Skip to main content

Orders Of The Day

Volume 163: debated on Monday 4 December 1989

The text on this page has been created from Hansard archive content, it may contain typographical errors.

Coal Industry Bill

Order for Second Reading read.

Before I call the Secretary of State for Energy to move the Second Reading of the Bill, may I say that once again there is a great demand to take part in the debate, and I therefore propose to place a 10-minute limit on speeches between 7 pm and 9 pm. I hope, however, that hon. Members called before that time will bear the limit in mind in the interests of others.

3.55 pm

I beg to move, That the Bill be now read a Second time.

This Bill is of major importance, not just to the coal industry but to the framework of our energy policy over the next five years. It may be helpful, therefore, if I set it in perspective before going on to introduce its detailed provisions.

The coal industry's performance over the past five years has been remarkable by any standards. British Coal has done well to maintain its United Kingdom sales. Between 1983–84 and last year, in spite of the damage done to customer confidence by the strike and in spite of large falls in the price of competing fuels—particularly imported coal and oil—British Coal lost only 4 per cent. of its business. It was able to fend off the competition only because of very large gains in productivity and improvements in cost.

Since before the strike, productivity has risen by over 75 per cent. and operating costs have fallen in real terms by 30 per cent. That is a success story that outstrips even the large gains in productivity seen elsewhere in industry during the past 10 years.

In the past four and a half years, more than 90 pits have closed. The number of employees has more than halved, from some 220,000 to a current total of fewer than 90,000. There has been virtually no recruitment from among communities that hitherto, to a greater or lesser extent, depended on mining, and I for one do not wish to play down the human consequences of those changes.

Each pit that has closed, however, has been subject to a detailed review procedure like that of no other industry, and each man who has left has done so voluntarily. British Coal has been able to offer alternative jobs to any men who wanted to remain in the industry; for those who wished to go, substantial amounts of redundancy pay have been made available, as well as counselling and retraining. To help bring alternative jobs to mining communities, British Coal set up British Coal Enterprise. I know that many hon. Members will have seen the exhibition that BCE set up last month nearby, and I for one have been most impressed by its contribution to the creation of new employment where mines have closed.

I apologise for interrupting the right hon. Gentleman so early in his speech. He said that miners had been able to exercise their rights under the colliery review procedures. In the summer, men at the Merthyr Vale colliery and pit in Aberfan wanted to exercise those rights, but were told that unless they agreed to the closure by the following Saturday they would lose every redundancy payment. They were therefore unable to exercise any rights under those procedures to assess what they considered to be an act of vandalism by British Coal.

I have heard about that. The detailed operation of the scheme is, of course, a matter for British Coal and not one for me.

I think that the hon. Gentleman will understand that it is probably better for me to deal with one intervention before I start giving way to others.

I am trying to answer the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), but the hon. Members for Wentworth (Mr. Hardy) and for Blyth Valley (Mr. Campbell) have risen to their feet. In a minute I shall have to ask the hon. Member for Merthyr Tydfil and Rhymney to repeat his question, because I will have forgotten what it was.

Our policies—voluntary redundancy, the colliery review procedure and job creation through British Coal Enterprise—amount to a package that is unrivalled in any other industry. By and large, these policies are working extremely well, but I recognise the strength of the point made by the hon. Member for Methyr Tydfil and Rhymney. As circumstances change the policies will have to evolve, but they are widely recognised as being a fair and effective mix. We shall encourage British Coal to continue to pursue them.

Does not the Secretary of State condemn British Coal's attempt to influence events in a dishonourable, outrageous way by casting aspersions on or writing critical letters to the review panel because it had the audacity to appear to criticise British Coal for its rather doubtful approach to redundancies?

I do not believe that the hon. Gentleman's question meets the circumstances of the case. Some views have been expressed by British Coal and by the chairman who presided over the independent reviews, but it is not for me to comment on them at this stage.

A mine in my constituency closed two years ago. The case went through the review procedure and the colliery won. However, on Coal Board instructions, the colliery was closed.

Implementation of decisions is not a matter for me; nor was it a matter for my predecessors. I cannot defend every single action by management; it will have to defend its own actions. However, the Government have played their part by providing additional resources and a system that is generally acceptable and working very well.

Within the 100 million tonnes a year of sales, the bulk goes to power stations. For the past four years, British Coal has had a joint understanding with the Central Electricity Generating Board under which it has supplied around 75 million tonnes a year at a price which fell year by year, in real terms, and which since November 1987 has in fact been frozen in nominal terms. Negotiations have been going on between British Coal and National Power and PowerGen on the terms of the contracts that will replace the joint understanding from vesting day at the end of March 1990.

As some hon. Members may have heard, British Coal has today announced that it has successfully reached agreement with each generator on the outline terms of interim three-year contracts.

For the first two years of the new contracts, British Coal will supply an aggregate of 70 million tonnes a year. In the third year it will supply 65 million tonnes. Prices will continue to fall each year in real terms. There is nothing in the contracts which prevents British Coal from bidding to sell additional spot tonnages where that makes financial sense.

These are, I emphasise, interim settlements. Negotiations will continue with a view to reaching longer-term agreements covering the period beyond the next three years. At the same time, the two sides will be working to flesh out the details of the three-year agreements.

If the agreement is allowed to continue on that depreciating scale, does the Minister not realise that Britain will have to import more coal? It may cost less now, but who knows what its future price will be? With a £20 billion balance of payments deficit, does the Minister not understand that it is economic lunacy to import more coal and thereby to add to the balance of payments deficit? The answer is to keep pits open and to use British coal. The Government ought to pay attention to our long-term energy needs.

The contracts which are freely entered into by British Coal and the generating companies are very good for both. The hon. Gentleman may cast doubts on this, but, according to Sir Robert Haslam's statement today,

"The new contracts are a firm rebuff for the Jeremiahs and their gloomy forecasts for the future of coal. It is evident that the 'scare stories' of further massive contraction of the industry have been seriously overstated."
It is good news for the coal industry, and the hon. Member for Bolsover (Mr. Skinner), who seeks to represent it in the House, should take credit for his industry when the opportunity presents itself.

Is it right for the Secretary of State to shield himself behind British Coal? Nuclear power is up to three times as expensive as coal, and the Government have supported it. Opencast mining is desperately damaging to the environment, and the Government have supported it. The importation of coal, to which my hon. Friend the Member for Bolsover (Mr. Skinner) referred, deepens the balance of payments deficit. Those are Government decisions. They are not matters on which the Minister can shield himself behind the chairman of British Coal.

The Government have provided very large resources for British Coal and, by and large, in recent years British Coal has taken great advantage from that and has substantially improved its position. I paid proper credit to that at the beginning of my speech. The right hon. Gentleman is deluding himself and the House if he believes that the coal industry can be protected by Government intervention to stop, for example, coal imports. The competition that British Coal must face—it will face it successfully—is from competing fuels—for example, natural gas and oil, both of which are available in this country. Unless British Coal can compete against those fuels—I believe that it can—the future will be bleak. I do not believe that the right hon. Gentleman's analysis or his remedy are right.

I must not stand here and answer questions. My task is to make my speech in support of the Second Reading of the Bill. I have given way many times, and I may well give way to the hon. Gentleman when I have made progress.

Those agreements are important steps forward for both industries. They will allow the contracts between generators and distributors to be put in place according to the planned timetable. The prospect of further reductions in real terms in the cost of coal in each of the next three years is good news for the electricity consumer.

The contracts are also good news for the coal industry. They remove much of the uncertainty that has overhung the industry in recent months. They give British Coal a large tonnage to go for and time in which to adjust its capacity and costs. But British Coal's ability to retain this business in the longer term will depend upon its own efforts to get its costs down even further over the intervening period. The remarkable productivity trend over the past few years must continue, and I believe that there exists within the industry the will and the technical skill to achieve it.

I represent part of Sunderland, where 1,700 people are employed in the Wearmouth pit. One of the most disastrous things to happen is that, through our port and others along the coast, large quantities of coal are imported from cheap labour economies, including South Africa, Colombia and places with which no level of productivity can ever permit our miners to compete. Does the right hon. Gentleman understand that that is disastrous for the 1,700 men at Wearmouth pit and that, if it continues, it will lead to the closure of that industry, which is one of the largest remaining industries in Sunderland?

As the hon. Gentleman knows, it has not been the policy of this Government or of the Government whom he would support to restrict the import of coal into this country. Levels of coal imports have not substantially altered in recent years. British Coal is capable of meeting a substantial portion of the needs of the British generating industry for a long time to come.

I thank the Secretary of State, who has been generous in giving way. He has informed the House about increased productivity and the agreement that has been reached today. He has confessed that he will not be opposed to the import of coal and he has announced that gas will be a great competitor. Is he aware that an energy group of hon. Members had a lecture by the chief executive of British Gas and that he told his assembled audience that British Gas expects to have between 2 GW and 7 GW of gas-fired power stations in 10 years' time? Will the Secretary of State concede that he is misleading the House to some extent about the long-term prospects for coal if the policy of the importation of coal goes ahead and if gas-fired power stations become the order of the day?

I cannot be certain about the future pattern of fuels for generating, but I know that a substantial number of power stations will be gas fired, as is right and proper. That will add to the diversity of fuel and we know that gas is an environmentally satisfactory fuel. I must add that I was not one of those who were most anxious that the flotation of the nuclear industry should not proceed, but I made a statement to the House when I felt that it was the right course of action. Ten GW of electrical generation capacity were going to be filled by nuclear power, about which there is now considerable doubt, so there will be plenty of markets for which British Coal can aim, if it is competitive and able to seize those markets. I am doing all that I can to enable it to achieve that.

The Government's view is that there should be a diversity of sources of fuel. We should like to maintain our level of nuclear power, but nothing that I have done in my time as Secretary of State has damaged the prospects of British Coalrather the opposite.

No, as I have given way considerably. If I make progress, the hon. Gentleman is next in line and I shall keep him in a corner of my mind. If he sits nicely and quietly, I may be able to give way to him a little later. I have much more to say, so if I give way again hon. Members will complain that I have gone on for too long.

Clause 1 provides for a new deficiency grant which will enable me to reduce or extinguish British Coal's accumulated losses as at the end of this financial year. It differs from the deficit grant, which was available to British Coal until 1987, in two respects. Whereas deficit grant was paid out in respect of each year's losses, the new deficiency grant relates to the accumulated losses in the corporation's balance sheet, rather than to the results of any one year. The second difference is that deficit grant was an ongoing grant and a continuing subsidy. The new grant deals with the overhang of the past, but it is not available to cover any losses that British Coal may incur beyond March 1990.

Apart from restructuring grant, to which I shall return in a moment, we do not envisage offering any grant subsidy to British Coal for the period beyond March 1990, for the simple reason that, taking the next three years as a whole, we expect British Coal to make a profit. As Sir Robert Haslam told the Select Committee on Energy last month, British Coal does not want a subsidy and it does not need a subsidy.

However, it is essential and urgent that we address the massive distortions that are now appearing in British Coal's balance sheet. That is because, on the basis of the balance sheet that we expect to see by March, there would be no prospect of British Coal being able to service and repay its debt. In those circumstances, it would be neither proper nor legal for me to continue to lend money to the corporation and the corporation would no longer be in a position to discharge its statutory functions. Let me spell out what those distortions are.

First, until this year, British Coal's borrowings, at around £4 billion, were broadly in line with the value of the fixed assets shown in the balance sheet. But the growth in borrowings this year will lift the corporation's debt to nearly £5 billion. Meanwhile, it is becoming clear that pressure on British Coal's margins has left its fixed assets substantially overvalued in terms of their true earning potential. I cannot at this stage tell the House the extent of the write-down that may be necessary. That will depend upon a detailed review of the industry's prospects, and I shall naturally wish to satisfy myself that they are based on demanding output and productivity targets.

Secondly, under a new accounting standard applicable this year, British Coal is expected to provide in its accounts for its concessionary coal liabilities—primarily to ex-employees—instead of charging them on a pay-as-you-go basis. The corporation also has potential liabilities in respect of ex-employees' industrial deafness claims. Over the past four months I have learnt just how painful such long-term provisions in the energy sector can be, and I am afraid that these are no exceptions. The concessionary coal provisions are likely to amount to nearly £2 billion at today's prices and the industrial deafness provision is around £0·5 billion.

Finally, there are the bottom line losses that British Coal has recorded over the past three years, including £200 million last year and perhaps double that sum this year. British Coal's balance sheet has no reserves against which those losses can be offset.

Altogether, the losses over the past three years, the provisions in respect of concessionary coal and industrial deafness, and the write-down of colliery assets could amount go more than £5 billion; they represent the accumulated deficiency with which I propose to seek powers to deal by means of deficiency grant. I foresee a substantial part of such grant being paid immediately on Royal Assent, provided that the Bill receives Royal Assent before the end of the financial year. That will allow British Coal to repay an equivalent amount of its borrowings so that its debt can be brought into closer alignment with the true value of its colliery assets. The remainder of the deficiency grant will be paid over time as British Coal's longer-term liabilities fall due.

Clause 2 raises the ceiling on restructuring grant from £750 million to £1,250 million, increasable by order to £1,500 million, and extends its availability by one year to March 1993.

The increase in the ceiling is urgently required because the existing £750 million has been fully committed. Indeed, there are unreimbursed costs outstanding at present as a result of this year's redundancies. I appreciate the concern felt on both sides of the House about what is implied in terms of further manpower rundown. The proposed increase in the ceiling is a broad-brush figure and is not based on a specific view of what the manpower rundown will be.

I think that it is generally recognised that the number of jobs will continue to fall as collieries exhaust their economic reserves and as manpower-saving investment comes to fruition, but I shall certainly not predict the outcome of individual colliery reviews or whether individual mineworkers will wish to remain in the industry or take voluntary redundancy. Similarly, I am not in a position to judge whether British Coal will find it profitable to sell more than the minimum contract tonnages to the power stations or to develop alternative profitable markets for its coal.

However, I am not disguising the hard truth that the industry will have to reduce its manpower costs further over the next three years, and the grant is vital if British Coal is to be able to afford appropriate redundancy terms.

Clause 3 makes a technical amendment dealing with loans to British Coal. Its purpose is to enable me to take temporary deposits from British Coal so that I can offer revolving credit facilities as well as term loans.

Because of the weakness of its balance sheet, British Coal has had access over the past two years only to short-term loans, and this has meant a great deal of volatility in the interest rate it faces. Once its balance sheet has been strengthened, I intend to consider how the maturity of its borrowings could be adjusted to a more conventional medium-term structure. There will, however, still be a need for temporary loan facilities, and clause 3 will allow a more straightforward way of providing those.

Finally, the Bill provides for an increase in the limits on licensed mining and other consequential changes.

I must outline what the Bill contains, but I shall give way to the hon. Gentleman if I have time after I have given way to his hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay).

I have not given way to any of my hon. Friends and, in fairness, I shall do so when I have concluded the point about licences.

Private sector coal mining under licence from British Coal, which owns all coal reserves in Britain, produces between 2 and 3 per cent. of our total output. Those mines are limited in size, under legislation from the 1940s and 1950s which has never been revised, to 30 underground employees in the case of underground mines and 25,000 tonnes in the case of surface—that is, opencast—mines.

I am sure that many of my hon. Friends will welcome the relaxation of the artificial and outdated restrictions on private mining. Will my right hon. Friend accept, however, that there will not be fair competition unless he alters the licensing system? It should be taken from the patronage of British Coal and transferred to the Department of Energy so that, in common with oil and gas licensing, it is open to tender. In that way, genuine private enterprise competition would be achieved.

I note what my hon. Friend says. I suspect that improvements could be made to the licensing system, but they must wait, I fear, until a major Bill to privatise British Coal is introduced. That will not happen until the next Parliament. In the meantime, I thought it right to introduce the modest proposals I have outlined to assist, but they are not a substitute for the more fundamental review that my hon. Friend would like.

The Secretary of State has said that manpower in the small mines will increase from 30 to 150. I hope that he will consider carefully the question of health and safety, especially when the rules and regulations are altered. There is a difference between a private mine that employs 30 men and one that employs 150, as such a work force means that the mine is fairly large.

One of the purposes of the changes is to improve safety in private mines. With the present number of 30 employees, it is difficult to use modern technology and equipment, but the safe operation of mines largely depends on using modern equipment. The hon. Gentleman is absolutely right that safety is an important consideration.

I must make some progress.

It is important to put our proposals for increasing the size of opencast mines into perspective. The smallest British Coal mine has about 250 underground employees; and while there are a few British Coal opencast mines with tonnages of less than 250,000 tonnes, they account for a tiny fraction only of the corporation's output.

We have made it clear that we would seek a mandate in the next general election to hive off British Coal's operations from its licensing functions and to privatise them once they have become fully competitive. The decision when and in what form the coal industry will be privatised is one for the next Parliament, and we do not want to pre-empt this decision by major changes now in the statutory framework.

When we have such extended opencast mine facilities, will my right hon. Friend please ensure that they are not concentrated in one area as they are in my constituency? We have to suffer opencast mining on top of opencast mining. Will consider the local people so that only one opencast mine at a time is operated and no more?

I have great sympathy with my hon. Friend, but I am not the planning authority which settles these matters. No doubt those with the authority will take note of what my hon. Friend said.

If my right hon. Friend is saying that at this stage it is not reasonable to transfer licensing arrangements from British Coal to the Department of Energy, will he at least give the House an assurance that he will look carefully at the royalty paid by private mining operators to British Coal? It seems to many Conservative Members that an £11 per tonne advantage in what is supposed to be a free and fair competitive market is not reasonable in the private sector.

I have no plans for doing that, but my hon. Friend has asked a question and I shall certainly look at the matter. However, I do not give an undertaking that he will necessarily have a favourable reply.

I had better make a bit more progress. I have given way a great deal and I merely wanted to redress the balance.

Order. A number of the hon. Members now seeking to intervene have also stated that they wish to participate in the debate and their interventions take up time.

We see merit in raising the licensing limits to take account of developments in mining techniques since the 1940s, to allow the working of deposits which are too small for British Coal to consider but too large to be worked by licensees under the present limit. Some of these deposits are of special qualities such as anthracite where British Coal's own local output may be insufficient to meet demand and the market would otherwise be supplied by imports. The increase will therefore open up the possibility of increasing employment and investment in the small mines sector.

I am aware of the concern felt in the House about the safety record of small mines. I am glad that the hon. Member for Barnsley, West and Penistone (Mr. McKay), who raised this issue, is still in the Chamber. However, the overall accident rate in licensed mines has in fact fallen in each of the last three years. I accept that it is higher than in British Coal's mines, but we are dealing with a small statistical population. My worry is that the existing limits condemn licensed mines to work with the equipment and techniques of the 1940s.

Investment in safer and more efficient equipment and techniques is likely to be forthcoming only if the mines can be worked more intensively, which means increasing the manpower ceiling. Indeed, contrary to claims by some Opposition Members, the measure is designed to offer the prospect of greater, rather than less, safety in licensed operations. In the opencast sector, the higher limit now proposed will greatly reduce the piecemeal working of small opencast deposits, and encourage investment in larger and more efficient machinery. Licensed workings will continue to be subject to planning approval and proper conditions of operation and land restoration.

I am grateful to the Secretary of State for giving way on the important issue of the safety of the mines and the individuals who work in them. The increase in miners is not great, but it is more than 500 per cent.; therefore, percentagewise it is large. There will be a tenfold increase—which is large—in the opencast extraction from the pit top. How many more safety inspectors will be employed in the industry to ensure that the extra miners working in the pits are well looked after and their safety, which is supreme and should come before any production, given top priority, with production coming second?

The hon. Gentleman is right to say that we should ensure that we have the right number of inspectors, as we have. They are up to establishment levels, although there are fewer inspectors now than there used to be. But there are substantially fewer miners than there used to be and the ratio of inspectors to miners has risen substantially. When we came to power in 1979, there was one mine inspector for every 3,185 miners employed by British Coal. The ratio is now one inspector to every 1,998 miners. That is an improvement of 52 per cent. The hon. Gentleman is right: that aspect of matters should not be a subject of controversy between us.

Much has been accomplished over the last five years since the miners' strike. That was a watershed in the industry's history. The Bill, together with the agreement reached with the generators, marks a further crucial landmark for the industry as it adjusts to a changing environment in which its two main customers for power station coal move into the private sector.

By addressing the losses and liabilities of the past, and by recognising the true value of its assets, we are providing the industry with the opportunity to compete in the market place of the future. The Bill is the measure of the Government's support for the industry, and I commend it to the House.

4.30 pm

The Opposition welcome those parts of the Bill that are intended to improve the financial position of British Coal. However, we are opposed to the Bill as a whole, especially because it permits more people to go underground in private pits whose safety record, whatever the Secretary of State may say, is quite deplorable.

The main financial provision of the Bill is to write off the debts of British Coal. We welcome that decision. The Government are doing the right thing but for the wrong reason. It is being done only as part 1 of the Government's usual three-stage procedure for privatisation which can be summarised as write-off, sell-off, and rip-off. That is what the Government intend.

Another clause increases the Government grant towards the cost of redundancies in the coal industry. If there are to be job losses, generous severance payments should be made, but it would be better still if we did not have all the pit closures that will lead to redundancies on the scale that is indicated in the Bill. As I have said, we are totally opposed to the proposal to permit more people to work underground in private mines. The safety record in private mines is dreadful, with fatal accidents running at between two and four times the rate in the pits run by British Coal. With that sort of record, we should be exposing fewer people to that sort of danger and not more, and we shall vote against the Bill for that reason.

We are also opposed to the tenfold increase in the size of private opencast workings. The record of private operators is bad enough already, as communities living near them can confirm. They do not take enough care, they do not try to protect local communities, and some of them have failed to restore old workings to agricultural use. The Government should have used the Bill to honour their undertaking to improve the arrangements for compensation for damage caused by mining subsidence. They said that they would do that as soon as there was a legislative opportunity. This is that legislative opportunity, and we shall press for the inclusion of that in the Bill.

We cannot look at the Bill in isolation. We need to look at the current position of British Coal and its financial situation. We need to look at its past, present and future relations with its major customer, the electricity supply industry. We also need to look at it in the context of the Government's general policies on energy, the environment and privatisation. As my hon. Friend the Member for Bolsover (Mr. Skinner) has said, we need to look carefully at the Bill's likely impact on our ever worsening trade deficit.

The Government have many questions to answer. How does the Bill tie in with the coal contract that was announced today? What will it do to electricity prices? Will it promote energy efficiency and conservation? Will its effects on the environment be good or bad? What future does it offer the coal industry? Will it make mining safer or more dangerous? How will it affect communities living near mines and opencast workings? What has the Bill to do with the proposed privatisation of the coal industry and how is it tied up with the privatisation of the electricity industry?—[Interruption.] We have had some instant answers from Conservative Members, but I am afraid that I cannot claim to have their intellectual grasp. Time does not permit me to deal with all those questions as swiftly as they do. However. I am sure that those questions will be seriously pursued by my hon. Friends, unlike the hon. Member for Ashby who, by the way he is behaving, apparently thinks that the idea of a new opencast working in his constituency is a joke. However, those questions will he pursued by my hon. Friends.

While my hon. Friend is asking questions of Conservative Members, will he include the protection of the fuel allowance to miners, retired miners and miners' widows? In my constituency, there is grave concern over British Coal's attitude in denying retired, redundant, sick and injured miners and miners' widows their fuel allowance. They fear that that practice will escalate and that those people will become a target for taking away that allowance. Will my hon. Friend ask the Minister to give an assurance that those benefits, which have been fought for by miners, will be protected?

My hon. Friend has put his question effectively; I could not have put it any better. That is one of the many serious questions that Opposition Members will ask about the future of the industry and how it will be affected by the Bill. My hon. Friend the Member for Rother Valley (Mr. Barron) will deal in particular with safety, opencast working and subsidence and he will want to know why the question of subsidence is not covered in the Bill. I should also like to thank him and my hon. Friends the Members for Cardiff, West (Mr. Morgan) and for Aberdeen, South (Mr. Doran) for the help that they have given me since I became the shadow Energy Secretary. I should like to pay tribute also to the effectiveness of my predecessor. In doing so, I am doing something that the Secretary of State could not do, at least not whilst keeping a straight face.

Throughout this decade the Government have been shortsighted, wasteful and environmentally backward. Nowhere has that been more obvious than in energy. Britain's use of energy has been profligate, expensive and harmful to the environment. Instead of carefully husbanding our energy resources, the Government have allowed them to be squandered. Through the period of this Government, coal-burning power stations have provided the bulk of the nation's electricity supplies. They will continue to do so into the foreseeable future.

A sensible Government would have recognised that and concentrated effort on improving the efficiency of coal-burning power stations. They would have invested in the research and development of more efficient techniques such as fluidised bed combustion and would have promoted coal-fired combined heat and power stations. They would have put an end to acid rain by cleaning the sulphur from the flue gases. Sadly, they have done none of those things and, as a result, the coal-burning stations—the mainstay of the system—are less efficient, more expensive and more environmentally damaging than they need have been.

A real commitment to those coal-fired stations could have made them cleaner and more efficient and could even have made their electricity cheaper. Instead of that commitment, the coal industry and the coal-fired stations have been derided and deprived. They have been derided by allegedly distinguished people in the electricity industry who were supporters of nuclear power and by the advocates of burning oil. They have been deprived of the research and development necessary to improve their competitiveness.

Instead, money has been poured into nuclear research and that truly bottomless pit, the AGR programme. That is the biggest technological foul-up in British history. Common sense and cheapness have had to take second place to the Prime Minister's obsession with nuclear power. That continues to this day. This year, less than 1 per cent. of the Department of Energy's research is going into coal, while more than 80 per cent. is going into the nuclear industry.

In view of all the official propaganda, it is hardly surprising that few people realise that supplies of cheap British-mined coal have been the foundation of success for the electricity industry. Coal-fired stations have kept the show on the road. The cost savings in the British coal industry have been used by the generating board to mask the uneconomic operation of nuclear power stations. If the coal industry and coal-fired power stations had got the credit that they deserved, and were to get it in the future, the coal price contract announced today would not have involved a reduced burn of British coal, nor would the Government face the alternative of increased fuel imports and a further worsening of the trade deficit.

I have to warn that when it comes to the balance of trade in energy the situation is not as bright as at first appears; trends are moving in the wrong direction. At the moment, Britain is self-sufficient in energy because we have an oil surplus. This is fortunate, because without it our trade deficit last year would have been not £14 billion but £22 billion, and the figure would be far worse this year. The Government should take care when they talk of alternative sources of fossil fuels, because Britain's fuel surplus has been whittled away from a surplus of 29 million tonnes in 1983 to one of just 9 million tonnes last year. That is partly because our oil surplus is coming down, but also because Britain imported on average 17 million tonnes of natural gas during each year of the 1980s.

On top of that, last year we imported 12 million tonnes of coal, so this is hardly the time for the Government to be promoting more coal imports or new power stations that will burn natural gas. It is bad enough that the Department of Trade and Industry does nothing about the trade deficit, but it is even worse that the Department of Energy appears to be contemplating making that deficit worse.

The contract announced today between British Coal, National Power and PowerGen is closely related to the Bill, but its real significance is that it signals an about-turn by the Government on electricity privatisation. Privatisation was supposed to secure competition between National Power and PowerGen. This contract means that there will not be any competition. Both have been told by the Secretary of State or his officials how much British coal they will burn between them for the next three years and how much they will pay for it. That agreement has about the same relation to open competition as Eric Honecker had to open government.

In February this year, the former Secretary of State for Energy, the right hon. Member for Hertsmere (Mr. Parkinson)—the living embodiment of the triumph of hope over experience—said to the Adam Smith Institute:
"We are devolving to Lord Marshall, to Bob Malpas, to the Area Board Chairmen, to the private generators, accountability for the industry. And we are devolving to them the power to run their business without sovereign interference … I myself look forward to an electricity industry in which managers are free to manage, and have to meet the demands of customers and competition, not of Ministers and civil servants. That is the principle of privatisation and I am sure it is one that Adam Smith would approve of. It is certainly one that I intend to uphold."
A little later, he left the job, but before doing so he made a speech in the debate on the Report stage of the Electricty Bill in which he summarised his approach by saying:
"We want to get away from political influence and political impositions."—[Official Report, 5 April 1989; Vol. 150, c. 279.]
During the past few weeks, the Secretary of State has made nonsense of all the arrangements made by his predecessor and particularly everything that he ever said as Secretary of State for Energy. The new Secretary of State has withdrawn nuclear power stations from the sale, but announced that they will provide the baseload on the system and that he will decide the price to be charged for nuclear power. He has now laid down the terms of the biggest contract that National Power and PowerGen will ever sign. So much for the industry being "free to manage" and not having to meet the demands of Ministers and civil servants. The case for electricity privatisation is in ruins and he knows it. His actions speak louder than his predecessor's words; and they both confirm Labour's case for leaving these natural monopolies in public hands.

The terms of today's contract are made possible only by the Bill. The proposed cuts in the price of coal are possible only because of the write-off proposals. Unfortunately, the cuts in price are not the only cuts in the contract. The new contract signals a reduction in coal sales to the generating companies from 75 million tonnes a year to 65 million tonnes a year—a reduction of 10 million tonnes—over three years. That reduction must lead to further substantial redundancies—there is no way round it. These job losses will come on top of the 12,000 jobs that the leaked Cabinet paper predicted would result as newer pits like Selby move to full production.

What of the price to be charged for this coal? We are told that British Coal will have to sell it at a price that absorbs the first and probably the greatest part of any inflation in each year of the contract. In other words, the cost of coal supplies to the generating companies is to be partly inflation-proofed by the coal industry, and that is a price cut in real terms every year. Will this price cut be passed on to the electricity consumers? Will electricity consumers face electricity prices lower than the rate of inflation, and, if not, why not?

If it is not the miners who are to benefit from their increased productivity and not the books of British Coal and not electricity consumers, whom does the right hon. Gentleman intend to benefit? Is it all part of the fattening up process? Surely, whatever else he does, the least that he can do is to make sure that low-income families and pensioners are protected from any unnatural price increase and his proposed nuclear levy.

Has the hon. Gentleman noticed that in the other industries that have been privatised price increases have been below the rate of inflation? Will that not apply to electricity as well?

I was talking about low-income families. Perhaps the hon. Gentleman can explain why it was that, in the first two years after British Gas went into private competitive hands, the number of people cut off for non-payment doubled and it had to be forced by a publicity campaign to do something to protect people. In any case, I cannot recall, before the privatisation of any other industry, people from the London business school predicting a 50 per cent. increase in the price of its product within the first few years, because that is what the new private owners would want. I will take more notice of them than of the hon. Member for Ashby.

The hon. Member for Leicestershire, North-West (Mr. Ashby) was talking about something but could not get his mouth round the words. I think that he was talking about Rover, and about water privatisation, which will cost the taxpayer about £1·3 billion. However, he dare not speak the words because he is frightened of offending the Prime Minister and she may think that he will finish up voting for the other fellow.

The price charged for Rover was so low that there is some suspicion that Lord Young thought it was a dog.

As I have already said, the main financial provision of the Bill is to write off British Coal's debts. That will require a contribution by the taxpayer of more than £5 billion to join the £5 billion that they have contributed to the water write-off and the £5 billion that they contributed to the British Steel write-off prior to privatisation.

The write-off is intended mainly to further the Government's privatisation programme, and it is the first stage of their three-stage procedure. I admit that this case is unusual, because the Bill applies the technique to two industries at once. The write-off will make British Coal more attractive to potential buyers, but the debt is also being written off to help pay for the cut in coal prices to National Power and PowerGen which was announced today. Without the write-off, British Coal would not be able to reduce prices as it is intended that it should.

It is not the first time that the benefits of coal reductions in the pits have been passed directly to the electricity industry. According to a press statement already quoted by the Secretary of State today, this year the generating board has already benefited to the tune of no less than £850 million. During the past three years the fuel cost to the generating board has come down by 6 per cent., its charges to electricity consumers have gone up by 12 per cent., and its trading profit has gone up by 90 per cent.

Over the past decade such cost savings have found their way into the profits of the Central Electricity Generating Board rather than being passed on to electricity consumers. In the elegant words of the leaked Cabinet paper, all the benefits of the savings on coal prices were kept as higher profits.

In all justice, the taxpayer, should not have to foot the bill for that write-off; the generating board should pick up the tab. Therefore, the write-off proposal in clause 1 is not intended just to help the privatisation of British Coal. A lot of the money to be written off has already been spent to help fatten up the electricity supply industry for privatisation.

That is not all. Cheap electricity generated at coal-fired stations has been used to cross-subsidise the expensive electricity generated in the nuclear stations, or, as the Cabinet paper states, allowed revenue to be moved into the nuclear business without leading to large overall increases in price. In other words, it financed the nuclear cost cover-up.

Much of British Coal's debt arises from the CEGB's profit and the cost of keeping nuclear power stations going, when that could not be justified by the price of the electricity that they were producing. Unfortunately, that will continue as the new Secretary of State has decreed that, no matter how much it costs, nuclear stations will provide the baseload. The consumers will be forced to pay for that privilege through the nuclear levy, the coal industry will pay for it through reduced sales of coal, and the miners will pay for it through job reductions in the pits.

I understand that it has been announced that the new nuclear company will be called Nuclear Electric Plc. A buzz word these days in energy circles is transparency. I think that a more transparent and accurate title for the new company might be Irradiated Loss-Makers plc. It will leave the consumers to pay for the losses.

If the CEGB were forced to repay the money that it has misappropriated from the savings on coal and bunged into its profits, and if the coal-fired stations were to take over the base load function of nuclear stations, much of the proposed write-off would he unnecessary and there would be much less need for British Coal to draw on the £1,500 million in redundancy subsidies in clause 2.

Before moving on to clause 2, we should consider the other aspect of the write-off provisions, which my hon. Friend the Member for Bolsover mentioned. The write-off is intended to be a precursor to the sell-off. We need to try to ensure, at least in the case of British Coal, that it does not turn into the usual rip-off. So, will the Secretary of State tell us his latest valuation of the assets of British Coal if the debts are written off? I hope that he will not tell us that he does not know, because if he does not know the value, how can he claim that he is getting value for money? Has he assessed the value of the land and the non-operational property of British Coal? If he has not, it proves that he is as ignorant and negligent as those people who sold off Royal Ordnance and Rover.

I think that the hon. Gentleman did not listen to what I said. I said that the write-off might be as much as £5 billion, but that I was not in a position to say what it would be until we had agreed with British Coal and the auditors what it should be, for precisely the reason mentioned by the hon. Gentleman. It would be foolish to agree a write-off until one knew the value of the assets remaining. The necessary valuations will be made on 31 March 1990, the date on which the write-off will take place. I think that the hon. Gentleman is misguided.

I am always willing to accept that, from time to time, I may be misguided. However, 1 am not as misguided as the Government's privatisation policy has been.

As the provisions allow for the debts to be paid off, or to be written off, over a lengthy period, many Opposition Members and people in other places are suspicious that the Government and the chosen auditors may find that a write-off is justified if privatisation is to proceed but somehow it will not be justified if British Coal were to remain, quite rightly, in public hands.

Clause 2 doubles the amount of grant which the Government may make to British Coal to cover the cost of redundancies during the period of the new contract. The Cabinet paper estimated that job losses would equal one third of the collieries, or about 30,000 jobs.

Time has certainly passed since that paper was prepared. Will the Secretary of State tell us his latest estimate of the job losses? Since that paper went to the Cabinet, I am informed that the total work force in British Coal's collieries—and I emphasise the word collieries—has fallen from 80,000 to about 66,000, and that more definite closure proposals are being implemented.

Will the Secretary of State tell us how many closures will take place and which pits are most at risk? Last week I published a list of pits, based on information made public by British Coal. The list suggested those pits that might be most at risk if the Government were to press ahead with 30,000 job cuts. In response, British Coal flannelled but never denied what we said.

The trouble is that the provisions in the Bill undermine any claims made by the Government or British Coal about job security, because the maximum grant for redundancies permitted in the Bill is clearly set at a level which is designed to meet redundancies on the scale referred to in the Cabinet paper. I am sure that the Minister will confirm that it is unusual for the Treasury to agree to back expenditure that it does not expect to take place. Suspicions are also raised because the period covered by the redundancy provisions is extended for one year, so that it will coincide with the third year of the three-year contract which has just been announced.

One other factor underlines the plausibility of any Government claim to a new-found commitment to the British coal industry.

One thing comes to my mind, and perhaps my hon. Friend will probe it further. The present redundancy scheme caters for weekly payments for people until they reach retirement age. As the average age in the mines is now much lower, do the Government intend to carry on that scheme, or are they going to tell us that they will alter it?

Once again, my hon. Friend, like his colleagues from Yorkshire, has put the question clearly, and perhaps the Minister will answer it in his reply. We will pursue the matter in Committee.

There is also the problem of coal imports. National Power and PowerGen have already signed contracts, so we understand, to import as much as 6 million tonnes of coal. Those supplies are clearly intended for the Thames-side power stations, which already receive coal by sea from Northumberland and Durham as they are equipped to deal with colliers. The pits in the north-east are among the cheapest and most efficient in Britain. Some have recently received substantial investment, and some have the most enormous workable reserves. Surely it makes no sense for the generating companies to try to replace that source with cheap coal from South Africa and Colombia, which until recently was known better for its coke exports than its coal exports.

There are proposals, moreover, for new coal handling facilities in ports all around Britain. Their total increased capacity is well in excess of 30 million tonnes a year. Some of the proposals come from close friends of the Tory party; some require private Bills, which are being pushed through the House with Government support.

I tell the Secretary of State that, if he wants people to believe that he backs British coal, the least he can do is withdraw Government support from the proposals for new coal handling facilities, particularly those proposed for Humberside. If he does not, we will know where he really stands and why he wants to double the redundancy money in the Bill.

The write-off and redundancy provisions in the Bill have been made necessary by a decade of neglect of the mainstay of our electricity system and its customers. Similar provisions will be required in future unless the Government change their policies. Energy efficiency, conservation and the needs of the environment have been ignored. Electricity prices have been pushed up to fatten the industry for privatisation and to cover up the nuclear losses. The consequences of these short-sighted policies are not some academic matter. In Britain, with its abundance of indigenous supplies of coal, oil and natural gas, the Government have contrived to bring it about that more of our old people shiver and die in a cold winter than in any of those countries in western Europe who do not have our natural advantages and envy our supply of fuel.

The financial provisions of the Bill should put British mined coal in a strong position to provide the bulk of Britain's heat, light and power, but that is no reason to sell it off. The Secretary of State has inherited this threat of privatisation from his predecessor. In view of his problems in sorting out the mess that he inherited in the electricity industry, he should recognise a shambles when he sees one coming. He should abandon the privatisation proposal while he can still blame Cecil. Then he could leave the people in the coal industry to concentrate on their proper job, which is to produce coal efficiently, cheaply and safely to the benefit of themselves, their communities and the whole nation. That is their real job, and he should let them get on with it.

15.3 pm

It is quite amazing to hear speeches with as many inaccuracies as we heard from the hon. Member for Holborn and St. Pancras (Mr. Dobson). We get them year after year. One would imagine that we have not put any money into the coal industry. One would also naturally assume that we have not previously had a write-down in capital. In 1965, we had a write-down of £415 million. In 1973, we had another of £450 million. Revised to current figures, that works out at £5·9 billion.

The nation should understand that we are not paying for an economic industry. I happen to be strongly in favour of it. I have never said whether I am in favour of denationalisation, but it is a loser. If we examine British Coal's assets, we see that the company is rapidly going bust and would be insolvent tomorrow but for the fact that the Government are putting money into it.

I am listening with interest to the hon. Gentleman. Did he use the same multiplier when he argued in the Standing Committee that considered the Electricity Bill that the nuclear power industry should be kept in public ownership? He then supported public ownership of energy.

The hon. Member was a member of that Committee and may have listened to my speech on that subject. I shall not anticipate my arguments on the denationalisation of mines. He will have to wait until another occasion to see whether I subscribe to that idea. I am dealing with the Bill which the Government have presented. It is exceedingly good, and I congratulate them on it.

Write-offs in the industry since 1947 work out at something like £10·5 billion. That is roughly half of the United Kingdom's health budget or equivalent to the turnover of our aerospace industries. The money could have been used much more profitably elsewhere, although I agree that if one has a local industry it should be supported.

We learned some time ago that, with nitrous oxide and sulphur dioxide in flue gases, the polluter pays, but on this occasion the taxpayer will pay—it certainly will not be the mighty industry. That is a very unfortunate form of expenditure.

Other hon. Members, including the hon. Gentleman, wish to make their own speeches, but as the hon. Gentleman was a member of the Standing Committee which considered the Electricity Bill, 1 shall give way to him.

How does the hon. Gentleman equate his statement that the polluter pays with British Nuclear Fuels plc's discharges from Sellafield and the problems that will occur because of nuclear waste disposal?

There are many forms of nuclear waste disposal. Some proposed by BNFL and the United Kingdom Atomic Energy Authority are extremely complicated. I am not drawing any parallel when I say that the Government are again coming to the rescue of the coal industry. They have consistently vouchsafed the industry.

Members of the Opposition Front Bench tell us that everything in the garden is lovely, but United Kingdom coal costs about £41 per tonne, whereas the spot price on international markets is roughly £27 per tonne. Are we to tell electricity users in the United Kingdom that they must pay higher electricity prices because of the higher cost of British coal? Electricity users want cheaper electricity and thus cheaper coal. Opposition Members are saying something entirely different. They are saying that we should keep the price up to benefit coal miners and make the public pay.

No. I shall not give way.

I shall give some figures. The hon. Member for Holborn and St. Pancras said that we import coal from Colombia, and it is true that we import a small amount from there at $38 a tonne. If it is stripped down, it comes to £30 per tonne, which is much less than the price charged for United Kingdom coal. I agree that the coal industry is doing the maximum to bring down prices, but it has not been able to bridge the gap. I congratulate the Secretary of State on having negotiated an agreement for three years on supplies of foreign coal which will enable the mines to bring down their costs further to compete in the international market. What is wrong with that philosophy?

I want to make a few more observations because I want to get the facts right. It is always a tragedy when a colliery closes down, whether through exhaustion or because it is uneconomic.

It was through Government policy under the Labour Government. They closed more pits than anybody else.

The hon. Gentleman may say that that is not clever, but it is accurate. Under the Labour Governments, 294 collieries were closed, but under Conservative Governments only 157 were closed. One cannot quarrel with those figures. The greatest number of closures was from 1964—65 to 1969—70, when there were 262 closures, all under Labour Governments. That is not a matter for congratulation. The Labour Government had to face the inevitability that coal was becoming completely uneconomic and had to do something about taxpayers' resources and adjust the number of mines to the correct figure for the United Kingdom.

The Labour Government faced reality. Now the Conservative Government are telling British Coal to face reality and it is prepared to do so. I do not think for one moment that the Bill is a precursor of denationalisation of the industry. Far from it: it is the infusion of a certain common sense, given that we cannot expect British Coal to continue paying interest of £570 million per year. That is a burden on the industry and the Bill is a way to relieve that burden.

No, I shall not give way.

Under the planned cuts, I am told that another 30 pits could be closed. That will be a matter of considerable regret. By 1993 manpower in the industry could be reduced to 50,000. With 50,000 mineworkers the industry will be thoroughly economic, capable of competing with other industries, and completely independent of Government subsidies.

I shall not give way. I have the Floor at the moment. The hon. Gentleman can make his own speech later.

The hon. Member for Holborn and St. Pancras said that the average age of miners is about 47 years. That worries me. Even if it is 47, it is low. I hope that the Government will bear that factor in mind when they draw up the redundancy arrangements. In giving redundancy payment to a man of that age one must take into account that he has a long life ahead of him and ensure that he can be retrained for a different purpose in life. He must be given a good payment and be properly resettled.

I have given way to the hon. Gentleman once. He has just come into the Chamber.

On a point of order, Madam Deputy Speaker. It has been suggested that my hon. Friend the Member for Barnsley, Central (Mr. Illsley) has not been in attendance for the whole debate. He has been here since the debate began and the hon. Gentleman should withdraw his allegation.

As I said, the Government must consider two factors with regard to redundancy payments. The low average age of miners poses great problems. The other factor is job opportunities in the coal fields. British Coal Enterprise has done a remarkable job in Ebbw Vale and in other parts of the United Kingdom. A great deal of money could be made on land sales. Colliery areas will come up for sale which could be made available to property development companies which could dispose of the land and charge a substantial rent. Indeed, a report in the Financial Times on 27 November said that British Coal was doing just that. I congratulate British Coal on that.

No, I wish to finish making my point. The hon. Gentleman can make long speeches in Committee.

The second factor is diversification, which is important. Everyone knows about the Dutch State Mines, now DSM, in the Netherlands. It does not run coal mines, but operates chemical works. It has diversified completely away from coal. I do not recommend that in the United Kingdom, where we have vast reserves, but diversification into other fields could be profitable and would be useful to mineworkers.

Another matter which has been accommodated—Lord Ezra is keen on this—is the purchase of power stations to broaden outlets for coal. I understand that several smaller stations could be developed for coal. That would be useful. RWE in the Federal Republic has been successful on this score. Another project in conjunction with BP would use heavy fuel oil with water or coal dust turned into an emulsion. Those are simply suggestions.

I come to my last point, because I do not want to hog too much of the time.

It is important to view the position not through rose—coloured spectacles but in the clear light of day. Power stations absorb 80 million tonnes of coal per year in the United Kingdom. However, there have been problems. West Burton has been deferred, Fawley B has been cancelled and we have heard nothing more about Kingsnorth B. Projected capacity totals 5,400 MW. It is possible that the three nuclear power stations at Hinkley C, Wylfa B and Sizewell C which could produce 3,600 MW will be shelved at least until after the review.

The Government, PowerGen and Natonal Power favour combined cycle gas turbines. I have the figures in front of me. Between them, National Power and PowerGen will use gas turbines to produce 4,223 MW or 5,000 MW under current plans, which is a considerable figure. If that is the case, what are the prospects for the coal mining industry? What opportunities will it have? If everyone goes for small power stations, which will mostly be gas-fired, and if there are to be some small coal-fired power stations, where is the justification for the manpower and the number of pits in the mining industry today? That is the question that hon. Gentlemen must ask. If they do not, they will reach the wrong conclusions.

Imports from Electricitê de France work out at 5,000 MW a year. Coal imports from abroad will be modest and kept modest. I accept that coal production may come down to 65 billion tonnes, which was the figure mentioned by Professor Robinson about five years ago. He was a man of great vision. He saw what could happen to British Coal. Labour Members seem to be completely misled. They have not taken any of these matters into account.

I should like to challenge the hon. Gentleman on a whole list of points, but I hope that he will comment on two. First, he called on British Coal to engage in land sales. Is he aware that the changes in derelict land grant which the Government inflicted on coal-mining areas brought a blight on any question of developing substantial areas? The hon. Gentleman should have been aware of that problem, but he seems to be out of touch. Apparently he still thinks that Lord Ezra is chairman of the British Coal industry.

Secondly—this is a serious point—the hon. Gentleman pretended to have considerable knowledge of the industry and referred to importations from Electricite de France to Sellindge in Kent. Does he accept that the appalling secrecy surrounding the price of that importation will have to end as we approach 1992? Will he join me in hoping that, during the Bill's passage, we may establish the true price?

The hon. Gentleman is acute to ask three or four questions which I have no intention of answering now.[Laughter.] The price of electricity from France works out at about 11/2 per kWH. That is comparatively cheap. We cannot produce if for that in the United Kingdom.

The hon. Gentleman says that the price is secret. Perhaps he can find the answer for himself and understand that it is cheap. It is profitable for Electricitê de France and for the United Kingdom, which is why we import it. If the hon. Gentleman had an opportunity to go back to university, he might learn something about economics and understand some of these problems.

I do not think for a moment that we have seen the end of nuclear power in the United Kingdom. If all Europe, except Spain and the Netherlands, and particularly France can run nuclear power stations profitably—[HON. MEMBERS:"That is not true."]—if the United States can run nuclear power stations profitably except in areas close to the coalfields, if Japan can run them profitably and if throughout the world more than 20 per cent. of electricity production is generated from nuclear power stations, there is no reason why we should not run nuclear power stations profitably in the United Kingdom.

Hon. Gentlemen can listen to me for a change.

The privatised sector wants both to write off the capital of the power stations, not in the life of the plant but over a shorter term. That creates one difficulty. Another is that they demand an increased rate of return because all private companies will be quoted on the stock exchange. That is understandable. If one is preparing a package for the market, it is not unreasonable to take economic considerations into account.

Don't tell me to come on. I happen to be on my feet at present.

The swifter write-off which we have been able to bring about and the opportunity for more people to work in small mines in the United Kingdom will be a godsend for miners. The valuable, profitable, opencast workings will be substantially acceptable to the private sector and, indeed, the coal industry. This will lead to greater profitability which the industry could never otherwise achieve.

5.24 pm

I find it strange to listen to the hon. Member for Bedfordshire, North (Sir T. Skeet), who is joint chairman with me of the all-party minerals group. I listened to his statistical slug-out—something of a lecture—and never cease to be amazed that he is not a Minister for the fuel industry simply because of his highly technical knowledge, which the House has just experienced. Indeed, I recommended him for that several years ago to the majority party. His knowledge is in balance, but highly technical.

I am sorry that the Secretary of State has left the Chamber. In every energy debate that we have had, Conservative Secretaries of State have all quoted Government energy policy. Since 1979, the Government have never had the framework for a sensible, planned, energy policy. Their philosophy denies that. The Government have a pricing policy, today more than ever. Their philosophy has always been to leave everything to market forces, and every Secretary of State, whether at the Department of Energy or another Department, has been subservient to free marketeers. Today we are back on that same avenue.

For the first time ever, a Conservative Government have embraced in a Bill pure state intervention. Intervention has always been a dirty word in the Conservative party. Tory Members think that it should not be mentioned, but it glares from the Bill. Why? Certainly not because of Conservative Christian charity to the mining industry. It is there for selfish financial motives. It is to provide a financial base for privatising the whole of the British mining industry, and the return of another Conservative Government depends on it. That is the basis. We shall talk about the coal debt write-off later.

I pay tribute to the mining industry. I worked in it all my life and I have represented a mining constituency all the time I have been in Parliament. As the Secretary of State partly acknowledged today, there has undoubtedly been a phenomenal reconstruction of the mining industry. It is now one of the most streamlined, efficient and effective fuel industries in the world. I do not want to dwell on the industrial trauma that took place. We are now in a settled period—although unfortunately not for industrial relations—with British miners producing some of the highest outputs per man shift in the world. I pay tribute to them for that achievement.

During that reconstruction, 90,000 jobs vanished in four and a half years, the number of collieries was halved and 98 collieries were merged or closed. Coal output from the 74 producing collieries is magnificent. No one, not even the hon. Member for Bedfordshire, North, could be glad to see literally thousands of miners lose their jobs in the past 10 years or to see the vast mining fraternities, which were the bases of family life and tradition, disappear. That is sad and is a matter for regret. The Bill will do nothing to console the mining fraternities about job security.

The pit lads, who have achieved magnificent productivity levels, will be demoralised when the Bill is enacted and far more than the 30,000 to which reference is made in the leaked Government document lose their jobs. That will result in many mining communities disappearing.

British Coal is providing cut-price coal to the Central Electricity Generating Board for about £850 million a year. Coal prices have been reduced over the past four years to the tune of about £1,000 million. The achievements of the miners and British Coal are now to be frittered away and the speculators, City investors and other sharks will be waiting for the subsequent rip-off. The Bill will fatten the goose prior to the privatisation of the coal industry. That will be the reward for services rendered.

We know now that the British nuclear industry is not competitive with British Coal because its costs are so very much higher. We know that the Magnox stations are the white elephants of the nuclear age. There has, of course, been cross-subsidisation. The market mechanism has not been operated. There has been no free competition. The Secretary of State says that the Government will have to impose a non-fossil fuel levy. It seems that this will be done to support the nuclear industry. That is unprecedented. The nuclear industry is already ring-fenced to the tune of about £12 million. It is protected because of its high costs. There is state intervention and protection, and a levy of about £1·4 billion a year is paid, in effect, by the British miner. It is the coal industry which has to pay the major part of the levy. In effect, the coal industry is subsidising electricity prices. This is a classic example of unfair competition.

The British mining unions have for years told the Government about the high cost of nuclear energy. We were told, however, that it would be cheaper in the long run. It was claimed that it was the fuel of the future and would solve the energy supply problems faced by industry generally. That has been proved to be a myth, and it seems that the miners are expected to pay the price of the nuclear industry's failure.

Since 1980, about £1·2 billion-worth of price cuts have been extended to the customers of the coal industry. The industry is told that it will have to produce more if it is to remain competitive, and it seems that miners will have to work harder and harder. In doing so, they will know that the profits that they produce at their pits will be hived off to subsidise the electricity industry. As my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) said, there would be a 6 per cent. reduction in electricity prices if account were taken of the subsidised prices that British Coal charges the electricity industry.

There has been talk of incidentals, such as the Associated British Ports (No. 2) Bill and import licences, within the general debate on the future of British energy generally and the British economy. The free marketeers argue that, with the development of port facilities and with a private coal industry, we could import about 30 million tonnes of coal a year. With existing facilities, we can import 10 million tonnes. That means the loss of another 35,000 miners' jobs. The Government would have no scruples in taking that course. They know that eventually they will be able to attract speculators into a privatised electricity industry.

Third-world countries and undesirable countries, such as South Africa, export coal. It is considered that any import surge is highly unlikely. Why? The answer is that there is a security problem. Overseas suppliers are grappling with major difficulties. For example, China, the USSR and Poland are preoccupied with the decline of their exports. China could become an importer of coal. I represent a constituency which produces some of the most advanced mining equipment in the world. There is tremendous mining technology in the Wigan and Leigh areas, and the products of it are sold to China. The export achievements are acclaimed.

I know, however, that in due course the machinery will be used to compete with the British miner. That I understand, but I do not understand how the market economy can be linked to countries that are politically unstable. Surely it would be too great a risk to have links of that sort. British industry would never fall for that. The racial tensions in South Africa, for example, are still unresolved and there is violence in Colombia. Australia is still beset with industrial relations difficulties.

The leaked document tells us that another 30,000 miners will lose their jobs for economic and financial reasons and not as a result of supply and demand considerations. The Government believe that they can intervene and cause British Coal to provide cheaper and cheaper coal for privatised industries. I and many others believe that this will result eventually in a suicidal supply of coal.

The hon. Gentleman did not allow me to intervene in his speech. I shall give way to him, however, as I have every reason to believe that he will be a member of the Committee that considers the Bill.

If countries such as Germany, France and Italy can import coal in measured quantities and—as in the case of Germany—utilise their own, why cannot the United Kingdom operate a similar arrangement? The hon. Gentleman mentioned China. If its annual production is roughly 1 billion tonnes and if it is a "third country", could we not help some of the teeming millions to survive by accepting some of its imports?

I should have thought that what I have said was pure Conservative philosophy: charity begins at home. Certainly it should.[Interruption.] I do not intend to deprive the hon. Member for Bedfordshire, North of an opportunity to speak, but we have listened to him lecturing the Chamber for 20 minutes or so. He has asked for answers, so let me give him some.

I am not suggesting that we should erect barriers against Third-world countries; I am merely arguing for conditions of fair and honest competition, based on all the costs that can be amalgamated to provide the cheap coal to which the hon. Gentleman has referred. That will require reasonable working conditions, a fair living wage and pure trade union practice. As the hon. Gentleman knows, many of those countries do not meet such criteria. South Africa is a classic example. We have never run away from such practices, and it should be remembered that we operate different pricing in parts of the British coalfields as well: there is a degree of competition there.

That seems to have stopped the hon. Gentleman from intervening. Let me now deal with the question of safety.

Before the hon. Gentleman moves on to that subject, I feel that the House is entitled to know the answers to a few questions. If the hon. Gentleman is suggesting that the mining industry should receive a subsidy, I think that we should know how much it will be, the levels of employment and production that will be involved and whether the subsidy will be a cost to the Exchequer. If the answer to the last question is yes, I think that we should know where it is to be met. Will it be substituted for some other form of expenditure, or will it be additional thereto? That is a reasonable question, is it not? Incidentally, I have no intention of serving on the Standing Committee.

I do not know that that is a reasonable question; it is a bit of a mixed grill. I shall give the hon. Gentleman his answers in writing. I can say now, however, that we believe in a degree of protection for our industries —why should we not? Nevertheless, I do not hesitate to add that a future Labour Government would introduce selective import controls if the economy ever returned to its present state. I have no scruples about recommending such action. As for subsidies, they should be provided according to need, not want, and Labour will take account of that.

Now let me return to the important subject of safety.[Interruption.] I am ot interested in whether anyone is looking pale or anaemic. Hon. Members who look pale should leave the Chamber. In the past seven weeks, there have been three deaths in the Lancashire coalfield. That is a sad fact; it is not a subject for jest. I concede that British Coal has tried to improve its safety record and techniques, and the lessons that have been provided have helped, to an extent, to avoid potential accidents, but we are still far from achieving a 100 per cent. safety record, and I doubt that we shall ever achieve it. Certainly we shall not do so without the professional concern and expertise that is imperative in extractive industries such as mining.

The pit safety union has expressed grave concern about the Government's proposals, and the chairman of British Coal has already voiced his surprise at the Government's announcement that they intended to liberalise the limits of privatised licensed mines. He was, he says, somewhat taken aback.

"We had assumed",
he says,
"that any changes in the statutory limits on licensed mining had been overtaken by the decision to privatise British Coal early in the next Parliament."
Clearly a degree of unpredictability has been involved.

As my hon. Friend the Member for Wentworth (Mr. Hardy) said earlier, unless a clear instruction is given for an increase in the number of coal mine inspectors, and unless deputies and overseers in private licensed mines are educated, trained and given clear responsibilities dictated by coal industry legislation there could well be many more accidents in such mines than there are now, while the coal corporation has such responsibilities.

The essence of the Bill is that it is a basis for the privatisation of the British mining industry. Its only saving grace is that that may never come to pass. We can, I believe, legitimately claim without boasting that, if the current Gallup opinion polls are correct about the political disposition of the British people, the legislation will never be enacted.

Essentially, privatisation means piratisation. It plunders the nation's assets; it paralyses our public services and lowers their standards; it pursues and promotes private greed, which I believe Conservative Members equate with godliness. A future Labour Government will ensure that those who produce the wealth of the British mining industry—let alone that of the nation—will become the possessors as well as the creators of wealth.

5.47 pm

Today's debate marks a new beginning for British Coal. The Bill is simple, having only four clauses, but it lays the foundation for a secure and prosperous future for the industry.

The miners of this country deserve a new dawn. The Coal Industry Nationalisation Act 1946, which promised so much for so many, could be seen as a political fraud because it delivered so little to everyone—until 1984, when the Nottinghamshire miners, through the ballot box, cast off the shackles of union dictatorship, and introduced democracy at the coal face.

The results have been spectacular. Productivity is up by 100 per cent., an achievement unmatched by any other industry. Coal prices to the main customers are down by 30 per cent. in real terms that too is unmatched by any other industry. Modern industrial relations between men and management, involving conciliation rather than strife, provide an example that other industries could follow.

This remarkable turnaround, spearheaded by the Union of Democratic Mineworkers and achieved in such a short time, is the principal reason why my right hon. Friend the Secretary of State is so confident about introducing his Bill. Let me offer my congratulations and thanks to my right hon. Friend, who, in his short time at the Department, has recognised the strategic and important role of the British coal industry, and has acted accordingly.

Today's announcement that contracts have been agreed between British Coal and the new generating companies, National Power and PowerGen, for more than 200 million tonnes of coal, at fixed prices, during the next three years will be widely welcomed in the coalfields. That will remove the cruel deception created by the Labour party, which purported to have received a leaked Cabinet paper stating categorically that the future coal requirements for the new power-generating companies would be 60 million tonnes per annum, and that 30,000 men would be made compulsorily redundant.


Why the Opposition stoop so low as to spread despondency and dismay among the miners of Nottinghamshire, only they know.

Opposition Members can bawl as much as they like, Madam Deputy Speaker, but I am not giving way.

I believe that they stooped so low because of the Socialist inferiority complex of being unable to accept that successful contracts were in the offing.

Clause 1 wipes out British Coal's accumulated debt to the taxpayers of £5 billion. In view of the Labour party's concern about taxpayers' money, one might legitimately ask why it is not making a fuss about it today, remembering its view last week about the sale of Rover to British Aerospace. To remove the debt burden, which is an annual charge of £5·70 on every tonne of coal mined, will lead to British Coal having a realistic prospect of viability, without continuous interference by politicians. Those written-off losses will be more than justified by the success of British Coal and its staff and the benefits gained by industrial and domestic electricity users.

Order. The hon. Gentleman is aware that the hon. Member for Sherwood (Mr. Stewart) does not intend to give way. He should therefore not persist in asking him to give way.

I am an optimist by nature. My optimism about the success of Britain's coal industry is well known in Nottinghamsire, compared with the daily prediction of doom and gloom by Opposition Members. Nevertheless, my constituents' jobs in deep mines will be put at serious risk by the electoral self-interest of the Labour party, which is opposed to any opencast coal mining. Those of us who work in the interests of the industry know that in today's green environment the future of our deep mines is dependent on output continuing at our opencast sites. Without coal from opencast sites, we should be faced with two choices: either to close the deep mines or to import coal that is low in chlorine content. To accept either choice would be totally unacceptable.

My hon. Friends and I who represent Nottinghamshire constituencies believed that we should oppose the Associated British Ports (No. 2) Bill, for the reasons that I have just outlined and to protect our constituents' jobs. However, because of its policy on opencast mining, the Labour party recognised that low chlorine coal would have to be imported in order to keep the deep mines working. Therefore, it decided on a sham during the Second Reading of the Associated British Ports (No. 2) Bill on 23 June 1988—that Labour Members would make synthetic speeches during the debate, and 180 Labour Members were advised to be absent when the Division was called at 8.20 that evening. That deception has not gone unnoticed in Nottinghamshire.

On a point of order, Madam Deputy Speaker. The hon. Member for Sherwood (Mr. Stewart) ought to be less disingenuous when he accuses Opposition Members. He told us that the Bill will be good for Nottinghamshire miners. However, it would lead to the closure of the Annesley, Calverton, Cotgrave, Gedling Rufford, Silverhill, Creswell and Clipstone pits.

That is not a point of order for the Chair. I remind the hon. Gentleman that my impression is that he is seeking to catch my eye during the debate.

This might be an opportune moment to remind the hon. Member for Ashfield (Mr. Haynes) that in his usual calm, quiet voice during the Queen's Speech debate he went over the top of the slag heap in his condemnation of the opencast coal mining industry. No fewer than 13 of the 18 Nottinghamshire collieries produce coal with excess chlorine. That is unacceptable to power stations and other commercial customers. The hon. Member for Ashfield might, when away from the glare of the cameras, explain to Nottinghamshire miners how he expects to protect their jobs without the sweetener of opencast mines.

The importance of British Coal's opencast operations must be fully recognised. Last year, 50 per cent. of the corporation's profit of over £400 million came from that source. In addition to blending the deep-mined coal that was delivered to our power stations, it sold 10 million tonnes to commercial users such as Bowaters and ICI. If low chlorine coal was not available to them, they would have no alternative but to turn to foreign suppliers.

Clause 4, which frees small coal reserves of up to 250,000 tonnes, to be worked by private operators, can only enhance the future of our deep mines. However, I welcome my right hon. Friend's commitment that all new sites will still have to abide by planning regulations.

We cannot have industrial expansion and keep a rural economy. Unfortunately, all developments affect communities. That is the price that we have to pay for a modern, industrial society. Nevertheless, we can minimise the length of time of extraction at opencast sites and restore them as quickly as possible. During the summer recess, I spent some time with British Coal's opencast executive. I looked at its operations in the east midlands, in particular at its restoration work at Morrells in Derbyshire, which is now recognised by environmentalists as an outstanding landscaped restoration. Speedy extraction and sympathetic restoration must be a pledge that we give to those who are affected by opencast mining. Nothing less will be acceptable.

Clause 4 will also foster diversity by increasing the manpower limit in private mines from 30 to 150 men. That change reflects the fact that the existing limit was set many years ago and that it has inhibited investment to improve productivity and safety. It has therefore militated against the creation of new jobs in depressed mining areas. However, in the light of the experience that we had last year in my constituency at Blidworth, will my right hon. Friend consider in Committee making exemptions to the clause when British Coal has announced a pit closure, due to it being uneconomic?

Blidworth colliery, with 30 million tonnes of reserves, received £10 million of new investment but failed to perform. When the closure came, 350 men were convinced that it was viable and, given a chance, they would have proved it. Their judgment was confirmed by a feasibility study that was carried out by a major British company which was prepared to take over the mine at no cost either to British Coal or to taxpayers. However, because of the existing rules it was not allowed to do so. That is an example of why I wish consideration to be given to an exemption rule.

Safety in the mining industry will be frequently mentioned during the debate, and rightly so. If coal is king, then safety is lord paramount. Therefore, let us remember the lessons from the past and build that knowledge into our mining and quarries safety legislation. One life lost is one life too many.

Although I have welcomed the Bill, my constituents will share one great disappointment with me—that it contains no mention of help to overcome the problem created by mining subsidence. My right hon. Friend is fully aware of that problem. I realise, nevertheless, that subsidence legislation is complex and needs to be carefully considered. Could my right hon. Friend therefore promise that in the next Session of Parliament a Bill to deal with subsidence will be introduced? That would go some way towards reassuring my constituents that that problem has not been forgotten.

The Coal Industry Bill has been drafted by a listening Secretary of State. It wipes out a debt of £5 billion, provides generous restructuring grants of £1·25 billion and introduces a small measure of flexibility which will protect and create new job opportunities. In all, it is a generous package in recognition of the commitment made by British miners to their industry. I cannot imagine that anyone in his right mind would vote against the Bill. I commend it to the House.

5.59 pm

I concur with the concluding words of the hon. Member for Sherwood (Mr. Stewart). It is extraordinary that the Labour party proposes to vote against the Bill, which increases funding for the coal industry. One can only assume, if the debate continues in that format, that we are seeing the ideological gulf on coal translated to a point where Members vote against anything that comes from the opposite side, regardless of the contents of the proposal.

If the hon. Gentleman wants to clarify the way in which Labour will vote, I shall give way.

Does the hon. Gentleman, who represents the Liberal Democrats, believe that it is an ideological matter to oppose shifting more people into pits that are between two and four times as dangerous as British Coal pits?

I intend to address that point. The essential point is that the Labour party proposes to vote against increased funding for the coal industry. I cannot see how that makes good sense.

Having served on the Committees on the Electricity Bill and, before that, the Gas Bill, I have heard the argument a few times. One of the problems with debate in the House is that there are so many ideological divides on coal industry issues that it is difficult to address the changes and how best we can plan for the future and ensure that the industry develops in a sensible, economic way taking account of strategic long-term interests and environmental considerations. Regrettably, those points tend to be overlooked or forgotten in the heat of the argument.

The Bill is essentially about the financing and restructuring of British Coal. Points have been made about the preparation for privatisation. The Secretary of State said that that may or may not come down the track, but there is no doubt that British Coal is charged with preparing for privatisation. The Conservative party has said that it is committed to privatising the coal industry. Consequently, British Coal is forced to aim for short-term maximum profitability to prepare the industry for a sell-off. That affects the way in which it approaches management of the industry. It raises legitimate questions as to whether the actions of British Coal are in the long-term interests of the country, whether British Coal is compromised by short-term commercial considerations and whether we should review the basis of organisation of the industry.

I stress those important points. It is interesting to note from the comments of the hon. Member for Erewash (Mr. Rost) and some other Conservative Members that there is, at least on the Government Back Benches, recognition of the fact that British Coal's monopoly of coal licensing is not satisfactory and should not continue indefinitely. It is strange that the assets of oil and gas are owned by and administered on behalf of the nation by the Department of Energy. The assets covered by the Coal Industry Nationalisation Act 1946 were transferred to the National Coal Board, now British Coal, which in moving into a commercial world must take account of considerations that did not apply when the NCB was created in 1946. I give notice that my colleagues and I will support the Bill but will propose amendments to transfer ownership of the coal assets from British Coal to the Department of Energy, thereby making significant developments possible.

British Coal has a vested interest in preventing potential competitors from moving into its market place. It has the power to prevent them from doing so. That is an extremely dubious position for British Coal to be in. The hon. Member for Sherwood quoted an example from his constituency. I have been slightly involved in two recent examples, in Scotland and in Kent. Bilston Glen colliery in Scotland was closed at short notice, although British Coal had announced that it had substantial reserves and considerable potential for investment. There is interest in forming a miners' co-operative to take over and operate that pit as a private venture, using private finance. It is interesting that the Labour party opposes miners getting together with private capital interests to reopen a mine that British Coal has closed. The interests of the miners and the communities should demand at least proper and fair examination of those matters.

I made representations to the Scottish director of British Coal and was told that he was not prepared to allow a representative of this potential co-operative access to information or to the pit. He had determined that the pit was not viable and did not want anyone else to have access to information that might be used against British Coal. That is wholly unsatisfactory. It is inappropriate that there is no right of appeal to the Secretary of State and no alternative way of getting a licence.

How deep was the hon. Gentleman's involvement in the pit which he mentioned, which is in my constituency? I did not hear of him being involved in any way. It is customary for a Member to have the courtesy to inform another Member of involvement in his constituency. Can he tell us the names of all the people in that community who were involved in the co-operative? Can he tell the House what private finance bodies were so anxious to be involved? We did not hear about it. Perhaps the hon. Gentleman has information that we do not have.

My information was in a circular letter written to all Scottish Members by representatives of some of the miners who wished to gain access to the pit. I am sorry if the hon. Gentleman did not read his post. I did and responded to it. I spoke to the people in question and this is the information that they gave me. I accept that in the end they may not have been able to put together a viable proposal, but British Coal should not determine the matter. It should be determined independently.

The same thing is happening at the Betteshanger colliery in Kent. British Coal is determined to take out machines over the next four weeks, resulting in the pit being abandoned and flooded, and at least 30 million tonnes, possibly 100 million tonnes, of workable reserves will effectively be lost for ever. Both cases involve low sulphur reserves of coal, which will be valuable when we pursue a low-sulphur electricity generation policy. In these circumstances, we are operating against the interests of our long-term strategic needs and of miners in pits who are exploring the possibility of saving their jobs and communities.

I have been advised by union representatives that they have made an offer to British Coal to pay to keep the machinery in, pending negotiations on the possibility of a workers' buy-out, and have been told that British Coal has no intention of allowing them to do that. The union representatives have told me of the possibility of another private interest taking over the pit. British Coal has said that it is not interested in holding discussions on that matter.

These examples reinforce the case for changing the basis on which licences for coal are issued. They underline the idea that British Coal is not a fit and proper custodian of all the nation's coal assets. It may well be the right custodian of the majority of those assets and it should be the major producer of coal in the foreseeable future, private or public. To have a more commercial approach and the possibility of exploring different methods of extracting coal and different approaches, we must remove control over licensing from British Coal as a matter of urgency. I was disappointed when the Secretary of State seemed to say that this could be left until later. I have given examples of what is happening now. Later will be far too late, because the pits will have been abandoned and irretrievably lost.

Coal reserves are not monitored on a dynamic basis in the way that oil and gas reserves are monitored. Every year, the Department of Energy produces an oil and gas Brown Book with a statement of probable and possible recoverable reserves from the North sea. Yet the stated recoverable reserves of Britain's coal industry have not been altered in many years in spite of the fact that many pits have been closed and that, realistically, many of those pits can never be reopened commercially.

It should be a requirement for British Coal in its annual report to say how many reserves that could have been viable have been abandoned irretrievably. That would enable us to make a strategic decision on whether we should find some other way to keep some pits open while ensuring that the industry operates competitively. It may be worth while to say that we shall pay a subsidy, as a separate fund, to maintain pits because the long-term value of the reserves will become apparent in five, 10, 15 or 20 years and there may even be private investors who are prepared to take a long-term risk on that. We should not simply allow British Coal to decide that it will abandon reserves irretrievably because they do not suit its short-term requirements.

The possible expansion of opencast mining is another important issue. It is clear that there is cross-party controversy on the matter. Opencast mining in a densely populated country such as ours is environmentally damaging and causes great opposition in the areas in which it takes place. We should not cheerfully say that we should go ahead with opencast mining because we must compete with the Australians and with the Americans. They have far more extensive areas of remote land where opencast mining can be carried out cheaply and with less immediate environmental impact. The upgrading from 25,000 tonnes to 250,000 tonnes is a big bite, and if substantial conditions are not attached it could lead to considerable devastation. We shall pursue that point in Committee. The Government should give us some idea of how opencast mining will be regulated.

I have had discussions with representatives of the mining industry, and I have also witnessed the rather tribalistic way in which opinions divide. In Scotland, we have faced the virtual destruction of our mining industry over the past few years. Before the miners' strike, there were 18,000 miners in Scotland, whereas there are now only 1,500. Almost all our pits have closed and one or two have been mothballed. To insist that we do not change the basis on which we operate the industry against a background of enormous reserves of low-sulphur coal in which British Coal is not interested is a travesty for which a future generation will not wholly forgive us.

The Bill should be passed, but it should be amended radically. It is unfortunate that, in introducing the necessary financial restructuring of the coal industry and in recognising that the licensing rules should be changed, the Government did not take the necessary radical step of transferring ownership back to the Department of Energy and ensuring that private developers, miners' cooperatives or any interest other than British Coal could feel that they could apply for a licence on a fair and competitive basis and not in circumstances in which they would effectively be done by British Coal which, with its short-term planning, has no interest in allowing competitors to enter the market.


The hon. Member for Gordon (Mr. Bruce) supported the Bill, but he made some important points which should be considered carefully in Committee. I support his point, especially about the need for change in the licensing arrangements, which is valid and necessary. Like him, I welcome the Bill as a necessary step towards creating a coal industry which will be properly equipped to compete in the energy supply market in the next 20 years. Whether British Coal is a public sector corporation or a private sector public limited company is not relevant to today's debate and, like other hon. Members, I am amazed that the Labour party has chosen to oppose the Bill on Second Reading.

I hope that the time is near when our coal industry will be a successful private sector extractive industry, selling good coal at competitive prices throughout Europe, but as we come to the close of the 1980s we must be careful not to draw a complete energy picture which looks too far into the future. I have been involved with energy matters throughout my parliamentary career, and I have seen oil prices quadruple, then double, then collapse. I have seen nuclear power suddenly become the least favoured electricity generating source recently and I have seen gas become the most favoured source for electricity generation. I have, therefore, become a staunch supporter of Murphy's law—that if anything can go wrong, it certainly will.

I have been a member of Committees on successive Coal Industry Bills in the past 15 years during which time various Ministers have proposed increased grants and borrowing limits for British Coal. I recall the general theme of speeches made by Front Bench Members from both parties, which was that this was the last time that we should see such huge increases in subsidy.

It is not all that long ago that we were told that oil reserves were running out, that electric cars would take over and that gas was so scarce and expensive that it should be reserved and not used as a fuel for the generation of electricity, but only as a direct premium fuel. Coal was fading from the scene, its primary role in electricity supply being taken over by cheap, clean, safe nuclear power. That was the picture not many years ago.

Finally, we were also told that bigger meant better and that the bigger the power station, the more efficient and less expensive its electricity output. All those shibboleths have been tipped up and destroyed one by one. As a result of the electricity privatisation programme, the role of nuclear power is being re-examined in the light of new market costings, replacing the previous system of public sector discounts and write-offs.

We approach the next decade seeing the emergence of a new programme of smaller generating stations using gas, coal, oil and wind power, rather than the large nuclear pressurised water reactors and the large coal-fired stations. However one looks at all the energy equations, it is becoming certain that we are changing from a producer-led energy market to a consumer-led energy market. There lies a rub in that for coal. The world has also now woken up to the dangers to our environment if we continue to burn fossil fuels in the inefficient and polluting ways that we do at present. We are having to reduce the use of a generating system which is comparatively clean—that is, nuclear power—and we are left with a reliance on fuels which, if we do not find methods of cleaning them, will produce acid rain and greenhouse gases at an ever-increasing and destructive rate.

We must consider two alternatives ahead of us. One is to burn coal only in power stations fitted with flue gas scrubbers and control systems to reduce sulphur and nitrogen emissions, and to use the fluidised bed coal burning system. The other is to increase energy conservation dramatically. Either alternative will involve increased costs and increased prices because, as we know from experience, cleaning systems are expensive and conservation works only if there are substantial price incentives.

The increased reliance on gas, oil and coal as our main feedstocks will inevitably result in rising prices as those fossil reserves are depleted. Some time in the next decade or so, nuclear power will inevitably come back into its own as a comparatively cost-efficient fuel.

In the context of the Bill, however, we are considering the future of coal. I welcome the realism that my right hon. Friend the Secretary of State has introduced into the energy policy debate with his decisions on nuclear ordering, his requirement for reasonable contracts for coal burn after privatisation and his enthusiasm for energy efficiency. British Coal is close to becoming a profitable, competitive industry after several decades of contraction. There have been huge investments by the Government, running at some £2 million every working day, and firm and positive leadership of the industry has resulted in a near doubling of productivity. But in the light of the accumulated losses, now approaching £5 billion, which is more than the corporation's total assets, it is essential that the financial restructuring proposed in the Bill should take place.

Clause 1 provides for ad hoc deficiency grants to eliminate British Coal's accumulated historic losses as at 31 March next year. If that were not done, the annual debt interest would amount to nearly £600 million, to add to the basic insolvency of the corporation. That is why I welcome clause 1.

Clause 2 extends and increases the grants available for continued restructuring and redundancy payments. The fact that the industry has been able to slim down its work force and make vital productivity improvements in recent years is largely due to the generous redundancy schemes being offered. It is important that we continue with voluntary redundancy efforts.

As we know, the contraction of the coal industry is a Europewide phenomenon. More than 1 million jobs have been lost in the European industry in the past 30 years. The European Commission has now recognised the need to help coalfield communities to adapt to the changes and is creating a new initiative known as RECHAR which will make £200 million available to help areas such as those referred to by the hon. Member for Gordon.

Clause 4 deals with the licensing of private mines and open-cast production. I welcome the employment prospects that that will produce, especially in declining coalfield areas such as Scotland and south Wales. The smallest mine that the Coal Board operates employs 250 men. The gap between that figure and the maximum of 30 men hitherto allowed in a privately licensed mine is far too wide. The new limit of 150 men makes much more sense, and 1 welcome it as a job-creating measure to help areas where big pits will inevitably be closing. I agree with those who argue that the Department should become the licensing authority in place of the Coal Board.

I believe that the Bill will be of great help to the coal industry as it faces up to the future. The main challenge will be the challenge of meeting environmental requirements. In that context, I hope that every support will be given to cleaner and more efficient use of coal, using combined heat and power schemes and the fluidised bed systems. I know that my right hon. Friend the Secretary of State regards energy efficiency as one of his top priorities. The Bill will lay the basis for a competitive industry but will also give the Government the main responsibility for providing a framework for the best use of our coal reserves. I hope that the House will agree to give the Bill its Second Reading.

6.22 pm

I was a miner for 27 years, and I am surprised by some clauses in the Bill. I do not, of course, oppose the writing off of British Coal's debt. I am sure that if that were the only purpose of the Bill all of us would support it. But the Bill is a double-edged sword, and it has some clauses with which we disagree.

We must ask ourselves what the future holds for the coal industry. We have watched the Bills promoted by Associated British Ports go through the House with the Government's support, and we have witnessed an increase in coal imports, especially from South Africa. We know of the interests of some hon. Members who have been involved with those private Bills and of the trips that they have made to South Africa, ostensibly to see how the South Africans mine their coal.

Those imports pose a threat to the north-east of England, where I was a miner for many years. Among the mines in the leaked list are Murton, Dawdon, Wearmouth, and Westoe, where some of the threatened 30,000 job losses may take place. Those losses will result as South African coal is brought up the Thames, and the north-east will suffer once again. If any area has been hit hard by pit closures and job losses, it is the north-east. Our mines and miners in the north-east are the most efficient in the country and produce the cheapest coal, but that makes no difference to this Government, because they have a one-track mind. They want to help their friends in South Africa and elsewhere to produce cheap coal, irrespective of the jobs that will be lost in this country.

We must ask ourselves, "What is cheap foreign coal?". It will be a problem not only in the north-east but in the constituency of the hon. Member for Sherwood (Mr. Stewart). He, too, will find foreign coal coming up rivers in his constituency and his pits being closed. Is the cheap foreign coal subsidised? When we ask the civil servants, they cannot tell us, and the lads in the Library cannot tell us. We even telephoned the South African embassy and asked what subsidy the coal coming into this country attracted. It does not come from South Africa to Britain direct but goes first to the Netherlands, but we know full well that it is South African coal. Because the subsidy on South African coal is a hidden subsidy, we are fighting in the dark. Australia does not subsidise its coal; we know that for a fact, because it is mainly opencast coal. We know, too, that Colombia subsidises its coal and that its industry is heading for economic trouble.

Because the Government encouraged the proposals in the Associated British Ports Bills and this so-called cheap foreign coal, our coal imports are unstable. We are relying on unstable countries for our supplies. Once the Government have closed pits in my constituency and in Nottinghamshire, the coal will be lost. The pits will not be reopened—unless, of course, a private entrepreneur wants to open them as private mines. Once a mine has gone, the coal is lost. The pit can never be opened again because the cost would be enormous. When that happens the Government will then carry on bringing in the foreign coal. Their policy towards the industry is two-faced. On one hand, they boast how good they are being to the British coal industry, while on the other they allow the port Bills to be passed and let in foreign coal.

In my constituency, we went through the new review procedure. Ours were some of the first collieries to do so. We have a pit called Bates colliery. It had about 29 million tonnes of reserves of the low-sulphur coal to which the hon. Member for Gordon referred; the coal was tested and its nature was confirmed. It is true that we have a few other problems there—for example, with water. But we went through the review procedure.

We put our case to the independent chairman and we won it. We were the first pit to win. We were overjoyed. We had a good drink that night, and I shall never forget it. A week later, MacGregor decided to close the pit—so much for the review procedure. Does the Minister intend to do the same with other collieries that win their case? Will he allow those pits to close? The Coal Board closed that pit when the review procedure had concluded that it should stay open and we do not know why. That question has never been answered by any Minister or top-level Coal Board official.

There is a private mine in the neighbouring constituency of my hon. Friend the Member for Wansbeck (Mr Thompson). A lot of my lads who worked with me in the colliery got a job there when our mine closed. I have heard some stories that make my hair rise. When the pit closed I never went down a pit again, let alone down a private mine.

One story related to the visit of a mines inspector, Mr. Sellars, to the private colliery. He was down the colliery half an hour and then he came running out and threw his hat on the manager's table together with a list of things to be done. He said that, unless the requirements on that list had been dealt with by the time he visited again the next week, he would close the colliery. It is deplorable that a mining inspector should go to a pit, know the state of that pit and know that he could close it there and then, but not do so. Instead, he ran away saying that it had to be put right before he came back the next week. That is what happens in private mines.

Mr. Paterson was killed in a private mine in the north-east. The report on his death said that he was in the wrong place at the wrong time. The rope snapped on the haulage, the tug ran away and killed him. When the inspector studied the rope he discovered that it had been condemned for more than six months. He then found out that the rope had not been changed because its replacement would cost more than £4,000. The miners of the north-east are on the dole, so they are fairly cheap. A pit can get another one of them at no extra cost.

The matter of deaths in pits is a difficult subject. The hon. Gentleman is making a coherent and good speech and surely he would not let himself argue that people are killed only in private pits.

I was a miner for 27 years and no one was killed in my pit because the rope had been condemned for six months. That is the point I am trying to make.

Two weeks ago the manager of a private mine went up to the fitter and said, "I'm finishing you this week." That is how they do it in private mines: people get no notice, they are just finished on the spot and out they go. He was finished not because he was not doing his job but because the manager said that he could phone another fitter 30 miles away. The fitter asked what would happen if one of the lads got fast in a machine or got his leg or arm stuck. The manager replied, "Ah, we'll manage. We'll get him out." That is the attitude of the entrepreneurs who run private mines. They are not worried about the miners because there are any amount of miners on the dole, but there is not any amount of equipment available. That is the reality of safety in private mines. The Minister should look at the private mine legislation and at the mining inspectorate to ensure that the inspectors do the same job in the private mines as they do in the mines of the nationalised industry.

There are big opencast mines all over Durham and Northumberland. They are spoiling the countryside and the environment. Obviously I know that opencast mining must take place. I worked in a mine that was always being "sweetened" from opencast mining. The Bill means that more and bigger opencast mines will be allowed. That has already happened in Durham and Northumberland, but once the Bill goes through there will be even more such mines elsewhere.

In common with my hon. Friend, I worked in the industry for 29 years. I am sure my hon. Friend would agree that west of Durham is an area of great outstanding natural beauty. If there is a proliferation of opencast sites and private mines, a most beautiful area will be pillaged by an army of carpetbaggers who will descend on the west of the county. Fifteen miles away we have four of the most modern coal mines in the world. My hon. Friend has referred to two, Dawdon and Murton. I worked at Murton. Productivity at those mines has never been higher. My hon. Friend should reflect on the comments made by the Prime Minister in 1985 when she spoke about the enemy within. Does my hon. Friend agree that the enemy within is sitting on the Conservative Benches?

I agree with my hon. Friend. Of course the British miner is not the enemy within. We know who it is; she lives down the road at No. 10 Downing street.

All my life I have been concerned about safety in mines. I have made a number of points about safety in private mines, but I could make many more. It is the Government's intention not to bring the standard of private mines up to that of the mines of British Coal, but to bring the standard of those mines down to that of the private mines.

The Bill will go through, but I must warn the Minister. If there is a disaster in a private mine employing 150 men I will hold him responsible, whether he is on the Front Bench or on the Back Benches. I will hold him responsible if anyone is killed. In this Chamber we often talk about the IRA and the thuggery, killing and butchery that it is about. I must say this to the Minister: "Don't put your head on the block and become like it."

6.37 pm

1 welcome the Bill and the happy coincidence that enabled my right hon. Friend the Secretary of State to include in his opening remarks the details of the contract that has been made—or perhaps I should say allowed to be made —between British Coal and the power generators. I do not know whether the contract was made by British Coal or through the Secretary of State, but I welcome it.

As I understand that contract, British Coal will supply 70 million tonnes in the first two years and 65 million tonnes in the third year. Those supplies will preserve the size and structure of British Coal very much as it is now. It will also give British Coal the breathing space it has earned and deserves to plan further ahead. I hope that the Minister can confirm that those figures relate purely to the contract between British Coal and the power generators and that it is still open to British coal to add to that turnover with spot price contracts and with any marginal cost production which it feels is commercially worth while in terms of its long-term plans.

If the contract and my reading of it are correct, the compliments of this House are due to the new Secretary of State. The Opposition's whingeing—we have heard whingeing of the worst kind from the Opposition today—is merely opposition for its own sake. The hon. Member for Gordon (Mr. Bruce) was absolutely right when he said that he was appalled that the Labour party could vote against the Second Reading of this Bill which gives so much to the coal industry. The Bill contains clauses which the Labour party would wish to oppose in Committee, as is its right, but to vote against the Bill in principle—a Bill that helps British Coal's finances—is absurd, and opposition for its own sake.

I agreed with one part of the opening speech of the right hon. Member for Holborn and St. Pancras (Mr. Dobson) —his comments about the lack of provision for subsidence in the Bill. That comment has been made by hon. Members on both sides of the House. I am told that subsidence was not included in the measure because it is primarily a financial one. I do not need to stress too strongly that my constituents know only too well that it is a financial problem for them. They have been seeking redress because of the subsidence problem for a long time.

In my constituency within the city of Nottingham two pits have been closed for 20 years, but the arguments about subsidence still continue. I still receive correspondence from constituents whose properties suffer subsidence because they are on top of the old Wollaton pit. The Coal Board has a strange way of granting assistance to some, but not to others. Since this House and this Parliament often provide financial compensation for a raft of matters which have their origins in the past and were the fault of no one in particular, it seems strange that there is no provision in the Bill for public funds to support British Coal in dealing with problems, some of which it has had to duck by pleading the statute of limitations. It deserves help with this matter.

We should compliment the Secretary of State because the terms of the contract seem to ensure that the price of electricity flowing from it after the privatisation of the electricity supply industry will be lower under the Bill than it would otherwise have been. I hope that the Minister will respond to that point. It seems as though, happily, there may be a negative movement in the retail price index in terms of electricity pricing. I accept that prices will always rise, but if the deal will help us to keep those rises below inflation, that must be good.

The Minister and others of my hon. Friends have mentioned the number of pits closed. It would certainly be wrong for Conservative Members to seek to duck the fact that pits have closed during this Government's lifetime. It is not enough simply to say that they were also closed under the Labour Administration. We are very conscious of the social distress brought about by closures. If the contract, to which the Secretary of State referred in his opening remarks, gives the industry breathing space and allows British Coal to slow down the closure process, the mining industry has deserved that breathing space. It will take a little pressure off pits which might otherwise be at risk. Such stocktaking is right on commercial and moral grounds.

Conservative Members are conscious of the personal sacrifice made by miners in the east Midlands during the terrible time in 1984 when many of them, at great personal cost, stood out for democracy against what were rightly described as the Scargillian mobs. That is why there are Conservative Members who, against their natural instincts for commercial investment, have consistently opposed the Associated British Ports (No. 2) Bill and will continue to do so. We recognise that we owe a large number of people in the east midlands a debt of honour.

I know that this always produces roars of disapproval from the Opposition, but as my hon. Friend the Member for Sherwood (Mr. Stewart) said, the Associated British Ports (No. 2) Bill would not have received its Second Reading if Opposition Members had been here that first night. For Opposition Members to say that they were slipped that night and given the night off by their Chief Whip was a quick bit of backfilling when they realised what had happened. It is absolutely disgraceful that, ever since then, to put right the damage done that night, Opposition Members have blocked a private Bill which had nothing whatever to do with—

Order. Perhaps we can return to the Second Reading of the Bill.

The hon. Member is as bad as the hon. Member for Bedfordshire, North (Sir T. Skeet).

I take that as a compliment.

In beautiful parliamentary terms, clause 1 takes 19 lines simply to say that we shall take powers to write off the accumulated debts and burdens of the past. That is great, and my hon. Friend the Member for Bedfordshire, North said, we should not lose sight of the fact that in 1989 terms, £5 billion was written off once before and £5 billion is being written off again in this Bill. If that figure of £10 billion is correct, the argument put forward by Labour Front Bench spokesmen that coal has been subsidising electricity in the past few years, falls down. The public purse has been subsidising coal. I am not arguing whether that is right or wrong, but simply that coal has been massively subsidised for many years.

Clause 2 gives us powers to finance change for the next couple of years, which is right and proper. The Labour party disagrees with clause 4. I find it contentious due to one omission, referred to earlier by my hon. Friend the Member for Erewash (Mr. Rost), the hon. Member for Gordon (Mr. Bruce) and others. I refer to the asset.

The coal under the ground, not British Coal, is the public asset. Just as with oil or any other mineral, a licence should be given to extract coal, but it should not be restricted to British Coal. The licence should be in the gift of the Secretary of State, acting on behalf of Parliament. This place, not British Coal, should give the licence to extract coal. I should not be at all surprised if British Coal also felt that this was reasonable. If Parliament rather than British Coal issued the licences, we would get a fair price from British Coal or from private and opencast operators. That seems the right thing to do. Perhaps when my hon. Friend the Minister winds up the debate he will comment on the possibility, if nothing else, of the creation of an independent coal commission, the function of which would be precisely to control the issue of licences.

There is no doubt in anyone's mind that the environmental impact on people living close to opencast mining is appalling. My hon. Friend the Member for Sherwood (Mr. Stewart) gave the technical, chemical and price reasons for the necessity of opencast coal. If the advantages of opencast coal are to be made available to the public through lower electricity prices and through the preservation of some of our deep mines that would otherwise close, then some of the price differential between the cheap opencast and the more expensive deep mining should be used generously as compensation for the small percentage of our people who have to put up with the environmental hassle, the dirt, the smell and the noise of opencast mining. The beneficiaries of that cheap coal should be prepared to pay something towards compensating people who suffer the nightmare of disturbance.

It would be quite wrong for the Opposition to imagine that no Conservative Member is worried about safety. Whether it is private-sector or public-sector mining, safety is paramount. Hon. Members have spoken about raising the numbers in private mines to 150. All hon. Members want absolute assurances that that will not result in a diminution of our priorities about safety.

6.52 pm

I do not wish to follow the hon. Member for Nottingham, South (Mr. Brandon-Bravo), because it would not be appropriate to make a long speech. The hon. Gentleman, the hon. Member for Gordon (Mr. Bruce) and other hon. Members have expressed surprise that my hon. Friends and I are critical of the Bill. I recognise that it provides money for the coal industry, but in essence it is a dishonest Bill, because although the word "electricity" does not appear anywhere in it, the Bill is more concerned with electricity privatisation than with anything else.

The Bill tries to persuade people overseas that electricity shares are a good bet because the Government will make sure that coal is supplied at a reasonable price. At first sight, the Government seem complacent about the enormous trade deficit, but they know that they have got the economy into such a mess that they will have to get rid of our current assets to meet current need. They therefore appear to be generous to British Coal.

Having persuaded British Coal to get rid in a very short time of a substantial part of what was its capacity three or four years ago, it is perfectly reasonable that the Government, having forced a situation in which capital assets are virtually sterilised or destroyed, should make some contribution towards making sure that that is reflected in British Coal's finances. They are not taking any great risks, because while they may be concerned to sell off electricity to meet current need, they are quite willing to take only the most short-sighted view and allow Britain to develop a dependency upon imported coal which currently appears cheap. As the incompetence with which the economy is being managed continues, sterling will fall and the price of imported coal will rise. It certainly would rise if we ever developed a dependency upon it. Perhaps the Bill is the beginning of a glimmering of understanding by some members of the Government who accept that point.

I am sorry for the Under-Secretary of State for Energy. The previous Secretary of State has gone to fresh pastures and a new one has been brought in. He, like the river, keeps rolling on. Unfortunately, he was in the Chamber about a year ago when some of his hon. Friends put down questions urging the privatisation of British Coal and the extension of opencast mining and private mines. I asked the previous Secretary of State whether he accepted that the Government had no mandate to privatise coal in this Parliament. I asked whether he agreed that the Government had deliberately eschewed such a mandate and suggested that it was matter for the next Parliament. I am glad to see that the Under-Secretary of State agrees. I asked the Secretary of State to assure the House that since the Government had no mandate there should not only be no privatisation but no significant steps towards it. Some of my hon. Friends will remember that the Secretary of State immediately got up and said that he gave me and the House the assurance that I was seeking. The Bill is quite some evidence of consistency!

I strongly oppose the Bill because I represent and have many close friends in the National Association of Colliery Overmen, Deputies and Shotfirers, the trade union of those charged with statutory responsibility for safety in the mines. The House should note that NACODS is absolutely opposed to clause 4 of the Bill because it recognises, as some hon. Members have recognised, that that part of the Bill will cost lives and limbs, and probably a significant number. Hon. Members may think that all that we are doing is increasing the work force of a private mine from 30 to 150, but if they look closely they will see that the 150 refers to the number down the pit at any given time.

I am sorry to keep interrupting on the subject of safety, but the hon. Gentleman is making an important point. Will he take it from me that, sadly, there have been 18 deaths this year in British Coal alone? It is not a question of the private or the public sector but the fact that mining is a very dangerous business.

The Under-Secretary of State will be aware that I do not need to be reminded that the coal industry is dangerous and that there have been too many fatalities and serious injuries in British Coal. It is a disturbing trend. Perhaps the Minister would like to consider the proportion of fatalities and serious injuries which occurred when contract labour was employed. That is an important aspect and deserves serious consideration. I do not suggest for a moment that the Minister is queueing up to kill miners, but the provisions of the Bill will lead to more people being killed and maimed in the new expanding private coal mines.

I should be happy to serve on the Committee which is to examine the Bill, but I should like to make one suggestion to the Minister which I hope that he will consider seriously. It is that before the Committee embarks even upon the sittings motion it should look at a film made by Yorkshire Television about safety in private mines. That was a carefully documented programme and a serious one. Every hon. Member should see it before discussing private mine expansion. It may be a revolutionary proposal, but I suggest that Conservative Members who will no doubt be clamouring for more opencast and private mines should be educated before they join in any decision making.

I do not wish to pursue the matter of safety, although I agree that it is vital and should be a factor in any change relating to private mines. How do the hon. Gentleman and his colleagues react to the idea of miners' co-operatives wishing to take over their own pits and using private capital? The Bill will enable them to do that in a way that they cannot do at the moment. Is the hon. Gentleman and his colleagues against that?

I do not think that that is realistic. I have studied the mining industry for a long time and there have been a number of similar initiatives, few of which have ever come near to fruition. Also, I would be worried about the terms on which private capital was available.

Another aspect of the Bill which I find threatening concerns the proposed extension of opencast mining by a factor of 10. In the original nationalisation of coal, the limit of 25,000 tonnes appeared so that small-scale development did not permanently sterilise small areas of coal. That was a reasonably modest provision. However, we have now reached a proposal for 250,000 tonnes, which is a much larger matter. As the fortunes of farmers decline, I have noticed the hon. Member for Sherwood (Mr. Stewart) becoming more sympathetic towards opencast mining. Perhaps his farm is on the list and he might make more out of coal than potatoes. Perhaps that is why he is optimistic—he is the only farmer I have met who is.

At the moment, despite the care and competence of the opencast executive, opencast mining is a nuisance and a danger. It causes congestion of local roads and a great deal of noise and disturbance. The opencast executive may seek to minimise that, but I wonder whether those Conservative Members who have been eager for some time to see this step taken would be prepared to see their profits curtailed so that those who live near the opencast sites shall not suffer nuisance and disadvantage. That provision in the Bill is a real threat to those living in close proximity to areas where coal lies near the surface.

This is not the occasion for a long and detailed speech as we shall have to look at these matters exhaustively, and no doubt repeatedly, in Committee. I am concerned that the Government have suddenly decided to provide support for British Coal. There is now only one colliery left in my constituency. When I entered the House, there were 19 collieries in the old south Yorkshire area, which has now disappeared to join the Doncaster area. There are only half a dozen of those 19 collieries left. We have suffered a devastating experience in a concentrated time scale.

The hon. Member for Bedfordshire, North (Sir T. Skeet) talked about land sales, but we cannot begin to improve the hundreds or thousands of acres of derelict land because of the way in which the Government have changed the rules for derelict land grant. That is another aspect that should be considered.

With regard to the Government's energy policy, the example of Kent has already been mentioned. I promised a friend that I would mention the Kent coalfield in the House at the first opportunity. My friend Frank Redman became national president of my association just a few weeks before British Coal decided to close his colliery. It was decided to close the colliery when men did not turn out in full numbers on a Saturday and Sunday, less than 48 hours after a promise of weekend working. That was not a great deal of notice.

However, the point that was made to me, which should also be made to the House, is that even if those men had turned out in full numbers on the Saturday and Sunday, they would not have been able to produce one cobble of coal more due to equipment malfunction. British Coal was looking for an opportunity to end mining in Kent. I believe that it was looking for that opportunity because the Prime Minister wanted an end to mining in Kent, presumably because Conservative Members based in south-east England do not like mining and do not want it on their doorsteps. In Labour areas, we can have opencast mining and private pits and be used as a simple instrument to allow the privatisation of electricity now and the privatisation in a few years of that part of the mining industry which remains because it is profitable.

That is no way to run an industry or a country. The sooner the present Administration's biased and bigoted incompetence is ended, the better. For the Government to pretend that the Bill is something for which we should vote when it represents a profound danger to our constituencies and profound disadvantage to our environment is to insult our intelligence, and it will not work.

Order. I remind the House that Mr. Speaker announced earlier that between 7 and 9 pm speeches should be limited to 10 minutes.

7.5 pm

The hon. Member for Wentworth (Mr. Hardy) must have had difficulty keeping a straight face during his loud opposition to the Bill. It is an excellent Bill, and I look forward to explaining why.

I am sure that we all enjoyed the speech by the hon. Member for Holborn and St. Pancras (Mr. Dobson), whom all hon. Members came to like and respect in his previous job. He too has a brass neck to raise the question of the Associated British Ports (No. 2) Bill and claim that the Conservative party is behind it. Many of my hon. Friends joined me in the Lobby to vote against that 13ill. Approximately 180 Labour Members did not turn up to oppose it. Therefore, the hon. Gentleman should not have made those comments in his opening remarks.

Will the hon. Gentleman tell us how many Conservative Members turned out to support the Bill?

I am happy to answer that question. The remarkable statistic is that 265 Conservative Members either did not support the Bill or did not vote for it. The hon. Gentleman knows those facts as he was here on that night whereas many of his party were not. The people of Nottinghamshire are aware of that.

The Bill underlines the strong support that the Government have given to the mining industry. It also underlines the two important obligations that remain with the coal industry—that of providing £2 billion for the concessionary coal obligations and £500 million for industrial deafness. A number of former miners in my constituency will be pleased to hear that.

I want the coal industry to mirror British Steel and the progress that has been made there. Far from opposing the Bill, many Conservative Members will ask how we can justify the payment of £4 billion of taxpayers' money enshrined in the initial clauses of the Bill. The justification for that lies in the massive reconstruction that has taken place and the enormous increase in productivity, which has doubled in the past four and a half years. That has been achieved with a reduction of 66 per cent. in manpower, yet the output has been reduced by only 15 per cent. Since 1985, we have seen a reduction of £1 billion in the price of coal to customers at a time when the cost of international coal has increased by no less than 70 per cent. That is a remarkable achievement.

One does not have to look only at the national scene. In my constituency, Gedling colliery has made remarkable progress. It will never make a large profit and has always performed on a wing and a prayer. Anyone who knows the Nottinghamshire coalfield knows how difficult the Hazel seam is. Earlier this year, it was under grave threat of closure. The work force has been reduced from 1,100 to 610 and we now have at the pit an enthusiastic and skilled work force with an average age of 30.

Following the reconstruction, the management set a target of 12,500 tonnes per week, which has been comfortably exceeded. We are now performing at the rate of between 13,000 and 15,000 tonnes per week, and the figure has been as high as 18,000 tonnes per week. Those show that substantial progress has been made locally as well as nationally. That is the justification for the major restructuring enshrined in the Bill.

Anyone who looks at the state of the coal industry and the fact that this year it will have to pay £570 million in debt-servicing arrangements will understand how difficult it is to run a business under constraints of that sort. I welcome the major restructuring involved in that.

I want to welcome the interim deal announced today by British Coal in respect of its arrangements with the generators. The Government are to be congratulated on their enabling rather than enforcing role. I hope that it will not be too long before we see much longer contracts of up to eight years, because that is what is required. It is noticeable that this deal will ensure that it is not necessary to leap into another closure programme. British Coal is not talking about closure, and nor are the Government. Only from Labour Members do we hear about closures. No one else says that British Coal is to launch a major closure programme.

I am sorry, I will not give way because I am under a time constraint. I hope that the hon. Gentleman will understand.

The generators also have an excellent deal. Effectively, prices have been frozen over the past two and a half years and now prices will be frozen for another three years, so they will have five and a half years of fixed coal prices on 400 million tonnes of coal. In other words, the generators have managed to secure a great benefit which only British Coal can deliver—fixed-price coal in sterling.

The hon. Member for Holborn and St. Pancras (Mr. Dobson) asked whether the generators will pass on this massive saving to the electricity consumer. We all know that coal is 50 per cent. of the cost of generating electricity and electricity prices should therefore come down in real terms. I calculate on the back of an envelope that they could come down by 2 per cent., and I should be interested to hear whether my right hon. Friend the Minister agrees with that calculation. This is also of key interest to British Coal. In the midlands, British Coal remains the largest customer of the East Midlands electricity board, which is to be found in my consitituency, so it too stands to gain a great deal in the reduction in the real cost of electricity.

It is interesting to look at the cost of producing electricity. At one time I spent a lot of time reading the evidence of the Sizewell inquiry. It was something of a masochistic experience. We now know that electricity produced by Sizewell will cost up to 10p a unit. We know that electricity produced by an AGR, based on historic costs, is about 7p a unit. The new small, environmentally friendly, privately financed—with up to 85 per cent. debt —ventures will produce at a cost of about 3p a unit. In other words, there will be a significant advantage for coal.

We hear the advantages of heavy fuel oil mentioned, but there has been a 70 per cent. increase in the price of that fuel over the past two years. The only heavy fuel oil available in quantity and at low prices is high in sulphur. When looking at international coal prices, I urge people to be careful.

Those of us who, in the early 1980s, did work on international coal prices know how difficult it is to predict the variables, because we invariably got them wrong. Therefore, I hope that my right hon. Friend the Minister will not put his faith in foreign coal. We have seen this year alone how much has changed in the provision of American, Chinese, east European and Australian coal. We should note that important point.

Although British Coal continues to produce at above the supposed international market rate, it has made colossal and effective progress. That is why the Government are right to adopt a carrot-and-stick approach to the coal industry. The Bill recognises the importance of the carrot.

My right hon. Friend the Secretary of State mentioned his support for new coal technologies and that too must be right. We must support and develop advanced coal technologies and new coal technologies. These can raise efficiency of generation from coal by 20 per cent., improve the economics and reduce carbon dioxide and consequently the gases contributing to the greenhouse effect. We have to take a sensible and sensitive approach to the environmental effects of the industry.

I am an unashamed believer in the privatisation of the coal industry. I want to see the industry follow the same path as British Steel because that is in the interests of British Coal, the employees, the management and the consumer. I suggest that Labour Members talk to employees of British Steel and see what they think about the matter.

The coal industry encapsulated all that was worst in British adversarial labour relationships. Privatisation will give those who work in the industry a real interest in how well it does. The men who work in the industry used to be alienated from the management, and that is the hallmark of the nationalised sector. Privatisation, by involving all the employees in the ownership of the business, will bring far greater identity with the commercial interests of the business and, a greater acceptance of the reality of the market place and will encourage the work force to work hard when times are good and to work themselves out of trouble when they are bad.

Above all, there are real opportunities for smaller operations such as Bilsthorpe in the constituency of my hon. Friend the Member for Sherwood (Mr. Stewart). Everyone employed there will be able to own shares, commercial money will be involved, there is new technology, it is small and clean, and, above all, the Union of Democratic Mineworkers—to which the country and the industry owe a great deal—is involved.

In support of ventures such as that taking place at Bilsthorpe, I support the Bill strongly and look forward to catching the eye of the Chairman of the Committee of Selection so that I may serve on the Committee which considers the Bill.

7.15 pm

I am pleased to he called to speak in the debate because, even today, my constituency relies heavily on the mining industry. However, in my constituency 29 per cent. of the under-25-year-olds are unemployed as a result of the Government's pit closure programme since the miners' dispute. I concede that some young people have been involved in such projects as the youth training scheme. For the uninitiated, these schemes allow the Government to present their entrepreneurial friends with cheap labour and to maintain their Victorian values in their attitude to work. They expect these young people to be grateful to the Government for finding them a job. We must tolerate that on top of 25 per cent. unemployment. This from the Government who told us repeatedly during the miners' strike that there was not a pit closure programme. History has proved that the House was misled.

I welcome the Bill's intention to write off some of British Coal's debt, but I remain suspicious of the Government's motives. It is ironic that a great deal of the burden of debt placed on British Coal was created by the Government forcing on it the pit closure programme. British Coal has to find 30 per cent. of the cost of every redundancy created by that programme, as well as carrying the reduction in the value of its assets. In some cases, so-called unproductive pits have been written off while British Coal is still paying off the interest on money borrowed from the Government to invest in those pits. How stupid can one get?

I would like to think that clause I was a result of the Government having a conscience over this matter, or perhaps suddenly becoming interested in the future of British Coal. I fear that neither could be further from the truth, as they have not shown any interest in writing off the debt on the many occasions when we have appealed for that. The truth is that they are using taxpayers' money to prepare the industry for privatisation, making it more attractive to their friends on the stock exchange.

The Bill cannot be taken in isolation from other aspects of the Government's energy policy. Electricity privatisation is an example—it is an absolute shambles. The Government had the audacity to try to con investors—their friends on the stock exchange—into taking over the nuclear power industry by guaranteeing them a share of the market when, at the same time, they were singing the song of free competition. However, realising that they could not con their old pals, they withdrew that part of the industry from privatisation. Someone suddenly realised that nuclear energy was costly. Labour Members have been telling the Government that for years, but the Government consistently and happily pursued their policy. That will cost the country dear for generations to come.

We then had leaked documents on the privatisation of the electricity industry. The Government are opening the gates to a flood of imports of cheap foreign coal, and that may cost 30,000 jobs in the British coal industry.

Now we know why the private Bill procedure was so misused by the unofficial whipping of the Associated Ports Bill. Now we know why some Government Back Benchers have been swanning around South Africa as guests of the South African mining industry. Those are the reasons why we must not consider the Bill in isolation.

The Government have shown, by their record of inept bungling and their deceit of the House, that they are not interested in the future of British Coal. It is a scandal that millions of tonnes of coal reserves are being thrown away while the Government flirt with cheap imports.

I thought that we had a huge problem with the balance of payments deficit. I find that difficult to believe, as the Government are working hard to contribute to that deficit by seeking to import coal. Do they have such short memories that they have forgotten the terrible problems that we had when world oil prices shot up, after we had placed reliance on cheap middle eastern oil for our energy resources? We were in a right mess. I thought that we had learnt a lesson from that shocking experience, but the Government are taking us down a similar path again. That is madness.

We cannot rely on the get-rich-now-and-to-hell-withtomorrow philosophy of the Government for Britain's energy demands. The House should have a long debate on the gambit of the Government's energy policy before it is too late.

I am concerned about the growing tendency for deregulation in coal mining, and its effect on safety. Several of my hon. Friends have also mentioned the subject. Most of our present regulations were established because of loss of life and limb, and not by convincing someone in this House in a debate. I can give a personal example of that.

In 1975, in my own colliery, there was an explosion. During the 24 hours that we spent looking for missing lads, in the hope that they might be alive, we received expressions of condolence from right hon. and hon. Members on both sides of the House. We were grateful for that, but we were more pleased when legislation was changes as a result of a public inquiry into the accident and the problem of degassing the headings. Some of my hon. Friends will be familiar with that.

I would be angry if someone came to the House and talked about changing that regulation on degassing. Every regulation has been changed by a disaster and a public inquiry. We will never convince Conservative Members that they should spend money on safety. Conservative Members have already demonstrated by their watery words that they are intent on deregulation and cutting corners and safety. I have worked in mines and I have seen what happens if one cuts on safety.

I regret that there has been a change of attitude by the management. They think that they are at the top of the tree, supported by the Government, or perhaps local management are frightened by Hobart house.

A few weeks ago there was a fire at Grimethorpe colliery. The work force and the management worked long and hard to contain the fire and thereby saved other reserves. Everybody was full of compliments for the work force that week, but within three weeks the same management was fetching the men in saying, "Your pit's in danger. The reserves are there, but we don't think you've been pulling your weight." People with that attitude would be happy to short cut on safety.

If we allow the tendency to deregulate to continue, I am fearful of the consequences for the safety of miners. Therefore, I beg the Minister to consider carefully what I have said.

7.24 pm

I have always argued in coal debates for the need for a diverse energy policy, in which the coal industry plays the major part—and by coal I mean United Kingdom coal. I see no reason to change my view because of the Bill. I certainly see no reason to change that view as a consequence of the major shifts in the energy industry in recent times—quite the contrary, a's I believe that the central thrust of the Bill is important to the development of our nation's industrial base. A diverse energy policy requires coal as its major ingredient. Where I depart from the views of the Opposition is in their belief that one can dragoon customers into taking coal. Customers will come only if the price is right and supplies are secure.

One of our problems is the Scargill legacy. Most people who want to switch to coal would be more likely to do so if there were dual or triple sourcing for their supplies, rather than depending upon a union which they believe is renowned for its militancy. It makes no sense for a country as rich in natural coal reserves as Britain to depend on imports to any significant extent. However, one can only resist imports if one makes one's own industry as efficient, capable, productive and profitable as the alternatives. Otherwise one would pass the problem down the line to other industrial users of electricity, who would themselves become competitively disadvantaged.

I believe that the Bill will receive widespread support in the House and in Britain because it is a vitally important step towards getting our act together, and helping to set up a coal industry with a secure and viable future based on the fact that it makes a profit, which is a central part of our industrial strategy.

I am amazed that we have heard only words of criticism from Opposition Members so far. During the years that I have been in the House, since the 1983 election, in debates on coal Opposition Members have always said that the coal industry has not enjoyed a level playing field compared with other industries. This Bill will give £5 billion to the coal industry, on top of the £6·5 billion already been put in. Yet the Opposition say that they will oppose it. How can it make any sense for the industry to be relieved of £570 million per year in debt interest payments and for the Labour party to oppose this solution? How can it make sense to those who work in pits where viability is threatened to see the Labour party voting against the money which would make them viable?

I will not give way, as I have only 10 minutes. I am sorry, but the hon. Gentleman had a chance to make his speech.

Refinancing is an important first step. I hope that what will emerge from it—and I hope that my hon Friend will consider this carefully—is consequent restructuring to ensure that British Coal does not close off any of the options for future privatisation. I make no secret of the fact that I believe that privatisation will better serve the interests of all those who work in and depend on the coal industry. Nor do I make a secret of the fact that I want British Coal to be broken into regional components when it is privatised, so that we shall have Yorkshire Coal plc, as well as Yorkshire Water and Yorkshire Electric. Our regional economy is already beginning to reflect the fact that major industrial players and their headquarters are inextricably bound up with the success of our regions. I want coal to contribute to that as well.

We have all talked of the United Kingdom coal industry as though it consisted only of British Coal, but the British coal industry mines more coal in the United States than here. None of the big companies which mine in the United States can operate here, however, because of the obscure, irrelevant and outdated restrictions on investment by private capital in our domestic coal industry. We have companies which control up to 14 per cent. of United States coal production and would like to invest in a big way here. We also have small companies which could restore profitability to some of the small pits which are closing but the rules introduced on nationalisation mean that they cannot contribute to our national prosperity. The Bill marks an important first step towards putting that right. Areas where coal mining jobs have been lost recently could have the opportunity of new jobs.

Safety is not an issue, as safety standards will be exactly the same following liberalisation. There will be the same procedures, the same restrictions, the same type of prosecutions of the guilty and even tighter enforcement.

No, I have already said that I will not give way. The hon. Gentleman has already made his speech.

With all other privatisations, the regulatory framework which have been put in place have been far more effective in terms of safety and the environment than what preceded them—and coal will be no exception.

There is a great deal of commonality about opencasting among those in the House who have experience of it. I do not think that any of them look with enthusiasm on the prospect of 10 times the present area of land being put to use for opencasting. I accept that opencast coal is needed as a sweetener for deep-mined coal. Anybody who denies that is being hypocritical, as he is denying that coal should be a major ingredient of our energy policy. If we argue the need for coal, we have to accept that a certain amount of opencasting is necessary, but—it is a big but—environmental issues must be considered carefully in any planning application.

Tipping in opencast sites has not been mentioned, but exercises most hon. Members' minds. Gamblethorpe tip is in my constituency. After years of opencasting, people now face the prospect of years of disruption to the environment as a result of tipping. If a statutory authority were to set down a timetable when an opencast mining application is made, stating what restoration work will be done, when the coal will be extracted and what the community will gain from the facility, so that there is no possibility of someone coming along later and saying, "What a lovely hole—I should like to tip something in it for a few more years," there might be a very different reaction. At the moment, people look out across wasteland knowing how they would like it to be restored so that it can be of benefit to the local community, but facing the prospect of years of disruption, noise and damage to the environment.

Planning for opencast mining is rather like planning for every other major infrastructure programme in that our compensation policy is absurd. It lays down that we shall be niggardly with compensation for those whose environment is disrupted for the greater good of the community, and then we are surprised when they fight like mad to prevent it and plans are deferred for years due to determined resistance. If, like some other Community countries, we were more generous with our compensation, recognised that there would be disruption and that the communities concerned had a legitimate claim to have something put back to compensate for the disruption, we might have a more balanced approach to opencasting and major infrastructure, planning applications.

British Coal's monopoly in relation to opencast licensing merely restricts further the resources available to operators to use for the benefit of the community. However, all the signposts in the Bill are good ones for the future of the coal industry, and I warmly commend it.

7.34 pm

We have been told that the Bill will be good for mining communities. The hon. Member for Sherwood (Mr. Stewart), who unfortunately is not here at the moment, said that Labour's opposition—

On a point of order, Madam Deputy Speaker. I think that it is the general view of the House that we want the public to see what is happening in the House. Can you rule whether it is in order for hon. Members to move around the Chamber according to who happens to be speaking? The hon. Member for Bassetlaw (Mr. Ashton) is so intent on getting his photogenic face on camera that, every time a Labour Member speaks, he moves—

Order. That has nothing to do with the Chair. I am neither Whip nor shop steward in the House.

I hope that, like a good referee, Madam Deputy Speaker, you stopped the watch during that point of order.

The hon. Member for Sherwood said that Labour's opposition to the Bill is a cruel deceit of the miners. The reverse is the case. The Bill is a cruel deceit of mining communities throughout Britain. The Government have changed the way in which the number of unemployed people are calculated 28 times already. Since June this year, 11,500 miners have been made redundant because of Government policy, but they have not been included in the number of unemployed. The Government are planning another change in the calculation of the number of unemployed people, so unemployed or redundant mineworkers will not be included in any calculation of unemployment after December.

Deceit is the Government's number one priority. Since the last general election, they have moved away from the coalfield communities and denied them even the right to show how bad their plight is. Hon. Members from Nottinghamshire should be honest enough to argue for the correct figures to be given. District councils in Nottinghamshire, such as Ashfield, Bassetlaw, Mansfield and the area represented by the hon. Member for Nottingham, South (Mr. Brandon-Bravo) are trying to get funds from Europe to support their endeavours to get development under way and to reduce unemployment. Because unemployment figures are not being calculated properly, the funding that councils can get from the EEC is put at risk. I hope that Conservative Members will be a little more honest.

I also wish that Conservative Members would stop suggesting that it is only because of the parliamentary Labour party that the Associated British Ports (No. 2) Bill is still proceeding through the House. No hon. Member has a better record than me when it comes to voting against that Bill, but half a dozen Conservative Members—

On a point of order, Madam Deputy Speaker. Your predecessor in the Chair ruled me out of order when I mentioned that subject. I trust that the rules will be the same for hon. Members on both sides of the House.

I have made my point, and I hope that Conservative Members will not deceive the electorate any more.

The Government have tried continually to deceive mining communities, especially those in the area that I represent. Before the last general election, the previous Secretary of State for Energy said that he had no intention of privatising the coal industry. As my hon. Friend the Member for Wentworth (Mr. Hardy) said, the Government went to the country at the last general election on that basis and came away victorious. Therefore, they have no mandate for legislation to privatise the industry. The Bill represents privatisation of the industry, pit closures in the coalfield communities and another rip-off of the mining communities by the Treasury.

My hon. Friend mentioned the word "deceit" earlier and referred to the hon. Member for Sherwood (Mr. Stewart). I do not want to make too much of whether the hon. Gentleman was deceitful, but is it not the case that the Bill, which the hon. Member for Sherwood supports, will close the pits at Clipstone, Annesley, Calverton and Rufford in the Sherwood constituency?

The Bill is nothing more than a fattening-up exercise for privatisation of the coal industry. It will benefit only one set of individuals, who are a minority in our society. It will fatten up the people in the City who have already ripped off an enormous fortune from British taxpayers.

The Bill means extensive job losses in the coalfield communities. As my hon. Friend said, it is calculated that the Bill will probably result in another 30 pit closures. Some of those at risk are in the constituency of the hon. Member for Sherwood. He is a fool to support the legislation because it will cost hundreds, indeed, thousands, of jobs in Nottinghamshire.

The Opposition Front Bench has obtained a leaked Cabinet document which shows that the figures calculated by Opposition spokesmen are correct. The document was prepared not by the Labour party but by the Cabinet. It got into the hands of our Front Bench team and I commend them for having obtained it. It suggests that the Bill will lead to 30,000 job losses. Conservative Members have said how wonderful it is that the Government have tied up a contract for all this coal, but nothing has changed. The document also states that a three-year agreement is part and parcel of the contract. [Interruption.] The hon. Member for Sherwood is making signs to the effect that three years will take the Government beyond the election. If he believes that the Government's mandate will be extended, he is living in cloud cuckoo land.

The Bill offers nothing to the coalfield communities. I was saddened when the Secretary of State spoke about the terrible deficit debt that British Coal currently carries. He spoke of a debt of £500 million, but that is not a debt in monetary terms. It is a scandal that British Coal has calculated the figure of debt as a whole, taking into account items such as concessionary coal for widows and retired miners. Do Conservative Members not realise that that coal was negotiated in decades gone by, by working miners, who gave part of their coal concessions and put it into a pool to keep widows and retired miners in fuel? It is not negotiable because it was negotiated in years gone by. It is a disgrace for British Coal to include it in its calculations.

I am sorry that the Minister of State is not present. I wished to raise with him coal mining subsidence damage about which there is serious anxiety among hon. Members on both sides of the Chamber. The Minister of State has misled the House. Earlier this year he said:
"We are reviewing this matter as part of our total appraisal of Waddilove and we have said that we will look at it again before 1990. We shall bring forward the review of the way in which adjudication is conducted and shall review the criteria by which the distinction betweeen the two types of arbitration is made.—[Official Report, 16 June 1989; Vol. 154, c. 1272.]
This Bill was the only real opportunity to do that. The Minister misled the House because he has not come back with legislation before the end of 1990. It is incumbent on him to state why he has not brought forward legislation on subsidence. On the same day, the Minister said that he was interested in setting up independent legal advice centres in coal mining areas but the Bill makes no provision for that.

Problems are still occurring with subsidence in my constituency. My constituents are having problems with British Coal. Yet another letter came to me recently from some of my constituents saying that they had a letter from British Coal threatening that unless they accepted £150 to redecorate the whole house—inside and outside—it would close the file.

The Bill is a disgrace. It is yet another rip-off by the Government in favour of their friends in the City. In no way, shape or form is it good for the coal industry. I hope that my hon. Friends on the Front Bench will stick to their commitment to repeal the Bill when we return to power.

7.45 pm

I am disappointed that Opposition Members are so vehemently against the proposals in the Bill. To write off British Coal's debts and, as my hon. Friend the Minister said, help it to become more competitive with other fuels such as gas and oil is surely a good thing for all workers in the coal industry, whether in deep mines, private mines or opencast mines.

There seems to be a general adverse feeling among both Opposition and Conservative Members about opencast mining. I deplore that because, as several hon. Members have said, it is the only activity that has made a profit for British Coal during the past few years. The percentage of opencast coal as a proportion of British Coal's output has risen from 13 per cent. 10 years ago to almost 20 per cent. now. It is an important activity if British Coal is to wipe the slate clean, balance its books and make a profit after its massive debt has been written off.

As we have heard, opencast mining can produce coal with a low chlorine content which has to be mixed with deep-mined coal. I am massively opposed to the Coalfield Communities Campaign, mainly financed by local authorities, which states that deep mining is a marvellous activity which produces jobs in the coalfields. It completely opposes opencast mining. The right hon. Member for Chesterfield (Mr. Benn) said that opencast mining damages the environment. The hon. Member for Holborn and St. Pancras (Mr. Dobson) said that people did not take care or look after the interests of the residents of the area and that it spoilt the environment. That is not necessarily the case. I have seen opencast mining in the east midlands, the west midlands, the north-west and south Wales. I have probably visited many more opencast mines than any other hon. Member here tonight.

I know that the Minister of State has visited many opencast pits. I am not aware that the Secretary of State has done so, but I should implore him to visit such pits. He will find that the workers are not from the National Union of Mineworkers or the Union of Democratic Mineworkers: They are either in the Transport and General Workers Union or are subject to a loose trade union arrangement. It is not a mining but a civil engineering activity. It is a massive earth-moving operation.

The United Kingdom does well on opencast mining, especially when one contrasts our difficult working conditions with seams only a few inches thick it is a bonus if they are 4 or 5 ft thick—with the 20 m to 50 m thick seams in Australia, America and Canada. We can get the coal out, deliver it to customers by conventional coal lorries, and more than compete with imported opencast mined coal.

I have been listening with great interest to the hon. Gentleman's comments on opencast mining, but he has not yet mentioned the people who are affected by it. He talked about councils and the Coalfield Communities Campaign. They are local councils, Labour and Tory, which are concerned about the environment.

The hon. Gentleman has anticipated exactly what I was about to say.

Thirty years ago my constituency had six mines near the villages of Coppull and Charnock Richard and thousands of workers in deep mines. Since then we have had a great deal of opencast mining. Some parish councils, local authorities and, indeed, the county council are opposed to that. We have mined 500,000 tonnes from Ellerbeck west and 500,000 tonnes from Ellerbeck north. Now we have the opportunity of a further phase at Ellerbeck west to mine 1 million tonnes in five years, and the 100 or so local residents who live near the potential mine want it to be developed. They know that they live on a coal reserve which will eventually be mined. They know that until it is mined their life will be uncertain, and that mining it will provide minerals, wealth and jobs.

Opinion in the area is split. The two parish councils are opposed to the development. I wholly support the application. We have a bad swamp—there is a little wildlife in it—which will be completely drained and made into a super lake. We have old colliery workings, barbed wire, shafts, old metal and brick work and slag heaps. It is a disgrace. I have heard comments about derelict land grant rules being changed, but we have no chance of doing away with all that unless the opencast opportunity proceeds.

I welcome the new rules that will help opencast applications to win approval. I note that some people are massively opposed to the misuse of the holes in the ground for refuse disposal, particularly if four or five years of mining are followed by three years of refuse disposal. I am fully in favour of local residents having their say. In my area they are in favour of the opencast operation.

I am delighted that hon. Members on both sides of the House agree that local residents should receive some form of compensation, as they already do.

Does the hon. Gentleman find serious transport problems in his constituency involved in collecting opencast coal? Is he in favour of railway lines being built to opencast sites so that coal can be moved in railway wagons?

Certainly heavy lorries bearing large loads travel to and fro, but much of the earth is moved from one part of a site to another. In many areas the disposal point is an eyesore, but I could take hon. Members to a site in Leicestershire almost as large as the Chamber, yet nobody driving along the road within 5 in of it knows that it is there because of sensible mounding and grassing. Indeed, sheep graze on the site.

I support the Bill wholeheartedly. I am delighted that the hon. Member for Gordon (Mr. Bruce) has tabled a sensible amendment. I hope that hon. Members will support changes in granting licences. The Bill provides an opportunity for the development of small areas of opencast mining and for British Coal to make a profit. The Bill writes off debt. I see nothing but good coming from it for the coal mining industry as a whole, particularly small private mines which should be allowed to compete with British Coal. In the past opencast developers and site owners have operated only as civil engineering contractors, winning the coal on behalf of the opencast executive.

I pay tribute to the opencast executive. It has asked me to lay on an exhibition in the tipper Waiting Corridor to show what opencast mining is and what environmental improvements people can expect. I hope that hon. Members will take the opportunity of visiting it from late January to late March.

7.54 pm

Like many of my hon. Friends, I welcome the major proposal in the Bill —the restructuring of the coal industry's finances—but some clauses cause anxiety.

The principal clause seeks to relieve British Coal of its huge debt of £4·5 billion. All hon. Members will welcome a reduction in that, but we have not heard how much it will be. The Bill does not state how much of the debt will be removed and the Secretary of State did not mention the exact sum. It remains to be seen how warmly we can welcome the clause and the reduction.

Although British Coal has shown an operating profit over the past two years, it is unprofitable on the bottom line because it finances that debt. The interest charges in the forthcoming year will be £575 million. The recent increases in interest rate have done nothing to alleviate that burden. Indeed, British Coal has been prevented from achieving the financial targets imposed on it because of interest rates and exchange rate changes. The figure of £4·5 billion is high. Tory Members tell us of previous reconstructions within the recent past, but we should remember the wealth that British Coal has generated since the war. The whole story has not been simply squandering taxpayers' money.

Since 1980 British Coal has been required to give up £1·2 billion in artificial price reductions to customers. Since 1985, £850 million has gone to the Central Electricity Generating Board to bolster its profits. The 1989–90 CEGB trading profit was well over £1 billion. Money has also been used to fund our nuclear programme or, to be more accurate, the shambles of what is left of our nuclear programme. It has been used to provide an excuse to run down the coal industry since 1985 so that now it is a small runt compared with its previous state.

The one thing that the money was not used for was a reduction in electricity prices to consumers. In the past two years the Secretary of State has imposed increases, although electricity generators were calling for price reductions. If those price increases had not been forced on the industry, British Coal would now be looking at an operating profit of about £1·4 billion. The electricity industry forced price increases on British Coal for tenuous reasons. World coal prices are low. The 4 per cent. of coal which is traded internationally is at artificially low prices.

Had the Central Electricity Generating Board opted for imported coal, prices would have increased quickly—assuming that the CEGB could have imported it. We have already heard about the effect that that would have had on the nation's balance of payments deficit, which is already at a record level. As I have said, however, the facilities were not available to enable substantial imports to take place. Conservative Members have referred to the Associated British Ports (No. 2) Bill. I merely say that if the Government were not prepared to vote for it, we would not have it.

The price reductions that British Coal has been required to make have been used to fund the nuclear programme, the costs of which are far higher than was ever suggested previously. Price cuts were demanded even though it was clear that the comparative generation costs of coal-fired electricity and nuclear electricity were in favour of the coal industry.

Over the past few years, the costs have been substantially misrepresented to the industry and to the House. Privatisation has initiated a re-examination of the decommissioning costs of nuclear power. Consequently, the true costs are now becoming clear. The different policy for nuclear decommissioning which has been implemented by the nuclear industry has brought a sharp increase in decommissioning costs, which has exacerbated the problem. The difference between the costs of coal-fired generation and those of nuclear generation will result in a nuclear levy of about £1·4 billion. That levy will be imposed upon the coal industry, thereby adding to the costs of British Coal.

The restructuring of the finances of British Coal is a welcome part of the Bill. It is interesting that it is designed to enable concessionary coal to be protected and to enable British Coal to meet the costs that it incurs in industrial deafness cases. I hope that the Government will continue to fund concessionary coal, which is an important issue in constituencies such as mine. Concessionary coal is provided for many retired mineworkers, and has been for many years. It is essential to maintain concessionary coal in areas such as mine, with high unemployment, low wages, few job opportunities and a large retired population. It is important that the scare stories about concessionary coal being bought out for a few thousand pounds should be knocked on the head.

If the financial restructuring takes place and the debts of British Coal are wiped away, British Coal's products will be competitive with imported coal and with other fuel sources. We have heard that technically British Coal will be bankrupt because its assets are worth less than its current liabilities, but why has British Coal been left in such a position for so long? Why has it had to have a £4·5 billion debt hanging round its neck, with interest charges of £400 million or £500 million a year and the electricity industry pointing the finger and demanding further price reductions? Coal mining constituencies have suffered closure programmes, massive redundancy programmes, all the misery of job losses and the knock-on effects on the local economy, so as to subsidise the nuclear industry and the electricity industry's profits.

Even now, despite the removal of a proportion of British Coal's debt, the industry is still threatened. There are the shadows of privatisation. At the same time there is the removal of nuclear power stations and also a lack of independent generation, although that is supposed to come forward. There is still pressure for further colliery closures. The hon. Member for Sherwood (Mr. Stewart) poured scorn on the leaked document and the reference to 30,000 redundancies, but the Cabinet Sub-Committee document states:
"It would be almost impossible to shield UDM areas from further closures given that British Coal has already fallen over backwards to maintain in existence relatively high-cost pits in Nottinghamshire."

Order. A time limit has been imposed on speeches during this stage of the debate, and I must call the hon. Gentleman to order.

8.5 pm

I welcome the Bill, but as my hon. Friend the Minister probably expects, my welcome is somewhat qualified. I welcome the Bill because it is the necessary prelude to what I hope will be the privatisation of British Coal. The former Secretary of State for Energy, my right hon. Friend the Member for Hertsmere (Mr. Parkinson), who is now Secretary of State for Transport, referred to that as the ultimate privatisation. That is a long overdue measure that will lead to greater efficiency, to a better deal for industry and domestic coal consumers. It would represent the great change that has taken place since the time that the country was held to ransom by the defence of inefficiency in the coal industry. With the advent of privatisation, miners will own part of their industry and trade unions will negotiate with owners who put the customer first.

As I have said, I welcome the Bill with some qualifications. I feel that the Government have once again missed the opportunity to reform many of the practices of British Coal that are unfair and anti-competitive. In my view the Bill should go a good deal further.

Clause 4 relates to coal production and exploration licences. It will permit British Coal to grant licences to work deep mines with up to 150 employees and to grant licences for opencast operations where total production is not likely to exceed 250,000 tonnes. On the face of it, the clause seems to offer a great improvement, but in reality, even with 150 employees in a deep-mining operation, the private sector cannot take on British Coal on the same commercial basis. The limit of 250,000 tonnes for opencast production can hardly improve competition when British Coal never exploits reserves at that level. The proposals may be gestures to competition but they fall far short of the ideal.

Clause 4 raises the more fundamental issues of royalty payments and licensing. British Coal receives about £11 per tonne royalty payment from private mining operations. Even though British Coal has the best sites, it enjoys the further advantages of an £11 per tonne royalty payment and an £11 per tonne subsidy. How is that fair or reasonable? How can it be anything but anti-competitive? In addition, British Coal has the power to decide whether an operator should be licensed. As the law stands, British coal is in a position to say, "We shall decide whether you are entitled to compete with us. If we decide that you can do so, we shall start with an £11 per tonne advantage, and you will pay us an £11 subsidy on top of that." I find it difficult to understand how the Government can justify that anti-competitive approach to the mining of coal. In my opinion, clause 4 should have gone much further.

As my hon. Friend the Member for Erewash (Mr. Rost) and the hon. Member for Gordon (Mr. Bruce) said, clause 4 should have removed the licensing responsibility from British Coal. It is a matter of regret that the Bill does not do that, so I ask the Minister whether he will give one relatively minor assurance. Will he say that when private mining operations increase as a result of the Bill, British Coal will not be allowed to contract for the production that then ensues from that mining, so further stifling competition in the marketplace? If my hon. Friend is serious about wanting to increase competition, he will surely give that assurance.

Competition is a subject about which many sections of the coal trade feel very strongly. I say "sections" because, from what hon. Members have said so far, it might be assumed that the coal industry consists entirely of British Coal. Of course it does not: there are several thousand coal merchants in this country, employing several thousand people. There are many wholesalers; there are importers and exporters of coal, producers of smokeless fuel, private deep-mine operators and opencast operators.

The people who work in those sectors are firm believers in competition, as are most Conservative Members. Even the Government believe in free competition. In the main, I think that we all accept that it is a guarantee of efficiency and a driving force for change. It seems strange, therefore, that a Government committed to privatisation and free market forces should stand by while a nationalised industry is allowed to engage in back-door nationalisation and anti-competitive practices.

For example, British Coal recently introduced loyalty rebate schemes, intended to restrict merchants to obtaining their supplies from British Coal; yet, as we all know, British Coal is regularly unable to supply the highest-quality coals. While British Coal makes deals to restrict the import of coals by independent importers, and while many—Opposition Members in particular—campaign to restrict coal imports to protect British Coal's position, the corporation itself is a major importer, and not only from the EEC. How many hon. Members realise that British Coal now imports and distributes Chinese and Vietnamese anthracite, while attempting to stifle imports by others? I ask the Minister to take a close look at whether the signing of such loyalty agreements contravenes GATT regulations.

There is also the question of concessionary fuels for retired miners and widows.

I will not give way, simply because I have not time to do so.

The Secretary of State has told us today that he will underwrite that commitment with taxpayer's money. Why, then, does he not insist that the distribution of the fuel is put out to open tender, as so many local-authority services have been? Why is distribution carried out exclusively by National Fuel Distributors Ltd—which is a subsidiary of British Coal—rather than being open to competition?

Then their is the question of incursions into private trade. In the past year or so, British Coal has acquired a 50 per cent. stake in British Fuels Ltd. At the time, British Coal gave assurances that an arm's-length relationship would exist. and the Minister gave me the same assurance. We now find that the commercial director of British Coal has been appointed chairman of British Fuels Ltd. How can that be describe as "arm's-length", and how can it be in the interest of free competition? Why does the Minister stand by while all that is happening? I ask him to give an assurance that, if National Fuel Distributors is put up for sale—as rumour has it that it will be—it will be offered on the open market?

There is widespread concern about preferential treatment with regard to British Coal projects for depots, pre-packed plants and land-sale operations, and about pricing tranparency. All that creates the impression that British Coal is manipulating the market. British Coal also intends to introduce a "master merchant" scheme, requiring merchants to hand over the names and addresses of customers. That is yet another attempt by British Coal to manipulate the market and take complete charge of it. In Ulster, British Coal regularly makes fuel available at £6 to £16 per tonne cheaper than in the rest of the United Kingdom. Why are prices being offered in Ulster that are not available to merchants in this country? How can that be a free market?

In every area of British Coal's involvement in the market, there is evidence of anti-competitive practices—so much so that many believe that an investigation by the Monopolies and Mergers Commission would now be appropriate. On the basis of what I have said, will the Minister make a referral to the commission in the interests of the private coal trade, the consumer and the nation?

I welcome the Bill as a step towards the privatisation of British Coal. My wish, however, is to see the privatisation of the state sector of the coal industry, rather than the nationalisation of the private sector. I ask the Minister to think hard about what I have said, and to ensure that, as he restructures British Coal, he increases competition and market forces rather than reducing them. If he is unable to influence British Coal by persuasion, he should use the mechanism provided by the Bill to compel the corporation to come to heel.

8.14 pm

When opening the debate, my hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) welcomed the clause in the Bill that gives British Coal some financial assistance. Let me make a brief plea for some of that assistance to come back to the anthracite coalfield of west Wales in the form of investment.

My constituency and Carmarthen contain at least 50 million tonnes of mineable anthracite reserves. Apart from the dwindling pocket of anthracite in the West German coalfield—which will dwindle further if the European Commission starts having a go at the way in which the German coal industry is financed—there is no anthracite between Llanelli and Poland. The potential for development of the anthracite coalfield and its reserves in Britain and Europe is enormous; yet despite that, and despite the potential markets, British Coal has walked away from the anthracite coalfield, and especially from deep mining it. It has closed the largest anthracite pit in Britain—indeed, in western Europe—and has mothballed a drift mine into which it had itself put £18 million. My area has only one deep-mined anthracite pit left.

There is plenty of opencast, however, and if the Bill is passed there will be a good deal more. Apart from its awful, damaging effects on the environment, opencast mining—at least in the anthracite coalfield—sterilises the coal beneath, which the opencast machines can reach and mine. When the earth is put back, anyone wishing to drift-mine or slant-mine the coal beneath it must incur all the costs of digging through the earth to get to it.

There are a few small producers, but they are very small, and they are finding it difficult to make a living. Anthracite is sold mainly to the domestic consumer market, and I am told that the current price for best west Wales anthracite "run of mine"—that is, as mined—is between £27 and £29 per tonne. My constituents, many of them elderly, are paying £155 per tonne; moreover, they cannot obtain the anthracite very often, because British Coal has closed the mines. We are forced to import Chinese anthracite, which is of inferior quality.

I understand that coal must be washed, sifted and distributed, but does a mark-up of 500 per cent. make any sense? A cartel is operating. It is not a cartel of miners—they are not benefiting from it—or a cartel of elderly consumers, but a cartel of private factors in south Wales. Someone is receiving the difference between £27 or £29 arid £155 per tonne. I do not know whether that is a matter for the Office of Fair Trading, but it certainly does no good to anthracite production or anthracite consumers.

The market is enormous, but, over the years, British Coal—whatever it has done in other parts of the country—has not paid much attention to the market in anthracite. First, there is the market in power stations. British Coal has said that anthracite cannot be burned in power stations, although it can be mixed with other coal. That is not true. Very clear fluidised bed technology has operated in Finland and the United States for years, burning not only the anthracite but the anthracite dust which is a cheaper component of it. Thereby a market is being provided for the better-class and better-priced anthracite.

Apart from the domestic consumer market, schools, hospitals and other public institutions constitute a market for the use of anthracite for central heating. The competition is intense. Certainly gas is a great competitor. I have been told that there are only two British manufacturers of small anthracite boilers for central heating. One of them is too small to engage in research and development. The other is not interested. I am certain that it is possible to burn anthracite in schools and hospitals on the continent. British Coal, however, is not interested in it.

British Coal should reopen the drift mine in my constituency on which it has spent £18 million. It should open small slant and drift mines to replace much of the opencast mining and get together with boiler manufacturers to try to sell anthracite to power stations. In addition, British Coal should get together with the smaller boiler manufacturers and ensure that anthracite can be used for the heating of schools, hospitals and other public institutions.

The miners in my constituency have shown loyalty and dedication to the mining industry and to British Coal. It is time that British Coal repaid their loyalty and dedication by investing in our coalfields.

8.21 pm

Since I became a Member of Parliament I think that I have attended virtually every debate on the coal mining industry. I seem to recollect that there has been a constant cry for more support for the mining industry. I recollect too the Opposition's total ignorance of the fact that £2 million a day has been invested in the mining industry since the Conservative party came to office. I am astonished by the Opposition's lack of generosity of spirit in their comments on the Bill. One would never think that an enormous debt is to be written off and that consequently British Coal will be profitable and able to compete with imported coal, about which the Opposition are rightly worried.

During the last five or six years the coal industry has undergone massive restructuring. Coal is now competitive with most other fuels. Since 1983–84, about 84 pits have closed. Only 86 collieries are now left, but they produce virtually the same amount of coal as was produced five years ago. The number of employees has virtually halved, to the current 86,900. That reduction has taken place without any compulsory redundancies. Productivity has increased by over 90 per cent. during that period, and it is still increasing.

To reach those figures, everyone in the coal industry has played a part—often a difficult part. I pay particular tribute to the Union of Democratic Mineworkers in Nottinghamshire and to its president, Mr. Roy Lynk.

The industry is basically profitable, but year after year what would otherwise be a profit is turned into a loss because of the huge interest payments that it has to make to the Treasury. That is what the Bill is about. It is not about imported coal or about fattening up the industry for privatisation.

A healthy coal industry plays a vital part in our national economy. Both sides of the House recognise that fact, despite the invective that we some times hear. If it is not healthy, costs rise, there are expensive imports and the industry cannot offer long-term contracts, based on certainty of supply and price, to the electricity supply industry. It makes sense, therefore, as Opposition Members have argued for a long time, to write off the accumulated losses. British Coal is entitled to say to the Government, "We have done what you asked, we have restructured, we are now profitable and we have played our part. The Treasury must now play its part." I know that my constituents in Nottinghamshire will be very happy with the Bill, in particular with the writing-off provisions that are fundamental to it. They will also find it astonishing that Opposition Members think so little of the Bill's provisions that they intend to vote against the Bill.

Without this help, the industry will find it very difficult to restructure. It will also benefit from the proposed increase in the restructuring grant that will rise to £1,500 million by 1993. The Government's policy has always been to try to ensure generous redundancy terms and, if possible, no compulsory redundancies. With the increase in grant, British Coal can offer generous redundancy terms without eating into annual profits.

There must surely come a time, however, when the redundancy process will cease. The industry seems to be run by accountants, not by entrepreneurs. Accountants decide whether a pit is uneconomic. Engineers and visionaries should play a major part in that decision. Pits which produce fine, excellent coal are in danger of closing because they verge on the margins of profitability. They cannot satisfy an accountant's eye if he looks only to next year's balance sheet figures.

Apart from aiming at a high-wage, high-profit industry that produces coal that is attractive to the consumer, industry and the electricity supply industry, we must do more than just make it the supplier of choice. We must go to the young colliery manager, the young pit deputy and the trained young worker and ask them what they see as their future. They are getting good coal out of pits that have considerable reserves, yet they fear for their job security. They have no conception of what British Coal's accountants have in store for them and their pit in even a year's time.

The opportunity should be taken to draw up a new plan for coal, otherwise the industry will drift, with each Secretary of State having a greater or lesser commitment to it. What does my right hon. Friend think the coal industry will look like in five years' time, yet alone by the end of the century? My right hon. Friend will not be there in five years' time; he will have moved to a different job. However, will his successor be able to look back and say, "This is what we planned five years ago; we have achieved it", or will he be living from day to day?

We have one of the finest indigenous industries in the country, with a dedicated work force at all levels and a product which is the envy of the world. If we want young mining engineers and coal face apprentices with ambition to come into the industry, they must surely feel that someone, somewhere up there has a commitment to their future. Does the board ever tell them what its vision of the future is, what its enthusiasm and commitment are and the obstacles to achieving those ambitions? Paring the industry down to the lowest sustainable economic unit until someone takes it off the taxpayers' hands is not a plan for coal.

I congratulate the hon. Gentleman on making a genuine, sincere contribution to the debate. He recognises the human and fundamental elements of the industry which we are debating. I put it to him that the theme of his address supports what I said—we must get out of the market force arena and free-for-all and away from the free marketeers who indulge in cost per unit price production and instead get back to a planned fuel economy, where each industry knows what it is expected to produce under a planned energy policy. Does the hon. Gentlemen agree?

I cannot take up the hon. Gentleman's comments because I have virtually a few seconds left in which to conclude.

Perestroika for an industry is not a banner under which young people can come in and work. We must give them more than that—a vision. I should like that to come out of the Bill.

8.31 pm

The hon. Member for Newark (Mr. Alexander) talked of a vision, but that vision was seen in the mining industry only as a result of nationalisation. Before nationalisation, the industry had no future, no hope and no vision. Only since the industry moved into public ownership has that vision been created. Judging by the Bill, however, I am afraid that that vision will disappear, for a number of reasons.

I have been proud to work in the coal mining industry for more than 30 years, both as an electrical engineer and as an industrial relations officer. I have been proud and privileged to watch it come from nothing to one of the finest highly technical industries in the world. I have been proud and privileged to work among and with the people who have brought the industry through that era. The British coal miner stands second to no one anywhere in the world in terms of his workmanship and adaptability to anything that comes before him. That is why the British miner has always been prized outside the industry, when anyone has been able to get hold of him.

The miners worked for the industry because they worked for the vision of which the hon. Member for Newark spoke—a blue flag flying over the winding gear, proving that the British coal industry belonged to the British people. That is what it has all been about.

The Bill marks the end of that vision, and the beginning of the end of an era. The next election, which the Conservatives will not win, will decide how the coal industry proceeds. The Bill is an enabling and paving measure for the privatisation of the coal industry. Conservative Members say that they cannot understand why the Opposition intend to vote against it, but that is the answer in a nutshell—we want a nationalised coal industry.

Although many of my colleagues and I approve of the £4·5 billion or £5 billion write-off, we must recognise what it will mean. We should not hide from the fact that this is a subsidising Bill for the electricity industry. In a way, it is a crafty Bill. The Minister will say, "Although we are aiming for the privatisation of the British coal industry we shall not bring that about until we win the next election." The Government have had two bites of the cherry. They have provided the means of achieving privatisation should they win the next election, but in their current term of office they have provided the means for subsidising the electricity industry. By the write-off of £4·5 billion or £5 billion, British Coal will be able to compete with any coal industry in the world—not for its own benefit, but to provide cheap energy for the electricity industry.

There is nothing untoward about that. It has happened in the past. The coal industry has always been used as a milch cow for private industry. In the era when coal could have been sold on the open market, as it was highly profitable and a bank balance 'had been built up, it was not allowed to be sold. The National Coal Board directors patted us all on the head and said, "You should not ask for a wage increase because it will cause the closure of the pits and raise the price so that we cannot sell coal." The pits have closed anyway, and coal has been sold at a cheap price to the electricity industry. That is why the coal industry has always been a milch cow. Through the Bill, the electricity industry will continue to be provided with cheap coal, especially through the nuclear levy.

The history of the coal industry is not surprising. Over all these years, the industry has carried out research and development through its electrical and mechanical engineers—for example, into the hydraulic systems which the aeroplanes use, coal-burn research, and mine support systems which had not previously been developed. The industry has provided electrical and mechanical engineers for mining industries throughout the world.

The hon. Member for Newark talked about electricians and mechanical engineers for the future. There has never been any other apprenticeship scheme like that provided by the NCB for its workers. Anyone who worked for the board could join its mechanical and electrical schemes. It put the workers through its technical schools and sent them on to the universities to get degrees. The NCB provided this country not only its fuel and with expertise in many subjects, but with its wherewithal. That is where the expense came in.

I should like to talk about concessionary fuel and cash in lieu. Historically, the coal belongs to the miners. I used to get 13 tonnes of concessionary coal per year. It was part and parcel of our wage agreement. [Interruption.] Conservative Members may not have seen a Yorkshire grate. One used not a shovel but two buckets, and the ash from Yorkshire grates has provided miles of pathways through allotments. That concessionary coal was included in the negotiations as part of the wages. We gave it up, tonne by tonne, to provide a pool of coal for the widows and retired mineworkers.

Who will pay for redundancy once the industry is privatised? I asked the Secretary of State about that earlier. As the Minister knows, redundancy has been paid in two ways—a lump sum payment and a weekly payment until the age of 65. Each time the age of redundancy has dropped, the ceiling on the money has dropped as well. Under the Bill, people in the mining industry under the age of 45 or 46 will be made redundant. Will the redundancy payment scheme be such as to provide the same benefits as people receive now? Will there be a lump sum payment based on age, wages and the number of years worked for British Coal, and then a weekly income until people find work or reach the age of 65? It is important that we should know.

Other hon. Members have mentioned small mines and licensing, but they did not mention that licensing was a bond. British Coal gave out licences, which were also bonds because so many private mines left areas of dereliction when the operators had finished getting out the coal. British Coal had to put matters right and it provided the expertise. If there is any alteration in the licensing system, we must ensure that the bond remains so as to ensure that the environmental problems created by private mines are dealt with.

Clause 4 raises the permitted number of workers under licensing from 30 to 150. Can the Minister tell me now whether the management structure under the health and safety rules will be the same as now? Will there be a manager, an under-manager and an over-manager? Will there be mechanical and electrical engineers? At present, they are not found in the small mines and most of the small mines, which run at the periphery of the large mines, have used British Coal's technical engineers for their work. It was supposed to be a free service for small mines, although it was in fact a charge on British Coal.

All those developments will be halted by the Bill. A lifetime of progress—

8.41 pm

It is a pleasure to follow the hon. Member for Barnsley, West and Penistone (Mr. McKay), who is one of the most respected hon. Members. I share with him an emotional bond with the coal industry because my family has been involved in it for many generations. Both my grandfathers were coal miners, my father spent more than 30 years in the industry, and I was myself briefly an employee of the National Coal Board at Hobart house. I am happy to say that I have now mended my ways.

I greatly welcome the Bill and I congratulate my hon. Friend the Under-Secretary on his work in bringing it before the House. I mean no disrespect to his precedessors in saying that he has been the most forward-looking and effective Minister for coal since I have been a Member of Parliament, and I pay tribute to his work. I especially welcome clause 4. I was sorry to hear that the Labour party rejects clause 4. It is a proposal to which it is not accustomed, but I hope that it will grow on the Labour party with some experience and that the Labour party will extend its new attitude into other areas of policy as well.

Clause 4 proposes a liberalisation of the opencast regime, which I welcome. The Government have belatedly accepted the recommendations of many who have gone before. In 1983, the Monopolies and Mergers Commission recommended that the limit on opencast sites that were operated by licensed operators should be increased to 100,000 tonnes, and in 1986 it reiterated that in a report on the South of Scotland electricity board. In 1986–87, the Select Committee on Energy recommended that the statutory limit should be removed altogether. I am glad that the Government have gone part of the way in raising the limit to 250,000 tonnes.

Under section 1 of the Coal Industry Nationalisation Act 1946, British Coal has a duty of
"making supplies of coal available, of such qualities and sizes, in such quantities and such prices, as may seem to them best calculated to further the public interest in all respects".
The Bill is one of the means by which that primary duty of British Coal can be fulfilled.

There is, of course, a conflict of interest for British Coal because it is the licensing body. It is extraordinary that the primary producer in the industry is responsible for licensing its competition. That does not seem fair, and the results have been nothing other than we might have expected. British Coal has the power not only to license competition, but to saddle it with royalties. The average royalty now paid by licensed opencast operators is a tonne and the figure was as high as £16 until recently. In effect, at various times, the royalty has been greater than the profit that the opencast executive has made on its own opencast operation. If the opencast executive had had to pay a royalty to the Crown on its production, it would not have turned in any profit in many years. Yet it is only the notional profits that the opencast executive has produced that have made British Coal's recent results acceptable.

Private producers have been very much the creatures of British Coal. They have not had the freedoms that they could have expected to find elsewhere in the private sector, but have been wholly controlled by the nationalised monopolist. They are controlled not only on the supply side, but on the demand side. The Central Electricity Generating Board has been the almost monopolistic purchaser of the coal that we produce and there has been an agreement between British Coal and the CEGB that has greatly affected the private sector.

In the 1986 supply agreement, it was announced that 50 million tonnes of coal would be taken from British Coal at nearly £47 a tonne, 10 million tonnes at £34 a tonne, and 12 million tonnes at £30 a tonne. The average price of that coal was just over £42 a tonne, but the price that has recently been forced on the private sector is not the average price, but the marginal price of the third tranche of the coal—£30 a tonne—out of which it is paying to British Coal £11 in royalties. The private sector has to make its profit and cover its costs out of a fraction of the revenue that British Coal derives from its own operations.

The private sector does pay its interest, unlike British Coal. It does not have the taxpayers' cheque book behind it to cancel debts. It not only pays interest, but contributes to the revenue of the Treasury by paying tax on the profits that it makes. That is a major difference between those two sections of the industry.

The private sector has been operating under severe difficulties. It is an astonishing achievement that it has made small-scale production profitable in spite of the arbitrary output limits and royalty levels that have been set above the average profit of the coal that is produced by British Coal.

What on earth is the logic of restrictions? I agree entirely with the Select Committee on Energy in its 1986–87 report that there is no logical basis for a tonnage restriction on opencast production. Competition is good for British Coal—or it would be if it was exposed to it —just as it is for everybody else. I should like the mineral rights of the coal to be vested in the Crown. Let British Coal pay royalties on the coal it extracts in the same way as the private sector and let it compete for the right to exploit the coal.

It was a Conservative Government in 1938 who nationalised royalties and gave them to the Coal Commission. As a result of the 1946 Act, the bounty that was supposed to be provided for the taxpayer has been channelled into the coffers of British Coal, not to the taxpayer. It has been a disguised form of subsidy all along, which has helped to mask the real disaster of British Coal's finances.

The changes are most welcome. In any case, they only keep up with technical developments in opencast mining over the past 30 years or so. In 1958, a mechanically driven dump truck of maximum size was about 20 tonnes, whereas today it is 10 times that—200 tonnes. All the machines are much more productive. Equipment is now available to licensees which in 1958 was not available even to the National Coal Board. Equipment improvements now permit extraction down to a level of 100ft, whereas the maximum 30 years ago was 10ft to 20ft. In 1958 a site with 25,000 tonnes of coal would take two to three years to complete, whereas today the process would take less than six months. The two to three-year period would now be long enough to permit the extraction of 250,000 tonnes of coal. In increasing the amount from 25,000 tonnes to 250,000 tonnes, the Government are only taking account of those technical developments.

The hon. Member for Barnsley, West and Penistone said that bonds were required because British Coal had to clear up the mess following the involvement of the private sector. I have yet to discover a company that has given a bond that has had to be called upon to fulfil the obligation to which it has exposed itself. No business that wants to stay in business and make profits over a long period could afford to behave in the way that the hon. Member for Barnsley, West and Penistone hypothesised.

The hon. Member for Wentworth (Mr. Hardy) talked about the safety record of the private sector. The mines and quarries inspectorate imposes a very tough regime —rightly so—upon all mining and extractive operations, and the private sector is subject to that regime in the same way as British Coal. It has no reason to fear investigations into its safety record. It is arguable that the safety record of the private sector will be enhanced and improved by the changes because it will now be in a position to have large enough operations to take advantage of larger and more expensive equipment and to spread the cost of investment in it over a larger area. That should lead to an improvement in conditions in the industry as well as to cheaper coal.

The overall benefits of liberalisation are many. This is not an anti-coal Bill but a pro-coal Bill, as a result of which the lot of the mining communities will be much improved.

8.51 pm

We have had a far-reaching debate. The Secretary of State opened by referring to the praiseworthy results achieved by the British mining industry in the past three or four years. He commended the 70 per cent. increase in productivity that miners have achieved. He also outlined the continuing closure programme that has taken place over the past four years and said that 90 mines had been closed as a consequence of the rundown of the industry. As a result of the Government's policy, manpower has been reduced by 130,000.

The tragedy of the Government's policy is that it has had a devastating effect on mining communities. The Secretary of State congratulated British Coal Enterprise Ltd. on the regeneration of jobs. I can tell him that he is under an illusion. A considerable number of jobs have been lost in my area but British Coal Enterprise Ltd. has provided little of the available alternative employment. Ackton colliery was sold to a private developer on the basis that it was not the job of British Coal Enterprise Ltd. to promote and generate employment. I thought that that was the whole purpose of British Coal Enterprise. Surely its role was precisely to inject money and regenerate employment. I have to inform the Secretary of State that little alternative employment has been provided in Hemsworth, 75 per cent. of whose male population has traditionally depended on coal mining for employment.

The Minister said that clause I was intended to give the Secretary of State the opportunity to wipe away British Coal's debts, which he estimated were £4·5 to £5 billion. Many hon. Members have referred to the Government's generosity in writing off British Coal debts. The hon. Member for Nottingham, South (Mr. Brandon-Bravo) and the hon. Member for Bedfordshire, North (Sir T. Skeet) claimed that the Government had repeatedly written off the industry's debt. My hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) gave us the answer to that argument. In the 1950s—the era in which the Government are supposed to have written off millions of pounds' worth of National Coal Board debts —the board was prevented from taking advantage of the very market forces by which the Government set so much store. In the 1950s, coal was fetching a price on the international market well above the price paid to the NCB by the generating industry. In effect, British Coal and the British miner were subsidising the Central Electricity Generating Boad. Had the NCB been able to command the world price for solid fuel it would not have needed to borrow from the Government or obtain Government grants; it could have reinvested the capital that it had accumulated. The Government would then not have needed to write off the accumulated debt.

The Minister referred to the rundown in manpower, and Opposition Members envisaged a further rundown as a result of the Bill. A leaked Cabinet document suggests that 30,000 jobs will suffer as a result of the Government's present policy. That would reduce the number of jobs in the mining industry from 90,000 cited by the Secretary of State to 60,000. I suggest that the main reason why the industry is beginning to be economic is that the number of miners' jobs has been reduced.

The burden on the British coal industry has been an accumulation of capital debt incurred in the restructuring of the mining industry over a number of years which has made it a highly productive industry comparable to any deep-mining industry in the world. That debt has been paid for mainly by the reduction in manpower in the industry, yet the Government have the audacity to suggest that the Bill provides the opportunity to write off £5 billion of debt. [HON. MEMBERS: "It does."] I accept that. The most honourable contribution from the Conservative Benches was that made by the hon. Member for Ellesmere Port and Neston (Mr. Woodcock), who said that the Bill is the prelude to the privatisation of the coal industry. That is why £5 billion will be wiped off, as it will fatten up the industry for privatisation.

My hon. Friend the Member for Holborn and St. Pancras (Mr. Dobson) has described the other debts carried by British Coal, as a result of subsidies, contracts and price reductions, which amount to £800 million. British Coal and the miners have subsidised the generating industry. The subsidisation of the electricity industry is paramount to the Government because they must sell the electricity industry on the stock exchange and at a price that the stock exchange is prepared to accept. We take careful note that the stock exchange and investors are interested in electricity generation from solid fuel only and it is that solid fuel which will subsidise the future generation of electricity.

The hon. Member for Bedfordshire, North asked what was wrong with importing Colombian coal if it is cheaper than that produced by British Coal. If the hon. Gentleman believes in competition, why did he advocate in the Committee considering the Electricity Bill that the nuclear industry, which is not efficient, should be kept in the public domain? He believes that the management of private enterprise is more efficient, so why was he afraid to put the nuclear industry into the private sector?

In comparison with the mining industry, nuclear power is not competitive and that is why he was anxious to keep it in the public domain, subsidised by the taxpayer. The leaked papers from the Cabinet suggest that the Secretary of State withdrew the nuclear industry from the electricity sale because private investors would not take on the liability of that industry. The generation of electricity from nuclear power is twice as expensive per unit as the electricity produced from coal.

The Secretary of State made great play of the contract made between British Coal and the generating powers. British Coal will provide 70 million tonnes of coal in the first two years and 65 million tonnes in the third year. Why was that contract struck? The answer is simple. The importation of large tonnages of foreign coal through the ports that were the subject of a Bill that we opposed cannot begin for three years. That is why the CEGB has bargained with British Coal. It is unable to import the necessary coal to make up for the shortfall that would result from forcing down still further the supplies that it receives from British Coal. The CEGB has a monopoly on demand and therefore can blackmail British Coal, as it has done recently in terms of the prices negotiated.

My hon. Friends have already stated why we will oppose the Bill. Clause 4 is a recipe for disaster and a danger to our miners. [Interruption.] My hon. Friend the Member for Ashfield (Mr. Haynes) wants to make a contribution. I represent a mining constituency and every hon. Member representing such a constituency must make a contribution.

My hon. Friend the Member for Wentworth (Mr. Hardy) has already said that clause 4 is dangerous as it will allow private companies to extend opencast and other mines. The Bill will allow the expansion of private mines, so the danger of injuries in those mines will increase. Parallel to that, however, is the fact that the regulations governing mine safety are to be reviewed, much to the consternation of people who work in the industry. Regulations are being liberalised as a consequence of improving profitability in the industry. I foresee that the number of people injured and the number of fatalities in the industry will escalate as a consequence of changing the regulations. Every hon. Member who represents a mining constituency must take that into account before going into the Lobby tonight.

The hon. Member for Sherwood (Mr. Stewart) has constantly badgered us about the Associated British Ports (No. 2) Bill. The Nottinghamshire miners and other hon. Members representing Nottinghamshire should know that he supports opencast mining. Such mining usually takes place in areas where deep mines have been closed and, as a consequence, many jobs lost.

Opencast mining is no substitute for the large reduction in employment in mining communities, and local authorities will show greater and greater resistance to it —as they do now, even to the small scale currently permitted by legislation. There will be greater resistance as a result of expanding opencast mining to 250,000 tonnes.

Local authorities will demand public inquiries about why opencast mining on such a scale should be permitted, and those inquiries will be the order of the day in mining communities.

Hon. Members should deeply consider the factors inherent in the Bill, and I hope that Opposition Members will oppose it when we divide.

9.5 pm

Mr. Michael Brown
(Brigg and Cleethorpes)