MINISTRY OF POWER
Devaluation (Fuel Prices)
3. Mr. Lane
asked the Minister of Power whether he has completed his examination of the effects of devaluation on oil prices; and if he will make a statement.
8. Mr. Emery
asked the Minister of Power what increases he now estimates will be caused by devaluation on the price of petrol or diesel oil for industry, for public transport and for the domestic user.
Mr. Marsh
On 22nd December, 1967, I announced that a detailed examination had found that devaluation would raise the prices of petroleum products by an average over all products of 1d. a gallon. The devaluation element varies for the different products. For petrol it is 1½d. a gallon and for diesel oil it is 1d. a gallon. I also announced that I had concluded that the temporary surcharge of 2d. per gallon on all products allowed since 29th June, 1967, could be reduced to the extent necessary to compensate for the devaluation increase. The schedule prices of the main petroleum products were therefore unchanged.
Mr. Lane
Does the Minister agree that the prices of individual oil products ought to be free to move down or up in the time ahead in response to market pressures?
Mr. Marsh
This is a very wide-ranging subject and I think it would create real difficulties at the moment. We have a very friendly relationship with the companies, and since, after full and fruitful discussions, we were able to reach an amicable agreement, it would be a pity to spoil it all.
[column 210]Mr. Emery
Has not the Minister anything further to add than merely repeat the statement that he made in December? Has he not taken into consideration the effect that a lowering of rebate may well have on the purchase of oil in the industrial and public transport sectors?
Mr. Marsh
It is very difficult. I am asked what the effect of devaluation was. There has only been the one devaluation. I cannot be expected to change the answer as weeks go past.
The question of rebates is a very complicated issue. The rebates vary from industry to industry and customer to customer.
Mr. McGuire
Is my right hon. Friend aware that a more prudent estimate of the increase in the cost to the country of the effects of devaluation, coupled with the natural forecast increase in oil, is about £275 million?
Mr. Marsh
I regard that as a somewhat large figure. The effect of devaluation on this is about £75 million per annum.
Mrs. Thatcher
How does the Minister square his decision on oil prices with his oft-repeated assertion that devaluation would improve the competitive position of coal with relation to oil?
Mr. Marsh
There are other devaluation Questions on the Order Paper later which may be discussed. The devaluation position improves the position of coal in terms of exports. The whole point that I have made is that the increase in fuel oil prices in relation to coal is so small as not to affect internal demand.
Capital Expenditure Programmes
4. Mr. Ridley
asked the Minister of Power what is to be the curtailment in the capital expenditure programmes of each of the three nationalised industries under his control, as announced on 18th November, 1967.
Mr. Marsh
I would refer the hon. Member to the reply given to the Questions by the hon. Members for Honiton, (Mr. Emery), Cambridge (Mr. Lane) and Sheffield, Hallam (Mr. J. H. Osborn) on 30th January.—[Vol. 757, c. 252.]
[column 211]Mr. Ridley
Why does not the right hon. Gentleman feel that if, in the long term, the level of investment in the nationalised industries as a whole is considered excessive, the proper course would be to adjust the test discount rate?
Mr. Marsh
The hon. Gentleman's Question is a clear one,
“To ask … what is to be the curtailment in the capital expenditure programmes of each of the three nationalised industries …”
This is a question of curtailing specific projects. This has been done and the figures have been given to the House.
Fuel Policy
9. Mr. Emery
asked the Minister of Power when and how he will announce the outcome of his revision of the Fuel White Paper.
13. Mr. Eadie
asked the Minister of Power to what extent the revision of energy potential brought about as a consequence of devaluation has affected the indigenous fuel industries for 1968.
25. Mr. Lane
asked the Minister of Power in what respects, after completing his study of the consequences of devaluation, he intends to alter the assumptions underlying the Government's Fuel Policy White Paper.
27. Mr. Woof
asked the Minister of Power if he will give an assurance that, before he comes to a decision on the reconsideration of fuel policy due to devaluation, he will consult the National Coal Board and the National Union of Mineworkers.
30. Mr. William Hamilton
asked the Minister of Power if he will now publish his reassessment of national fuel policy consequent on devaluation and accompanying measures.
Mr. Marsh
As I explained in the debate on 22nd January and in a reply to my hon. Friend the Member for Ince (Mr. McGuire) on 23rd January [Vol. 757, c. 77] the consequences of devaluation are not sufficient to affect materially the policy guide-lines in the Fuel Policy White Paper (Cmnd. 3438). The White Paper is not being revised. Paragraph 6 of the White Paper makes it clear that policy will be kept under continuing review.
[column 212]Mr. Emery
The reply that the Minister has given appears to be slightly different from what we have been led to believe before. The White Paper was taken back for revision as far as the coal aspects were concerned. It appears that the Minister has said nothing new on that. Is it not shocking that a matter of months after the Government have produced this White Paper we still do not know their final views on the matter?
Mr. Marsh
I find it difficult to understand the point that the hon. Gentleman is making. The White Paper has never been withdrawn. An idea got around in the Press and on the B.B.C., for reasons I have never understood, that it had, but it has not. What I said was that we would go away and work out how far devaluation impinged on the policy. It does not.
Mr. Lane
Can the Minister tell us when the White Paper will be returning to this House for further discussion and approval?
Mr. Marsh
That is a matter for the wisdom of those who determine the business of this House. It is not for me. The White Paper is published as Government policy.
Mr. Woof
Would my right hon. Friend not agree that it is highly desirable that consultations should take place with the National Coal Board and the National Union of Mineworkers to obtain an economic and objective survey of the mining industry in the review? Would he not also agree that such consultations would ensure that the nation would gain tremendous potential from coal which would be cheap enough to challenge other competitors?
Mr. Marsh
As I was saying, there is no review in progress. The White Paper is based on the assumption that the coal industry will be viable, as I think it will, in the 1970s. That is why this House has unanimously agreed to make financial provision on a very big scale to hold it together. I am in no doubt that once the industry gets down to this level it will be competitive, but only if it gets to the right viable level.
Mr. Hamilton
Does my right hon. Friend recognise that there have been new factors in addition to devaluation since November, namely, the offer [column 213]of aluminium smelting companies to fire their power stations with coal? This being the case, will my right hon. Friend either withdraw the White Paper and issue a new one, or make representations to the Leader of the House for a debate, which we were promised in the first place?
Mr. Marsh
I am always willing to convey views to my right hon. Friend. As far as the aluminium smelters are concerned there is an offer to set up a smelter based on coal, but this will not be producing until the early 1970s. It will use only half a million tons of coal a year anyhow. It will not really have any effect on the figure of 155 million, given the margin of error which there must be on such questions.
Mr. Kelley
Is my right hon. Friend trying to say that the White Paper on fuel policy was withdrawn without any idea of reviewing it in the light not only of devaluation, but of the coal commitment factors which ensued therefrom? I understand that an increase in capital expenditure in certain industries is not desirable in the present economic situation.
Mr. Marsh
We must get this clear. The White Paper was never withdrawn. What happened was that between the White Paper being presented to the House and any debate, there was devaluation. At the request of many people I agreed to go away and produce different figures which resulted from devaluation. There is no increase in capital expenditure. It is merely a question of seeing how far the position of oil has changed vis-à-vis coal.
Mrs. Thatcher
Referring to the Minister's previous answers about the aluminium smelter, will he give an assurance that the future of aluminium smelting will be determined in relation to the commercial future of aluminium here, and will not get tied up with the coal versus nuclear battle?
Mr. Marsh
The question of aluminium smelting is quite separate from the question of an overall fuel policy. We are talking here of about one-third of 1 per cent. of the nation's energy requirements, and that does not have very much effect on fuel policy.
[column 214]Shipbuilding Steel (Price)
10. Mr. Wingfield Digby
asked the Minister of Power whether negotiations have yet been concluded on the price of shipbuilding steel; and with what result.
Mr. Marsh
I would refer the hon. Member to my reply to my right hon. Friend the Member for Sunderland, North (Mr. Willey) on 31st January.—[Vol. 757, c. 366.]
Mr. Wingfield Digby
The right hon. Gentleman talked about a further statement. Is he aware of the urgency of this problem? The shipbuilding industry has received many inquiries. It is necessary for it to quote fixed prices, taking into account the price of steel. This is urgent.
Mr. Marsh
Of course, it is urgent. This is why the Steel Corporation entered into immediate discussions, and the Press announcement after its December meeting, which was agreed by both the ship-owners and the Steel Corporation, said that
“both sides found the meeting constructive and looked forward to continuing discussions.”
I think that the hon. Gentleman is exaggerating their anxieties.
Price Increase (Notification)
28. Mr. Biffen
asked the Minister of Power how many requests for increases in prices have been notified to his Department under the voluntary arrangements of the prices and incomes policy since devaluation; how many of these requests have been agreed entirely or partially; how many have not been agreed; in how many instances price increases have been proceeded with despite non-agreement; and if he will make a statement.
Mr. Freeson
Under the voluntary early warning procedure my right hon. Friend has received five notifications of proposed price increases since devaluation, four of which were attributable to cost increases resulting from devaluation. No comments were made on the proposals in three cases; one case is still under consideration; and in the case of petroleum products devaluation increases were allowed but offset by reductions in the temporary surcharge introduced after the Middle East War.
[column 215]Mr. Biffen
In view of the considerable range of industrial products which are covered by the presumptive price control of the Ministry of Power, and in view of the importance which the Government attach to the maintenance of stable prices by the Government in the post-devaluation situation, by what numbers has the hon. Gentleman increased the staff dealing with these inquiries?
Mr. Freeson
That is quite a separate question.
British Steel Corporation (Orders)
32. Mr. Patrick Jenkin
asked the Minister of Power what representations he has received from steel users about the decision of the British Steel Corporation to adopt a system of centralising orders; and what reply he has sent.
Mr. Freeson
My right hon. Friend has received no such representations.
Mr. Jenkin
In the event of the decision being put into effect or being threatened to be put into effect, if the Consumer Council for Steel made strong objections, as appears likely, to the centralisation of orders, will the hon. Gentleman give the maximum weight to those representations so as to ensure that there is no elimination of competition between the various operating groups?
Mr. Freeson
Any such views would be taken fully into account, and if, for any reasons, the objections to such proposals were not accepted, as the hon. Gentleman knows, the Minister is required to lay a statement before Parliament.
Joint Meter Reading
41. Mr. Biggs-Davison
asked the Minister of Power what is the result of his Department's study of the question of joint meter reading and billing in this country, having regard to French experience, details of which have been sent to him; and whether he now proposes to recommend to the gas and electricity boards that they combine their meter readings.
Mr. Freeson
The study of the advantages and disadvantages of joint gas and electricity meter reading and billing as well as other related matters is continu[column 216]ing. Full account is being taken of French practice and experience in this field.
Mr. Biggs-Davison
How long will the inquiry take and when can we have a decision on the matter?
Mr. Freeson
I am not in a position to say how long it will take. One reason is because, unlike the position eight or nine years ago, there have been major developments in the computer field which complicate the relationship between meter reading, billing and accounting and other matters of management control.
Mr. Dance
Is the hon. Gentleman aware that I tabled a similar Question about 18 months ago on this very subject and received precisely the same answer—that there would not be any saving? Is he aware that I saw this system working in France? Cannot we hurry this up, for if it can work in France, why cannot it work here?
Mr. Freeson
The basis of the industries concerned in France is radically different from that applying in this country. In that country there is a unified industrial management, whereas we have two separate industries. However, the position is being studied closely. As I said, it is much more complicated than it was eight or nine years ago.
Mr. Emery
Is the hon. Gentleman aware that major savings could be made in this sphere? Is he further aware that if he considers that a computer cannot overcome some of these difficulties, his thinking is very far behind normal managerial practice?
Mr. Freeson
I do not believe that there would be major savings, any more than the Weir Committee did eight or nine years ago. I was not suggesting that computers could not overcome the difficulties that are involved, but that other problems also arise.
Electricity and Gas Industries
(Organisation)
43. Mr. Palmer
asked the Minister of Power when he expects to introduce legislation to alter the organisation of the electricity and gas industries.
[column 217]Mr. Marsh
I am examining whether there is a need for changes in the structure and organisation of the gas and electricity industries. I have no proposals for legislation at this moment.
Mr. Palmer
Has my right hon. Friend seen the detailed reports which have appeared on this matter in the Economist, the Financial Times and other newspapers? Is he aware that speculation of this kind is unsettling to the staffs in the electricity and gas industries? Will he make a statement soon?
Mr. Marsh
I cannot be held responsible for what appears in, for example, the Economist. If I were, that would indeed be taking something on hand. On the general point of the organisation of these industries, I would remind my hon. Friend that these are very big industries and that it is important that the study should be comprehensive. Certainly no steps will be taken which would lead to a loss of savings which could otherwise be made.
Aluminium Smelter (National Coal Board and Alcan)
46. Mr. Peyton
asked the Minister of Power if he will make a statement on the arrangement proposed between the National Coal Board and Alcan relating to the aluminium smelter.
Mr. Freeson
This matter was debated at length only last week and I have nothing further to add at present.
Mr. Peyton
Will the hon. Gentleman remind the N.C.B. of its statutory duty not to give preference to one customer against another? Will he, moreover, point out to the N.C.B. that the excuse of marginal tonnage is not sufficient in respect of an agreement covering a period of 25 years?
Mr. Freeson
The N.C.B. is fully aware of its statutory position in this matter. I do not believe that it requires any reminder from me.
Nuclear Power Stations (Siting)
48. Mr. Leadbitter
asked the Minister of Power whether the Government is prepared to relax its present requirement that nuclear stations must be built in remote areas; and if he will make a statement.
[column 218]Mr. Marsh
With permission, I will answer this Question at the end of Question Time.
COAL
Mining Costs
5. Mr. Ridley
asked the Minister of Power how many pence per therm coal costs to mine in the United Kingdom at present on average.
Mr. Freeson
In the year 1966–67 the average cost of production, including interest, of all N.C.B. deep-mined coal was 4.6 pence per therm.
Mr. Ridley
How then can the Coal Board make offers of 3d. or 3¼d. a therm, as has been reported, or are those offers not true?
Mr. Freeson
I stated in the debate last week the position of the Department concerning the offers that have been reported in the Press. I have nothing further to add to what I said then.
Mr. Shinwell
My hon. Friend has referred to average prices. Surely he knows that there are great variations in the quality of coal. If we take into account the kind of coal that is used for the generation of electricity, the therm cost is very much below the figure he gave.
Mr. Freeson
Not only that, but, as the years go by and the industry modernises itself, the average cost will come down even further. This is the intention of the N.C.B., and there is every reason to believe that it will achieve its objective.
Mr. Woof
Is my hon. Friend aware that the Coal Board's recent offer to supply coal to the Central Electricity Generating Board at 3¼d. a therm for a power station at Seaton Carew was based on the likelihood of coal being highly competitive in the 1970s? Is he further aware that the recent rebuff by the Chairman of the Central Electricity Generating Board should be challenged either by his right hon. Friend or by the Government? The Government are supposed to be the real gaffers. What is at stake is the livelihood of thousands of people in the 1970s.
[column 219]Mr. Freeson
I think my hon. Friend is mistaken when he describes the reaction of the C.E.G.B. to the National Coal Board's offer in this case as a rebuff. There was a counter offer referring to supplies in connection with the whole of the requirements of the C.E.G.B.—not a rebuff.
Smokeless Solid Fuel (Stocks)
12. Mr. Gardner
asked the Minister of Power if he is satisfied with the current level of stocks of smokeless solid fuel; and if he will make a statement.
Mr. Freeson
Overall stocks of solid smokeless fuel together with expected production should be adequate to meet demand during the remainder of the winter.
Mr. Gardner
Can my hon. Friend say what effect the decline in the production of gas coke has had on stocks, and can he say what increase is being made in the development of solid smokeless fuels, using the softer kind of coal?
Mr. Freeson
The latter part of the question is a matter for detailed consideration by the National Coal Board itself. There is a problem here with the reduction in the supply of gas coke, but already alternative fuels are on the market to replace them, and the demand in future will depend on the economics of producing new types of fuel.
Exports
14 and 18. Mr. Alison
asked the Minister of Power (1) if he will give a general direction to the National Coal Board, in the national interest, to divert further capital resources to the promotion of exports;
(2) what representations he has received from the National Coal Board about the development of South Killingholme, near Immingham, as a modern coal port.
Mr. Freeson
The National Coal Board is fully conscious of its export opportunities and the action necessary to exploit them. My right hon. Friend has recently informed the Chairman that the Board's proposed development at Immingham, which will serve both home and export markets, is acceptable on financial and fuel policy grounds.
[column 220]Mr. Alison
Does the hon. Gentleman mean that the original Treasury veto on the expenditure of £7 million has been lifted? As the National Plan for Coal abolished a firm figure for coal exports, can he say what the new revised firm figure is in the light of devaluation?
Mr. Freeson
I am not sure why there is this emphasis on the word “firm” in the context of coal exports. One achieves what exports one can. If they are higher than originally estimated, one offers congratulations to the industry. The industry has reviewed its figures upwards, and it is expected that there will be a somewhat higher export figure than originally visualised.
Sir C. Osborne
As Immingham is in my constituency, may I ask whether this proposed development for coal exports has been cleared with the local authorities, in view of the fact that there are enormous developments in the district for petro-chemicals? Will one development clash with the other?
Mr. Freeson
I shall certainly pursue the query which the hon. Gentleman has raised in so far as it concerns my Department, but I have no reason to believe that the plans for this development at Immingham have not been worked out in full consultation with the local planning authority.
Devaluation (Coal Derivatives)
15. Mr. Eadie
asked the Minister of Power what are his proposals about coal derivatives in the light of devaluation.
Mr. Freeson
My right hon. Friend is sure the National Coal Board will take full advantage of any opportunities arising.
Mr. Eadie
Would not my hon. Friend agree that it would be helpful to the country if there were a re-examination of the question of coal deliveries? Would not he further agree that the Report of the Committee which considered this subject some years ago is now out of date?
Mr. Freeson
This is a matter for the National Coal Board. It is in close contact with whatever is going on in this respect, not only in this country, but in others, and I think that we must leave it to the Board to put forward proposals.
[column 221]Sir B. Craddock
Can the hon Gentleman say whether research is continuing into the production of oil from coal?
Mr. Freeson
Research is going on all the time, particularly in countries where there are cheaper coal supplies, and the National Coal Board is in touch with this.
Price
16. Mr. Edward M. Taylor
asked the Minister of Power what is the policy of Her Majesty's Government with regard to the National Coal Board's practice of charging regional prices reflecting the price of winning coal.
Mr. Freeson
The Board's policy is that the prices of coal should broadly reflect the costs of production in the individual coalfields. This policy is supported by the Government and was endorsed by the National Board for Prices and Incomes in their 1966 Report on Coal Prices (Cmnd. 2919).
Mr. Taylor
Would not the hon. Gentleman agree that this policy imposes an intolerable burden on areas like Scotland, where prices are so high, and where the position is becoming worse in smokeless areas? Smokeless fuel in Glasgow costs 18s. 3d. a bag, 3d. more than in the North of England.
Mr. Freeson
There is no question of unfair discrimination in this industry against Scottish coalfields. The fact is that here, as anywhere else in the country, it is not possible to sustain a price level which allows for continuing huge losses in particular collieries.
Mr. Lawson
Will my hon. Friend bear in mind that industry in Scotland is prohibited from importing cheaper coal, if it can get it? It is one thing to charge regional prices. It is another to uphold them with the power of the State.
Mr. Freeson
I am not aware that there is any restriction on the N.C.B. bringing in coal from other parts of the country should it be necessary to do so as part of its commercial negotiations with industry.
Mr. Ridley
Would the hon. Gentleman agree that it is at least an essential part of public accountability that these [column 222]regional prices should be published, so that the world knows what they are?
Mr. Freeson
I am not aware that any part of industry is short of information on the price which it is being charged for coal.
20. Mr. R. W. Elliott
asked the Minister of Power if he will take steps to prevent the National Coal Board from entering into contracts to supply coal at a price which would increase the annual deficit of the Board.
Mr. Freeson
My right hon. Friend is not prepared to base policy guidance of the Board upon the premise that the industry should incur continuing deficits. Its agreed financial objective is to make a profit of £10 million a year.
Mr. Elliott
Does the hon. Gentleman appreciate that that is a very welcome Answer? However, will he also realise that the low price offered to Alcan must mean either that other consumers will pay more or that the deficit will increase? Will he continue with a policy of honesty in this regard?
Mr. Freeson
I do not accept either of the two points in the hon. Gentleman's supplementary.
Mrs. Thatcher
As the hon. Gentleman said in a previous debate that he expected that the deficit of the National Coal Board this year would be £10 million, does he still stick by that estimate?
Mr. Freeson
That estimate has no connection with the supplementary question, which asked whether this specific proposal meant an increase in the deficit of the Coal Board. When it comes into operation—should it come into operation—it will not be until the 1970s.
Mr. Speaker
Mr. Concannon.
Mr. Concannon
Is my hon. Friend aware that there are already mines mining coal at a price of 2.3d.—
Mr. Speaker
Order. I called the hon. Gentleman to ask Question No. 24.
Capital Investment
17. Mr. Edward M. Taylor
asked the Minister of Power what is now the policy of Her Majesty's Government regarding [column 223]the level of return to be earned by the National Coal Board on the capital invested.
Mr. Marsh
The National Coal Board's financial objective is to break even after interest and depreciation including £10 million a year to cover the difference between depreciation at historic cost and replacement cost.
Mr. Taylor
Is this the immediate target, or only for the early 1970s?
Mr. Marsh
This is the target which was set out in the White Paper on financial objectives. It is a net return of about 6 per cent.
Capital Liabilities
24. Mr. Concannon
asked the Minister of Power if he will make a statement on his plans for the reorganisation of the capital liabilities of the National Coal Board.
Mr. Freeson
No such plans are under consideration.
Mr. Concannon
Is my hon. Friend aware that the reorganisation of the liabilities of the coal industry in the 1965 Act was done on the assumption that the industry would be mining 180 million tons in the early 1970s? Would he not look again at this, since the £450 million which was transferred to the reserve fund will be used this year, and this will put an increased burden on the units which are already becoming capital-intensified?
Mr. Freeson
It would be far too early, only two years later, to undertake a further major capital reconstruction of the kind which my hon. Friend suggests.
Redundancy Payments (Durham)
31. Mr. Shinwell
asked the Minister of Power what is the estimated number of mineworkers in the county of Durham who will qualify for redundancy payments in 1968 according to the provisions in the coal borrowing powers Act.
Mr. Freeson
The National Coal Board are unable as yet to give an estimate, as the number will depend on how many are able to be transferred to pits remaining open as others close.
Mr. Shinwell
In that case, why did the Government initiate this new scheme [column 224]without having any idea of how many men would be made redundant? Is the inability—either of the Government or of the National Coal Board—to furnish a figure due to the fact that there is a continuing process of closing mines, which is adding to the insecurity which now exists in the North-East?
Mr. Freeson
On the second point, of course, the answer is, “Yes” . This is a continuing process and it was not started recently. On the first point, the Scheme introduced under the Coal Industry Act relates to the period up to March, 1971 and not just to this particular year. Therefore, it would not be possible to give a full estimate of the number of men who will be affected by the Act.
Proposed Power Station
(Seaton Carew)
38. Mr. Woof
asked the Minister of Power how many miners' jobs he estimates would be saved in County Durham if the proposed new power station at Seaton Carew were coal-fired instead of nuclear-powered; how much would be saved on the capital costs; and in reaching his decision, what account he will take of the cost to public funds of paying unemployment benefit and redundancy compensation payments to 7,000 miners.
Mr. Marsh
As I said to my hon. Friend the Member for The Hartlepools (Mr. Leadbitter) on 17th January—[Vol. 756, Col. 620]—the Government are examining the many factors affecting a decision on the method of firing the power station and we will make a full statement on the main points relevant to the decision later.
40. Mr. Willey
asked the Minister of Power what discussions he has held with the Northern Regional Economic Planning Council about the proposed power station at Seaton Carew.
Mr. Marsh
None so far.
Mr. Willey
Will my right hon. Friend rectify this as soon as he can? Is he aware that the Chairman and Council have complained repeatedly that Ministers do not sufficiently consult with them? Will he reassure the North-East on this score, in view of our feeling that there should be better consultation between the Minister and the Council?
[column 225]Mr. Marsh
Yes, Sir, and my right hon. Friend will no doubt agree that of first importance is the question of getting clear what we should consult. As soon as we have taken a decision on that, I see no reason why we should not then go ahead with the consultation. Obviously the Regional Council has a right to be consulted.
Mr. Ridley
Will the Minister make public the price at which the N.C.B. has offered coal for Seaton Carew and other power stations of this sort?
Mr. Marsh
I have learnt from bitter experience that the nationalised industries may suffer from many things, but certainly not from an inability to put their case across in public.