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ON THE RECORD
RECORDED FROM TRANSMISSION BBC-1 DATE 31.1.93
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JONATHAN DIMBLEBY: Good afternoon and welcome to On The
Record. Today - the climb down over coal; the budget; and the dole queues.
On Thursday Michael Heseltine and his
colleagues will wrestle again over how many pits should be saved and at what
cost. As the government prepares to make a spectacular U-turn, the conflicting
views of three Tory backbenchers suggest that the Cabinet has no easy way of
escape.
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We start with coal. The Government is
now committed to a U-turn, forced on it not by any market imperative but by the
will of the electorate, forcibly expressed in Parliament, not only by the
Opposition, by a host of Tory backbenchers as well. Had Michael Heseltine
pressed ahead with his original plan to close thirty-one pits, the Government
would certainly have been faced with a humiliating defeat at the hands of its
own supporters.
Last week the Select Committee came up
with a way of escape for a beleaguered Cabinet, but will it work, or does the
solution to one problem simply cereate another in its place.
With me now, three Conservative
back-benchers: Keith Hampson, a member of the Select Committee and,
incidentally, one of those who helped run Michael Heseltine's campaign for the
leadership against Margaret Thatcher; Raymond Robertson, whose Aberdeen
constituency contains a good many voters who work in the oil and gas industries
and John Marshall, a member of the No-turning Back group and a convinced
advocate of market forces.
Keith Hampson first. With the
subsidies that you propose to put into the coal industry, with seventy-eight
thousand or more jobs originally at risk, how much of that gap do you expect to
close. How many jobs will be saved if the Government adopts your scheme?
KEITH HAMPSON MP: Well, the report specifically doesn't
get into the numbers of pits, which pits, or overall the jobs. We started from
a different angle which is, can you increase the market for coal, then it's up
to British Coal the operators to decide how you can best do that, because
British Coal has always had a favoured position. When electricity was
privatised the companies were required to have huge volumes of coal which they
had to buy at very large prices and that's why now that the contracts are over,
they don't want to proceed with those volumes. So we've got to in a sense,
re-rig the market a bit.
DIMBLEBY: Yes, but given that you were driven by
the political imperative of jobs and communities - that's why people were up in
arms - you must have come up with some notion of how many pits are likely - say
people talk about fifteen to twenty pits - how many jobs roughly, what
ball-park figure have you got in your mind?
HAMPSON: We didn't go into that. I honestly
with ......
DIMBLEBY: You ignored it altogether?
HAMPSON: We have here great depth. How many jobs
overall, not just in the pit industry, but in the equipment manufacturers, in
the gas industry, the nuclear industry. The employment consequences are
heavily and thoroughly examined, but we do not say what our recommendations
would have in consequence on those jobs.
DIMBLEBY: Would it be fair though, Mr Hampson, to
say that we are talking about if your proposals were taken up, saving some tens
of thousands of jobs, don't be specific, but we're talking about saving tens of
thousands?
HAMPSON: I think at the lowest end, if these
proposals are adopted, you could save about thirteen pits, possibly in my view
about seventeen. I think it's really raising expectations too far when people
say twenty-odd, because what that means is simply you're rippingout the coal in
the short term for about the next year or so before you actually close the pits.
DIMBLEBY: Okay. So we're talking about tens of
thousands of jobs, maybe thirteen to seventeen pits. Raymond Robertson,
amongst your constituents, oil workers and indeed many gas workers. What do
make of the proposals?
RAYMOND ROBERTSON: Well, I'm concerned that the Select
Committee is asking the Government to fundamentally change the balance between
coal and gas in favour of coal. Why was it right for those members who have
mining constituencies to say to their people, "Do not.. it's wrong for us to go
back and say to you, prepare for unemployment, yet it's right for me and other
colleagues in Teesside and East Anglia to say to our constituents, it's
perfectly alright for me to go back and say to them, prepare for unemployment".
Well, I'm not prepared to do that.
DIMBLEBY: And that's what you think you're facing
if they pick up - if Heseltine picks up these proposals?
ROBERTSON: It's not just me that saying that. The
United Kingdom Off-shore Operators' Association has estimated that over a five
to seven year period fifty-five thousand jobs in the Northern gas sector would
be at threat, and ..
DIMBLEBY: And do you buy that figure?
ROBERTSON: Oh that's backed up - it's not my
figure, that is backed up by other consultants like County Nat-West with
MacKenzie who have said something in the region of thirty to forty-thousand
jobs.
DIMBLEBY: Keith Hampson.
HAMPSON: Well, it's not the case, if you accept
these recommendations. It could have been, but I - the interesting thing is
that all the Labour members signed up to this report and in this report we say
you do not go back on the dash for gas. There will be at least twelve
stations, that's about eighty - eight thousand milliwatts of electricity
generated by gas, that's about getting on to twenty odd per cent of the market.
We reckon you could actually, probably have another two stations. We do not
say that there should be no more stations. What we do say is, that there are
twelve consents sitting in the Government at the moment, another twelve, which
almost all the evidence was that the economics of the market will not now
require, people will not want to go on with them, but we do say, they could go
on if you, as the Government, take real care as to how and why you need those
stations.
DIMBLEBY: Reassured not!
ROBERTSON: No, the economics of the market
obviously will take coal if coal is being subsidised. The gas industry is not
being subsidised, we have more gas than we have coal, it's cleaner and it more
environmentally friendly than coal.
HARRIS: But the Labour Party members would have
liked to have said, close down what is going to happen. Stop these gas
stations coming on stream. They signed up to the logic, which is there is a
big industry there, it is successful and we're saying that gas will take
twenty-four per cent of the energy generation market.
ROBERTSON: So I have to be thankful we're not
closing it down, when we're merely turning it back. Well, I'm not thankful
about that, and that's unacceptable.
DIMBLEBY: When you say it's unacceptable are you
also saying there is no way, if the Government comes up with something of the
kind that Keith Hampson and his colleagues are proposing, you won't be able to
go in the lobbies and say Aye?
ROBERTSON: I'm not saying that, because they were
too far down that road. What we've now to got to do is to impress upon
Government colleagues who represent the gas industry like myself (INTERRUPTION)
... have now got to press upon the Government that we find that aspect of this
report unacceptable.
DIMBLEBY: How many of you roughly are there, d'you
reckon?
ROBERTSON: Well, in the North-East of Scotland
there are a clutch of members, Teeside and East Anglia. I mean we failed to
put the case for gas because coal is emotive, coal is sexy and really the
Government and I'm afraid the DTI has like (INTERRRUPTION) has allowed itself
to be conned by the coal lobby.
DIMBLEBY: Now let me bring in you John Marshall -
no turning back group; thorough believer in the free market, representing, as
it were, a group of MPs who may not be specificlaly involved as Mr. Robertson
is, but have a broad overall view. How do you respond to what the Select
Committee's come up with?
MARSHALL: I think first of all, what the Select
Committee has shown is that when Michael Heseltine put forward his proposals he
did so because the alternative wasn't easy. The alternative would cost jobs
elsewhere and we've actually seen a very interesting discussion between our two
colleagues..
HAMPSON: Not in gas though - not in gas.
MARSHALL: They will cost some jobs in gas - of
course they will. What we've seen is a very interesting discussion which is
when you re-rig the market, to use Keith's words, then you cost jobs elsewhere,
and you always cost jobs in the more successful industries in order to help the
less successful, and this is what's going to happen as a result of this report.
What concerns me first of all is that
we're going to see more money being spent over the next few years than would
have happened under the Heseltine proposals. At a time when the Government
should be cutting back public expenditure - the net effect of this will be
increased public expenditure - and I also feel that any system of subsidy never
has the beneficial consequences that people imagine.
We are told, for example, that one of
the consequences - one of the necessary conditions of this - is that working
practices in the pits should be improved and costs should be reduced. I think
one has to look back at the history of British shipbuilders, British Leyland
and other industries which have received huge subsidies, always on the promise
that this is the last time. Don't worry - in future working practices will be
better. It hasn't happened in the past, I doubt if it will happen now.
DIMBLEBY: Mr. Marshall, are you saying this is
basically back to "lame duck" strategy if we're not careful?
MARSHALL: Well, I think there must be that risk
involved. I'm sure Mr. Scargill is sitting perhaps watching this programme,
but I can't believe that Mr. Scargill is thinking of ways of cutting costs in
the Coal Industry.
DIMBLEBY: Let me ask you Mr. Hampson, to deal with
this point about the borrowing. The charge is that this is going to cost the
Exchequer - the cost of borrowing far more when already it is ballooning almost
out of control.
HAMPSON: Well, first, productivity in British
Coal has gone up by over two hundred per cent in the last seven years. We
reckon - and every expert we've had come to us said - that they could go on
improving productivity over the next five years. That would enable them to get
their prices down to the level of imported coal prices.
That is sensible, because fifty-five per
cent of all accessible coal reserves in this country - this country only has
twenty-five years of coal available to it from present pits - fifty-five per
cent of that coal is in these thirty-one pits. It's lunatic... in the national
interest it must be right to try and get that out.
DIMBLEBY: Be good enough to deal with the question
Marshall raises.......
HAMPSON: But that is the reason why you should,
in the short term, give them a breathing space to get their costs down so that
those energy reserves can be got at. Now in terms of the PSBR, we're proposing
subsidies of about a hundred-and-eighty million this first year, tapering off
over five years to a total of about five hundred. The cost to the PSBR of the
redundancy package, the re-training measures and everything else, is over one
point three billion this first year. The Treasury, therefore, saves on this
sort of subsidy as against what otherwise the closure programme would cost.
DIMBLEBY: Money saved, Mr. Marshall.
MARSHALL: Well, that just will not be true. As
Keith full well knows a number of pits are going to be closed this year - they
will have the full cost that they would have had under the Heseltine package.
What he also knows is that the pits we're talking about will probably be closed
at the end of the subsidy period, so that, in fact, there will be their
redundancy costs there as well.
What we also - what I suspect and what
the press suspects is that the subsidy will be much higher than he indicates
and, finally, this report isn't about productivity and keeping costs down as
much as possible, because you know full well Keith that the cheapest form of
producing coal is by open-cast mining. Yet your report recommends that
open-cast mining should basically be ended.
HAMPSON: No we don't sir..
MARSHALL: Oh yes you do. Oh yes you do.
HAMPSON: I wish people would read the report. We
say that open-cast is declining anyway in the next five years and it would go
down to ten million tonnes - well, it would go to twelve - we're saying it
should go down to about ten, a small decrease. However, the levy which is
already paid to the nuclear industry we reckon is being overpaid to the nuclear
industry and we're proposing that this subsidy for coal should be sliced off
that. So there's no actual cost to the PSBR in the subsidies at all.
DIMBLEBY: It's cost free, you're saying?
HAMPSON: It's cost free to the Treasury. It is
coming off the electricity consumers who are already paying it, already paying
it for nuclear. We're suggesting some of it should go from nuclear into
helping coal.
DIMBLEBY: If the cost of coal is reduced
internationally over the timespan of these subsidies, is your subsidy
open-ended during that period to ensure competitiveness?
HAMPSON: It is specifically tailored to the
condition that British Coal lower their costs over a five-year period as
they've said they could do. It tapers off from the first year of a-hundred-and
eight right down to the odd twenty million at the end of the five-year period -
a total of around five hundred million, provided they reach the productivity
levels.
MARSHALL: That's the same story we've heard with
every subsidy in the past.
HAMPSON: We believe it's worth giving them a
chance because fifty-five per cent of this nation's coal reserves are locked
into those pits which you otherwise wouldn't get unless you pursue this policy.
DIMBLEBY: Let me ask you Mr. Robertson and Mr.
Marshall - if the Government listens to you on this and ignores what the Select
Committee are saying altogether, there clearly is (because of the number of
coal concerned Tories) serious risk that the Government would lose the vote.
Do you feel so strongly about that that you are prepared in principle to
challenge that and face that prospect?
ROBERTSON: I honestly think that those of us who
represent constituencies which have a gas interest didn't speak out loudly
enough in October when all this was heppening. As I said earlier, I'm
frightened and I'm fearful that the Government and then the Select Committee
really did allow themselves to be conned by the coal lobby, and that can't be
allowed to happen again.
DIMBLEBY: Mr. Marshall next. Mr. Marshall - on
the substantial point, are you prepared to say "No" or in the end do you bend
because you want to stay on that nice warm Government bench? - or back-bench
behind the Government?
MARSHALL: I didn't know that back-benches behind
the Government were particularly warm, particularly nice, or particularly cosy.
We're in the situation where the Government is seeking to make up its mind,
it's right that all of us should be part of that policy creation process, and
until the final policy is determined it's not for any of us to say whether we
will support it or not.
DIMBLEBY: Let me ask - it is, however, I suspect
for Mr. Hampson to say, and I'm sure he's happy to say it - if the Government
falls far short of your recommendations, will it face the prospect of upheaval
as it clearly faced before it decided to change course?
HAMPSON: Yes. Can I just say that we weren't
conned. In here there's a whole section with at least oil companies in the
industry citing the facts and figures, and we did on balance decide - can I
just correct this though because we decided that the arguments of Robin Cook
and others, that this whole crisis was to be blamed on gas was not the case.
Labour members signed up to that. There's going to be a huge gas industry
supplying a quarter of our energy generation in five years' time.
DIMBLEBY: Right. Now answer my question if you'd
be so kind, briefly. Have we got to get pretty close to what you're saying to
be confident of getting it through?
HAMPSON: If Arthur Scargill and the Unions can
bring about these productivity changes, then there's a real future of getting
prices down to import levels and British Coal will have a future but, if we
don't, we'll face this crisis again and the Government will have to consider
closing pits again.
DIMBLEBY: Mr. Hampson, do I take it that you don't
wish to answer my question, because if you don't do it right now you're not
going to have a chance to. Yes or No?
HAMPSON: I think the Government will have to
close pits later on unless we can get productivity down and the cost of British
coal down.
DIMBLEBY: Still doesn't answer my question
unless.. We'll see what happens. Thank you all three for demonstrating it
is indeed going to be more fraught than some may so far have assumed.
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