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British Coal

Volume 177: debated on Monday 23 July 1990

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To ask the Secretary of State for Energy how much the Government have invested in British Coal since 1979.

We have assisted the corporation in financing over £7 billion of new investment since 1979.

Will my right hon. Friend confirm that the Government have invested far more in the coal industry than did their predecessors? As a consequence, the arrangements between British Coal, National Power and PowerGen for the supply of coal mean a secure future for coal mining in Britain which will play a major part in future developments.

My hon. Friend is absolutely right. The new contracts with the electricity generators provide British Coal with a large market opportunity, a guaranteed income stream over the next three years, and time to adjust to the needs of a competitive electricity market. My hon. Friend is also correct about the support that the Government have given to the coal industry.

Grants made available to British Coal under this Administration exceed in real terms the total assistance given by all previous Governments since nationalisation of the industry was completed.

Will the Secretary of State comment on the paradox that the Government and almost all their supporters have boasted for the past decade or more about record investments in British Coal, but that the market opportunity, although the Secretary of State may describe it as large, is small? Every member of the Government and most of their supporters joyfully trooped through the Lobby to secure the replacement of the investment about which the Government boast.

The Government's support for the coal industry has enabled it to make massive improvements in productivity, which is now about 75 per cent. over the pre-strike level. That is a fine achievement and will enable British Coal to compete in the market at the end of the three-year contracts with the generators. I hope and expect that British Coal will achieve a substantial share of that market.

Given the massive size of investment in the industry, and that much of it is long term, should not we also take steps to ensure that British industry is not held hostage to fluctuations in world prices in coal? I refer in particular to the importation of sulphur-free coal.

It is impossible for any industry to be entirely insulated from world prices or environmental considerations, but the step that we have taken in improving the productivity of British Coal and playing our part in the European directive on emissions will enable British Coal to take advantage of the position in future.

Does the Secretary of State accept that many of the grants that have gone into the coal industry since 1979 were effectively investments in its closure and rundown? Does he agree that where there has been capital investment, to which he correctly referred, we must make sure that it has the long-term effect of producing coal? We must get way from three-year contracts, which are no good whatever to the coal industry. With the chairman of British Coal, will he get together people from National Power and PowerGen and begin discussions about long-term contracts so that investment is not wasted?

I agree with the hon. Gentleman this far: the three-year contracts are only a start and longer contracts are needed for the coal industry. I am sure that he will welcome the fact that a substantial part of the support that British Coal has received from the Government has enabled the necessary changes in manpower levels to be achieved in as humane and reasonable a way as possible.

The bulk of the assets being written down stem from the "Plan for Coal" initiated by the Labour party when it was in office. That was based on a forecast of coal demand that failed to materialise. I do not say that no recent investments will need to be written down as a result of the collapse of energy prices, but the Monopolies and Mergers Commission report on British Coal's capital investment last year noted an improvement in the corporation's investment appraisal procedures. That augurs well for the future.

Does my right hon. Friend agree that the figures demonstrate that the nationalisation of British Coal was an unmitigated disaster? When can the taxpayer look forward to that burden being removed?

If I had been around in 1946 I should not necessarily have agreed with the solution of the then Government. However, that might be controversial. The Government's policy is to privatise the coal industry. Proposals will be put before Parliament, but after the next election.