Coal as a nationalised industry

Coal shortage

There was a coal shortage in the international economy between the end of the Second World War and 1957. Demand was high and, in early 1947, freezing weather intensified the coal shortage, producing a serious energy crisis. The government was forced to ration coal and many households were left without heating. Exports were temporarily suspended and, for the first time, the government considered importing coal.

To protect the country from future crisis, the government attempted to increase capacity and production in the industry. This proved difficult as the shortage of manpower persisted. In 1950 and 1956, the National Coal Board (NCB) expanded production targets until the mid-1960s. As the established deep-level mines were unable to meet demand, the government invested in opencast mining during the 1950s - a policy previously regarded as impractical. The NCB was given increased borrowing powers for the purpose of investment.

Falling demand

The economics of the coal industry changed radically after 1957, and demand rapidly fell away in the face of competition from oil and gas. Even so, the British industry was faced with problems of overcapacity and low productivity as marginal mines had been kept in production to meet previous demand. In 1959, the National Coal Board (NCB) produced reduced estimates for future demand and consumption. By 1962, the government was considering the closure of collieries.

Colliery closure

The collieries closed during the second half of the 1960s, and successive governments acted to offset the social and political costs. The Conservatives forbade coal imports and taxed fuel oil to make British coal more competitive. Wilson's Labour government acted more directly, and the Coal Industry Act of 1965 allowed the NCB to write off £400 million in debt and ease its financial position. As the industry was rationalised in the late 1960s, the Coal Industry Act of 1967 provided subsidisation of redundancy and early retirement.

The Heath government alleviated the NCB deficits through grants and, by the 1970s, coal mining had become a state-subsidised and protected industry. With the oil crisis of 1973 and 1974, demand for coal increased again. The Coal Industry Act of 1973 enabled the NCB to write off debts and granted new borrowing powers. In 1974, the Board produced a new plan for increased production based on a large-scale investment programme.