Before I call the hon. Member for Barnsley, West and Penistone (Mr. Clapham), it has been indicated to me that many Members wish to participate in this debate. I would like brief speeches so that we can have wide participation.
I am grateful for having secured this debate on the coal industry because it is at a very important juncture. It is once again at the crossroads. I am pleased to be debating it with the Minister, as I know that she has empathy with the industry and mining communities because she represents one and understands the issues. I hope that we can encourage that empathy to translate into positive action to support the coal mining industry.
Last week, there was an announcement by RJB, the largest mining company in England, that Ellington colliery, the last in the north-east, would be closed in February 2000 with the loss of 400 quality jobs. There is a shadow across the whole of the English coalfield because some 5 million tonnes are already on stock and imports are penetrating some of the markets that United Kingdom coal previously had. I hope that this debate will play some small part in trying to find a way forward that will retain what remains of the industry within a secure, diverse and sustainable energy framework.
Government policy was contained in the October 1998 White Paper on energy, which was supposed to pave the way for a level playing field that would help the coal industry. It is fair to say that one year on, it is clear that that policy needs reviving if we are to save the coal industry. Collieries are closing, employment in deep mines is falling and the future of the entire English coalfield is threatened. However, it is not only the English coalfield that is affected, as we shall see.
Only 18 of British Coal's former deep mines are operating. There is one colliery in Scotland—the Longannet complex—two in Wales and 15 in England, soon to be cut to 14. We are fast approaching the point of losing the industry's critical mass. It is not only the English coalfield that is suffering; the Welsh and Scottish coalfields suffer from the same problems.
Since this debate was announced, I have received several letters. The chairman of Tower colliery, Tyrone O'Sullivan, says that it pays £5.4 million per annum to
the Exchequer and has kept 400 people in quality jobs, thus reducing the cost of state benefits. He says:
The UK Government needs to decide where the UK stands on Energy needs. The UK Coal Industry is the most efficient by far in Europe.
The problems we face within Anthracite is the Polish and Chinese. This coal is dumped in the UK. Also subsidies within Europe, Germany, Spain, Poland. We've stopped German coal into UK but it is within Europe affecting our exports to France, Germany and Belgium.
Coal prices are at a 20 year low, this is not sustainable but if UK pits close now…we will have no industry to respond in the future.
He then makes a telling point:
Tower Colliery has constantly invested into the future with heavy financial developments of the mine and infrastructure and would like to develop another part of the mine which would produce coal directly for Aberthaw Power Station. But this development is costly and due to present uncertainties we are unable to commit ourselves. This would result in further employment at Tower if this was able to commence.
Tower feels that the uncertainties have been made worse by the Baglan Bay gas-fired power station, which will threaten the market at Aberthaw.
It is not only jobs in mining that are threatened. For example, I received a letter on Monday from the Association of British Mining Equipment Companies expressing grave concern about developments in the UK coal industry. Those companies export about £300 million of mining machinery and have been selling £200 million of equipment into the English coalfield, although that has declined recently. Every pit that closes reduces orders and threatens manufacturing jobs.
I refer the Minister to what Philip Deakin, the association's director general has to say. His letter states:
It is apparent, and has always been understood, that should the UK mining industry cease to be a legitimate and equal fuel supplier to UK energy generators, then the effect on this manufacturing sector will be catastrophic. The loss of up to 8,000 ABMEC member company engineering jobs and over 50 companies to the UK economy will inevitably follow. This in addition to 15,000 direct employees within the mining industry.
Redundancies have and are taking place. Company turnovers have been severely reduced and profit margins slashed. Without the trading foundation of a UK coal mining industry, our drive for export sales, currently in excess of £300 million annually cannot be sustained and will inevitably leave this association's member companies with only one or two options—to cease trading or move abroad.
That is not an idle threat: if the coal industry were to decline further, members of ABMEC tell me that they would have to consider relocating in countries such as Australia and America, where there is still a deep coal mining industry. Therefore, the threat extends far wider then the core coal mining industry.
When we examine the British coal mining industry, we find that the industry's development and the cost reductions it has achieved suggest that, with a little aid, it is quite capable in the short term of reaching a point where it can stand on its own two feet. In 1994, imports into the UK cost between £1.20 and £1.30 per gigajoule, whereas UK production costs were between £1.40 to £1.50 per gigajoule. The UK industry has been able to reduce its costs and dramatically decrease the gap: now, it has got its price down and is signing contracts at £1.15 per gigajoule. However, import prices have also fallen dramatically: they now come in at between 70p and 75p per gigajoule.
How are we to react? Costs in the UK industry are falling and there are indications of further opportunities that might prove beneficial. In such circumstances, it is fair to ask the Minister to consider seriously action to assist the industry, perhaps formulated through regional selective assistance.
I congratulate the hon. Gentleman on choosing to debate this subject. On the question of aid, he will recall that those of us who voted against the pit closure programme were deeply concerned about the fact that Germany's industry receives a multi-billion pound annual subsidy, authorised by the European Commission. With all the current noise about Europe, does the hon. Gentleman agree that it is about time we sorted out that issue, as the Select Committee on European Scrutiny has chosen to do shortly?
I am asking my right hon. Friend the Minister to consider what can be done to give aid to the UK coal industry. My right hon. Friend is, of course, aware that massive aid is paid to the German, French and Spanish industries.
I believe that the simplest way to give aid would be to pay the generators the difference between delivered international coal market prices and the UK price, so that the subsidy went to generators in the short term, until the industry was able to find stability. Assistance to preserve the industry is required because it is accepted that UK coal mining is the most productive in Europe. It is perverse that the French, German and Spanish coal industries should receive about £3.5 billion in state aids when they have no chance of becoming competitive.
In the Gallery this morning are miners from some of the threatened collieries. They are disappointed that help is given to other UK industries, but that the plight of their industry is not currently being taken into account. Their disappointment is all the greater because they know that coal prices will rise in future and that the absence of a competitive indigenous coal mining industry will make us less secure and far more dependent on imported fuels.
Looking at the other two thirds of the energy mix reveals good reasons why the Minister should consider providing an aid package to the coal industry. Gas reserves are depleting rapidly. The 1998 "Digest of United Kingdom Energy Statistics" shows that on current use, proven plus probable reserves will last for only 14 more years. It is striking to compare that with the 1992 statistics, which predicted their lasting another 24 years. In six years, 10 years supply of gas has been "lost". The Department of Trade and Industry should focus on those statistics and help the UK coal industry in order to ensure that we do not become overdependent on imported gas and that we have a diverse energy mix.
In 1998, coal doubled its price advantage over gas as a fuel for power generation, yet coal burn continues to fall: it fell by 23 per cent. in the first half of 1999 and new gas-fired stations continue to be approved. The UK coal report for October compared the prices of coal and gas, and revealed that coal is a significantly cheaper generating fuel than gas: gas generation costs 1.4p per kWh, whereas coal generation costs 1.16p per kWh, so coal has a fairly large margin of advantage over gas. Against that background, it is extremely disappointing that section 36 consents and section 14 consents to build more gas-fired power stations continue to be granted. I hope that the Minister will tell us that she intends to ensure that the moratorium is strictly observed in future, perhaps until the proposed changes resulting from the pool review have bedded down.
Nuclear power carries inherent risks and waste storage problems remain unresolved. The recent accident at Tokaimura in Japan reminds us of the enormous risks involved in nuclear energy. Most nuclear stations in the UK are operating beyond their design lives. Earlier this year, the nuclear installation inspectorate expressed concern about staffing levels at some nuclear power stations; the full report, when published, should make interesting reading. It is fair to predict that the next few years will bring the decommissioning of some of the older nuclear power stations. Those factors and a need to avoid overdependence on gas imports are reasons why we should ensure the survival of a UK coal industry.
Viewing the industry in the context of our environmental obligations gives rise to some concern, because the Environment Agency's tight emission policy poses a threat. That policy far exceeds our environmental obligations and unless rationality prevails, it could become another factor that helps to strangle the coal industry. I accept that we have to face up to our environmental commitments and no one suggests otherwise; however, those commitments must be balanced within an appropriate energy framework.
If we are to increase generation from coal-fired stations to make up the loss when the nuclear power stations are decommissioned and to restrict gas, we need more meaningful investment in clean coal technology. Clean coal demonstration plants should be built now to prepare the way for the higher efficiency coal plants that will be required to replace the old, low efficiency plants. The Government must act now if the United Kingdom coal industry is to be retained as a viable part of the energy mix.
The Government could consider taking several actions now. For example, they could end the section 36 and section 14 consents. They could consider bringing forward negotiations on the French interconnector to enable the contracts to be renegotiated. When the Select Committee on Trade and Industry reported on the coal industry in 1993, it suggested that there should be reciprocal arrangements so that as much electricity could be sent through the interconnector to France as was received in this country.
There should be more investment in clean coal plant, and action should be taken to protect the UK coal industry against dumping from eastern Europe. We have heard recently about dumping Polish coal. The letter from Tower colliery mentions the threat that it faces from dumped coal.
The Minister should consider regional selective assistance or some other aid package for the industry. The aid should be paid to the generators to make up the price difference, as I suggested earlier. Failure to act now could lead to a speedy demise of the UK coal industry. If a sane and sensible energy policy with a proportion of UK coal burn is to be retained in future, we must act decisively.
The Minister has considered and responded to the coalfield task force report, which the Deputy Prime Minister instigated to examine how the victimised miners' pensions might be reinstated. At what stage are those inquiries? How long will it be before progress is made?
I am grateful that the hon. Member for Barnsley, West and Penistone (Mr. Clapham) has been able to arrange the debate for today. It could not have been more timely for Ellington colliery in my constituency. The hon. Gentleman referred to its closure in his remarks. The Ellington problem is part of the coal industry's wider problems, and I shall begin by considering Ellington specifically.
When I was elected, there were three working pits in my constituency which employed 3,500 men. We retain the last working pit in the north-east of England where 430 men are in work and make a massive contribution to a local economy that currently has little else. The closure of Ellington colliery would be a disaster for an area that stretches for many miles; it would affect several other constituencies. The pit had more than 1,000 jobs when it was closed by British Coal and reopened by RJB Mining. The much smaller work force profitably produces larger quantities of coal than its predecessors. That is a remarkable achievement. The pit employs people from a wide area—from Alnwick to Amble, Hadston, Widdrington, Lynemouth and Ellington, as well as many men in adjoining constituencies such as Blyth Valley and Wansbeck.
A wider north anxiety—that the economy of the north is far behind that of the rest of the country—forms the background to the worries about Ellington. Newspaper headlines such as, "What about the North, Mr. Blair?", reflect a general feeling that the north is in no position to cope with a blow such as the closure of Ellington colliery. The measures that have been announced so far cannot deal with the consequences.
The pit is in an area of serious unemployment, and many of the measures that the Government propose as alternatives to keeping the pit open have been used in dealing with earlier pit closures. They have not created anything like the increase in the number of jobs that the area needs to cope with the 1,000 jobs that have already been lost at Ellington colliery, let alone the 400 that will be lost if the pit closes in February.
Ellington feeds its coal directly to the Alcan power station, which powers the Alcan smelter. It would be hard to imagine a more efficient arrangement for coal. There are no transport costs and thus no environmental consequences of transporting coal around the country. Ellington uses the best method of transferring coal. However, the coal contract with Alcan belongs to RJB Mining and the idea that someone else could buy the pit without the contract is ludicrous. The RJB press release stated that the company would be interested in offers to take over the pit. No one will take it over without the contract to feed the coal straight to Alcan.
RJB Mining has massive opencast resources in Northumberland. It has the lion's share of the large amount of opencast mining in Northumberland. My constituency has the largest amount in the country. Local residents were told that they had to accept opencast mining because it was necessary to keep the deep mine open; that, without the sweetener of opencast coal and its lower price, we could not keep the deep mine open. Now, we have opencast, but we will not have the deep mine unless drastic action is taken.
As the hon. Member for Barnsley, West and Penistone pointed out, the coal market is unnaturally depressed at the moment. No one believes that the coal price will remain at its current low level. No one assumes that the coal market will be easy in future, but it is generally accepted that the current price is unrealistically low. The state of the market is assisted by massive subsidies, such as £3 billion to £4 billion a year in European Union countries and those in other countries too—leaving aside the current level of subsidy in Poland.
Therefore, we must put the case for some assistance for the coal industry over this difficult period. Otherwise, when the market settles down to a sensible level, there will be no British coal industry to take advantage of it. We cannot simply open and shut down the British coal industry at a moment's notice; pits cannot be closed and quickly reopened. Once pits are closed, they are usually lost permanently. That will happen at Ellington.
We have met the Minister and the Secretary of State for Trade and Industry, who were ready to meet us at short notice and to consider the matter. However, we were presented with the strict doctrinaire view that the Government would not grant any state aid to the coal industry. That is an uncomfortable position for the Government to take when the coal market is in such an unnatural state. The Government's view constituted a curious unilateralism: they claimed that, if we did not provide state aid, all other countries would stop providing it. I can understand why the Government want to end the distortions of the coal market that state aid creates. However, we cannot do that by letting our coal industry go simply to show how damaging a subsidised coal market can be. That is an absurd position.
We must ensure that our coal industry can survive this period at least at a minimal level. Heaven knows, the British coal industry is now smaller than anyone could imagine. Instead of sitting back, allowing the industry to be destroyed and then claiming, "We told you so; we told you that state aid was a bad thing", the Government should take a more pragmatic view and find a way of assisting the industry through this period.
The objective of European-approved aid for the coal industry is viability. Ellington can be viable if it is allowed to continue to fulfil its Alcan contract in the next three or four years, and receives assistance to meet the additional costs resulting from sandstone layers that have been found and to bridge the price gap. That might lead to the possibility of reconsidering the longer-term reserves that exist at Ellington. Although the first move into the northerly part of the pit's potential reserves yielded coal that might have been unsuitable for generation, there is no evidence to suggest that coal a little further away would not be highly suitable for power generation. That possibility could be explored if the pit were kept going.
The previous Government introduced a scheme in 1993—they did not spend very much money on it—and it provides a model for what could be done. However, it is not the only model. As has been suggested already, we do not have to provide a direct subsidy to the coal producer; it could be a subsidy to the generators and many people would feel more comfortable with that. One way or another, it is essential to try to bridge the price gap in that short period. This country has the lowest production costs for coal in Europe, but we are allowing the industry to go to the wall because production costs are subsidised elsewhere and there is an unnatural condition in the coal market.
I was disturbed that Ministers did not tell us that, although they were worried and although there were legal difficulties, they would consider whether a scheme could be devised to meet European criteria. There has been state aid to the coal industry in Britain, so it is not a question of suddenly introducing it. It existed under the 1993 scheme and £12 million was paid out under it. Therefore, there is a baseline from which we can operate. Ministers did not say that they would consider what could be achieved and that they would consult the Treasury to see whether they could find the money. There was none of that. They simply said, "No. That is not part of the doctrine. We do not do this sort of thing." We cannot take such a rigid and doctrinaire line when we are looking at the possible disappearance of an industry in conditions that are artificial—and that are made artificial in part by subsidies elsewhere.
The wider issues that go far beyond Ellington have already been mentioned and other Members will raise them in the debate. If we have no domestic coal industry, we will almost certainly do fatal damage to our mining engineering industry and to the production of mining equipment in this country. We need a domestic industry to ensure that we are in the forefront in the development of technology in mining engineering and in the sales of mining equipment. Big potential markets for mining equipment will exist particularly in the far east where there will be deep mining. We should ensure that we have an industry that can take advantage of the opportunities presented by that.
In many other parts of the country, closures, such as the one now planned for Ellington, would have a disastrous effect on local jobs. The problem is not peculiar to my constituency, but the impact on my constituency and a couple of neighbouring ones will be devastating. I have seen no evidence that we shall receive the scale of assistance that could begin to match the jobs already lost, let alone those that will be added to the total.
There must be a major rethink about how parts of the north-east are funded. We need to consider education funding, health funding and why we do not have something like the Barnett formula, which examines needs in the region, if we are even to begin to tackle the problem. In addition, we must consider specific aids that are designed to bring in jobs on the necessary scale to replace the mining jobs that have been lost. That will not be accomplished overnight, so I ask the Minister to consider whether a scheme, which would meet European Union criteria, could be introduced for a short period. Such a scheme would not be inordinately expensive in comparison to aids given to other industries and it would keep those 430 jobs in existence over the next few years. That would an extremely valuable thing for the Minister to do. I simply cannot understand the attitude that says, "We cannot even consider that." I urge her to reconsider urgently.
I congratulate my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) on securing such an important and timely debate. I shall concentrate my remarks on reinforcing those made by the right hon. Member for Berwick-upon-Tweed (Mr. Beith).
The recent announcement of the closure of Ellington, the colliery I worked at until 1994, will effectively end 600 years of coal mining in the great northern coalfield. It will consign 430 men to the dole unless a rescue package can be put together or unless the colliery is sold to a new owner.
Ellington is an important regional asset. It played a major role under both the National Coal Board and British Coal, consistently making a profit. It has made a profit every year under RJB Mining, employing only one third of the work force that existed under British Coal and producing nearly 1 million tonnes of coal a year. That is a magnificent achievement by all concerned, but their reward for that is the sack.
Mr. Budge claims that the colliery faces severe geological conditions and puts it up for sale. To ensure that he attracts a buyer, he takes away the market that Ellington now has with Alcan. That is an insult to everyone who works at the colliery.
I have no doubt, as do the work force, that Ellington has the potential for a long and viable future. There are known reserves at the pit of about 300 million tonnes, which represent fuel to power the next millennium. In order to mine that coal, Ellington needs investment, but that investment has not been made by RJB Mining. There is no doubt that Mr. Budge's company is directly responsible for the announced closure.
However, if Ellington can be assisted through the next four years, a decent future is possible. The pit can continue to supply Alcan and, during the next four years, we are endeavouring to build a new clean coal power station. The Wansbeck Energy Company has received its second tranche of European funding for a full feasibility study into such a project, where we hope to develop on site not only a power plant, but a clean energy centre, manufacturing wind turbines and developing photovoltaics and other forms of renewable energy. Ellington's survival is key to that visionary project.
About £10 million is required to ensure continued production and it would guarantee 430 jobs for the next four to five years. It is fairly obvious that RJB Mining has no intention of investing that sort of money. Sadly, for Mr. Budge, investing in Australia and Indonesia is infinitely preferable to investing in this country. To bleed his UK coal industry to invest abroad is a disgraceful state of affairs. I therefore make no appeals on behalf of RJB Mining.
I appeal, on behalf of the 430 miners who work at Ellington and their families, for the Government to intervene, to grant aid and, if necessary, to subsidise Ellington to protect those jobs. There is an overwhelming social case and a powerful economic case for that. More importantly, the Government have an opportunity to give something back to communities who have given so much to this nation.
There is also an overwhelming social case for assistance. The area surrounding Ellington has been in decline for more than 20 years. We have development area status, but need an enterprise zone. I urge the Government—whatever happens to Ellington—to provide an enterprise zone for the area. The problems of previous closures are many and varied. The area has been described as an inner city pulled apart. It has been made much worse by the 18 years of neglect and wilful destruction carried out by the previous Tory Government. We have objective 2 and 5b status when, statistically, we qualify for objective 1. With the exception of football, we are at the top of all the bad leagues and at the bottom of all the good ones.
Ellington underpins the local economy, which is still very fragile. Some £10 million each year is paid in wages and we cannot afford to lose that. The only guarantee of a job for the 430 men who work at the colliery is the one that they now have. Despite all the schemes for retraining, the task forces and national, European and regional funding, unemployment is still more than twice the national average.
I am delighted to say that the Government are attempting to address those issues through improved economic development, education and health action zones and all the mainstream improvements that have been announced over the past two and a half years. The closure of Ellington will set that work back even further. There is a powerful economic case to be made. Some £10 million over four to five years will guarantee jobs for the 430 people who work there and will provide an opportunity for work for many more years to come.
Subsidies to private industry are given in one form or another every day—from farming to car manufacturing, although there is, I might add, over—production in both industries. I have no difficulties with such support. In one case, jobs are preserved and expanded; in the other, it preserves a way of life. However, what is good for one industry is surely good for another. Ellington needs regional assistance to re-equip its powered roof supports in order to mine the available coal. The Government can, if they so wish, provide such a subsidy for UK coal. I urge the Minister to make such a case in Europe.
I have touched only on the social and economic arguments, but, in conclusion, I make one last appeal, which stands above all others. Let this Government—on behalf of the nation—give something back to the communities who so desperately need it. On the eve of armistice day, I remind the House that this may be the last chance to make such an appeal for the mining industry. I remind the House of the contribution made to freedom and democracy, and to the wealth of this nation, by miners and our communities. Mining villages the length and breadth of the land have two memorials to our fallen. From Ypres to the Somme and from Tobruk to Arnhem, miners paid the ultimate sacrifice. From the disasters of West Stanley to Hartley, from Easington to Woodhorn, mining communities paid dearly to fuel the industrial revolution and to power this century.
For nearly 20 years, Labour politicians have watched the destruction of Britain's mining industry and have been unable to do anything at all. We now have the power to do something about that destruction. We can make a genuine difference. On behalf of the mining community that I represent, I ask that this Government—our Government—intervene to protect 430 much-needed jobs.
I shall speak briefly, as we were asked to do so that other Members could speak. It will be easy for me to be brief, because I want only to support the hon. Member for Barnsley, West and Penistone (Mr. Clapham). I congratulate him on initiating the debate.
The hon. Member will remember that he and I served on the Select Committee on Trade and Industry; many other hon. Members will recall the late, lamented Energy Committee, which did such a good job to protect energy in general and the coal industry in particular. The hon. Member will remember that, when we joined the Trade and Industry Committee in 1992, we intended to look at a range of issues, although when I suggested that the Committee examine the coal industry, I was told by one of its senior Conservative members that that would be a reverse takeover of the Trade and Industry Committee by the Energy Committee.
However, within a matter of weeks, we were engaged in a serious inquiry into the coal industry, due to the decision taken by the Conservative Government to shut 70 pits—in fact, only half were to be closed, and half were to be put into review. However, as many Labour Members will be aware, the review was a device for delayed closure and, at that time, we were left with only about 30 pits. There was death by stealth in the coal industry, and that continues at present. In opposition, Labour was going to do so much to help and save the industry, but the death of the industry by stealth continues under the Labour Government, as it did under the previous Conservative Government.
I reinforce two points made by the hon. Member for Barnsley, West and Penistone. First, I was pleased that he referred to clean coal technology. Although we do not lack ideas, we lag behind in the development of that technology. It is a shame that we cannot make progress in that matter, so as to protect not only the coal industry, but our future fuel supplies.
Secondly, the hon. Member referred to the interconnector across the channel. Seven years ago, we gave much consideration to that matter. The amount of energy coming into this country from France is equivalent to the amount that could be obtained from four to five pits. Four or five pits have closed unnecessarily due to the fact that we are bringing in nuclear power subsidised by the French Government. That is not fair competition. That nuclear power is subsidised just as much as the Spanish, French and German coal that was referred to by the right hon. Member for Berwick-upon-Tweed (Mr. Beith) and by the hon. Member for Barnsley, West and Penistone.
I am pleased to follow the passionate speech made by the hon. Member for Wansbeck (Mr. Murphy), who has worked in the industry and in the colliery that is now subject to closure. He said that he would not plead the case of RJB Mining—I can understand that. However, unless, to some extent, one pleads the case for RJB, one cannot argue for the coal industry. I realise that the hon. Gentleman wants to plead the case for the coal industry, and I am sure that he does so, but, in making that case, he will also be pleading for RJB. I know that he does not want to throw the baby out with the bath water.
Since it took over a vast chunk of the British coal industry, RJB has mined 150 million tonnes of coal—80 per cent. of which has gone to the power stations. The company received no subsidy, but, over the same time, Germany, France and Spain spent £14.5 billion on subsidy. That works out at almost £49 a tonne—more than the selling price of British coal seven or eight years ago. It is a massive subsidy, which permits industry in those countries to have coal that is almost free.
RJB spent almost £400 million on new plant and the replacement of equipment, and a further £1,000 million on accessing new reserves—£1.4 billion is a big investment, but it is only one tenth of the subsidy that goes into the industry in France, Germany and Spain. The hon. Member for Barnsley, West and Penistone pointed out that British coal prices have come down from about 1.4p to 1.15p per gigajoule, but that the world price is between 70p and 80p. How can any coal mine in this country compete with world coal prices—or even European coal prices—without some Government assistance?
A graph of coal production over the past five years shows that, with their big subsidies, French and German output has been steady, and that Spanish output has gone up. The United Kingdom—where there is no Government assistance—is the only major mining country in Europe where output has gone down. As has been pointed out, 7,000 men are employed in RJB alone, and there are huge knock-on effects for those employed in the mining equipment companies referred to by the right hon. Member for Berwick-upon-Tweed.
I propose that the Government should give some assistance to the British coal industry—perhaps paid when coal is delivered to the power stations. As the hon. Member for Barnsley, West and Penistone suggested, coal could be sold to the power stations at prices similar to world prices. If we do not do that, we shall destroy what is left of our coal industry, at a time when gas reserves are being depleted and oil is no longer being found at previous rates. We shall want more and more energy, but we will have isolated much of our coal energy underground.
I do not really believe in subsidies—I believe in competition and free markets. I believe in level playing fields. However, they do not exist for the French, the German and the Spanish. If we cannot have a level playing field for competition and free markets, let us have one for subsidy. If some people say, as Governments—whether Labour or Conservative—have done, that it is not possible for us to subsidise our coal industry, they should remember that the European Commission, when defending subsidies paid to the German coal industry, made it clear that the UK had the right to subsidise its industry if it wanted to. In the absence of that assistance, the conclusion must be drawn that the British Government do not want to help the coal industry. I am aware that the Government have enormous sympathy with the industry, but that will not keep the pits alive—at some stage, there has to be cash.
I shall not speak for too long because I know that many hon. Members want to take part in the debate. I congratulate my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) on securing this debate, which is timely in the light of the closure of Ellington pit.
Let us take our minds back a few years to when miners and their families and communities came to London in their thousands upon thousands. It is reckoned that those on the countryside march have since outstripped that number, although, at the time, the miners' march was certainly the biggest that we had known. The Tory Government did not take a blind bit of notice of the feelings of those miners and marchers. It is interesting that the Tories are now taking into account the concerns of those in the countryside in their communities, but that the miners were left to die at the wayside. Given what is happening now, the debate is a timely reminder of what happened then.
Today, the coal industry is in the throes of dying. Along with others, I plead for something to be done. We must remind ourselves that RJB Mining bought the industry at a give-away price. In fact, it would not be a bad idea to renationalise the industry at that price, give Mr. Budge his money back and tell him to go to Australia.
The crux of the matter is that Mr. Budge is investing thousands of pounds in an opencast mine somewhere in Australia and, as my hon. Friend the Member for Wansbeck (Mr. Murphy) said, in mines in other countries, too. I wonder why. Is RJB Mining to become a core cartel? Will Mr. Budge, with the help of the Government and the Tories, bring an end to the coal industry in this country, so that he can import coal from Australia and all the other countries in which he is investing his money—money made by the British miners?
No Government subsidy has been given, so Mr. Budge can claim that he did not get anything from them—apart from cheap pits—nevertheless, it is unfair of him to ask for money to keep British mines open when he is investing his money abroad. It should be made very plain that this guy is ripping off British miners and taxpayers. It is unfair that the British taxpayer should be asked to give him money while he is investing it abroad.
The industry is a two-way business. Although it is not to our liking, the coal industry is privatised, so RJB Mining should put its money where its mouth is. At the moment, all it is doing is making a profit from the pits, but, as soon as they hit trouble—such things happen to pits; they are living things—they are closed. That is not good for the industry. Mr. Budge has a responsibility. He could meet the Minister and offer to invest millions of pounds in Ellington colliery, provided that the Government help out, but he does not want to do so. All he wants is to get his money, close the pits and be away to somewhere else. All we want is a partnership.
My plea, and that of my hon. Friend the Member for Bolsover (Mr. Skinner), for the Prime Minister to renationalise the pits has fallen on deaf ears because the Labour Government do not want to take such a course. The pits should be renationalised. There must be a partnership; no one man should ask for subsidies while investing elsewhere. I plead with RJB Mining—not the Government—to show us the colour of its money. Perhaps then it will get some money out of the Government.
Those of us who voted against the pit closure programme remember extremely well the sound and fury at the time, not only against the Government but from Labour Members, who claimed that they believed in the coal industry. I shall not utter a word of criticism of any Labour Back Bencher who is taking part in this debate because I know how they are constrained and how much they are fighting for the interests of coal miners. I accuse the Government.
For example, in his pre-Budget statement only yesterday, the Chancellor of the Exchequer talked about the gas, electricity and water regulators promoting competition. What about the coal industry? I should like to hear a little about that. We know that the Chancellor has £9 billion in his so-called war chest. Why is he not using that money to help coal miners? Will somebody tell me? Will the Minister reply to that point, because I should like to know? On behalf of the miners, I am very angry with the Government because of their hypocrisy. Labour Members stirred up feelings while the previous Government were in office, but Labour, in government, is doing exactly the same as its predecessor. They are a bunch of hypocrites.
The Government are doing nothing to help. If Labour Back Benchers are not prepared to say this, I shall say it for them: the comments of my hon. Friend the Member for Rayleigh (Dr. Clark) on subsidies are absolutely true. It is possible for the Government to provide subsidies, but they will not do so. Can do, but will not is the truth of the matter. The miners are left to take account of that fact and to take it out on the Government for their complete failure to look after mining interests.
The European issue has also provoked sound and fury. I have just heard the right hon. Member for Berwick-upon-Tweed (Mr. Beith) talking about obeying the European rules. To do so may be one thing, but what are such rules supposed to achieve? We have problems at the moment with the French on beef, but on coal, the rules are wrong. They are canted and stacked against the British coal miner and the British coal industry.
Recently, in my constituency, a massive series of grants have been made in order, in the words of the Government representative, to capture what is known as the Grindley lane site for major investment. Such grants have been used to bribe and blackmail people into accepting the site. Up the road at Madeley, next to Silverdale, where the miners in my constituency have worked and slaved for years, but which is being closed—as is Trentham—not a penny of that money is being made available.
The Government are absolutely hypocritical, and it is time that their Back Benchers turned on them. What we hear about public services can be applied to the coal industry as well. It is time that the British people woke up to the fact that most of this stuff is being driven by a craven surrendering to a European regime. That is the name of the game, and everyone in the House knows it.
I congratulate my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) on securing the debate and on his very able speech. I must declare an interest: I am a consultant to Scottish Coal. My speech will concentrate on the critical financial difficulties in which the Scottish coal industry finds itself due to the problems of delivering opencast coal to customers down south in England.
The problem arises from the fact that a rail company, EWS, has given priority to moving by rail foreign coal that is unloaded at the deep-water port of Hunterston. EWS has a near monopoly in handling bulk freight, and has taken capacity from indigenous coal producers in order to satisfy the contract for imported coal. The loss of revenue to Scottish Coal from the sale—or non-sale—of coal costs £500,000 a week. The knock-on effect is obvious.
The coal produced in Scotland is low in sulphur and is blended with high-sulphur coal from deep mines in England, which makes the coal acceptable to generating units. The resulting cash flow problems in Scotland and England affect the viability of deep mines and miners' jobs.
The haemorrhage of money cannot go on. Foreign coal poses a threat due to the strength of the pound and direct and indirect subsidies by foreign Governments and multinationals. In South Africa, rail companies are subsidised to bring coal to ports. Polish coal subsidies have been mentioned, while in the case of Colombian coal, negotiations take place at the point of a gun.
If we are to have a coal industry in the United Kingdom, the Government must step in. All foreign coal is bought in American dollars, and that causes a balance of payments crisis. Every tonne of British coal that is burnt represents a saving to the Exchequer and a job in the UK. It is logical that the Government should take an interest, in the short term and the long term, if the coal industry is to survive.
I make one special plea. The freight problem cannot wait to be solved. It must be given a higher priority, because a week of costs at £500,000 is a week too long.
In the interests of brevity, I shall refer to just two issues that have been mentioned in the debate, and try to impress upon the Minister the need to consider seriously the issues that confront the industry. The first issue is that of jobs, which are influenced by coal stocks, as my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) said. Secondly, I want to draw attention to the interest in clean coal technology.
The Government could give assistance in both respects. The suggestion by my hon. Friend the Member for Barnsley, West and Penistone should be seriously considered. We should be helping the coal industry by allowing coal to be delivered to power stations at a price equal to that of subsidised imported coal. I see no difficulty with that, and I shall state my reasons.
The development and engineering of clean coal technology would be in the interests of the country, especially the mining industry. That technology is proven. We had the Grimethorpe scheme, which, incidentally, was sold by the previous Government when we were so near to success. That was a crime. It was a sin on their part. If they had not sold the scheme, we could have been operating that system now. However, it is not too late for us to pursue that option.
In doing justice to the mining industry, we have no need to look for taxpayer's money. Since 1994, when the Government became guarantor of the mineworkers pension scheme and staff superannuation fund, more than £1,000 million in interest has been paid into the Chancellor's coffers. We could recycle back into the industry some of those funds—funds that have been paid by the miners and the industry in the past, and which are now being channelled into Treasury.
I make a plea to the Minister that we now need joined-up government. We need the Chancellor of the Exchequer to release some of the money that he has received, not from taxpayers as such, but from the industry. We could then set up a public-private partnership to develop clean coal technology. That technology is a success story, ripe for development, and there is no reason for us to delay in setting up a PPP. We could use the funds that have already been generated. Moreover, further funding from those pension schemes is guaranteed, because when they are revalued there is always an increase, which is paid to the Chancellor.
We have spoken about renationalisation of the coal industry as though it were a bridge too far, but given RJB's share price at the moment—the valuation of that company—it would be far cheaper and easier to buy the company back into public ownership.
The funds that I mentioned might be used for that purpose.
Let me tell the Minister that if we sincerely want to support the mining industry—as the Government declared on being elected in 1997—we can do that without subsidies from the taxpayer, by using money that has been generated in the mining industry. Now is the time to make an approach to the Treasury to ask to use some of the money that we accrued in the industry—money which I and other hon. Members who have spoken in the debate contributed. That is one way in which we can save the industry and develop clean coal technology, which will see the industry through the next century.
I plead with the Minister to take those two points on board, because that would improve the miners' lot.
Many of my hon. Friends have made the arguments that I wished to make. I congratulate my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) on initiating the debate and on his continuing fight for our coal industry. He is second to none in his efforts on behalf of that industry.
The speech by my hon. Friend the Member for Wansbeck (Mr. Murphy) reminded me of my fight for the Tower colliery, in Cynon valley, during 1994. At that time, I advanced in the Chamber the very arguments that my hon. Friend made. I know how strongly he feels, as I felt strongly at that time.
In 1995, the miners of Tower colliery, the last deep mine in Wales, became owners of the pit. In the first year, they made pre-tax profits of £3.5 million. I can remember the right hon. Member for Henley (Mr. Heseltine), who was then Secretary of State for Trade and Industry, arguing that there was no future for Tower colliery—that it was finished. He sent one of his Ministers to the Tea Room and said, "Tell the men to throw in the towel", and I answered, "Tell them yourself."
The miners of Tower did not throw in the towel. They launched their own bid, with their redundancy money, to buy the pit. Two hundred and twenty-eight miners each put up £8,000 to buy that pit, and it re-opened on 2 January 1995. Those miner owners have set up a fully co-operative structure. They have an open management, with worker directors who are accountable to the work force, as well as one person, one vote decision making. Shares must be returned to the company by those who leave the pit, and they cannot be bought by outsiders. Such a scheme could be repeated elsewhere.
Tower colliery employs 400 people from the valleys of south Wales—still an area of high unemployment and deprivation. In my constituency, 12.6 per cent. of workers are still unemployed. The colliery offers well-paid jobs, and there is a spin-off of about £10 million a year to the economy of the Cynon valley. Therefore the industry is very important.
Tower has consistently invested in the future, with heavy financial costs in the development of the mine and the infrastructure. It would like to develop other parts of the mine, which would produce coal directly for Aberthaw power station, but that development is costly and, due to present uncertainties described by my hon. Friends, it is unable to go ahead. Tower pit pays more than £5 million annually to the state, in addition to the £8 million paid to the Government to buy the pit, and it is still paying back another £2 million. We should remember that the pit has a very important contribution to make to the economy of south Wales, especially the Cynon valley.
I urge my hon. Friends not to throw in the towel, but to keep on fighting. I also urge my right hon. Friend the Minister for Energy and Competitiveness in Europe to reply sympathetically to the strong case made for coal. There is a case for it, which should be answered by the Government. It was not answered by the previous Conservative Government, but I hope that this Government will show greater understanding and sympathy.
Finally, on a lighter note, the story of Tower has been put to music. There is an opera called "Tower", which opened in south Wales three weeks ago and is now touring Wales. It tells the story in music and song. It could come to England, but the Arts Council of England has turned down an appeal for a grant, saying that there is no interest in England. Anyone who heard my hon. Friends today would know that such an interest exists. May I tell my hon. Friend the Minister for the Arts that my constituency was twinned with Islington during the miners' strike, so there is an interest in Islington, in the north of England and in Scotland, and the Arts Council of England should change its mind?
I congratulate the hon. Member for Barnsley, West and Penistone (Mr. Clapham) on securing an important debate, and I welcome the right hon. Member for Airdrie and Shotts (Mrs. Liddell) to her place in her first key debate as the Minister with responsibility for energy at the Department of Trade and Industry.
There is no doubt that the coal industry has suffered enormously over the past 15 years. Economics and the environment were the principal reasons for pit closures in the 1990s, and now the driving forces are the environment and subsidies in Germany, Spain, France and Poland, which are almost certainly illegal.
It is particularly tragic that Ellington is to close at a time when alternative employment in manufacturing in the north-east is under threat from Government policies that have pushed manufacturing into recession, from which it is just emerging.
I have enormous sympathy for some of the more honest old Labour Members of Parliament, who fought the election on the expectation that the coal industry would be protected under a Labour Government. Labour raised expectations that the coal industry would be safe in its hands. The new Labour leadership must have known that that was not true, because in its manifesto the Labour party made it clear that it would fight global warming through a new target of a 20 per cent. reduction in CO2, emissions by 2010.
The Labour party in opposition gave miners and the coal industry the cosy reassurance that coal mining jobs would be safe, yet the Deputy Prime Minister has signed Britain up to achieving an even higher CO2 emission target than that demanded by Kyoto. This debate, therefore, is not just about coal or gas or electricity; it is about how the Government can marry the target to which they signed up with their implicit promises to the coal industry.
I refer the hon. Member for Blyth Valley (Mr. Campbell) to the Select Committee on Trade and Industry report on the coal industry, which states that
the Kyoto greenhouse gas emission targets, together with the UK's 1997 commitment to a 20 per cent. cut in 1990 levels of CO2 by 2010 … represent a more dramatic increase in environmental pressures on coal than anything foreseen in 1993, and on a far tighter timescale.
The right hon. Lady's written answer to my question about European coal subsidies contained reassuring but unconvincing language, but, as was pointed out by my hon. Friend the Member for Rayleigh (Dr. Clark) and by the hon. Member for Midlothian (Mr. Clarke), the fact is that last year, according to RJB Mining, Germany, France and Spain subsidised their coal industries by £3.2 billion, a highly unfair and probably illegal subsidy. Perhaps that should be called the Midlothian question. It shows a huge gap between the new Labour message and the new Labour reality.
The biggest deceit of all is contained in the Government's White Paper on energy, which seeks to justify the gas moratorium on the grounds that it will protect the coal industry—a view, incidentally, that is not shared by many outside the Government. The Labour- dominated Select Committee on Trade and Industry stated:
We do not believe that this moratorium on section 36 … consents for new power stations will assist the coal industry in the short run … we look to the Government to ensure that … the moratorium is lifted as soon as practicable.
The Government, whose Deputy Prime Minister had signed up to some challenging CO2 targets, found that some of his colleagues were worried about the effect that that would have on the coal industry. The Government decided that they must be seen to be doing something to appease those members, and accordingly embarked on a gas moratorium, despite the fact that they know and the whole world knows that it will do nothing to help the coal industry.
The Government claim in the White Paper that the dash for gas has been artificially encouraged by distortions in the electricity market and by inadequate competition in generation. The argument is that both of those factors have artificially raised the market price of electricity, thus encouraging new gas-fired power stations to be built.
No one questions the importance of the reforms to the electricity pool or of competition in electricity generation, but the idea that companies would invest millions of pounds without considering the future price of electricity is nonsense. It make a mockery of the reasoning behind the gas moratorium set out in the White Paper.
The moratorium is resulting in higher electricity prices than would otherwise be the case, and significantly higher CO2 emissions, and is leading to further downgrading of the competitiveness of British industry.
The next great deceit in the Government's arguments for the gas moratorium relates to the environment. Combined cycle gas turbine stations emit about half the level of CO2 emitted by a conventional power station, but because of the increased use of gas over the years and increased output from nuclear power, the CO2 emissions from electricity generation have already fallen below 1990 levels.
That is why the White Paper states that the Government
would expect to see a decline in CO2 emissions from the power generation sector over the period covered by the Kyoto Protocol",
even on scenarios that retain the gas moratorium in the years 2008 to 2012. Therein lies the deception. From 2010, if not earlier, as was pointed out by other hon. Members, the UK will have to begin to decommission Magnox nuclear power stations.
Thus the Government's environmental policy is geared solely to meeting the Kyoto target of 2008 to 2012. The fact that in the years after 2012 the CO2 emissions are likely to rise is, as far as the Government are concerned, irrelevant. In other words, the Government are living for the short term and taking no steps to deal with the position after 2012.
The third great deception in the Government's argument behind the gas moratorium involves security of supply. Britain has total remaining gas reserves which at current production rates will last between 23 and 35 years. That is stated in appendix C of the Government's White Paper on energy. That is why the Labour-dominated Select Committee on Trade and Industry concluded:
There are no reasons on grounds of security of supply, or in terms of confidence in long-term availability, to resist the growing use of gas.
That is the final deceit. The gas moratorium will not protect the coal industry, its purpose is not to protect hapless companies from mistakenly building gas-fired power stations in response to short-term artificial prices, and it will not help with the security of electricity supply. However, the gas moratorium will add to the price of electricity and will lead to higher CO2 emissions than would otherwise be the case. For those reasons, we believe that the gas moratorium should end.
The difficulties faced by the British coal industry are real and have been exacerbated by the Deputy Prime Minister and by illegal European subsidies. The real concerns and real difficulties should be addressed by the Government through real policies and real remedies, not through an artificial policy that will do nothing to help, but which will damage British industry and the environment.
I join colleagues in congratulating my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) on securing the debate. He is a great advocate for the coal industry and the people who work in it. I pay tribute to my hon. Friend, who has never lost sight of the fact that it is the people in the industry who suffer as a consequence of decline in that industry. He mentioned my empathy with the industry—I have great empathy with it. My hon. Friend the Member for Cynon Valley (Ann Clwyd) asked me to listen sympathetically to the debate. I assure the House that I have listened sympathetically. I am also conscious that a substantial number of my hon. Friends have not been successful in catching your eye, Mr. Deputy Speaker, because of the pressure of time. I undertake to meet them as soon as possible in a setting that will allow them the time to make the points that they wish to make. I am happy to do that at any time.
I have listened carefully to the considered points that my hon. Friends have made, but as I have only 10 minutes to reply, I shall write to them with detailed responses to the points that I am unable to answer now. I want to provide as much access as possible to Members who represent mining communities. These are challenging times, and there are challenging times ahead. We shall not walk away from our mining communities. Given my history, I would not be following my conscience if I walked away from the mining communities that sent me here. Indeed, on a lighter note, I am one of the few women honorary members of the National Union of Mineworkers. I was invited to join by the late Michael McGahey, who was born and brought up in my constituency.
The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) welcomed me to the Front Bench very graciously, and I thank him for that, but I am not going to take any lectures from a Tory on what should happen to the coal industry. The gall of some people who come to the House and posture about it angers me, so I shall draw attention to what happened under the previous Government.
In 1980, slightly more than 230,000 men were employed in the coal mining industry; by 1997, the figure had fallen to 12,600. Every one of us who comes from a mining community knows the cost of that. We know the suffering that was caused because of the politically driven vendetta against those communities. More importantly, the Government have to deal with the legacy of the Conservative Government's incompetence. We are facing up to the responsibility that we have as a Government for the toll taken on miners' health by the coal industry and, by reducing the distortions that were forcing coal out of the electricity market, we are dealing with the legacy that the previous Administration left the coal industry
Hon. Members have referred to the stricter gas consents policy. I shall take up a point made by the hon. Member for Bognor Regis and Littlehampton, who wants the moratorium on that policy to be lifted. It has been painful to refuse a lot of those power station applications, because some of my hon. Friends have told me that they want gas-fired power stations to meet particular needs in their constituencies. However, because we recognise that the coal industry must be given a level playing field, we have been prepared to act. We must have security and diversity of supply. We have turned down 4 GW of gas-fired generation, which is equivalent to 10 million tonnes of coal—roughly half the output of RJB Mining. If that is not helping the coal industry, I do not know what is.
No, I am not taking interventions from the hon. Gentleman. I am surprised that he is on his feet, because I have not said the magic word "Europe". That usually brings him out of his box.
We have introduced a programme of radical and far-reaching reform aimed at ensuring that the coal industry has a secure future, but I shall not delude anyone—there are still difficult days ahead. I was surprised by the tone adopted by the right hon. Member for Berwick-upon-Tweed (Mr. Beith) following the meeting that my right hon. Friend the Secretary of State and I had about Ellington with the affected constituents. We made it clear that we would examine every possible legal means of assisting the coal industry.
Questions were raised about the investment that miners have made and the profitability that they have achieved—that point was made strongly by my hon. Friend the Member for Blyth Valley (Mr. Campbell). I have to point out that RJB amassed profits adding up to £550 million from 1995 to 1998. In the first six months of this year, it had declared profits of £4 million, which it distributed in dividends. Pressure should not be put on the Government to pick up the costs when the private sector makes such profits. It is important to bear that in mind. I can assure the miners of this country that we will do everything to ensure that our energy markets support the future of the coal industry.
A number of my hon. Friends referred to coal pits that have a strong future, and much has been said about subsidised and unfairly priced coal imports. I appreciate the points that have been made, and the Government have acted on unfair subsidies. A number of hon. Members referred to Polish coal. A lot of people have expressed to us their concerns about dumping. I give a commitment that I shall seek to meet my Polish opposite number as soon as possible to raise that matter.
My hon. Friends asked for specific aid for the coal industry and referred to the European energy markets. Over the past few years, we have fought hard for liberalisation of those markets, and I recognise the difficulties caused by the one-way traffic of electricity from France. I have met my opposite number—indeed, I addressed a seminar in the Assemblée Nationale specifically on that issue—and shall do so again next week, and I have approached the European Commission to make sure that there is true liberalisation of energy markets in France. My hon. Friends raised the issue of the French interconnector, of which we are very much aware. The matter is covered by treaty, but, notwithstanding that, we are anxious for progress to be made.
As we said in the White Paper in response to the industry, we seek to create a climate of fairness, not favours. That is what we have delivered and what we shall continue to deliver, but we have to be realistic. Investment in the UK coal industry is at a historically low level. Indeed, the main proprietor, RJB, is investing in Australia rather than the UK, which is an important signal that mines run out of economic resources. Pits also face geological challenges to which we must respond. We must have mechanisms to help miners to achieve a secure future whenever economics and geology work against them.
My hon. Friend the Member for Barnsley, West and Penistone asked me about victimised miners. The Government are very concerned about that issue, and I hope to be able to make an announcement soon about the means whereby we shall deal with their problems. I hope to set up a group that will look into those cases following the consultation that is to take place.
My right hon. Friend will be aware of all the work that is being done in north Staffordshire on behalf of the victimised sacked miners, but is she aware that tremendous concern still exists? We want a test centre to assess cases of vibration white finger. Will she look into that issue urgently?
My hon. Friend has fought a good campaign, and she makes a sound point. Until now, we have had some difficulty over the availability of technicians who work on that condition. A strong case relating to it has been made for her area and, in the new year, I hope to be able to say something that she will find encouraging.
I am conscious that the industry has contributed a huge amount to our economy, and it has a future. The stricter gas consents policy is creating a more level playing field for the coal industry, but it cannot exist indefinitely. We have said that, once the pool reforms are in place, the moratorium will have to be lifted, but I say to the mining communities, from the bottom of my heart, that we will not turn our back on them. My hon. Friends know of my commitment to the industry. My door is always open, and we shall look seriously at every point that has been raised today with a view to finding a means whereby we can secure the future for the industry.