently under way will be allowed to continue. I hope that if someone comes up with an innovation that looks like a winner for the United Kingdom some priming money will be found.
I have some sympathy with the case made by the Opposition, but research and development should be dictated by the market rather than funded by taxpayers and electricity consumers, who always seem to pick up the bill.
Mr. Jack Thompson : For once in my political life, I find myself in agreement with something said by the hon. Member for Littleborough and Saddleworth (Mr. Dickens)--his comments about investment and market forces. Over the years, the private sector has certainly made a limited contribution to research and development in the industry. At Grimethorpe and Point of Ayr work is being done on producing oil from coal, for instance.
At Westfield in Scotland, there have been experiments on the Lurgi system of producing gas from coal. I was interested to see what happens there. The system is well advanced ; 2,500 tonnes of coal at a time are put through the equipment, producing an exact equivalent of natural gas. That gas is put straight into the grid for consumers' use.
I am not an economist, but I am interested in what happens in America. The Americans are sending their coal to put through this equipment for test purposes, because they believe that there is a market for it. We have to think ahead to the time when North sea gas runs out--it may not be too far off. We have to produce new sources of energy--gas from coal, for example-- in preparation for that time. What are the alternatives ? It would not be a wonderful idea to get gas from the middle east, I imagine. To avoid that, we must start producing our own gas from coal.
As an engineer in the industry, I have benefited from technological developments over the years. Indeed, I have seen phenomenal progress in the mining industry, much of it started at the grass roots by engineers. Many years ago, a colleague of mine developed a piece of equipment for controlling conveyor systems ; it regulated them in such a way that, when one stopped, the next one stopped, too--and so on. The equipment was taken away to Bretby and developed from its crude original form into a sophisticated piece of equipment that is sold all over the world. A company in Derbyshire, Davies, manufactures it, and private sector companies have benefited from it.
A conveyor signalling system has also been developed at Bretby. It is the best of its kind in the world, and we always found it a first-class device. Fire protection equipment also began life in the industry. Nowadays, we all have smoke alarms in our homes ; 25 years ago, I saw similar equipment specially designed for the mining industry being installed in mines. From those early radioactive devices, the domestic alarms were developed.
It would be criminal if we were to lose all this experience and knowledge. The new clause suggests that the Coal Authority impose a levy on licensed operators. I suspect that they will benefit enormously from that arrangement. Even a small levy, combined with Government support, could help to maintain research and development and help the operators to produce coal in the amounts that they want, while keeping the mines safe.
Mr. Hardy : The House may recall that three or four years ago, I sought to raise the issue of the closure of the Coal Board science establishment at Wath upon Dearne in my constituency. It was unfortunately closed to concentrate research at Bretby--because Bretby was in a marginal Conservative seat. It decided that it would be better to move that resource southwards, although it is interesting that the hon. Lady who represents that area has not taken any interest in the debate.
It is essential that we maintain mines research. Conservative Members tend to think that the coal industry is finished and that coal is the energy of the past, but
Column 217countries with more sense than us are investing more in mining and are sinking more new pits in preparation for the day when reserves will be needed.
My hon. Friend the Member for Clackmannan (Mr. O'Neill) said that Japan has remarkably little coal of its own. It depends heavily on imports, yet the Government and industry there decided together that some of the biggest earnings would come from environmental and energy-related development. That is one reason why my hon. Friend was able to quote Japan's enormous investment in energy and environment research, even though it is not a producer of that energy. In a little while, the Government will discover industry. It would not surprise me if, in the next two or three weeks, the Prime Minister were to make a speech recognising that industry is important. The Minister and his ministerial colleagues will jump on the Prime Minister's bandwagon and say that Britain has to start to seize its trading opportunities, enter world markets, increase its sales of manufactured goods and expand its technological base ; yet we have here an enormously important industrial opportunity which we are likely to imperil.
We need to make earnings to compensate for the appalling balance of payments, for which the Government must bear heavy and historic responsibility. The balance of payments deficit will not be cleared unless we see the re-emergence of industry in Britain. There must be a reasonable home base to allow the coal technology industry to prosper. We have a world lead. Britain does not still lead the world in many sectors, yet the Government are about to throw away our lead in one of them. There is not much point in speaking to Ministers at great length. We tried it in Committee, without in any way filibustering. My hon. Friend the Member for Delyn (Mr. Hanson) may laugh, but he is well aware that that was the case.
If the Minister and his colleagues have any sense, they will recognise that Britain has a considerable opportunity and that there is enormous potential for record breaking. To throw that away would be an example of crass irresponsibility.
The hon. Member for Littleborough and Saddleworth (Mr. Dickens) talked for most of his speech about the need to rely on market forces. Towards the end, however, he began to talk about the market-led economy and the possibility of a bit of seed money being thrown in by the Government, which seemed to contradict his earlier remarks. Even he perceived the need to maintain research and a role for the Government. Why are the Government less than interested in co-operating with business--be it in the public or private sector--and in stimulating investment to secure jobs for our people and earnings for our country ? Why have they failed more than the Government in any other industrial nation to pursue the course that even the hon. Gentleman began, in the second part of his speech, to recognise was valuable ?
The debate represents the last gasp of opportunity, unless the House of Lords has some wise words and a little weight to put into the debate, for Britain to cling to a sector in which she has displayed some international leadership, which is likely to bring a great deal of international profit. One hopes that the Minister and his colleagues will not throw the opportunity away.
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Mr. Tipping : I do not think that anyone can deny that there have recently been some bleak years for our coal industry. I have heard Conservative Members say that there is no future for coal. But if we look at what is happening internationally, we see that new coal-fired power stations are being built in China, India and Pakistan. They are, to some extent, using British consultancies, British professionalism and British equipment. There will be life after gas here in Europe. Gas will run out and when the much-vaunted and much-delayed nuclear review comes, we shall get to the bottom of the financing of nuclear electricity. In perhaps 10, 20 or 30 years, Britain and Europe will be looking at a future for coal.
Is it not sad that the Bill says absolutely nothing about research and development ? In contrast, the Coal Research Establishment near Cheltenham is a world beater, a centre of international repute. Some of the consultants mentioned by the hon. Member for Littleborough and Saddleworth (Mr. Dickens) go from the Coal Research Establishment and offer consultancies abroad. That brings money, jobs and investment back into this country.
Even in these bleak years, we must offer a beacon of hope for the future. Unless we are careful, we shall destroy the Coal Research Establishment at Cheltenham. It is important that its staff should be kept together, and we can do that by looking for sources for funding. Funding needs to be pump priming, but it cannot be short term--research takes years. A good example of that is
liquefication--the topping cycle has taken many years to get right. We must show in the Bill that there is a future for investment and for a cleaner environment. We must give the people who work at the Coal Research Establishment and at the centre at Bretby that opportunity for the future. We must keep the flame burning and, even in these bleak times, the new clause provides an opportunity to do so.
Mr. David Hanson (Delyn) : I want to speak in support of new clause 4. It is regrettable, particularly for those of us who sat through the Committee stage of the Bill, to find that, after all our deliberations, it contains no mention of research and development. That is why it is important that the new clause should be accepted. The new clause would set down for the first time in the Bill that there would be an organisation with a duty in statute to monitor and encourage research and development. That is important because we cannot leave such matters solely to the private sector. The new clause states that there will be a levy on the private sector--the new owner of the coal industry--to ensure that some of the profits are ploughed back into research and development to create, for example, clean coal, more efficient ways of producing coal and to increase the ways in which the British economy can be expanded by improvements in the quality of materials produced from the coal market. We have not heard anything from the Minister about what is to happen now that such factors have not been included in the Bill and the coal industry is to be privatised.
There must be an overview of the industry and its performance in terms of research and development. If the Minister rejects the new clause, the key question for him to answer will be how--in the absence of the Coal Authority's having responsibility for such matters, having the power to set a levy and having Government support to implement such a levy--the private sector will be able to,
Column 219or want to, invest in developments such as clean-coal technology, improved machinery and improved productivity. There has to be an external body, particularly when the coal industry faces short -term contracts of three to four years at the most.
I asked which private sector industry coming into the new invigorated market, if the Bill receives a Third Reading and is approved by the other place, will undertake investment in research and development when we have three-year contracts and short-term operations for the coal industry.
As my hon. Friend the Member for Clackmannan (Mr. O'Neill) said, the idea of a levy and having some Government overview of research and development is not revolutionary. The Australian Government provide a 150 per cent. tax rebate for research and development matters. As we heard from my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham), some £700 million from the American federal resources is pumped into the private sector industry annually to provide research and development. Even the South African coal industry--not one which I would recommend whole- heartedly to the House--has in principle a levy on production and future investment into the industry.
In comparison, if our industry is privatised and no safeguards are built into the Bill, research and development will be left to the private sector. If that happens, it will cut corners ; it will not do it because it will think about the short term.
I shall complete my remarks with two important examples from my constituency. The Point of Ayr colliery is currently using the continuous miner system--a system of mining developed in the United States, through the investment of some of the £700 million that my hon. Friend the Member for Barnsley, West and Penistone mentioned earlier. That money was invested in the industry, making vast productivity gains in how the pit in my constituency develops and produces coal. It is much more efficient ; productivity has soared in the past three to four years.
Each of the new machines cost £3 million to install. They cost millions of pounds of American money to develop. Why will we not be in that market after privatisation ? Where will the private sector be in that market after privatisation ?
My hon. Friend the Member for Wansbeck (Mr. Thompson) mentioned the Point of Ayr liquefaction plant. I went to the opening of that plant, which turns coal into oil, when I was prospective candidate for my constituency before the 1987 election. Since then, until it was sold to the private sector some six months ago, that facility had not made a penny profit ; it probably still does not now and will not for the foreseeable future.
The investment and development of the process took place under the auspices of British Coal. If the new clause is not accepted, how would the equivalent of the Point of Ayr liquefaction plant in my constituency fare in the private sector jungle that will exist after privatisation ?
Column 220Very few private sector operators will invest seven to eight years of massive resources into developing a process that may or may not produce a profit.
The clause should be accepted because it guarantees the future of research and development and makes sure that next century we will have an efficient coal industry that produces goods that people want to sell and develops processes of which Britain can be proud, rather than importing processes from those countries that have had the foresight to put in the money.
Mr. Etherington : In 1979, I visited Bretby and the Stoke Orchard research centre near Cheltenham. At that time, it was an exciting prospect for the coal industry, which appeared to have a future. I also recall that people in my union and in the industry in general rightly pointed out that the amount of cash being put into research in the coal industry paled into insignificance against that being spent on the nuclear industry. Yet at that time, we were told that the coal industry had a viable future.
It has since been proved that those who were sceptical about the coal industry were correct, and unless the Government accept the clause, it will prove something that was pointed out to me many years ago. I was told, "When you look at investment in an industry, look first at the proportion that goes into research and development." That--rather than the amount spent on redundancy payments, giving industries away, producing glossy brochures or paying a city to get rid of industries by putting them into the private sector--gives some idea of the industry's potential future.
I take issue with the hon. Member for Littleborough and Saddleworth (Mr. Dickens), who is keen to leave everything to the private sector. This country can provide the finest proof ever seen anywhere in the world that that does not work. If the hon. Gentleman casts his mind back to the 1950s, he will recall that, in those days, we had a fine motor cycle manufacturing industry
Mr. Etherington : Thank you, Mr. Deputy Speaker. It is unfortunate that, following your ruling, I am unable to reply to the hon. Lady's intervention ; there is an answer, as I am sure you are well aware. The fact is that the motor cycle manufacturing industry was left to private enterprise. While our Government and private enterprise were spending nothing whatever on research and development in real terms, the Japanese were, and we have all seen the result : Japan has become the predominant motor manufacturer in the world.
If the Government do not accept new clause 4, they will prove what many of us have believed for a long time--that the privatisation of the coal industry is an interim measure
Column 221in advance of its total destruction. The money spent on nuclear energy and nuclear development comes not from the private sector, but from the Government.
We are always being told how wonderful Japan, Germany and the United States are, and what marvellous industries they have ; what the Government do not tell us is that those countries' Governments believe in supporting their industries. This Government do not believe in supporting the coal industry. We are always being told about the amount being invested, but examination of the amount spent on research and development shows it to be minuscule.
The same can be said of research and development in renewable energy. The way in which the money is being invested suggests that we shall have a burgeoning nuclear industry in the future. That is what it is all about-- nothing else. Many people in this country believed that, after Chernobyl, there would be a moratorium of many years on, and perhaps an eventual rundown of, the nuclear industry. That is not the Government's intention, as is shown by the amount being spent on research and development.
As I have said, the industry is now at an interim stage. The rip-off merchants will move in, and get the remainder of the coal out with the minimum investment. I feel that research and development is too important to be left to the private sector. That has been proved by other nations : all nations that are successful in any given sector ensure that a fair amount of public expenditure goes into research and development, for the benefit of those nations. The Government do not believe in that ; they believe in leaving everything to market forces. The new clause clearly states : "It shall be the duty of the Secretary of State to ensure that the Authority fulfils its duty".
The Secretary of State does not want that duty, as the result of the vote will demonstrate.
I am pleased to see the Minister smiling. He often makes me smile, and I do not mind his reciprocating ; that is fine. However, anyone who wishes to establish the position of any given sector should find out what is being invested in research and development.
Mr. Etherington : It does not matter how many times I say something : I shall certainly make more sense than the hon. Lady. However, I am pleased that she is at least taking notice, because that is not one of her prevalent characteristics.
We all agree that Britain is renowned for its innovations and its research and development--so much so, that many international firms have come here, not to pick our brains and leave but to establish their own research and development. I am thinking especially of IBM and other companies involved in research and development in the coal industry.
As my hon. Friend the Member for Sunderland, North (Mr. Etherington) said, the budget for research and development in the coal industry is only a fraction of what the nuclear industry receives, yet, with only that fraction, it has produced many innovations which have been picked up worldwide. I will list a few. Fluoridised bed combustion boilers are an efficient way of burning even low calorific, wet fuel such as slurry, but the development is going abroad although it can be used on a small scale by, for example, a farmer heating grain or other products.
We led the field in the flame-proofing of underground electrical equipment. We have developed safety equipment such as self-rescuers for men to carry underground, and hydraulic splints. We also worked on underground methane monitoring, and my hon. Friend the Member for Wansbeck (Mr. Thompson) mentioned smoke alarms. Water barriers for explosions were perfected at Bretby, and I saw them tested there many years ago.
We have improved lighting underground and ventilation through the design of portable and surface fans. Companies such as Thermotank sell their products abroad. Of course, we now have machines with built-in sensors which cut coal but not the roof or the floor. We should be proud of our manufacturing industry and the position we hold, but we are now fighting a rearguard action. The export potential of our innovations is obvious. Anderson Strathclyde was bought by a South African company, which recognised its potential and is now manufacturing for international markets rather than the home market.
Only last week, I was invited to the Chinese embassy for a reception. I was asked about my visit to investigate the Chinese coal industry 10 years ago. I was told that China is now the largest producer of coal in the world, and the Chinese believe that their coal industry can continue to expand--they realise that coal has potential. China is only one nation, but much of the equipment I saw there was British, and I was proud to see it in use. We ask that the Government put a levy on this newly evolved private enterprise, so that establishments and many schemes will survive.
One thing that worries us is that where there is no coal industry, there is nowhere to perfect machinery, plant or methods. What is more, there is no showpiece where potential buyers can see machinery working ; adaptation cannot easily be undertaken from afar. Companies are now inclined to remove their manufacturing base from Britain,
Column 223to go where the customer is. In other words, they are moving to where there is expansion and where people are investing in coal mining.
I am talking sense based on the facts-- I believe that Britain knows what is good for it. I am talking sense to the Government, who seem to be in some way biased. As the hon. Member for Lancaster (Dame E. Kellett-Bowman) said, they are all for the nuclear industry. It is peculiar that the City of London is not for the nuclear industry. It would not buy it, or touch it with a bargepole. The Government could not even sell it or give it away, because it is a liability. I suggest that the hon. Lady talks to her capitalist friends, who will tell her the same. What can be done with an old nuclear station ? If we had invested in research and development in the coal industry, we would have been light years ahead of any other country. Will the Government at this stage take on board and support the amendment ? I shall go as far as my hon. Friend the Member for Sunderland, North (Mr. Etherington), and say that if we do not invest in research and development, the country is dead. That applies to all industry. If we do not invest in research and development, which we are good at, our workers will be head- hunted and taken abroad, and manufacturing will occur abroad. We shall be just a screwdriver society, which Conservative Members seem to think is marvellous.
As my hon. Friend the Member for Midlothian (Mr. Clarke) said, it is important that the Minister say that he is prepared to take on the provision outlined in new clause 4, because no clause provides for an authority for research and development. My hon. Friend the Member for Delyn (Mr. Hanson) has already referred to the great steps that the Coal Research Establishment has made in developing the combined cycle and the topping cycle techniques, which are now used worldwide. We have heard reference to their use in China and Pakistan, but countries closer to Britain with great gas resources are also using that new technology.
The hon. Member for Littleborough and Saddleworth (Mr. Dickens) referred to market forces bringing forth other resources to replace coal.