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Domestic Coal Prices

Volume 529: debated on Monday 21 June 1954

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Motion made, and Question proposed, "That this House do now adjourn."—[ Mr. Wills.]

11.29 p.m.

I apologise to you, Mr. Speaker, and to the Parliamentary Secretary to the Ministry of Fuel and Power for raising this matter at this late hour, but the question I wish to raise, that of the substantial differences in the price of coal between the North of England, the Midlands and the South of England, has been exercising the minds of my constituents for some considerable time. I have received resolutions from organisations in the constituency, and I promised that I would raise the matter at the earliest opportunity.

According to figures furnished to me by the Ministry, the price of domestic coal in Newcastle is 92s. 10d. a ton: in Nottingham it is 93s. 1d., in York 103s. 3d., in the Rhondda Valley 101s. 7d., but in Southampton it is 134s. 8d., in Brighton 134s. 6d. and in Plymouth 129s. 7d. Therefore, it can be seen that there is a difference of some £2 a ton in the cost of coal in the North of England, in the Midlands and in the South of England. The figures which I have quoted are the summer prices for coal. For the winter prices, of course, another 10s. a ton has to be added, and that brings the price of coal in Southampton up to £7 4s. 8d. a ton during the winter period.

There are a good many people who cannot take advantage of the summer price of coal. Old-age pensioners, for example, cannot take advantage of it because they can only afford to buy a cwt. of coal or so at a time. They cannot afford to buy a ton of coal at summer prices in order to lay up a stock for winter use. In addition, a good many other people have not the accommodation for storing a ton of coal. It is estimated that some 30 per cent. of the dwellings in this country have accommodation for less than half a ton of coal, so that for many people the winter prices are, in effect, the prices which they have to pay for coal.

At the present time, coal prices are undoubtedly extremely high in the South and South-West of England as compared with the North and the Midlands. The difference in price apparently, is not caused by the merchants' retail margin, that is to say, by the cost to the coal merchant of collecting the coal from the railway siding and distributing it to his customers. I assume that the retailers' gross margin is about the same in the North of England as in the Midlands and in the South of England, and cannot cause the variation in price as between the different regions.

In Southampton, the merchants' gross retail margin is 30s. 1d. per ton, in Plymouth 26s. 3d., and in Brighton 31s. It would be interesting to know why the merchants' retail margin is so much lower in Plymouth than in Southampton or Brighton. In all three places the profit per ton to the retailer is the same, 2s. 3d. per ton, and that cannot be said to be in any sense an excessive profit.

It is obvious that the difference in the cost of coal in the various regions is due practically entirely to transport charges. The transport charges of a ton of coal to Southampton are 40s. 10d., to Plymouth 42s. 7d., to Brighton 39s. 7d., and it is those charges which make the difference in the price of coal as between the various regions.

When the coal industry was privately owned and administered by a large number of private companies who were, to some extent, in competition with one another, and when the railways were privately owned, this difference in price as between one region and another might have been quite unavoidable. But surely the position is different now that the coal industry has been nationalised and is working as one unit very largely under a centralised direction, and now that the railways are under national ownership.

It should be possible, in the circumstances of today, to work out a plan by which the cost of coal can be equalised throughout the country. It is much easier to state the problem than to advance a solution, but I wish to make one or two suggestions to the Parliamentary Secretary. The best solution would be to average the price over the whole country: that is to say, to average the transport costs. That is done with regard to the cost of transport to many national conferences. The cost of the tickets of the delegates is averaged. It is done for the Labour Party's national conference. If the conference is held at Scarborough, a delegate from Plymouth pays no more for his ticket than a delegate from York.

There are more consumers in the North than in the South of England. If under a scheme to average the price, consumers in the North were charged 15s. more a ton, the price to consumers in the South could be reduced by £1. The price in the two regions would then be approximately the same. That seems to me to be a sensible proposition now that the industry is nationalised. The Parliamentary Secretary may say that there are difficulties. He may say that by increasing the price to consumers in the North one will offend a larger number of voters. I would point out that the chief electoral stake of his party is in the south of England.

If that is not a feasible proposition I have another suggestion. We export 13 million tons of coal annually, and hope to increase the amount. The world's industrial production is increasing, and there is an ever-increasing demand in Europe for the coal we can export. If we increased the export price, I believe that we could sell just as much coal abroad. The yield from the increased price could be used to subsidise the long-distance transport of coal by railway to the South and South-West of England. An increase in the price of coal to industries and hotels and restaurants might also be considered. I understand that the cost of coal is not a very big item in the cost of most industries, except steel and cement, and the cost of coal could be raised without affecting greatly the final cost.

To do this would perhaps stimulate industry to use fuel-saving appliances. Again, the increased yield from the higher price could subsidise the long-distance transportation of coal. A long-term solution, which I commend to the Parliamentary Secretary as advice for the Minister of Transport, would be to reconstruct, and bring up to date, the country's canal system. At one time the country had a fine network of canals. That network has been allowed to fall into dis-use. Using modern machinery and methods, the canals could be reconstructed and modernised in a com- paratively short time, and at no great cost. They could then be used for carrying coal, such transport being cheaper than carriage by railway.

If none of these solutions commends itself to the Parliamentary Secretary, I suggest two final possibilities. If he cannot do anything to average out the price of coal and so lower the price to domestic consumers in the South, he could at least supply free, to those consumers, fuel-saving appliances to use in their homes. If he did that they could get the same heat with 30 per cent. less coal, and so save 30 per cent, of the present cost. If he cannot even agree to that, I think it is incumbent upon the Ministry to supply to the old-age pensioners in the South of England a certain amount of coal at a reduced price for use in the winter. As it is, because of the present price of coal, the old-age pension is worth less in the South than it is in the Midlands and the North.

I hope that at least one hon. Member opposite will take part in this debate and support the general line which I have advanced, from examples from his own region. I want to give him time to do that and to allow the Parliamentary Secretary ample time to reply. I know that his reply will be courteous, because he is always courteous in debate, but on this occasion courtesy will not be enough. If he does not agree to any of my suggestions, I hope he will put forward some other concrete suggestion of his own to deal with this serious problem.

11.41 p.m.

I am very grateful to the hon. Member for Itchen (Mr. Morley) for giving me the opportunity of joining in this debate. This is a subject in relation to which I have been dealing with the Minister and the Parliamentary Secretary for nearly 18 months, making known the very strong feelings which exist at any rate in the South-West against the very high prices which the people there have to pay for their domestic coal.

The earliest letter which I want to quote, dealing with exactly the same point as that raised by the hon. Member for Itchen, was written by the South-West region on 1st April, 1953, in answer to a suggestion that there should be some uniformity in the price of coal throughout the country or, failing that, some re-zoning, in order that there could be a fairer national average price, and an inquiry why these very high charges were made in the South-West—the difference between the pithead price and that paid by the consumers at that time being nearly £4 a ton. The reply from the Region states:
"Concerning the uniformality of price throughout the country, the Minister has from time to time explained why this is not practicable with coal, but it is understood that the National Coal Board is not unmindful of the desirability of reducing the number of zones, thus creating a greater standardisation of prices over larger areas than at present."
It goes on to show how these high prices are arrived at. As the hon. Member for Itchen has said, it is purely due to the merchants' distribution margin, which, throughout Devon at that time, was standardised at £1 5s. 10d. a ton. This morning's price in my own home town of Bideford was 27s. 6d. a ton. Added to that are the importers' costs, which include sea freights, Discharging, and any rail transport costs from the port of arrival to the merchant, which were then standardised at £2 0s. 7d. a ton.

The reason why it is not even in the mind of the Minister to have a standard price throughout the country was given to me in a letter dated 12th May. 1953. It states that:
"The consumers in and near the coalfields have always had relatively cheap coal because transport costs from the pits are low, and for these consumers the introduction of uniform prices would mean substantial increases. It is difficult to see how such increases could be justified on economic grounds; prices near the pits would be exceeding costs of supply so that consumers in distant areas might have coal at prices below the cost of supplying it. Uniform prices are attractive in theory, but there are sound practical and economic reasons why hey should not be applied to coal."
That, I submit, is no answer to the question. It does not satisfy those living in the South-Western region. There may perhaps be good economic reasons, but we want to know what they are, and we are not at all sure that it is not a political reason, rather than any other, which prevents the nationalised coal industry from having a nationalised price.

There is nothing novel in the idea. In the Post Office one pays the same price whether one sends a parcel from Lands' End to John O'Groats or from one village to the next. We in the South-West do not see why, because we live where we do, we should not get some benefit from the nationalised industry whether we approve of it or not.

When one tries to complain or to criticise the nationalised coal industry it is rather like pushing at a feather bed—if I may liken my hon. Friend the Parliamentary Secretary to a feather bed. One cannot get an answer. My hon. Friend has been most patient with me for at least 15 months, ever since the Minister handed over this controversy for his attention. But I think he has failed to find a solution, and I should be grateful if he could, for example, make bigger zones and thereby average prices more evenly. That was a point which I raised in a debate on fuel and power in the House last October, but I never had a satisfactory answer on that occasion. Or. if we cannot have a standard price, could the Ministry not consider getting coal to the South-West by sea from, say, South Wales, instead of from Newcastle, or wherever it is that we get it at the moment. One other suggestion is that, in the new freight charges scheme, could not coal for the South-West be considered for some preferential treatment?

11.48 p.m.

The Parliamentary Secretary to the Ministry of Fuel and Power
(Mr. L. W. Joynson-Hicks)

Perhaps I should begin by saying that I know that my hon. and gallant Friend the Member for Devon, North (Brigadier Peto) appreciates that I am by profession a farmer; but I did not know that he had so closely joined forces with the hon. Member for Wednesbury (Mr. Stanley Evans) as to be able to say that I was so successful a farmer that I had some relation to a feather bed. I appreciate the compliment as a farmer if he is not complimentary to me as a representative of the Ministry of Fuel and Power.

I am grateful to the hon. Member for Itchen (Mr. Morley) for having raised this subject in debate, because it is a very real problem. The basis of his argument was a comparison of what is claimed to be a high price for coal in the South as compared with the North. But I am not at all sure that those who live in the North would accept price as the sole criterion. We have to consider the total cost for coal over the year, and in the North it may he that they have to pay more over the year because they burn more. It is a colder climate there, and it may be that the actual amount of money spent on coal in the North is not so disproportionate to that spent in the South.

I do not think it would be difficult to work out, as the maximum permitted quantity of coal for those living in the North is substantially more than that for those living in the South.

The figures the hon. Gentleman quoted are substantially accurate. I recognise them as figures I have given him in answers to Questions he has asked during the past few weeks. There may, since the answers he received, have been some minor variations of an upward character, and they may not, therefore, be entirely accurate, but they are accurate for the purpose of this discussion. The basic question is whether the rises to which he referred are the last rises that will take place, at any rate this year.

A tremendous amount depends upon whether or not the industry is successful in achieving the task it has set itself and which it considers reasonable for it to achieve this year, namely, an increase of 2½ per cent. in the amount of coal it produces. That will not only affect the question of stocks of British coal available next winter. It is also bound to have a substantial effect upon the budget which the National Coal Board is working on during the current year. If the budget should not prove to have been successful, one cannot say that the price of coal would not be affected.

The figures the hon. Gentleman has quoted are based entirely upon the price of Group 4 coal at Southampton. Group 4 coal is the average household quality of coal. Let us consider the prices of lower groups. They do not show such a gloomy picture as the hon. Gentleman has painted. The price of Group 5 coal at Southampton on 2nd May, before the last rises in price and the introduction of summer prices, was 135s. 8d. a ton, which is exactly the same price as it will be on 1st December next, when the winter prices start. So there will be no rise in the price of that group of coal.

On the same basis the price of Group 6 coal on 1st December next will be exactly 3s. a ton cheaper than it was on 2nd May last at the end of the last winter prices and before the introduction of summer prices. Next winter's price of Group 7 coal on 1st December will be no less than 6s. a ton cheaper than it was on 2nd May. It will be cheaper by 2s. than it was on 1st January last. The hon. Gentleman's figures were quite fair, and I am not suggesting that they were not, but it is also reasonable to take into account that there is another side to the picture.

He asked me about the merchants' gross retail margins. They vary from place to place according to the expenses to which the merchants are put. And in the Midlands in the ordinary way where the depots are closer to the collieries, the costs are not so great and the margins are generally less. The answer to the hon. Member's question about Plymouth is that it is less there because there are no merchant's depot expenses at all as the trade is entirely sea-borne, and consequently depot expenses are eliminated with delivery direct to the customer.

The main question that has been raised, however, relates to the equalisation of transport charges, and the hon. Member for Itchen produced a delightful analogy of the Labour Party conferences. It is a happy thought, but coal weighs much more bulky than the Labour Party even when it comes together. But the fact remains that the person buying the coal pays the cost of the coal to him, and the hon. Member's suggestion boils down to someone else paying the cost of the coal for his constituents. He is prepared that they should pay part of it, but who is to meet this subsidy, because that is what it is. The hon. Member suggests that people in the North should help to pay. I am going up to Newcastle in a few hours and, if he likes, I will ask them what they think of that suggestion. I feel they will not take kindly to it. He also suggested that industry could bear a share, but that is only going to raise costs and increase the price of industrial products.

The hon. Member also made an interesting suggestion about transport through the canals, and probably what he has in mind is the pumping of waterborne coal. Research is going on into that matter and perhaps in years to come such a possibility will become economic. But generally speaking the answer to this problem is that the Government are opposed to the introduction of additional subsidies in cases of this sort. In any event I rather fear—and I confess it with some shame—that I may have been out of order because such a proposal directing that the National Coal Board should exercise discrimination would require legislation.

Particularly in regard to the hon. Members' plea on behalf of the old-age pensioners, I would suggest that it is not a question of dealing with one item by itself. If one is going to subsidise one item for one particular class it is a matter which should not be done out of relation to other items and classes, and in any case it would be practically impossible to do it with coal because it is not allocated by individual registration but by the registration of householders and the old-age pensioner will not always be a householder. There is that practical difficulty, but I would commend the deferred payments system which might be of assistance to some of the hon. Member's constituents who can carry a stock of coal, or assistance by some voluntary organisation.

The Question having been proposed after Ten o'Clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at One Minute to Twelve o'Clock.