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The speech made by Michael Heseltine, the then Secretary of State for Trade and Industry, in the House of Commons on 18 January 1994.

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

In our election manifesto, we pledged to privatise British Coal. Last spring, in our White Paper “Prospects for Coal”, we renewed that pledge. Before I deal with the specific measures in the Bill, it is worth spending a few moments on the wider issues of nationalisation.

The British coal industry is one of the last major industrial sectors left in the public sector. Nationalisation of our industries was a central feature of post-war Labour Governments. It was resisted fiercely by the Conservative Opposition of the day, and there are few people left who would deny that, as a policy, it imposed intolerable economic and legislative burdens on our country and contributed to the decline of our regional economies.

The policy was designed to transfer the commanding heights of the economy to state control. The naive political rationalisation at the time was that control would be vested in the people. In reality, power rapidly shifted to monopoly providers and monopoly producer unions. What power the people possessed was exercised by civil servants, who rapidly became both protector and confidant of the industries’ self-interest, and, worse, by the political convenience of the party in power.

The traditional—and, in the end, the only effective—disciplines of the marketplace were replaced by ill-disciplined compromises and cash-consuming delay. The objectives of enhanced efficiency, increased productivity and a high quality of service played little part in the day-to-day practices or assumptions.

Industrial management, hitherto widely dispersed throughout the regions of the United Kingdom, was replaced by top-heavy bureaucracies that were located largely in London. Perhaps most damaging of all, in virtually every case our key industries withdrew from or were denied access to the markets of the world. I say this to reinforce the case for the Bill, if such reinforcement were necessary. Today, the concept of state ownership is bankrupt. Across the world, country after country is turning to the discipline of the marketplace as each seeks to dispose of its nationalised industries.

Even the Labour party has lost the will to fight for this arcane concept of industrial organisation and management. Of course it parades and re-parades the weary arguments that a tiny body of its constituents, and of course its union paymasters, want to hear, but it knows that the tide of freedom that we have brought to the nationalised industries is now as irreversible here as it is in so many countries, under Governments ranging from the socialists of China to the right-wing Government in France.

Mr. Dafydd Wigley (Caernarfon)

Does the Secretary of State accept that one of the worries of many ex-coalminers and miners’ widows is that the benefits and agreements that they had with the National Coal Board will not be continued after privatisation? Will he give a categorical assurance on the matter?

Mr. Heseltine

I shall deal with the specific objects of concern case by case, as I consider the detailed contents of the Bill.

Before I leave the overwhelming case in favour of privatisation at large, which rests behind the Bill, I must point out that, as hon. Members will know, the facts are stark. In 1979, the nationalised industries were costing the taxpayer £50 million per week in losses. Today, they pay £60 million per week in taxes on the profits that they earn as private sector companies and, most chilling of all for the Labour party, 6 million shareholders are willing to testify and to vote for the success that privatisation has brought.

What are the facts about the nationalisation of the mines? At the time of nationalisation in 1947, there were 720,000 mineworkers employed by the National Coal Board. By 1980, that figure was down to 230,000—a reduction on average of around 15,000 a year. The rundown was as much a characteristic of Labour as of Conservative Governments.

The number of operating pits also declined throughout that period. Opposition Members will recall, for example, that between 1964 and 1970, and between 1974 and 1979, the number of producing pits fell by 313. Indeed, since 1979, it is a Conservative Government who have injected by far the largest support for British Coal in the history of British Coal—nearly £20 billion.

Mr. Ronnie Campbell (Blyth Valley)

That was redundancy pay.

Mr. Heseltine

Yes, the Conservative Government made very generous redundancy payments. However, the hon. Gentleman is not prepared to face up to the fact that £8 billion of that £20 billion was capital investment in the industry. So, since the war—

Mr. Campbell

I can give the Secretary of State one example of what happened in my colliery. A transport system, which cost £300,000, was bought, put in the timber yard, set up and kept there, and charged to that colliery when it closed. That is only one example. What happened at the other collieries in which the Government invested?

Mr. Heseltine

The hon. Gentleman can quote his £300,000 example, but does the House seriously believe that it stands up against the £8 billion that has flowed into capital investment in the Coal Board since 1979? The Opposition talk as though they cared about the industry, but they ran it down. There has never been such a large investment programme in the coal industry as under Conservative Governments since 1979.

Mr. John Evans (St. Helens, North)

Is the Secretary of State aware that, at Parkside colliery in my constituency, a £6.5 million investment in a new face, which was in production for a fortnight before it was closed down under his regime, is now rotting in the ground?

Mr. Heseltine

The hon. Gentleman might ask himself whether the decision to invest such large sums of money was justified in the face of a falling market for the product. That is an example of precisely the lack of discipline that I have been referring to—a lack that was characteristic of nationalised industries throughout the post-war period.

Mr. Eric Clarke (Midlothian)

The accounts of the National Coal Board show that it repaid to the Government, at a very high interest rate, loans that it had received over some years. The money that the right hon. Gentleman was crediting the Government with investing in the industry was paid back before the so-called profit was decided. The Secretary of State can investigate that fact if he likes.

Mr. Heseltine

The hon. Gentleman must understand that most of the £20 billion invested in the National Coal Board since 1979 will be written off, which means that it will be charged in perpetuity to the taxpayer. I admire the fact, however, that he is now a director of a private sector coal company. I know that the House will wish him all the very best good fortune.

Mr. Clarke

I am not a director of a private company: the right hon. Gentleman has been misled. I am an adviser to a company which has the involvement of the Scottish trade union movement.

Mr. Heseltine

I would not wish to misrepresent the hon. Member. If his advice is successful, however, he might soon be a director of the company.

Since the war and nationalisation, the coal industry has lost its market for producing town gas, it no longer sells coal to the railways or mines coking coal, and it has lost the greater part of sales of coal for home heating and industrial use. During the debates of the past year or so, we have been all too familiar with the fact that British Coal is now very dependent on sales for electricity generation, and we are equally and starkly aware that it is coming under increasing pressure in that market as well.

Mr. Derek Enright (Hemsworth)

If there is no market whatsoever for coal, can the President please explain why five applications are being processed for opencast coal mining in my constituency, when the opencast coal will be dearer than that from Grimethorpe?

Mr. Heseltine

The explanation is entirely a matter for those people who have submitted the applications to carry out the mining. It seems extremely unlikely to me that people are bidding to take on onerous responsibilities for mining coal in an opencast field when they could get it cheaper from the deep-mined industry. However, that is a judgment for those people who are prepared to invest their money in the process.

The Government’s position is clear. We have given an undertaking to ensure that the Coal Board offers to license the deep mines to the private sector, and I am glad that there are a number of cases in which agreements have been reached or the negotiations are well advanced. I much admire all those Opposition Members who are playing a role in facilitating negotiations and encouraging the prospects that those pits might find an alternative life in the private sector.

Several hon. Members rose—

Mr. Heseltine

I cannot give way to three people at once, but the lady must of course have preference.

Ms Joan Walley (Stoke-on-Trent, North)

Will the President tell us exactly why he is not prepared to set up a target for the amount of opencast mining, and why it is that in, north Staffordshire, Trentham and Silverdale have been closed, and we now expect even more opencast mining to go ahead? Why are not environmental issues at the heart of his energy policies?

Mr. Heseltine

The hon. Lady mentions a most important subject, and she must be aware that consultation is now under way on mineral planning guidance 3. It is a matter for my right hon. Friend the Secretary of State for the Environment, but it raises important issues of balancing the environmental and economic arguments that are—superficially at least—in conflict. I have great sympathy with the hon. Lady’s arguments.

Mr. John Cummings (Easington)

The right hon. Gentleman has confused me. I agree with him that successive Governments, Labour and Tory, have invested heavily in the mining industry during the past 30 years. Indeed, with the closure of Easington colliery, tens of millions of pounds of taxpayers’ money have been left in a flooded mine. Is it not obligatory for the President to underpin that £20 billion-worth of taxpayers’ investment by assisting in working a market for the benefit of a British industry, providing British coal?

Mr. Heseltine

The hon. Member has obviously missed the point: that, with the approval of the House, we offered to put more taxpayers’ money behind the production of deep-mined coal if people would come forward and find an additional market for that coal. In some cases, negotiations have been concluded or are proceeding. It would be wrong for me to give artificial assurances that I can sustain economic activities for which there is no market justification.

Mr. Terry Lewis (Worsley)

Will the President explain the logic of taxpayers’ money subsidising the acknowledgedly inefficient Spanish coal industry through the European Union?

Mr. Heseltine

I challenge that logic constantly. My department, as the custodian of much of the trading interest of this country, has the responsibility of constantly challenging the existence of subsidies. The aim is not for us to introduce them into our economy; it is for us to try to eliminate them from the rest of the European Union. That is the task in which we are engaged.

Mr. Paddy Tipping (Sherwood) rose—

Mr. Heseltine

Will the hon. Gentleman forgive me? Madam Speaker, you introduced a ten-minute limit, and I suspect that I am beginning to intrude into rather more speeches than I would wish to do. I must ask hon. Members to allow me get on to the detail of the Bill.
There is one last point that I wish to record about my judgments on the industry. I have not the slightest doubt that our coal industry would be in a much healthier position today if the adjustment which has taken place under every Government, and too late, had taken place in the post-war period of economic expansion, when the diversification of the economy could have proceeded faster and when the highly desirable employees of the coal industry could have found jobs in growth industries of that time.

I will go further. I have little doubt that, if the coal industry had had to face the challenge of the marketplace much earlier, it would have achieved productivity gains which recently, and under pressure, it has begun to achieve, but it would have achieved those productivity gains in time to head off at least part of the dash for gas, and thus it would have secured for itself a larger share of the marketplace than is today realistic.

Mr. Simon Hughes (Southwark and Bermondsey)

If the President is arguing that a secure future for coal required privatisation some time ago, there have been 14 years of his government during which that could have happened. Is not the criticism the same—that a lack of strategic energy policy has been the consistent feature of every year of his Department and its predecessor since 1979? That is why coal is in difficulty; it has never known what place it would have and never been given any security as part of a diverse market supply, as the best resource that we have available.

Mr. Heseltine

That was an interesting intervention by the hon. Member from the Liberal party. I do not pretend to have been shadowing with great care Liberal policy statements for the earlier part of the past decade, but I do not remember, Madam Speaker—perhaps you do, and perhaps I owe the hon. Member an apology—the Liberals making a major demand in all those years that we should privatise the coal industry.

Indeed, if the Liberals had ever come forward with any firm demand at all, especially one that might contain any element of controversy, it would have come as a surprise to me. The Liberals would demand privatisation of the coal industry only in sections of industry, or of the electorate, where there was no coal industry, for fear that otherwise they might offend someone. That is a classic example of the Liberal Democrat party waiting until all the policy options have been closed, and then asking, “Why don’t you do it some other way?”

Mr. Dennis Skinner (Bolsover)

Will the President of the Board of Trade give way?

Mr. Heseltine

I cannot resist.

Mr. Skinner

The right hon. Gentleman has not been following Liberal policy closely enough. I know that he has been ill and has been missing, and that for a long time he was not a Cabinet Minister. However, if he would check the facts, he would find that, in true Liberal Democratic fashion, that party was in favour of privatisation before the general election, but is now against it.

Mr. Heseltine

The hon. Gentleman reveals the sort of inconsistency on doctrine that we have come to expect from the modern Labour party. I congratulate him on having read the documents. It shows that he is preoccupied with “back to basics”, and has learnt to read effectively after all this time.

Mr. Bill Etherington (Sunderland, North)

I took great note of the right hon. Gentleman’s long diatribe against nationalisation. Is he prepared to tell the House how many private companies have made as many gains in productivity as the Coal Board has made over the past two years?

Mr. Heseltine

The hon. Gentleman will know that British Steel is now a world-class company, that British Gas is trading in more than 45 foreign countries, that British Airways is now one of the most successful airlines in the world, and that our electricity, our power and our telecommunications industries are straddling the world in the best interests of Britain.

Why? It is because we privatised the companies that have made that possible. Let us remember that we did that in the teeth of the opposition of the Labour party. If it had had its way, we would still have huge bureaucracies of politicians and civil servants suffocating the entrepreneurial zeal that the Conservative party has let loose on the world market.

Mr. Jack Thompson (Wansbeck)

Will the Secretary of State give way?

Mr. Heseltine

For the last time.

Mr. Thompson

I have followed the right hon. Gentleman’s argument closely for the last few minutes, and he rightly claims that £20 billion has been put into the industry in the period concerned—£8 billion in capital investment. But does he recall that the Conservative party has been in power for the past 15 years, and that he and his predecessors were responsible for policy? Surely policies could have changed over those 15 years so as to accommodate the situation that has developed now.

Mr. Heseltine

If I had to plead guilty to the hon. Gentleman’s accusations, I would have to say that I wish that we had privatised the coal industry in the early 1980s. I must make that clear. However, the implication is that, in doing so, we would have gained the serried support of the Labour party, whereas actually it was encouraging the National Union of Mineworkers in any obdurate political action that it could devise to stop the modernisation of the industry. The coal industry has found itself at the end of the queue. More’s the pity, and, I suspect, more’s the price that the coal industry has paid as a result.

The Bill contains the Government’s proposals for restructuring and privatising British Coal. It sets out the necessary provisions for safeguarding pension rights and concessionary fuel entitlements, and those affected by mining subsidence. It also reflects our determination to ensure that the high safety standards in the industry are maintained or improved in the light of the advice of the Health and Safety Commission.

We believe that a competitive energy market is the best guarantee of secure, diverse and sustainable energy supplies in the forms that people and companies want, and at competitive prices. Electricity and gas privatisation have changed the nature of the energy market from a producer-led to a consumer-led market. We have made it a priority to establish a range of substantial privately owned energy companies free to take strategic decisions within a proper framework of regulation. The time has come for the coal industry to enjoy the same freedom.

We examined the prospects for coal within the energy market very carefully during the coal review. On the basis of all the evidence that was presented to us, we had to conclude that there was every prospect that the market would continue to be difficult.

Despite that, it remains the case that coal accounts for over half of all fuel used for electricity generation. On any calculation, coal will continue to be one of the chief sources of energy for the electricity supply industry in the years ahead. The House will remember that we accepted the key recommendation of the Select Committee and have introduced a subsidy for additional sales for electricity generation from deep mined coal. However, the real test is the rate at which the industry can improve its competitiveness.

The industry, as Opposition Members have said, has made considerable strides in improving productivity over recent years. It is only by building on those gains that the industry will compete effectively in future. Privatisation will best ensure that prospect. Time and again, privatisation has demonstrated the ability of industries which had previously lagged behind their international competitors to catch up and, increasingly to set the pace. That is true whether one looks at the docks, at steel, or at a whole range of public utilities. There is every reason to expect that the coal industry will do the same.

Mr. William O’Brien (Normanton)

Will the President give way?

Mr. Heseltine

If the hon. Gentleman will forgive me, I think that I have given way enough.

Our intention is to offer British Coal’s assets for sale in five regional businesses. Those will be based on Scotland, Wales, the north-east, and two parts of the central coalfield. Potential purchasers will be able to bid for one or more packages, and all bids will be considered on their merits. Our proposals will attract new outside management, and they will give the industry’s existing managers and employees the chance to make proposals to take over their own industry.

The Government have made it clear that we are prepared to offer financial support to help potential management and employee buy-out teams to carry their proposals forward.

Mr. William O’Brien

Will the President of the Board of Trade give way?

Mr. Heseltine

No.

On receiving Royal Assent, the Bill will end immediately the existing statutory restrictions that limit the scale of operations of private sector mines that can be licensed by British Coal. It will provide for a new Coal Authority to carry out those functions of British Coal which would not be appropriate for the private sector.

The new Coal Authority will be based in Nottinghamshire. Its main functions will be licensing of coal mining, owning and granting access to our coal reserves, carrying out British Coal’s responsibilities for the physical legacy of past mining to the extent that they are not taken over by the private sector, and making available mining records and geological information.

The Coal Authority must be fully impartial in carrying out its licensing duties, so it will not, therefore, be allowed itself to participate in commercial mining. British Coal will become a licensee of the Coal Authority prior to privatisation. The Bill contains scheme-making powers, similar to those in previous privatisations, for the transfer of property, rights and liabilities of British Coal to other parties as necessary for the privatisation of the business. The Bill provides for the dissolution of British Coal in due course.

I turn now to the critical issue of safety. The coal industry in the United Kingdom has one of the best safety records in the world. I made it clear as soon as I arrived at the DTI that I would do nothing to prejudice that record. I repeat that pledge today. In 1992, we sought—

Mr. Ronnie Campbell

Will the President give way?

Mr. Heseltine

The hon. Member has had a go.

In 1992, we sought the advice of the Health and Safety Commission on the safety implications of privatisation. The commission’s full and considered advice was received in October. The Government published that advice, and accepted it in full.

The essence of the commission’s advice is that it should continue to be the health and safety regulatory body for the coal industry, that the Health and Safety Executive should be the enforcement authority, and that the framework of legislation must be sufficiently robust to command the continued confidence of the industry and to ensure that health and safety standards are maintained or improved.

Mr. Ronnie Campbell

On that point—

Mr. Heseltine

The commission’s advice is that there is already a comprehensive framework of law governing the mining industry, with a rigorous inspection and enforcement regime. The commission believes that the work that it has been doing since 1983 to modernise that framework will make an important contribution to ensuring that it is adequate to the demands of a privatised industry.

The commission has also taken steps to ensure that the best practice in British Coal’s existing owners’ instructions continues to be applied throughout the industry. The work to achieve that is now largely completed. Draft regulations were laid by my right hon. Friend the Secretary of State for Employment on 1 October last year to give legal status to a number of the most important requirements of British Coal’s safety instructions.

The commission has also recommended that there should continue to be a national rescue service. The commission will consult widely about the way forward. The Bill reflects the advice that we have received from the commission.

Another issue of fundamental concern to employees and former employees of British Coal is pension provision. I am determined that the pension entitlements of those who have given their working lives to the industry, and their dependants, should be fully respected and safeguarded in the process of privatisation. A consultation paper on proposals for British Coal pensions after privatisation was published in September last year. Comments were received from the trustees of the British Coal schemes, from the corporation, from industry unions and from more than 1,000 individuals.

After careful consideration of all the responses to the consultation paper, on 2 December we announced our decisions. All pensioners and deferred pensioners of the mineworkers’ pension scheme and the staff superannuation scheme and all currently contributing members will be able to leave their past service entitlements in the schemes, which, on privatisation, will be closed to new members. New industry-wide pension schemes will be created for employees of British Coal and its subsidiaries who are transferred to employment in successor companies.

The Bill provides for the closed schemes to be given a Government solvency guarantee that will ensure that pensions and deferred pensions are increased annually after privatisation, in line with the retail price index by reference to their level at privatisation. In addition, beneficiaries will be able to benefit from any fund surpluses through pension payment increases over and above RPI levels. The new industry-wide schemes will provide the same package of benefits as the corresponding main scheme. Employees transferred to the new schemes will be given protected person status under the Bill.

The Government believe that those proposals meet in full our commitment to protect pensions under the two existing schemes. The proposals will provide security for pension entitlements earned from service with British Coal and will provide protection for pension entitlements from future service with successor companies. The Bill provides the necessary statutory underpinning for all the- safeguards proposed.

Next, I refer to concessionary fuel entitlements. I am again determined that they should be properly safeguarded. A consultation paper on this subject was published in October. My hon. Friend the Minister for Energy yesterday announced our conclusions. Responsibility for meeting the entitlements of former employees and their dependants will be transferred to the Government. Successor companies will be responsible for the entitlements of British Coal employees who transfer to them.

I believe that our policies for the treatment of pensions and concessionary fuel fully meet the Government’s commitment to safeguard entitlements, and are fair to beneficiaries and to taxpayers. They will provide welcome and essential reassurance to many mining families that their hard-earned entitlements will not be jeopardised.

Mr. Eric Illsley (Barnsley, Central)

Will the right hon. Gentleman give way?

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Will the right hon. Gentleman give way?

Mr. Heseltine

No. I have given many times.

The Bill addresses the issues of subsidence. There must be proper protection for the rights of householders and others who may be affected by coal-mining subsidence. A large part of the Bill is devoted to establishing a strong regulatory regime for that purpose.

The Coal Authority will take over all British Coal’s existing responsibilities for subsidence, except in clearly defined areas where licensees will be responsible. Householders will therefore be in no doubt against whom to claim. It is an enabling power. We have yet to take final decisions as to the extent of the areas for which licensees will be responsible. Obviously, that will need careful consideration, bearing in mind the interests of the industry, the taxpayer, and, of course, the claimants.

The Coal Authority is given a strong duty to ensure that licensees make proper financial provisions for meeting claims, and the power to require that security, possibly in the form of a trust, is provided.

Mr. Foulkes

Can the President give an assurance that the beneficiaries of concessionary coal will continue to receive coal if that is what they wish, and will not be forced to take cash in lieu?

Mr. Heseltine

The answer is yes. But as happens now, there will be arrangements for a financial exchange of those rights if it is agreed with the individuals concerned. The hon. Gentleman’s point is well made.

After nearly 50 years in the public sector, the coal industry has acquired exactly the same myths as those that used to haunt other nationalised industries. It is commonly suggested that they can never match the efficiency of their competitors; that their future lies only in an endless continuation of taxpayers’ subsidies of one sort or another; that somehow or other they cannot attract significantly worthy management for the task in their control; and that, in the end, only politicians are fit to take the strategic decisions affecting their future. Time and time again, all those myths have been exposed and exploded. In case after case, they are myths.

This Bill will give the coal industry the opportunity to demonstrate that it can compete, it can stand on its own feet, it can attract managers who are the best in the world, and it is fit and able to take control of its destiny. I do not have the slightest doubt that the industry will make good use of that opportunity.

I look forward to the day when private sector coal companies will join other privatised companies as free-standing, competitive enterprises, carrying a new entrepreneurial spirit into the marketplaces of the world. To enable that to happen, we will privatise the coal industry. We will set the industry free to meet the challenges of the marketplace, to innovate, to compete and to win its rightful share in the diversified energy market in the years ahead. That is the Government’s policy, and I commend the Bill to the House.

The speech made by Michael Heseltine, the then Secretary of State for Trade and Industry, in the House of Commons on 9 March 1993.

I beg to move, to leave out from ‘House’ to the end of the Question and to add instead thereof: ‘recognises the importance of the manufacturing base to the wealth creation process in this country; congratulates Her Majesty’s Government on setting in place the basic framework for economic recovery—low inflation, low interest rates, good industrial relations and a low tax regime—supported by measures in the Autumn Statement; applauds Her Majesty’s Government on its success in attracting more inward investment than any of the United Kingdom’s Community partners; acknowledges the widely reported signs of recovery in business confidence; recognises the unparalleled opportunities to help individuals to get back to work; and looks forward with confidence to the prospect of a return to sustained growth.’. It is not possible to overstate the trivialisation of the critical issues that the House is debating to which the hon. Member for Livingston (Mr. Cook) returns time and again. Everybody knows that the trading world—our major customers—has been experiencing a significant and prolonged recession. The political complexion of the Government of our trading partners makes no difference—whether it be America, which has gone through a very difficult period but is now recovering; Germany, which is now heading down; right-wing Governments; or France and Spain, which have considerable economic difficulties. No nation broadly the equivalent of our own has been able to stand apart from that recession process.

As the House knows full well, with a nation such as ours, which has such a high proportion of its gross domestic product exported, it is utterly naive and totally irresponsible to try to give the impression that somehow this country’s economy can stand apart from the impact of that recession across the world.

It is characteristic of the systematic policy of the hon. Member for Livingston of undermining this country that he seeks to parade our problems as uniquely British and uniquely related to the late 1980s. The hon. Gentleman has become one of industry’s greatest salesmen. The problem is that it is the industrial interests of France, Germany, America and Japan that he is selling—and selling at the expense of British industry, British investment, and British jobs.

In the emotional end to his speech, the hon. Gentleman drew our attention to the problems of Leyland DAF. I will apologise to no one for the concern that we share for the problems of Leyland DAF. The hon. Gentleman totally fails to understand that the Dutch and Belgian Governments had to act so quickly because under the rules of receivership in those countries, it is not possible for the receiver to use money that is the product of the business. Instead, the receiver must look for outside funds. In this country, the receiver can use the funds of the business to keep it in existence.

A British bank provided the money that enabled the receiver to continue the activities of those businesses, whereas the hon. Gentleman’s contribution to the position taken by the British banks was to suggest that they had pulled the rug from under Leyland DAF. There he was again, undermining the British banks—just as he undermines British industry.

The most dispiriting aspect of today’s debate is the wording of the Opposition motion. It contains not a word of praise for British companies, and no recognition of a single person out there who is selling, manufacturing, marketing or exporting to help Britain to win. Nothing at all—except the carping, whingeing criticism of the hon. Member for Livingston, whose closest experience of the entrepreneurial society was his role as campaign co-ordinator in 1985, when he tried to sell the Labour party to the British people—and laid the foundations for the second worst defeat in the party’s history. The hon. Gentleman’s capacity to exploit the electorate’s fears in the search of profit for the Labour party is utterly staggering.

There are no credible policies left for the left. I reject absolutely the gross distortion of the 1980s that the Opposition motion parades before the House, because it is not true. It is not true to say that our manufacturing industry is collapsing. Despite the recession, output remains more than one fifth higher than at the bottom of the last recession in 1981. [HON. MEMBERS: “Oh!”] The only fair comparison is to take the bottom of a recession with the bottom of a recession, the top of the peak with the top of the peak.

Investment is more than one third higher, productivity is two thirds higher, and exports are four fifths higher.

Mr. Michael Brown (Brigg and Cleethorpes)

Does my right hon. Friend recall that, in the early 1980s, south Humberside suffered massive structural unemployment from the decline in the fishing and steel industries? Will my right hon. Friend share with the House and with the hon. Member for Livingston (Mr. Cook) his visit to my constituency just 10 days ago, when he performed the topping-out ceremony for the new Kimberly-Clark factory, which has £12 million of DTI finance, and at which 700 people will be newly employed with effect from next year, rising to 2,500? Is it not the case that unemployment in my constituency has fallen from about 6,000 in 1987 to 4,500 and that it is now below the national average? Is not that an example of the achievements of the regeneration of British industry?

Mr. Heseltine

That is what I call speaking for England. [Interruption.] I am certainly not prepared to share my experience of visiting my hon. Friend’s constituency with the hon. Member for Livingston, who would be embarrassed to hear of the success that we saw there.
Much more important, the motion reveals how little the Labour party understands the achievements of the past decade—how little it understands the realities of world competition, or the degree of change that the 1990s will continue to demand. Let us remember—although it is a sickening prospect—the end of the 1970s. Then, this country had a reputation as the sick man of Europe. We had been losing our share of world trade in manufactured goods for 30 years, and probably longer; we were overtaxed, and we were over-nationalised. We had failed to regenerate our small industrial and commercial companies, we had inadequate training, we were under-educating our children and we were gripped in an inflationary spiral.

To make matters worse, we had an appalling industrial relations record. Our managers could not manage: they faced strikes in their own factories, in the factories of their suppliers and in the public services. In the starkest terms, British industry was uncompetitive. That was the inheritance that our party came to deal with in 1979.

Today, all that the hon. Member for Livingston can say, half apologetically, is, “I had my doubts about the record of the last Labour Government.” At least I said what my doubts were when I was on the Back Benches; it took the hon. Gentleman a long time to work out what his were.

Dr. Keith Hampson (Leeds, North-West)

Does my right hon. Friend recall that, at the very end of the 1960s —after a long period of Labour government—Michael Shanks, the guru of the Labour party, published a Penguin book called “The Stagnant Society”? That book bore true testimony to Labour’s period of office.

As my right hon. Friend may have noticed, the hon. Member for Livingston (Mr. Cook) completely ignored the underlying legacy with which British industry was faced: the appalling reforms forced on our school system during that period of Labour Government and the fact that the proportion of 18-year-olds in higher education had fallen under Labour—the only time since the war when it had done so.

Mr. Heseltine

My hon. Friend is absolutely right to point out Labour’s critical failure to improve our education standards.

In 1979, the problems that we faced were deep seated and long term. In large measure, they were a deliberate consequence of the Labour party’s policies. We always made it clear that the Labour party, its policies, its manifestos and its dogma were a disaster; now, even Labour itself has come to recognise that those policies are a disaster. The party leader himself has realised that change must come, simply because his party’s policies have proved to be a disaster. The problem for him is that his party now thinks that he is a disaster as well.

Mr. Malcolm Chisholm (Edinburgh, Leith)

Will the Secretary of State give way?

Mr. Heseltine

No.

How can the hon. Member for Livingston possibly have the nerve to come to the House and lecture us on industrial policy, when the whole House knows that the closest thing to an industrial policy in the Labour party is an apology for the past and a promise that it will not do the same all over again?

Let me set the 1980s in context. I shall begin wall industrial relations. Labour resisted every step of reform as it fought to preserve the privileges of the trade unions which provided its funds. What is the result? The result is that this country has the best industrial relations for 100 years.

Then there is privatisation. There was never a policy more calculated to destroy the motivation and resilience of an industry than the policy of transferring that industry’s ownership to the state. In state hands, industries are subsidised by taxpayers, suffocated by political and bureaucratic control and denied the chance to compete overseas. Their investment programmes are curtailed to meet the public expenditure constraints of the national Government. That was our inheritance—and the greatest single justification for all the criticisms that we have made over the years is the fact that Labour now has not the nerve to say that it will ever introduce nationalisation again.

So unaware is the hon. Member for Livingston of the damage that nationalisation did to this country that he points to my Department’s budget which has been cut. Why has it been cut? Because the losses of the nationalised industries have been turned into the profits of the privatised industries. What are those industries doing? I will tell the House what they are doing.

Mr. Chisholm

Will the Secretary of State give way?

Mr. Heseltine

In 1979—

Hon. Members

Give way.

Mrs. Alice Mahon (Halifax)

On a point of order, Mr. Deputy Speaker. Is it not customary, and polite, for Ministers to give way to Back Benchers?

Mr. Deputy Speaker

It is entirely up to the Member who has the Floor to decide who to give way to.

Mr. Heseltine

I am, as a matter of custom, always polite. I will give way to the hon. Member for Halifax (Mrs. Mahon).

Mrs. Mahon

I thank the right hon. Gentleman. He will remember Mr. Catton, from Eliot Machine Tools in Halifax, who wrote asking whether he could intervene when Customs and Excise—quite wrongly—fined the firm. It is struggling in the present climate.

That happened just after the right hon. Gentleman made his speech about intervening before breakfast, dinner, tea and so forth. Will he now tell us why he wrote back to Mr. Catton saying that he could not possibly intervene? The company has now had to be taken over.

Mr. Heseltine

As I am sure the hon. Lady knows, if Customs and Excise pursue outstanding bills, that must be a matter for them. It would be utterly wrong for Ministers to interfere with the course of their legal processes. [Interruption.] This is a novel development. The Labour party clearly believes that it is right for Ministers to intervene in the course of justice. That is a chill warning of what we might expect if it ever returned to power.

I was speaking of the transformation of the loss-making nationalised industries. In 1979, those industries cost the Exchequer £3 billion, some 1.5 per cent. of gross domestic product. Last year, the privatised industries paid £2 billion in taxes. That is why my Department’s budget has changed so dramatically.

Moreover, those companies—now in the private sector—are out in the world trading place, winning contracts for Britain. In 1982, the United Kingdom produced 14 million tonnes of crude steel and exported 3 million tonnes of finished steel. Last year, we produced 16 million tonnes of crude steel and exported 8 million tonnes of finished steel. We now have a trade surplus of about 3 million tonnes, compared with a deficit in 1982. Not the least reason for that is the fact that British Steel now produces a tonne of steel in under five man hours, compared with over 13 in 1979.

Many of the privatised industries tell a similar success story. We do not hear about that from Labour.

Mr. Chisholm

Will the right hon. Gentleman give way?

Mr. Heseltine

No, I am not going to give way. I am going to tell the House how well the privatised industries are doing. British Gas, in partnership with Agip—[Interruption.]

Mr. Deputy Speaker

Order. The hon. Member for Blyth Valley (Mr. Campbell) must not half get up and shout across the Chamber. [Interruption.] Order. The hon. Gentleman has been in the House a long time.

Mr. Heseltine

That is characteristic of Opposition Members. All that I want to do is to parade before the House the success of British companies. All that the Opposition want to do is to make sure that nobody listens.

Mr. Chisholm

Will the right hon. Gentleman give way?

Mr. Heseltine

No, I am not going to give way. I am going to explain to the House the success of British companies. I do not mind how much the Opposition like or dislike it—I am going to do it.

British Gas, in partnership with Agip, is investing over £4 billion in the next 10 years on the exploration and development of a huge new gas field in Kazakhstan. British Telecom is now one of the world’s foremost telecommunication companies. Last year, it won a contract worth £350 million to run a telecoms network for the New South Wales Government.

Mr. Chisholm

On a point of order, Mr. Speaker. I have been in the House for about a year, and I seek your guidance. When I was elected to this place I thought that I was coming to a debating Chamber. Can you please tell me how I can turn this House into a debating Chamber? I have never seen anything like this throughout the past year.

Mr. Deputy Speaker

The House is in order. We are having a fulsome debate.

Mr. Heseltine

The problem, Mr. Deputy Speaker, is that there have to be two sides to a debate, but the Opposition have no case to make.
Thames Water, as part of a consortium, has won a £448 million Turkish water plant construction contract. Instead of monopolistic Government ownership, in addition to the profits and the contracts, there are now some 9 million individual shareholders—three times the number there were in 1979. The privatisation programme was the second major change that was brought about in the 1980s, to the immense benefit of the national economy.

My responsibilities include one of the last of the nationalised industries. The hon. Member for Livingston referred to the coal review. I have always made it clear to the House that there are no easy solutions to this intractable set of problems.

At the end of January, the Trade and Industry Select Committee produced its report on British energy policy and the market for coal. I pay tribute to the amount of detailed work that the Committee put into its report. The Government will publish their detailed response shortly. [HON. MEMBERS: “When?”] The Select Committee has recognised that the central issue is the market for coal. It makes no sense for British Coal to continue to produce coal that no one wants to buy.

The stark facts are these. Over 30 million tonnes of coal are stocked at the generators. Over 10 million tonnes are stocked at the pithead. There is enough coal for the rest of this year without another tonne being mined. Well over £1 billion of coal is stocked in mountains that get bigger with every shift that is worked.

The Select Committee’s central conclusion is that it should be possible to find a market for an additional 16 million tonnes of deep-mined coal in each of the next five years. It suggests that the Government should require the generators to contract for an additional 5 million tonnes on top of that.

The Select Committee is right to see the size of the market as the central issue. It estimated total electricity demand in England and Wales over the next five years as equivalent to 586 million tonnes of coal. Caminus, the consultants who advised my Department and whose report I have published, puts the figure at only 565 million tonnes. British Coal puts it lower still—at 563 million tonnes. These differences may seem small, but they remove one quarter of the additional market of 80 million tonnes which the Select Committee believes that it has identified.

No one can predict with accuracy the precise scale of a market five years ahead. The Select Committee’s figures are at the very top of the range. The critical question that we face, therefore, is the extent to which private sector companies will contract for coal. Those companies will form their own judgment about the size of the market.

The fuel mix is equally important. I note that the Select Committee had considered carefully the extent to which the market for coal could be increased by interfering with gas or nuclear. I have noted with interest that the Select Committee has come out against that. This has no doubt been greeted with relief by many hon. Members’ constituents whose jobs would be put at risk. I have said it before and I shall say it again: we cannot interfere to protect jobs in one part of the economy without losing jobs and investment elsewhere.

One of the most attractive of the Select Committee proposals to many hon. Members is to restrict electricity supplied from France via the French interconnector. I have looked into that issue extremely carefully. I myself shared with the Select Committee the concern to examine again the extent to which the scope for additional sales of coal rests upon reducing imports of electricity. I have also taken legal advice on the matter, a summary of which I intend to make public.

The position is clear. As I am sure the right hon. Member for Chesterfield (Mr. Benn) will remember, measures to restrict imports of electricity across the interconnector would be contrary to article 30 of the treaty of Rome. It would also put the Government at considerable financial risk in relation to indemnities given at the time of electricity privatisation and reported to the House.

The effect of removing Electricité de France’s non-leviable status, as the Select Committee recommends, would be highly uncertain and may lead to EDF being allowed access to the same premium prices available to Nuclear Electric and financed through the levy. The regional electricity companies would in turn have to be put under an obligation to purchase electricity from EDF. Far from reducing imports from France, this would reinforce their position, and our consumers would end up paying more for their electricity.

I therefore have to tell the House that the proposal by the Select Committee to reduce the amount of electricity coming across the interconnector from the present 6.5 million tonnes of coal equivalent to zero, or anywhere near that, is not an option, but we are still looking at whether anything might be done. To this end, my hon. Friend the Minister for Energy will go to Paris tomorrow to follow up the conversations that we have been conducting with the French Government.

Dr. Michael Clark (Rochford)

Will my right hon. Friend give way?

Mr. Heseltine

No, not at the moment.

I now turn to the suggestion that the additional tonnages that the Select Committee believes that it has identified can be purchased through a subsidy at a total cost of £500 million. This is intended to reflect the difference between British and world prices. It is an interesting approach. The Select Committee suggests that this could be achieved at a cost of no more than £5 per tonne, but I regret that I cannot agree with the Select Committee’s assessment of the likely costs. I am continuing to discuss these matters with the generators.

Finally, I turn to the proposal that we should legislate to require the generators to take coal at a price and in a quantity that they would judge to be against their commercial interests. I have to say, at least to my hon. Friends, that this is not an attractive proposition. I have never hidden my regard for the immense amount of work that the Select Committee undertook, but many intractable problems remain to be resolved. The Government have to weigh all the consequences. I expect to set out the Government’s reply to the Select Committee and to publish the White Paper shortly.

Dr. Michael Clark rose—

Mr. Heseltine

I give way to my hon. Friend.

Dr. Michael Clark

I am grateful to my hon. Friend for giving way. Of course, the detail of the Select Committee report will be debated at another time, but my right hon. Friend referred to the legal position on importing electricity from France—we shall consider that matter later—and I therefore invite him to consider the legal position on our using the French grid system, within the Common Market spirit of good will, to export electricity to Italy and Spain. If that does not happen, the French will have the prerogative to export electricity to us while we are denied the opportunity to export to France and Spain, because the French will wish to keep that market, too.

Mr. Heseltine

My hon. Friend is well informed on such matters. I assure him that my hon. Friend the Minister for Energy will discuss that and a range of other matters with the French Government tomorrow. I also reassure the House that there have already been consultations and discussions with the French on that matter.

Mr. Malcolm Bruce (Gordon)

To take up the point of the hon. Member for Rochford (Dr. Clark), does the President of the Board of Trade accept that nobody suggests that we should terminate the interconnector with France or reduce its use—certainly the Select Committee does not suggest that? The suggestion is that it should be operated as was intended in the first place, as a two-way exchange of electricity, which provides us with a market that would substitute up to 6 million tonnes of coal equivalent a year. Does the right hon. Gentleman accept that he is being asked simply to negotiate free and fair trade rather than allowing the French to have it all their own way?

Mr. Heseltine

I am sure that the hon. Gentleman will wish to consider the point that he is pursuing in the light of the legal advice about the exact position. The contracts are long standing and subject to the law. The hon. Gentleman will want to consider the matter further.

I will go back to what I was saying, dealing with the record of the 1980s—

Mr. Andrew Mackinlay (Thurrock)

Will the right hon. Gentleman give way?

Mr. Heseltine

Is it about coal?

Mr. Mackinlay

No, it is about the fact that the right hon. Gentleman is going backwards.

Mr. Heseltine

No, I shall not give way. I must make progress.

Mr. Derek Enright (Hemsworth) rose—

Mr. Heseltine I must now make progress.

A critical component of a healthy economy is the vibrancy of the small and medium-sized company. Today at last, Britain is generating small and medium-sized businesses. When the Government were elected in 1979, there were 1.75 million of them; today there are 1 million more, which grew and developed in the 1980s. Even during the recession of 1992 about 400,000 business start-ups took place.

Why did that happen? It happened because we changed the tax regime to enable it to happen. Changes in corporation tax, in inheritance tax and in income tax made it pay to invest, to hold on, to take risks and to start businesses. It left discretionary wealth in the hands of people who were prepared to invest it in the enterprise culture. It is from the small and medium-sized company sector of the economy that jobs come.

The hon. Member for Livingston made a great deal of the issue of unemployment—but let us consider the facts. Let me remind him that, over the last economic cycle, in 1979–90, the work force in employment grew by 1.5 million, twice as fast as in the rest of the EC. Even in recession, employment now is almost 1.5 million higher than it was 10 years ago. We still have a higher proportion of the adult population in work than almost any other European country.

Mr. MacKinlay rose—

Mr. Heseltine

Let me put the heart of the matter to the hon. Member for Livingston. Has he any idea of the dilemma that our companies face? When he visits large companies, does he ever even look to see the changes that are there staring him in the face? He can walk round any company and ask any management; he can talk to the people employed there. There will be only one story, one explanation, one option. Fewer people are employed, in the drive for those companies to survive in an ever more competitive marketplace. Fewer people are employed as investment—the very investment that the hon. Gentleman keeps talking about—replaces people’s jobs.

For example, we are producing 300,000 more vehicles a year than we were 10 years ago—but 100,000 fewer people are employed in the industry producing them.

Mrs. Angela Browning (Tiverton)

Although I have been in the House only for a few months, I worked in business for the previous 18 years, 15 of which—during the 1970s and 1980s—I spent selling the products of British manufacturing industry against the competition. I totally support what my right hon. Friend says about the competitiveness of British manufacturing industry. Is he aware that only last November the shadow Chancellor said in The Guardian that in Labour’s view the public sector would be the engine of growth? How out of date can the Labour party get?

Mr. Heseltine

My hon. Friend makes a telling point. Let me add to it: the other day the shadow Chancellor, looking at the success of the privatised utilities, argued that there should be a windfall tax. The Labour party does not have the money to renationalise businesses, so now it wants to tax them into subjection. It is the old story—when Labour Members see success they want to tax it—before breakfast, before lunch, before tea, and before dinner. Then they get up the next day and start taxing it all over again. That is when Labour Members are really happy, destroying success at every turn, every day, all the time.

It is our duty to tell companies that they have our support in the battle to survive, even if that means telling the people the truth about the nature of change and the process of moving from job to job. Let us be clear—

Mr. Mackinlay

Will the right hon. Gentleman give way?

Mr. Heseltine

No, I shall not give way.

The Government strategy is clear.

Mr. Mackinlay

What about the south-east?

Mr. Heseltine

What about a bit of silence, for a minute?

We must set the conditions for growth and pursue competitiveness over the whole range of Government policy. That means low inflation, low interest rates, a competitive pound and support for exports, higher education, research and development and for training.

Now I come to the next great success of the 1980s. The United Kingdom received one third of all inward investment into the EC in 1991. We have 41 per cent. of Japanese inward investment and 36 per cent. of the investment from the United States. It has been estimated that inward investment in 1991–92 created 23,000 jobs and safeguarded 29,000 more. That is success on a massive scale and the Labour party would do well to remember it.

Several Hon. Members rose—

Mr. Heseltine

The hon. Member for Livingston called for an industrial strategy—

Mr. Mackinlay

Will the right hon. Gentleman give way?

Mr. Deputy Speaker

Order. I should be most grateful if the hon. Member for Thurrock (Mr. Mackinlay) would recognise that the Secretary of State is not giving way. [HON. MEMBERS: “He is frit.”] That may be hon. Members’ view, but the Secretary of State is not giving way to the hon. Member for Thurrock.

Mr. Heseltine

The hon. Member for Livingston called for an industrial strategy. What is the cornerstone of that strategy? It is to impose the social chapter of British industry. Spain, under a socialist Government, has 18.3 per cent. unemployment; companies are leaving France to bring jobs here, away from a socialist Government; German industrialists are shifting manufacturing to central Europe; as a result of the Maastricht treaty, Britain has the opportunity to attract inward investment on a growing scale. We now have the chance to restore the manufacturing base that the Labour party did so much to erode over 40 years—and what is Labour’s policy? It is to impose the social chapter.

Jacques Delors says that Britain can be a paradise for Japanese investment. Good. Today, not tomorrow, please. And thank you.

The Labour party says that it has changed; it will never change—because change requires courage, guts and vision. Change requires the will to stand up to vested interests and the Labour party is nothing except the representative of—

Mr. Jimmy Boyce (Rotherham)

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. I am sorry to stop the President of the Board of Trade in full flow, but there is a point of order.

Mr. Boyce

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Is it for me?

Mr. Boyce

Yes, it is. I wonder whether the President of the Board of Trade could—[Interruption.] Would you be kind enough to ask the President of the Board of Trade to lower his voice a couple of octaves because we can hear his ranting through the microphones on this side of the House at the same time as his ranting from the other side of the House?

Mr. Deputy Speaker

Neither the content nor the volume are the responsibility of the Chair.

Mr. George Howarth (Knowsley, North) rose—

Mr. Deputy Speaker Order.

The hon. Member only came into the Chamber a few minutes ago and he has been leaping up and down ever since. He must resume his seat.

Mr. Heseltine

I hope, Mr. Deputy Speaker, that I have not offended you by the scale of my voice. I tend to adjust the volume depending on the penetration of the Opposition that I must make.

I think that the House will wish me to extend a note of sympathy to the hon. Member for Livingston, because the 829disaster scenario to which he clings becomes less credible every day. Survey after survey shows confidence and recovery. The latest surveys by the Confederation of British Industry and the Institute of Directors show that British business knows that the recovery is coming and is under way. The surveys all have the same message—that Britain is moving ahead.

In the three months to January, retail sales were 1.5 per cent. higher than a year earlier. In February, car registrations were 16 per cent. higher than the year earlier. In the fourth quarter of 1992, manufactured exports were at record levels, excluding oil and erratics, and were up 6.5 per cent. on a year earlier, and manufacturing investment was 5.5 per cent. up on the start of the year.

The poor old hon. Member for Livingston is stuck where he was a year ago—he is the only person whose performance has not improved during the past 12 months—when he was talking about health service trusts. The Opposition—led by the hon. Member for Livingston—engaged in a scandalous campaign and exploitation of public concern about the national health service. Yet what has been the Government’s record under their stewardship of the NHS? More than 1 million more patients are being treated.

The hon. Member for Livingston is now in the business of undermining British industry, but let me tell him that British industry is already making a commendable job of undermining him. I hope that the House will finish the job tonight and will support the Government.