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Lord Hardy of Wath: My Lords, I am well aware that the Government are taking rather a lot of money out of the miners' pension fund. I am quite sure that my noble friend Lord Varley, who is very knowledgeable about these matters and experienced in energy matters, may wish to comment.

Some years ago, when Mr MacGregor was chairman of British Coal, I went to a large exhibition at the National Exhibition Centre which was presented by the British mining engineering industry. Mr MacGregor spoke at that exhibition bringing in the new criterion that no reserves could be counted unless they could be mined currently and profitably. That wiped out about 150 years of Britain's SS coal reserves. I wonder whether the Government have done a calculation of the effect of the massive increases in productivity in the past decade, under British Coal as well as under Mr Budge. I believe that, in economic terms, they have clawed back at least half of the period that Mr MacGregor wrote off.

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Will the same criteria apply to the small gas fields which will be very expensively harvested? That should be considered.

I am nearing the end of my speaking time. I became very angry occasionally during debates on coal in the previous Parliament because all we used to get from the other side were references to Mr Scargill and the miners' leadership, with the very clear implication that the mining communities were the enemies within. I found that utterly offensive. The record of those communities in Britain has been very substantial. We heard no words about the "enemy within" when the nation called for coal, and there were no such words when men were suffering from pneumoconiosis and other such diseases against which my noble friend Lord Lofthouse has waged such an active campaign. It is good that the Government are now implementing the provisions introduced, albeit half-heartedly, by the previous administration. However, this is a national burden--and it ought to be.

Miners' health is also one of the reasons why I welcome the priority given to safety by British Coal--now our national coal board--and by Mr Budge. While I opposed the privatisation of coal, I was reassured by the priority given to health and safety by Mr Budge, and I believe that the men and management at Tower colliery, at Long Gannet and those in Mr Budge's pits deserve commendations on their efforts to ensure that strides forward in productivity are matched by concerns for safety and health. Because of that, perhaps future miners will not suffer such disadvantages. At this time we need wisdom and I only hope that Her Majesty's Government will show it. My Lords, I beg to move for Papers.

5.51 p.m.

Lord Haslam: My Lords, first, I should like to express my appreciation to the noble Lord, Lord Hardy, for introducing this debate, because yet again the coal industry and its related industries are clearly at another important crossroads. I hope that noble Lords will bear with me if I reflect briefly on an earlier period of British Coal when I was directly involved as its chairman during the period after the miners' strike until the end of 1990. I believe it contains some important lessons for the present situation.

First, we should remember that the trigger for the strike was the threat by my predecessor, Sir Ian MacGregor, to close six collieries. In the five years following the strike we were to close over 100 uneconomic pits, leaving 69. Manpower was reduced by 140,000, but total output was only marginally reduced. Thus, productivity was doubled, equivalent to an improvement of 14 per cent per annum. I do not take any great pride in those statistics, but if that had not been done, I do not believe that we would even have the coal industry that we have today.

Surprisingly, Mr Scargill survived at the end of the strike, but was suffering from the illusion that the strike had been a real success. Thus, he was as confrontational as ever and opposed to the closure of

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every colliery. However, most of the miners had come to recognise--I pay tribute to them for this--the economic realities and we were able to work around Mr Scargill. That was only made possible because during that period we had no enforced redundancies. Every miner was offered either a transfer to a lower cost pit or the generous redundancy terms that we were permitted to offer by the then Conservative government. I must also pay tribute to the outstanding British Coal management skills in carrying through this daunting task. It was quite the most difficult one I had experienced in my long and varied industrial career. I should also like to endorse the tribute of the noble Lord, Lord Hardy, to the officials of the miners themselves, who in the end did extremely well to help to bring about that particular achievement.

My successors were able to pursue these policies with equal vigour right up to privatisation in 1994. It had been my belief that the "fighting weight" of the industry would be based on about 35 to 40 large, low-cost collieries, the number being predicated on the belief that they would provide future access to most of the remaining workable reserves in the UK without incurring the prohibitive costs of sinking new mines. However, that was not to be.

There were a number of other parallel issues on which we focused our attention. These were as follows: first, the dumping in the UK of cheap coal from Poland, Russia, Colombia and China; secondly, the import of highly subsidised nuclear energy from France through the inter connector link, which originally was intended primarily to export cheap coal energy to France. Those dumped imports were equivalent to the output of six large collieries. Thirdly, government subsidies to British Coal were being phased out, but massive subsidies continued to be paid to the coal industries of Germany, Spain and France. In Germany, the subsidy was between £3 and £4 billion per annum. The outcome of this was that the UK bore the brunt of absorbing all the cheap imports that were available around the world.

Furthermore, there was a need for urgent government support in the development of clean coal technologies, which could improve generation costs by 25-30 per cent and reduce by a similar amount the emission of greenhouse gases. One of the greatest contributions that the UK could have made to reducing world CO2 emissions would have been to develop and demonstrate advanced clean coal technology. Undoubtedly, that technology would have been widely adopted in the developing world.

All these topics were pursued with vigour by the then government and also with the European Commission. But even then the limited support we received could only be described as lukewarm. As a result, all the topics have today a familiar ring because they are still not solved and continue to be subject to rhetoric rather than determined and meaningful action.

Current world coal consumption is about 4 billion tonnes per annum. Reputable international energy agencies estimate that that figure will rise to about

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6.4 billion tonnes by 2020, primarily because of growing demand from the developing countries, in particular China and India. For example, China's need for coal is growing at the rate of about 100 million tonnes per year. Surprisingly, demand is also growing from the USA as it cuts back its nuclear capacity. At present, no further nuclear plants are planned for the USA, and by 2020 half the existing units will have been closed down. That represents almost 10 per cent of US energy consumption. What will replace it? It will be coal and gas, and most probably mainly coal. Those figures also reflect that there are an estimated 200 years' worth of coal reserves in the world, whereas the comparable figure for oil and gas is 50 years. It has often been said that we shall find new reserves of gas. However, having visited the Falkland Islands recently and seen the drilling operations off the islands, I believe that we might be coming to the bottom of the barrel.

A worrying feature is that the countries I have just mentioned are not showing any signs of supporting the Kyoto targets. By 2020, even if the UK and EU targets are met, they will have a minimal impact on the world outcome. The achievement of any Kyoto targets for reducing the world production of greenhouse gases from coal-burning are far removed from reality.

There is no doubt that in the late 1980s the German Government heavily supported their coal industry because they failed to face up to the problems of restructuring, as we did. However, now they have a more valid reason as they face a real problem: they are dependent upon Russia, the Middle East and Algeria for their supplies of natural gas. As the noble Lord, Lord Hardy, has already indicated, those countries are not the most reliable suppliers. They also face added pressure from their influential Green Party to phase out their nuclear industry, which represents 30 per cent of their electricity supply. Against that background, the German Government are most unlikely to allow their coal industry to disappear.

On the evidence that I have, our own natural gas reserves are currently estimated at 12 to 14 years, although the noble Lord, Lord Hardy, quoted a lower figure. But, surprisingly, we shall be supplying gas, through the new inter connector, to the Germans, for example, in the interests of so-called EU competition, thus further reducing the life of our own reserves. In addition, the Magnox nuclear reactors will be phased out by 2010 and the AGR reactors will be past their anticipated life, eventually leaving only the Sizewell B reactor active. Therefore, we could then find that we are in the same position as the Germans, dependent upon imported gas from Russia and the Middle East and our growing renewable energy sources which, while making encouraging progress, will not in any way fill the gap.

Against that background, are we willing to allow the remaining vestiges of our coal industry to disappear, along with the future access they provide to some of our valuable coal reserves, without having a much clearer vision of how we will meet our energy needs post 2020?

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6 p.m.

Lord Varley: My Lords, it is always a great pleasure to speak after the noble Lord, Lord Haslam, in debates of this kind. His comments were certainly interesting and the points he made about the world situation were devastating. I was particularly interested in his comments about the Falkland Islands and his visit there. I was the chairman of the Falkland Islands Company for about five years. Along with others, I would be absolutely astonished if oil were discovered in the Falkland Islands in the quantity that is regarded as commercial, although I hope fervently that that will be the case.

I join the noble Lord, Lord Haslam, in his tribute to British mining engineers. I expect that the noble Lord, Lord Ezra, will join in that tribute. Until a few years ago we had--I do not know whether they still exist in the quantities required--the finest coal mining engineers in the world. They contributed immensely to the terrific productivity records of British Coal not only under the chairmanship of the noble Lord, Lord Ezra, but under the chairmanship of the noble Lord, Lord Haslam, too. It is a pleasure to follow such a distinguished industrialist as the noble Lord, Lord Haslam.

It is also a pleasure to support my noble friend Lord Hardy of Wath. I thank him for initiating the debate. I congratulate him on making such a powerful speech in support of the coal industry and the related engineering industries.

It appears to me that the country is now in a make-or-break situation as far as concerns the coal industry. That sounds dramatic, but I believe that we are exactly in that position. With British mined coal at a production level of around 25 million tonnes a year, employment at about 7,000 people, and faced, as we are, by imported coal, some of it at dumped prices, we are presented with close to a crisis in the industry. The fact that the coal industries of our European neighbours receive massive state subsidies from their governments only highlights the problems we face here in Britain. Either we take whatever steps are needed to protect our industry at roughly its present level or we give up the ghost and face the consequences.

I cannot pretend--I hope that the Government do not pretend--that a few fine words and cheap platitudes will save the industry. There are many people now who secretly believe that the coal industry is a fringe industry and an embarrassment; an industry that ought to be got rid of as quickly and as quietly as possible. I noticed that in a debate in another place on 10th November, Mrs Helen Liddell, the Minister for Energy and Competitiveness in Europe--what a wonderful title that is--said in her peroration that,

    "coal has a future".

Addressing the mining communities directly, she went on to say:

    "from the bottom of my heart, ... we"--

meaning the Government--

    "will not turn our back on them".--[Official Report, Commons, 10/11/99; col. 1065.]

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I hope that those fine words will not come to haunt Mrs Liddell in the future. I have read very carefully what she said in the debate on 10th November and I could not detect anything in her remarks which encourages me to believe that the industry will not decline further, and probably quite rapidly, in the next year or two. Unless action is taken quickly and effectively, what is left of the industry will be gone in a short space of time. It will then become a real fringe industry.

I hold no brief for the company, RJB, which owns the bulk of the coal industry. But if the fine words of hope and heartfelt concern of the Minister for Energy mean anything at all, they mean that she will have to work out with RJB what is needed to secure the industry's future at the current level of production; and she will have to do it very urgently. That may mean direct financial assistance, either in the form of direct subsidy to the producers, similar in scale to that which is made by governments in Germany, France and Spain, a point made by the noble Lord, Lord Haslam, or a subsidy to the electricity generators to burn coal. If the Government do not take action soon, the honeyed and comforting words will be seen and taken as empty gestures.

Some may say that it is perfectly reasonable--some would even say desirable--to let the coal industry die. I have heard those arguments put time and again. That is not my view yet; I think that the industry can still be saved. It is not the declared policy of the Government--yet. But unless the Government take action soon, the industry will die quite quickly and more misery will be inflicted on the mining communities, adding to the massive misery imposed on the miners by the previous Conservative government and from which they are still suffering.

We hear a great deal about the deprivations of the inner cities. I do not doubt for a second the privation and acute hardship that exist in parts of our great conurbations. But those hardships are shared by former mineworkers and their families in small mining communities throughout Britain. The throwing out of work of miners by the previous government in the early part of this decade created wretched conditions in those areas. It will take many, many years to eliminate those conditions.

The Markham Valley in north Derbyshire, where I worked as a very young man nearly 50 years ago, had five collieries within about two-and-a-half miles. Markham Valley is well known to the noble Lord, Lord Ezra, and probably to the noble Lord, Lord Haslam, too. I know that the noble Lord, Lord Ezra, visited the area on many occasions during his stewardship of the National Coal Board. At the peak of performance, those five pits employed about 5,000 men. The villages which surrounded those pits have suffered a plight which will take decades to eliminate. I have in my hand a photograph of the existing site. The head stocks of those pits have gone, the surface buildings have been removed, and this vast site has

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been bulldozed. It looks like a lunar landscape. I shall show the photograph to my noble friend Lord Harris of Haringey--

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