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Coal Industry (South Wales)

Volume 958: debated on Monday 20 November 1978

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

10.0 p.m.

I am pleased to have this opportunity to raise the subject of the general situation and future of the coal industry in South Wales. In addition to referring to the general situation, I wish to refer also to two problems which concern my constituency, the first being the threatened closure of the Deep Duffryn colliery in Mountain Ash and the second being the future of the Phurnacite plant in Aberdare.

I pay tribute to the work of my right hon. Friend the Secretary of State for Energy and my hon. Friend the Under-Secretary of State who is to reply to the debate. I know that they have worked to ensure that coal will have a vital role in meeting our energy needs in the years ahead. I know also that my hon. Friend the Under-Secretary of State is fully conversant with the problems of the industry, having worked for over 20 years at the Lochhead pit in Fife before entering Parliament. In fact, there is a connection between my constituency and Fife in another context as well, because Keir Hardie was associated with the coal industry in Scotland before coming down from Fife to become a Member of Parliament, the first Labour Member of Parliament for Merthyr Burghs, of which Mountain Ash became part.

The Government's Green Paper on energy policy gives expansion of the coal industry strong endorsement. This consultative document supports the coal industry's case. It assumes expanding production from 135 million tons in the mid-1980s to 170 million tons by the end of the century, as proposed in the industry's "Plan for Coal".

I pay tribute also to the South Wales area of the NCB as well as to the National Coal Board. Reviewing the industry's progress this year, Sir Derek Ezra said:
"The coal industry's financial results for the year 1977–78 will again be satisfactory even after paying considerably higher interest rates on loans for investment. It means that in spite of many difficulties caused by inflation and recession in the economy, the industry has had three consecutive financially successful years."
In quoting what Sir Derek Ezra said, I realise that there are special financial problems in the South Wales coalfield. There have been financial losses, but these losses, I submit, should not lead to action which would be regretted by future generations. In the past in South Wales we have already had closures of pits some of which, if they had remained open, would have been producing coal today and contributing to our energy resources.

I wish in particular to refer to the future of the Phurnacite plant in my constituency. I ask the Government, if they are approached by the National Coal Board or by National Smokeless Fuels Limited, which is a wholly owned subsidiary of the NCB, for financial support for investment in the new process at the Phurnacite plant in Abercwmboi, to give that application sympathetic consideration.

I understand that consideration is being given to introducing a new ANCIT process at this plant. The future of the plant is of particular importance to the people in the Cynon valley. There has, of course, been a pollution problem in the area of which we are well aware, but I understand that the new ANCIT process would not only ensure the production of smokeless fuel over the coming years but would go a long way to deal with the pollution problem.

There are six pits in the area—the Deep Duffryn, the Mardy, which is in the constituency represented by my hon. Friend the Member for Rhondda (Mr. Jones), the Under-Secretary of State for Wales at present on the Front Bench, the Penrikyber, in my constituency, Tower and Fernhill, which we share in both our valleys, and Merthyr Vale—which are supplying coal for the Phurnacite works.

The Phurnacite works will have a major effect on the future of pits in these areas. The social consequences involved in the future of that plant are such that it requires immediate financial support. The National Union of Mineworkers and the miners' lodges have said that they will co-operate fully with the Board in seeking ways to improve the complex.

I turn to the threatened closure of some of the pits in South Wales. I am concerned in particular about the proposals to close the Deep Duffryn nit at Mountain Ash. There has been an investigation by the National Coal Board, the regional NUM and the miners' lodges into possible development of resources at the pit. The geographical situation in the area has been studied fully. The situation as it will affect the viability of the mine in the immediate future and in the long term has also been examined.

I understand that there is a proposal to set up a Government working party involving the area NCB and NUM to examine the future of the industry in South Wales. Surely, closures should be postponed until that examination has been completed. I hope that the Minister can give us some information about that working party, which is regarded with hope by the miners of South Wales.

The miners recognise the problem which flows from the operating loss in South Wales. Some suggest that there should be a separate Welsh coal board. That is nonsense which we reject.

It would be a step backwards to break the regions into separate units. We need a unified coal policy for the whole of Britain. I have met the South Wales officers of the NUM. They have presented a reasonable and responsible case. The union believes that the Board should approach the Government to provide financial aid for a number of years to give the area an opportunity to reap the benefit of the investment which has taken place in the last four years. Certain projects are still not completed. The union believes that Government support could be given along the lines of that given in Scotland where there have been similar problems affecting the production market. My hon. Friend the Member for Bolsover (Mr. Skinner), who is present in the Chamber, will know that the NUM's policy has been to develop resources throughout Britain.

What action should we take on the various types of coal? On the power station pits, the NUM believes that support for the burn of Welsh coal should be given, including stocks, for a period of time. An adjustment in price might mean that the power stations would take more of the stocks than they do at present.

For the coking coal pits such as the Lady Windsor pit and the Abercynon pit in my constituency, there is a need for financial support, first so that the pits realise the benefits that are on hand and secondly to discourage the import of such fuel into the country. The British Steel Corporation, a publicly owned body, should be encouraged to use indigenous coal.

One must realise that the loss of availability of anthracite must lead to imports. If the quota is not produced from the anthracite pits, the fuel will be imported. Consumers might have to adjust their heating appliances at great cost.

The union regards the Phurnacite pits as the main problem. Without them, the associated Phurnacite works would lose feedstocks and about 1,000 jobs would be lost. The pits are neighbours of one another, as they are of the Phurnacite works. These are in an area that is already over-burdened with too much unemployment.

The miners' unions and the lodges in my constituency are making a reasonable request to the Government. They have the support of the Labour Party in Wales and of the trade unions. The miners from the Deep Duffryn lodge met the industrial committee of the local authority, and the Abercynon borough council is giving the miners its full support. The miners in my area support the National Coal Board in any approaches to the Government which will result in more financial support for South Wales in the next few years while investment is pursued to enable better financial results to be achieved.

I have a large number of questions to ask my hon. Friend the Minister, and I wish to give him plenty of time in which to answer them. First, what is the future of the Deep Duffryn pit in Mountain Ash in view of the claim that there are substantial coal reserves? What is the Government's attitude to the threatened closure of other pits in South Wales? What future is there for the Phurnacite plant in Aberdare? Will that plant be given investment for the new process? If the money is forthcoming, it will meet the growing demand that exists for smokeless fuel, and it will also deal with local pollution problems.

What action will be taken to cope with the special financial problems of the South Wales coal industry? The people of South Wales and the whole mining community in the area have played their part in the industrial revolution. I believe that the nation owes a great deal to the valleys of South Wales, because the people in that area have given so much to the country in the past.

When will my hon. Friend set up the promised working party? Great hopes were raised among miners at the possibility of such a working party. I hope that my hon. Friend, who has a reputation for being sympathetic to the coal industry —he has worked in the industry and knows it very well—will maintain that reputation by giving a good response to my questions.

10.13 p.m.

I congratulate my hon. Friend the Member for Aberdare (Mr. Evans) on his enterprise in initiating this important debate. I am sure that the whole House will be grateful to him. I can hear the echoes of those thanks in the valleys of South Wales, an area in which I take a great deal of interest and to which I am greatly attached.

I listened with great interest to my hon. Friend, who put forward his case with feeling and compassion. I am grateful that he has allowed me sufficient time to endeavour as best I can to answer the important points he has made.

The coal industry in the United Kingdom has seen many changes. It has witnessed the boom of the post-war years and the optimism which followed. It has also seen the severe problems of contraction in the late 1950s and 1960s in the face of harsh competition from cheap and plentiful supplies of oil, the effects of which are still very much with us at present. We are now witnessing what I believe is another exciting period in the history of the industry.

The Labour Government recognised from the outset the important part to be played by the coal industry in any future energy policy in the United Kingdom. On taking office we established the tripartite coal industry examination to look into the problems and prospects of the industry, to set about helping the industry to reverse the decline of the previous decade and a half, and to face the formidable task of preparing the foundation of the modern, efficient, and competitive coal industry that we believe is necessary for the future. The outcome was the endorsement by the Government, the management and the trade unions of the NCB's 10-year investment programme Plan for Coal ". At the same time, while we gave our support to the financial framework within which the Board could pursue its new objectives. we recognised
"the special burdens of the past, the need to provide safeguards against short-term fluctuations in the price of competing fuels, and the need to take appropriate action if other public policies prevent commercial pricing or impose exceptional burdens on the Board"
"Plan for Coal" was reviewed in 1976, when the NCB looked ahead to the prospects for the rest of the century and put forward its suggestions for further strategic planning objectives. Although less of a contribution from new mines was now expected under "Plan for Coal", the target of 135 million tons output in 1985 was still considered valid and the Government confirmed its support for the plan.

But there are many uncertainties in planning to meet demand 10 or 20 years ahead. A soundly based and widely accepted framework for a national energy strategy is necessary to give the flexibility needed to meet changing circumstances. The Energy Commission set up at this time last year by my right hon. Friend the Secretary of State for Energy was established to advise and assist in the formulation of such a strategy. Its first task was to discuss a paper on future energy strategy and its comments on this were included in the Government's Green Paper "Energy Policy—A Consultative Document", published in February.

The Green Paper confirmed the need for the Government to be prepared to give operational assistance to the NCB. It also made clear the difficulties that the United Kingdom would experience in balancing energy supply and demand in the long term without a substantial contribution from United Kingdom coal. It went on to say:
"The coal industry could also have short-term problems. Production cannot be varied rapidly and the industry must maintain adequate capacity and manpower on the base of which it can expand to cope with increased demand in the long run."
With their endorsement of "Plan for Coal", the Government demonstrated their confidence in the future of the coal industry by making available the capital funds that the NCB needed to implement its ambitious programme. Last year the NCB's capital investment was more than £300 million, and since 1974 investment of more than £1 billion has been approved.

But we did not forget the heavy social burden of the past. Since taking office the Government have provided almost £400 million in grants to the coal industry to assist in bearing this cost. Another £70 million has been provided to help overcome short-term operational difficulties. Some £100 million was given as a grant for a pneumoconiosis scheme set up between the NCB and the unions.

I make no apology if so far I have ranged much wider than the issues which my hon. Friend has raised. I wanted to demonstrate the commitment and determination of the Government to ensuring that our coal industry will continue to play a major role in the future energy strategy of this country.

My hon. Friend is concerned about the future of the coal industry in South Wales. South Wales has a very proud coal industry. It is one of the oldest established areas of the industry, with reserves having been worked for over 150 years. It produces some of our prime coking coals and is the sole producer in the United Kingdom of anthracite. There can be little doubt, therefore, that the industry in South Wales will have a vital part to play in the continuing future of the coal industry in the United Kingdom.

South Wales has, I agree, suffered contraction together with the rest of the United Kingdom coal industry. But there has been plenty of investment in the coalfield under "Plan for Coal". In fact, some £80 million has been invested there in the last three years. The new mine at Betws, which began production in May, is designed to produce 500,000 tonnes per year of anthracite at two and a half times the national average for productivity. The colliery should then enable the whole of the United Kingdom demand for anthracite to be met from indigenous sources. Valuable coking coal reserves have been proved in the Margam area.

But we must also bear in mind that one-third of the collieries in the coalfield are more than 4 century old, and over half of the total are over 75 years old. As with all extractive industries, the reserves of a particular pit cannot last for ever. In addition, where the geology is difficult the most accessible and easiest-won reserves are exploited first, and this must mean that some mines will find it difficult to contain costs to an acceptable level.

The coalfield has made increasing losses over the past three years, after taking Government grants and profits from opencast operations into account. This, of course, places a tremendous burden on the National Coal Board if it is to meet its statutory objectives of breaking even one year with another.

My hon. Friend asked about the general outlook for the industry, not only in South Wales but in the whole of the United Kingdom. To some extent I have nailed my colours to the mast in relation to the Government's commitment towards coal. My hon. Friend asked how the Government proposed to try to deal with the problem of South Wales. I am pleased to be able to tell the House that I have the authority tonight to say that, with the agreement of the National Coal Board and the mining unions, the Government intend to put in hand a tripartite study of the South Wales coalfield.

This will be undertaken by a sub-committee of the coal industry tripartite group. I will cover both the difficulties currently being experienced in the coal field and the positive prospects for the future. We are in touch with the Board and the unions about the details with the intention of launching the study as soon as possible. The outcome of the study will be taken into account by the Government in their general review of the strategy for the coal industry early next years as part of the updating of the fore casts of all the fuel industries. I hope my hon. Friend will agree that to some extent that meets his question about what the Government intend to do. I suggest that I have made a constructive response

My hon. Friend also asked a specific question about the Phurnacite plant in his constituency. I am pleased to confirm what he said, that there is a continuing demand for Phurnacite and that National Smokeless Fuels is interested in the process he mentioned the ANCIT process. It would like to replace the Disticoke batteries with ANCIT batteries as the former reach the end of their natural lifespan.

My hon. Friend also made some comparisons with other countries and spoke about how they approached the question of giving sustenance and aid to the mining industry. I should like to give some comparisons with the European coal industry. I refer to a recent report by the European Commission on State aids for members' coal industries for 1978, document no. COM(78)367 Final. It shows aid to current production in Belgium as £24 per tonne, with production costs at £52 per tonne. The figures for France are £14 and £38 and for Germany £12 and £38.

We in the United Kingdom are entitled to hold up our heads when we talk about production costs in relation to Government help and sustenance, for here the first figure is 56p. That is an updated figure, reflecting decisions taken since the publication of the Commission's report. The production costs are £22 per tonne. That demonstrates that we have the cheapest coal production in the EEC and are subsidising our industry less than any other EEC country is subsidising its industry.

My hon. Friend also asked about Deep Duffryn colliery, in which he had a personal interest because it is in his constituency. The mine was sunk in 1850 and is the oldest surviving colliery in South Wales. The colliery employs 470 men, and because of mining difficulties, production stopped for several months in 1974–75 to re-establish face room at a cost of about £1 million. In spite of this effort, the collierly continued to make a loss.

In recent years, many meetings between management and unions have examined the possibility of extending the life of the colliery. Various proposals have been examined and costed in detail, but all efforts have failed to determine reserves of coal in a suitable geological environment for the successful operation of a modern coal-getting system.

The development of these unsuitable areas of reserves would be extremely expensive and could not provide any possibility of the necessary return on expenditure, if one looks at the matter only in terms of expenditure and cost. During a recent joint examination, it was agreed that a final face changeover would mean the cessation of output for at least seven weeks. In view of the high losses incurred in previous years—the figures that I have are a loss of £5·5 million in the past four years and £7·50 per tonne in the current year—the area director announced on 2nd November that, in his view, there was no further point in attempting to continue coal production in this mine.

Officials of the NUM referred the matter to their national executive, which will decide whether to appeal at national Board level against the closure. If the colliery closes, there are alternative jobs at neighbouring collieries which will be available for any of the men who wish to remain in the industry.

My hon. Friend mentioned the procedure for colliery closures in South Wales. The industry's agreed colliery review procedures provide for the unions to be consulted by the NCB on possible closures and allow them to appeal up to national Board level. That procedure is jealously guarded by the mining unions and I am sure that my hon. Friend would not want me to say anything that might usurp the rights of the unions to enter consultation and conciliation in this matter.

I think that I have answered all my hon. Friend's main points. They were important points. He initiated the debate with enterprise and initiative, and I hope he will concede that the fact that I have announced the setting up of a working party to investigate the whole of the South Wales coalfield demonstrates that the debat has been worth while.

The Question having been proposed at 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 half-past Ten o'clock.