DOCUMENT IS T H E P R O P E R T Y O F H E R B R I T A N N I C M A J E S T Y 'S G O V E R N M E N T
C P ( 7 2 ) 135
COPY NO
£Q
28 N o v e m b e r 1972
CABINET
COAL POLICY
Note b y the S e c r e t a r y of S t a t e f o r T r a d e and I n d u s t r y
1.
A t t h e m e e t i n g of the C a b i n e t on 2 M a r c h (CM(72) 1.1th C o n c l u s i o n s ,
M i n u t e 3) m y c o l l e a g u e s a g r e e d i n t e r i m m e a s u r e s to m e e t t h e N a t i o n a l
C o a l B o a r d ' s (NCB) d e f i c i t f o r 1971-72.
We a l s o a g r e e d t h a t
P a r l i a m e n t should be t o l d t h a t t h e G o v e r n m e n t i n t e n d e d in due c o u r s e to
i n t r o d u c e l e g i s l a t i o n t o d e a l w i t h t h e f i n a n c i a l p r o b l e m s of t h e c o a l i n d u s t r y .
2.
T h e M i n i s t e r i a l C o m m i t t e e on E c o n o m i c S t r a t e g y h a s r e v i e w e d
the o p t i o n s open t o u s to m o d e r a t e the c o n t r a c t i o n of the i n d u s t r y , e a s e
h a r d d h i p f o r r e d u n d a n t m i n e r s , and m a i n t a i n s u p p l i e s of c o a l at a l e v e l
a d e q u a t e to m e e t f u t u r e u n c e r t a i n t i e s .
They approved my p r o p o s a l s for:
a.
T h e c a n c e l l a t i o n of a b o u t £ 4 7 5 m i l l i o n of t h e N C B ' s d e b t
to the E x c h e q u e r .
b.
R e c u r r e n t g r a n t s of a b o u t £170 m i l l i o n a y e a r of w h i c h the
most important are:
i.
A r e g i o n a l g r a n t of £ 7 0 m i l l i o n a y e a r .
ii.
R e d u n d a n c y p a y m e n t s of a b o u t £ 3 0 m i l l i o n a y e a r .
iii.
C o m p e n s a t i o n to t h e e l e c t r i c i t y g e n e r a t i n g b o a r d s
f o r b u r n i n g s u r p l u s c o a l (the p r e c i s e s u m to b e a g r e e d
b e t w e e n t h e C h a n c e l l o r of t h e E x c h e q u e r and m e ) .
3,
T h e C o m m i t t e e a g r e e d t h a t l e g i s l a t i o n s h o u l d now b e i n t r o d u c e d to
give effect to t h e s e p r o p o s a l s , and I s h a l l s u b m i t a d r a f t B i l l to t h e
Legislation Committee shortly.
They also a g r e e d that I should m a k e a
s t a t e m e n t in P a r l i a m e n t b e f o r e the B i l l w a s i n t r o d u c e d , a n d i n v i t e d m e ,
in c o n s u l t a t i o n w i t h t h e H o m e S e c r e t a r y , to s u b m i t the d r a f t to t h e C a b i n e t
for t h e i r a p p r o v a l .
1
!
4.
O u r p r o p o s a l s m a y s e e m o v e r g e n e r o u s t o s o m e of o u r s u p p l i e r s
a n d in p r e p a r i n g the s t a t e m e n t I h a v e A i m e d a t a p r e s e n t a t i o n w h i c h by
e m p h a s i s i n g t h e v i t a l i m p o r t a n c e of the i n d u s t r y s own c o n t r i b u t i o n on
I
c o s t s and p r o d u c t i v i t y , w i l l go a s f a r h \ 3 we c a n to d i s a r m c r i t i c i s m .
h o p e to a r r a n g e with t h e L o r d P r e s i d e n t to m a k e t h i s s t a t e m e n t in
P a r l i a m e n t on T u e s d a y 5 D e c e m b e r ; and s e e k m y c o l l e a g u e s a p p r o v a l
of i t s t e r m s .
1
1
P W
D e p a r t m e n t of T r a d e and I n d u s t r y
28 N o v e m b e r 1972
2
DRAFT STATEMENT ON COAL POLICY
With p e r m i s s i o n , Mr S p e a k e r , I w i l l make a s t a t e m e n t
the coal
about
industry.
L a s t y e a r , t h e N a t i o n a l Coal Board i n c u r r e d a d e f i c i t
of
£157M, m a i n l y b e c a u s e o f t h e c o s t s of i n d u s t r i a l a c t i o n .
c o n t i n u i n g c o s t s of t h e W i l b e r f o r c e s e t t l e m e n t mean t h a t
The
the
Board*s l o s s e s a r e s t i l l r u n n i n g a t a r o u n d £ 1 0 0 m i l l i o n a y e a r
and, u n d e r p r e s e n t a r r a n g e m e n t s , t h i s would i n c r e a s e
Under p r e s e n t c o n d i t i o n s , t h e i n d u s t r y c o u l d o n l y
t h e s e l o s s e s by a massive
further.
eliminate
contraction.
A g a i n s t t h i s b a c k g r o u n d my Hon F r i e n d ,
the Minister for
Industry
t o l d t h e c o a l i n d u s t r y i n August t h a t b e f o r e c o n s i d e r i n g what
a s s i s t a n c e from p u b l i c f u n d s m i g h t b e p r o v i d e d t o m e e t
serious financial
their
s i t u a t i o n , t h e Government w i s h e d t o know
what a c t i o n t h o s e i n t h e i n d u s t r y were a b l e t o t a k e
to secure i t s f u t u r e .
As a r e s u l t ,
themselves
t h e two s i d e s of
i n d u s t r y - management and u n i o n s - p u t t o u s j o i n t
the
proposals
f o r a c t i o n b o t h b y t h e i n d u s t r y and b y t h e Government.
Y e t , a t t h e same t i m e , t h e r e i s an i n c r e a s i n g a w a r e n e s s
t h r o u g h o u t t h e w o r l d of t h e d a n g e r of a s h o r t a g e of t h e
of e n e r g y .
We i n t h e UK a r e f o r t u n a t e i n h a v i n g l a r g e
sources
reserves
of c o a l i n a d d i t i o n t o t h e more r e c e n t l y d i s c o v e r e d
of o i l and g a s i n t h e N o r t h S e a .
fields
We must e n s u r e t h a t
n a t i o n a l a s s e t s a r e w i s e l y u s e d and t h a t t h e c o a l
i s given the opportunity to r e e s t a b l i s h i t s e l f ,
these
industry
as the
supplier
of a c o m p e t i t i v e f u e l w i t h o u t b e i n g a p e r m a n e n t b u r d e n on
the
taxpayer.
The Government welcomes t h i s j o i n t a p p r o a c h and t h e
which t h e B o a r d , w i t h t h e f u l l
drive
c o - o p e r a t i o n of t h e u n i o n s ,
a r e making t o s t i m u l a t e s a l e s and m a r k e t i n g , i m p r o v e
r e d u c e o v e r h e a d s and i n c r e a s e p r o d u c t i v i t y .
already bearing fruit
record l e v e l s .
quality,
These e f f o r t s
and o u t p u t p e r m a n s h i f t i s
are
approaching
The u n i o n s w i l l c o - o p e r a t e w i t h t h e Board i n
a j o i n t r e v i e w of t h e p e r f o r m a n c e and p r o s p e c t s of p i t s .
The
Board a r e a l s o c a r r y i n g o u t a s y s t e m a t i c r e v i e w of t h e i r
land
and p r o p e r t y h o l d i n g s t o e n s u r e t h a t t h e s e a r e p u t t o
most e f f e c t i v e u s e a n d i f
are
surplus to operational
the
requirements
sold.
The I n d u s t r y ' s j o i n t l y a g r e e d p r o p o s a l s e x p r e s s a d e t e r m i n a t i o n
t o p u t t h e i r own h o u s e i n o r d e r and t h e Government
have decided t o t a k e powers t o e n a b l e us t o s u p p o r t
industry in i t s future
First:
therefore
the
task.
We i n t e n d t o make a s p e c i a l r e g i o n a l g r a n t t o h e l p t h e
B o a r d p r e s e r v e j o b s e s p e c i a l l y i n a r e a s of h i g h
unemployment.
N e v e r t h e l e s s i t i s acknowledged
that
t h e r e w i l l need to be f u r t h e r
r e d u n d a n c i e s and we
t h e r e f o r e i n t e n d to i n t r o d u c e improvements
redundancy t e r m s .
in
We s h a l l s e e t h a t e v e r y e f f o r t
made t o p r o v i d e new j o b s and f u n d s w i l l b e
for t h i s under the I n d u s t r y Act.
is
available
We s h a l l make t h e
maximum p o s s i b l e u s e of ECSC f u n d s a v a i l a b l e
for
these purposes.
Second:
We i n t e n d t o t a k e p o w e r s t o c o n t i n u e g r a n t s
towards
1
the Board s s o c i a l c o s t s , to c o n t r i b u t e towards the
c o s t t o t h e Board of h o l d i n g s t o c k s and t o c o v e r
losses
i n c u r r e d a s a r e s u l t of s p e c i a l a g r e e m e n t s w i t h t h e
e l e c t r i c i t y generating boards to burn e x t r a c o a l .
t h e same t i m e we p r o p o s e t o f o l l o w t h e p r a c t i c e
t h e E u r o p e a n Coal a n d S t e e l Community and g i v e
At
in
support
t o coking c o a l .
Third:
We p r o p o s e t o w r i t e o f f t h e B o a r d ' s a c c u m u l a t e d
deficit
a s a t March 1 9 7 3 and t h e amount b y w h i c h t h e B o a r d ' s
c a p i t a l assets are a t present overvalued.
This w i l l
c o n s i d e r a b l y r e d u c e t h e B o a r d ' s i n t e r e s t and d e p r e c i a t i o n
Charges.
L e g i s l a t i o n w i l l be introduced for these purposes.
In the
meantime any n e c e s s a r y a d v a n c e s f o r p u r p o s e s a u t h o r i s e d u n d e r t h e
Coal A c t s w i l l c o n t i n u e t o b e made from t h e N a t i o n a l Loans F u n d .
The Government m e a s u r e s I h a v e o u t l i n e d w i l l d e a l w i t h t h e B o a r d ' s
immediate f i n a n c i a l p r o b l e m s , m o d e r a t e t h e c o n t r a c t i o n of
i n d u s t r y and e a s e t h e s o c i a l and human c o n s e q u e n c e s of
contraction.
the
that
The c o a l i n d u s t r y ' s c o n t r i b u t i o n t o e s t a b l i s h i n g a
viable position i s v i t a l .
A s s i s t a n c e from p u b l i c f u n d s on t h e
s c a l e i n d i c a t e d cannot be j u s t i f i e d w i t h o u t e f f e c t i v e
and
s u s t a i n e d e f f o r t s b y a l l s i d e s of t h e i n d u s t r y t o i m p r o v e
its
c o m p e t i t i v e p o s i t i o n and c o n t a i n i t s c o s t s ; i n d e e d i t i s only­
through such e f f o r t s
t h a t i t w i l l be a b l e t o t a k e
full
a d v a n t a g e of t h e o p p o r t u n i t i e s , n o t l e a s t i n E u r o p e ,
the future
holds.
that