Orders of the Day — Coal Operating Aid Scheme

– in the House of Commons at 8:19 pm on 22nd November 2000.

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That this House authorises the Secretary of State to pay, or undertake to pay, by way of financial assistance under section 8 of the Industrial Development Act 1982, and in respect of coal mining qualifying for aid under the UK Coal Operating Aid Scheme, sums exceeding £10 million for each of Hatfield Coal Company Ltd, Mining (Scotland) Limited, and RJB Mining plc.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

It is incumbent on me to remind the House that Mr. Speaker has imposed a time limit of 10 minutes on speeches by Back Benchers.

Photo of Mrs Helen Liddell Mrs Helen Liddell Minister of State (Science, Energy and Industry), Department of Trade and Industry, Minister of State (Energy and Competitiveness in Europe)

The Government also anticipate paying sums of less than £10 million to a number of other applicants for aid.

On 17 April, my right hon. Friend the Secretary of State for Trade and Industry made a statement to the House on energy policy, in which he announced the intention to lift the stricter gas consents policy, the forthcoming introduction of new electricity trading arrangements and plans to provide temporary aid to the coal industry to enable it to overcome short-term difficulties in the period of transition.

In July, I announced that the Government had formally applied to the European Commission for its approval of the UK coal operating aid scheme. The notification followed extensive consultation with coal producers and purchasers to ensure that the scheme we proposed met the Government's objectives as spelt out by my right hon. Friend on 17 April, and that it complied with European regulations.

Photo of Mr Bill O'Brien Mr Bill O'Brien Labour, Normanton

May I draw my right hon. Friend's attention the promise made in May by the Prime Minister in response to my question to him£that aid from the coal operating scheme could be used for cleaner coal technology? Will my right hon. Friend include such technology in her programme, so that we can have some assurances about the continuation of mining?

Photo of Mrs Helen Liddell Mrs Helen Liddell Minister of State (Science, Energy and Industry), Department of Trade and Industry, Minister of State (Energy and Competitiveness in Europe)

As I progress through my opening remarks, my hon. Friend will learn that our ability to pay aid is constrained by fairly concrete rules and that cleaner coal technology is not included. However, my Department funds research into cleaner coal technology and is anxious to see the maximum uptake of schemes that promote it.

Last week, we were pleased to announce that the European Commission had approved the coal operating aid scheme.

Hon. Members are aware that the history of the coal industry has not been a happy one. From 1985 to the early 1990s, the coal industry suffered serious decline, with employment falling from 270,000 people to fewer than 20,000. That had a devastating impact on workers, their families and the communities in which they lived. The Government put in place a major regeneration programme for the coalfield areas. In December 1998, my right hon. Friend the Deputy Prime Minister announced that, over three years, about £354 million would be invested in coalfield regeneration. That was in addition to the amount of more than £1 billion devoted each year to the regeneration of local authority areas containing coalfields.

However, the recent history of the coal industry is by no means all gloom. The industry has made great strides in improving efficiency and raising productivity. Between 1990 and 1998, output per head increased by an average of 33 per cent. a year—more than for any other energy industry, and far more than the 5 per cent. average for industry as a whole.

The Government's general policy remains that it is for the coal industry to find its own place in a competitive energy market, and it is in a very good position to do so. Our coal industry is by far the most efficient in Europe. Germany, which has the largest coal industry in the EC, produces about 20 per cent. more coal than we do, but with a labour force that is nearly 10 times greater. The German industry benefits from massive Government subsidies; the French and Spanish coal industries are also subsidised.

Photo of Mr Ian Bruce Mr Ian Bruce Conservative, South Dorset

I have a question on precisely that point. We understand that the subsidy to other coal industries in the EU is more than £3 billion; that forces our coal industry, which is so efficient, to be uncompetitive. What have the Government done to refer that unfair subsidy to Germany, France and other countries, so that the British industry can survive?

Photo of Mrs Helen Liddell Mrs Helen Liddell Minister of State (Science, Energy and Industry), Department of Trade and Industry, Minister of State (Energy and Competitiveness in Europe)

One of the reasons why we are introducing the motion is to address that unfairness to the UK coal industry. Indeed, we have raised the unfair subsidies with the Commission. As I shall point out, we are opposed to the continuation of the EU coal subsidy beyond the end of July 2002, when the European coal and steel community treaty comes to an end.

Several hon.:

Members rose

Photo of Mrs Helen Liddell Mrs Helen Liddell Minister of State (Science, Energy and Industry), Department of Trade and Industry, Minister of State (Energy and Competitiveness in Europe)

I shall not take many interventions, as several hon. Members want to speak. As a courtesy to them, I shall try to complete my remarks as quickly as possible.

The Government believe that the UK coal industry has a long-term, viable future, but we recognise that it faces exceptional short-term difficulties at present. Coal prices have been very low; the stricter gas consents policy has been lifted; and the new electricity trading arrangements are due to be implemented. We thus propose to pay aid temporarily, to enable the industry to overcome its temporary difficulties in the transitional period following the lifting of the stricter gas consents policy.

As the House is aware, the time scale for full implementation of NETA is likely to be spring 2001. Work on preparing the market is far advanced. As my right hon. Friend the Secretary of State for Trade and Industry announced last week, he is satisfied that the programme of reforms in the 1998 White Paper is substantially complete; he has therefore lifted the stricter gas consents policy. Thus it remains true that the coal industry needs to adapt to those changes in the market, even though the timing is not quite as the industry anticipated in the spring.

There has been a significant recovery in coal prices since April, although it is not clear how long that trend can be sustained. However, owing to the advance nature of coal contracting, much of the current UK coal production will be sold under contracts whose terms were drawn up some time ago. Many coal producers will thus not benefit from any upturn in coal prices for some time to come, so despite the significant changes that have taken place in the coal market, the subsidy scheme is still necessary.

The scheme is designed to allow those elements of the industry with a viable future without aid to overcome short-term market problems; to prevent a sudden and sharp decline in the size of the coal industry; and to ensure that mines with a long-term future do not close because of short-term problems.

It may assist hon. Members if I explain the working of the scheme. Aid may be paid to producers of coal who meet all the criteria laid down in the formal notification to the Commission, as set out in the UK coal operating scheme dated 26 July 2000. Among the criteria are that sales of coal to UK customers must genuinely need help to meet losses; that subsidy must not cause a price that would undercut third-country coal of equivalent quality; that significant progress towards degression of both production cost and operating aid must be demonstrated; and that there must be a realistic prospect of medium-term viability once the aid scheme finishes.

The aid will be considered in three tranches covering the period from 17 April 2000 to 23 July 2002: tranche 1 will cover this year from 17 April; tranche 2 will cover the whole of next year; and tranche 3 will cover 2002 until 23 July. Payments will be subject to the production unit continuing to meet the cost improvement plans agreed. At the end of each tranche period there will be a reconciliation process, to ensure that units receive what they are entitled to, but not more.

The scheme will assist only those parts of the industry with a viable future once the subsidy scheme has ended.

Photo of Mr Joe Ashton Mr Joe Ashton Labour, Bassetlaw

Will my right hon. Friend give way?

Photo of Mrs Helen Liddell Mrs Helen Liddell Minister of State (Science, Energy and Industry), Department of Trade and Industry, Minister of State (Energy and Competitiveness in Europe)

Will my hon. Friend allow me to proceed? I am anxious that Back Benchers should have an opportunity to contribute.

I reiterate that this is a temporary measure for temporary difficulties and that my right hon. Friend the Secretary of State has made it clear that it will end in July 2002. In order to obtain aid, a production unit will have to demonstrate a viable plan not only up to the end of the subsidy scheme in July 2002, but for the period beyond 2002 until at least mid-2004. This is not an attempt to prop up a lame-duck industry. Through this measure, we are ensuring the long-term future of competitive mines.

The scheme will treat all mines in a fair and non-discriminatory way. We will ensure that subsidies paid will not cause the delivered price to undercut third-country coal of equivalent quality. That means that the subsidy cannot be used to undermine the competitiveness of non-subsidised firms. The Government are appointing a specialist panel, the import parity price panel, to ensure that that criterion is satisfied, so there is no question of mines that do not receive subsidy suffering because aid is paid to other mines.

Any mine that satisfies the criteria will be eligible for aid. This is not just for the big players. No mine is too small to qualify. Opencast and deep mines can apply. The scheme is not discriminatory.

The scheme as notified to the European Commission had an estimated total cost of £110 million, although the final amount paid will depend on what applications are received, the price of coal and the progress made in decreasing costs. The level of subsidy paid to individual production units will be designed to cover the losses incurred by the production of coal in the subsidy period. It will not cause prices unfairly to undercut those of non-subsidised firms, and no undertaking will receive more than £75 million over the entire lifetime of the subsidy scheme.

I assure the House that the funds will not be wasted. Funds will be available only to cover losses made in the production of qualifying coal. We have employed expert consultants IMC Consulting to help us to ensure that costs identified are appropriate, reasonable and calculated in accordance with the scheme. They will also advise as to whether the cost reduction plans submitted are realistic, and whether the units are viable beyond the operation of the scheme. What is more, the reconciliation process at the end of each subsidy period will ensure that if actual costs and receipts differ from those that were estimated, balancing payments or repayments will be made. Money will not be wasted.

We have already received several applications for aid under the first tranche, and further applications will be considered, as long as they are received by the end of this year. Once we are satisfied that the applications satisfy the scheme's criteria—and of course we shall have the advice of our mining consultants and the import parity price panel to help us make that assessment—we shall submit them to the European Commission. We have already done so for Longannet. The Commission then initially has three months to approve the aid, although we are very hopeful of much swifter responses.

This aid scheme will ensure the long-term future of a profitable mining industry in the United Kingdom. The criteria for aid are such that the money will not be wasted, competition will not be distorted, and unnecessary closures will be avoided. Yes, £110 million is a considerable sum, but I, for one, am in no doubt that this aid is well worth paying to secure the long-term—

Photo of Mr Joe Ashton Mr Joe Ashton Labour, Bassetlaw

May I say, as a Member who has the headquarters of Budge in his constituency—and two coal mines, which is very unusual these days—that there will be a tremendous vote of thanks to my right hon. Friend for what she has done and the way in which the Government have rescued the industry? However, will she answer a question arising from what she has said? If Budge sold the industry, as has been mooted in the past, would these subsidies still be available, and would they be taken into account and influence the sale price? What would the outcome be?

Photo of Mrs Helen Liddell Mrs Helen Liddell Minister of State (Science, Energy and Industry), Department of Trade and Industry, Minister of State (Energy and Competitiveness in Europe)

The issue is the long-term profitability of the unit. The assessment is not based on the ownership of the unit; it is based on the unit's potential to become profitable at the end of the subsidy period. Thus, the issue is not ownership, but the pit's production potential.

The aid scheme is a very useful way forward for us. It will secure the long-term future of Britain's coal industry, and I am sure that it will be welcomed in the many mining communities in this country.

Photo of Nick Gibb Nick Gibb Shadow Spokesperson (Trade and Industry) 8:34 pm, 22nd November 2000

I declare an interest in the Register£in particular, a visit to Denmark this summer to examine windmills, courtesy of National Wind Power, a subsidy of Innogy.

I listened with interest to the Minister for Energy and Competitiveness in Europe, and I noted especially the passionate way in which she talks about coal mines and mining communities. She undoubtedly speaks on the subject with great conviction. The problem is that she cannot translate that sincerity into practical policies that actually help.

The current clutch of Department of Trade and Industry Ministers devote much time and energy to crafting the right phrase, but there is a chasm between the words used and the policies delivered. They talk of competition and productivity while piling on to business regulations that are destroying British productivity, which grew by just 1.4 per cent. a year over the last three years compared with 2.4 per cent. under the previous Government and 2.7 per cent. in the United States.

The motion gives the Government authority to spend £110 million subsidising the United Kingdom coal industry when the German, French and Spanish spend some £3,500 million a year in illegal subsidies to their coal industries£industries that are up to five times less efficient than the British coal industry.

An effective set of Ministers, who were able to deliver genuine help for the British coal industry, would be working harder and being smarter and tougher in challenging those European subsidies. The lack of ministerial focus on that matter was exemplified in a European Standing Committee, which sat earlier this year, on state aid to the coal industry. That Committee examined a Commission report on state aid. The EU, as the Minister said, permits operating aid only on condition that progress is made towards the economic viability of a particular pit or unit. However, the Commission report, published in September 1999, was damning in its verdict on the German, French and Spanish coal industries. It said:

With the exception of a certain potential in the United Kingdom, the possibility of a Community coal industry which can compete commercially on the international markets can be definitively ruled out… While state aid can offer an adequate means of coping with economic crises, the state aid given to coal production in the EU has not been capable of providing an answer in economic terms to the structural crisis facing the European coal industry…The strategy of lowering production costs through the use of more advanced technology has proved ineffective. In other words, the European Commission is saying that the key condition for operating aid to the European coal industry, with the exception of that in the UK, cannot be fulfilled and thus, unless the aid is closure aid, it is illegal. That is a pretty hard-hitting Commission report, which should have given DTI Ministers ample ammunition to boost any campaign against the £3.5 billion annual subsidies to the European coal industry that are so damaging to the UK coal industry.

However, the Government's policy changed by not one degree as a result of that report. The subsidies in Europe continue, and the Government, instead of stopping £3.5 billion of subsidies in Europe, are giving £110 million of subsidies to the UK coal industry as though one matched the other. It is a case of all mouth and no action.

In December 1997, the Minister's predecessor as energy Minister, now Minister of State at the Foreign Office, the hon. Member for Leeds, West (Mr. Battle), told the Select Committee on Trade and Industry that the DTI is "committed" to

taking action to block the subsidies to German and Spanish coal producers that create barriers to the sale of UK coal

in the EU. He said that he wanted to "prise open" a market for British coal in Germany. How is that going? Has the present Minister managed to prise open that market? It is clear from her predecessor's statement that the DTI policy back in 1997—no doubt inherited from the previous Government—was one of serious engagement with the EU on subsidies. Only a change of policy—the determination to be seen as good Europeans—has led to punches being pulled. In other words, new Labour policies are inflicting on the coal industry wounds that the motion before us does little more than apply an Elastoplast to.

One of the worst Labour self-inflicted wounds to the coal industry has come from the Deputy Prime Minister, who raised Britain's CO2 emission reduction target to 20 per cent. of recorded 1990 levels, significantly beyond what was required to fulfil our international obligations. As the Trade and Industry Committee report on the coal industry published in March 1998 said,

the Kyoto greenhouse gas emission targets, together with the UK's 1997 commitment to a 20% cut in 1990 levels of CO2 by 2010…together represent a more dramatic increase in environmental pressure on coal than anything foreseen in 1993, and on a far tighter time scale.

On top of that, Magnox power stations are being decommissioned and they represent 8 per cent. of our electricity production. That will add further pressure on the CO2 emission targets and the coal industry. Again, new Labour is inflicting pressure, and the problem cannot be resolved by a £110 million annual payment that expires in 2002.

The announcement of the United Kingdom coal operating aid scheme that was made by the Secretary of State in April this year was a quid pro quo for his decision to lift the stricter consents policy—the gas moratorium. Further details of the scheme were announced to certain newspapers at the same time as consents for a number of new gas-fired stations were announced. It all seems very politically charged.

The gas moratorium was a political gesture to Members representing coal mining areas. No one believed the ex post facto justification set out in the 1998 energy White Paper that artificially high electricity prices were somehow encouraging new build gas-fired stations at the expense of coal. No one was going to invest hundreds of millions of pounds on the basis of temporarily higher prices in the full knowledge that reforms to the electricity pool were imminent. The Government have all but admitted that by severing the link between the end of the gas moratorium and the beginning of the new electricity trading arrangements, which have been put back to March next year at the earliest.

The moratorium has done enormous damage to British industry in the three years of its existence. Electricity prices are higher than they would otherwise have been, with knock-on effects on the competitiveness of energy-intensive industries. Thousands of jobs have been lost in those areas seeking to build the new gas-fired plant and millions of tonnes of additional CO2, have been, and will continue to be, pumped into the atmosphere as a consequence. In 1998, Ralph Hodge, the chairman of Enron Europe, said about the gas moratorium:

Consumers, the economy and the environment will be the losers, with higher-than-needed electricity costs, significant job losses and much higher emissions of greenhouse gases. That is the downside of the policy, but what is the upside effect? The Select Committee was clear in its conclusions as to the effect of the gas moratorium in helping the coal industry. The Labour-dominated Committee said:

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 possible. In other words, it is another disaster of a policy—downsides for industry and the environment, but no upside for the coal industry.

That brings me to the final example of the all mouth and no delivery policy for coal that the motion is meant to remedy. I refer to the promotion of clean coal technology, which was mentioned by the hon. Member for Normanton (Mr. O'Brien). When the right hon. Lady's predecessor was an Opposition spokesman in 1996 he said that Labour would "seriously consider" offering clean coal power part of the £400 million existing subsidy for renewable energy. I wonder how that serious consideration is progressing, or was it just yet another broken Labour promise?

Page 111 of the Government's trade and industry expenditure plans refers to the Government's new policy on cleaner coal technology. It states:

As well as contributing to a £60 million portfolio of research and development projects over the next few years, the Government will initiate a series of focused trade missions and seminars. That is all very useful—I am sure. However, when that —60 million is scrutinised in a little more detail in the Department of Trade and Industry energy paper 67, it is revealed to be £12 million over three years and is

forecast to generate projects worth at least £60 million.

So the big proportion of £400 million promised in 1996 boiled down to £4 million once the Labour party took power. A Government serious about helping the future of the coal industry in these environmentally conscious days would take clean coal technology more seriously than that.

I have several questions about the motion, which does not specify how much will be paid to the three companies listed in it. I understand that further details need to be worked out, but will the Minister confirm one or two points? Longannet has already been submitted to the European Union, but will she say how much that pit will receive? Will she confirm that Hatfield, Selby, Blenkisopp, Harworth, Maltby, Rossington and Welbeck, the other pits listed on the DTI website, will be submitted to the EU? What steps will the EU undertake and what further permissions will be required?

We shall not oppose the aid of £110 million, but it is the only positive policy that the Government have had for coal since they came to office. However that aid is tiny compared with the negatives that they have delivered for coal in the same period. There have been no concrete achievements in tackling the £3.5 billion of subsidy in Europe, but there have been an ambitious CO2 emissions target and an almost non-existent commitment to clean coal technologies. Labour Members have been sufficiently spun by Ministers to regard the subsidy as manna from heaven. It is not, and I trust that they will not regard it as such.

Photo of Mr Eric Clarke Mr Eric Clarke Labour, Midlothian 8:46 pm, 22nd November 2000

I declare an interest: I am a paid adviser to Mining (Scotland) Ltd.

I am an ex-trade union official and was a miner for 26 years, so I realise that the most important aspect of an extractive industry is the development of new face lines. Investment in coal mining is a long-term investment, and the whole industry—not just the industry in Scotland—thanks the Government for this help.

Development must take place alongside production to achieve continuity of work. Major developments are occasionally necessary and that means that millions of pounds must be spent. For example, in Scotland, the Kincardine area of the Longannet complex cost millions of pounds to develop.

We need finance for deep mining. Opencast mining in Scotland helps to subsidise some deep-mining activities and it also guarantees production and quality to the power stations. Scottish coal is low sulphur and it is blended with deep-mined coal from England to keep deep mines open and to make that coal acceptable to the generators.

We are debating not a hole in the ground, but a sophisticated and highly developed industry. It is the pride of the world and investment has been made in the coal industry and the manufacture of mining machinery. One problem in Scotland and elsewhere is faulting in the strata—in other words, faults underground. The forecasting of those faults is important. New sophisticated equipment can make three-dimensional forecasts and determine exactly where they lie. It is possible to design the layout of pits to miss the faults, and the dry-aways and production face lines will be better planned. That is all needed, but very expensive. It adds to overheads, but guarantees success.

The coal industry can stand on its own. Savings in the balance of payments for other fuels that take its place are second to none. Every time fuel—oil, gas or anything else—is bought on the international market, it must be paid for by American dollars, although it does not necessarily come from that country. Burning coal from indigenous mines saves this country millions of dollars. Oil prices have quadrupled, gas prices have increased by 9p a therm and even the cost of imported coal has increased—as we forecast—so our coal is a good investment. More than that—I do not want to make a plea—it is giving people employment. The spin-off is phenomenal. For every coal miner employed, 10 or more people are employed in ancillary industries.

The Government are to be congratulated. It gives a crow in the throat, as they say in Scotland, to hear the Conservatives give advice about the coal industry. I spent most of my life in the industry—26 years underground and 12 years as a union official. I do not need to be told what happened to the coal industry in Scotland because it was Mrs. Thatcher and her cohorts who were responsible, and they acted not for economic reasons, but out of political spite. Conservative Members may shake their heads, but it is a fact. I must thank the Government for their help. I hope that it is a start because there is a need for long-term investment. That goes for the industry both south and north of the border.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry) 8:51 pm, 22nd November 2000

I shall try to heed the Minister's suggestion that we speak briefly so that hon. Members who represent coal mining constituencies have plenty of opportunity to speak. Indeed, the deputy leader of my party, my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) is one of them. Twickenham is far removed from the coal mining industry—almost as far as Bognor Regis—but I have an interest because this subject is about environmental policy as well as about coal mining.

In the Government's report on climate change, published a few days ago, I was struck by the extent to which the coal mining industry has carried the burden of CO2 emission reductions. Ministers of this Government and the previous Government have gone around the world saying that Britain has made an enormous contribution to reducing CO2 emissions, but the small print in the report makes it clear that the sacrifice has been made almost entirely by one industry.

Between 1990 and 1998, the shift to gas from coal reduced carbon emissions by 13 million tonnes compared with a reduction of 2 million tonnes of carbon achieved through the petrol duty escalator, protests against which almost brought the country to a halt. That 13 million tonnes needs to be set in the context of the total net reductions in this country, which were, as far as I can deduce from the figures, about 13.5 million tonnes. Therefore, one relatively small industry has carried almost the whole burden of adjustment in an important environmental shift. In that context, it is only reasonable to expect some of the pain caused by that adjustment to be cushioned.

The Government's intervention is not propping up a declining industry—I would not support it if it were—but easing a transition within a relatively small remaining part of an industry that has taken an enormous amount of pain so that Britain as a whole can claim substantial environmental improvements in the global context that is discussed in The Hague.

The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) said that he saw support for the coal mining industry as a quid pro quo for the liberalisation of permission for gas-fuelled power stations. I am sure that that is right, but it is an entirely reasonable quid pro quo. It seems right that the coal industry should get some relief from the pain of adjustment, but equally right that the gas permissions should be liberalised. There are powerful reasons why that should happen. Every unit of energy emits 40 per cent. less carbon-using gas and there are the additional benefits of using combined-cycle technology, which reduces carbon emissions even further. There is less sulphur, fewer particulates and additional advantages of being able to build gas-powered plants near the consumer without investment in the transmission system. Such plants can be built much more quickly. We all know the good reasons why gas must develop. So, the policy is a quid pro quo, but an entirely reasonable one in which there is an element of balance.

In the long term, we face a challenge that neither coal nor gas can answer. The problem will arise around 2005—the hon. Member for Bognor Regis and Littlehampton mentioned it—when the older atomic power stations, which at present make a major contribution to the reduction in carbon dioxide emissions, will have to be phased out. If they are replaced by gas-powered plants, emissions for every unit of energy will increase by about 60 per cent., and if by coal-powered ones, by about 80 per cent.—unless new technology is developed.

So, neither fuel represents an answer to the problem. That is why regarding gas as a panacea is just as dangerous as seeing it as some unacceptable form of fuel. That is why we on the Liberal Democrat Benches have tried to tie the Government to much stronger commitments to renewable energy in 2010. Indeed, it is why we tabled amendments to the Utilities Bill to that effect.

However, in the narrower context of the motion, and given the pressures that the coal mining industry has had to bear, the proposal is entirely reasonable, and we shall support it.

Photo of Denis Murphy Denis Murphy Labour, Wansbeck 8:56 pm, 22nd November 2000

I also extend my congratulations to my right hon. Friend the Minister for Energy and Competitiveness in Europe on the work and effort that she and her Department have put in to ensure that this Government aid package has been given the green light by the European Union, and that it has been brought to the House for approval so quickly.

There should be no doubt in anyone's mind, particularly in this House, that if the aid package had not been available, the bulk of Britain's deep-mined industry would now be closed. That would not only have been a tragedy for the United Kingdom, but a great loss to Europe. Given the short-term problems that the industry faces, and hence the need for such aid, Britain's mining operations are much more efficient and productive than anything else Europe has to offer. I hope to demonstrate in the next few minutes how short-term aid could benefit the long-term energy needs of our nation.

Our first aim must be to retain a balanced energy portfolio—a sensible share of the generating market for gas, nuclear and coal. The events surrounding the fuel crisis of the past few months are a timely reminder and a warning that we close any sector of our home energy production at our peril. The 300 per cent. rise in the cost of oil has sent shock waves around the world, with demonstrations from Strasbourg to Sydney, yet over the past 15 years we in the UK have allowed our greatest source of energy—coal—to go into free-fall and to decline desperately.

In some traditional mining areas, we have lost completely a skills base that took generations to build. In many cases, sadly, it has been replaced by desperate social and economic problems. We now have one colliery, Ellington, left in what was the great northern coalfield. I spent nearly 30 years of my working life there and I know many of the men who still work there as friends and as comrades.

I am delighted, therefore, that as a result of the aid package Ellington colliery has been offered a lifeline by RJB Mining, protecting the jobs of several hundred miners who live in an area where unemployment is still a blight and the rate of it has consistently remained at twice the national average for far too many years. I welcome the measures taken by the Government to address the very real problems faced by former coalfield areas, with a variety of initiatives from health to education. I intend to continue my pressure on RJB Mining to extend the life of Ellington beyond the four years already agreed, in order to exploit the huge reserves of coal that lie under the North sea.

I am sure that one influential factor in the argument will be access to markets. In order to ensure our balanced energy portfolio, we desperately need a new generation of clean coal-fired power stations to replace the ageing ones that are presently in use. These replacement stations are the only hope of a real long-term future for Britain's mining industry.

We are fortunate in the north-east of England that not only do we have an abundance of energy, but we are rich in ideas. The first offshore wind farm in the United Kingdom will shortly be producing electricity just off the coast of my constituency. Newcastle university is a world leader in photovoltaics—the science of turning light into power. The earth balance project in my constituency not only grows and produces organic food, but produces electricity from biomass and wind power.

The Wansbeck Energy Company is well advanced with the Wansbeck energy project, a partnership between local authorities and the companies Merz and McClellan, and Kennedy and Donkin—two of the most respected names in the field of energy and power. The company intends to build a commercial clean coal-fired power station of approximately 400 MW with the gasification of coal in a combined cycle process.

Given the demands of Kyoto, environmental issues are at the forefront of the developers proposals. There is confidence that the proposed process will offer significant improvements over existing coal-fired power stations, and that in terms of emissions it will compare favourably with modern gas-fired combined cycle gas turbines.

Contaminated mine water from abandoned coal mines is a particular problem in many regions of the United Kingdom, particularly in our area. A unique and ingenious approach to resolving the problem involves using the contaminated mine water in the gasification process in that power station. The plant uses significant quantities of water, which needs to be treated to extremely high standards. The opportunity exists, therefore, to use water from former coal mines rather than town water, reducing the threat to water courses and local rivers, and disposing of contaminated water in a responsible way.

I urge my right hon. Friend the Minister to visit my constituency and see at first-hand our proposals, or, if that is not possible, at the very least to meet a delegation from the constituency in London. At present we have the skills base to build and operate the plant, for recently, as my right hon. Friend knows, National Power announced the closure of what was then the UK's oldest power station, Blyth A and B. The work force therefore still exists.

In conclusion, the aid package has secured thousands of mining jobs and protected many more thousands of jobs in the equipment manufacturing sector, which secures exports worth more than £200 million a year. Although the aid secures jobs for the short term, the mining industry may need long-term help. I urge the Government to support schemes such as I have outlined. The saying, "Think globally, act locally" has never been more apt, especially as we witness what could be the first major climate change attributed to global warming.

Although in my view it is not possible to end our use of fossil fuels in heavily developed industrialised nations, we can certainly improve the efficiency and dramatically improve the emissions from a new generation of clean coal-fired power stations. I urge the Government to support the development of a clean energy centre in my constituency, where we can generate electricity, manufacture wind turbines and light cells, and develop new technologies to increase the contribution that needs to be made by renewables. We can do that side by side with the fuel that has served the nation well for generations: coal.

Photo of Alan Beith Alan Beith Liberal Democrat, Berwick-upon-Tweed 9:04 pm, 22nd November 2000

Ellington colliery is in my constituency, and it employs quite a number of miners in the constituency and a significant number in the constituencies of the hon. Members for Wansbeck (Mr. Murphy) and for Blyth Valley (Mr. Campbell). All of us who represent those constituencies have been involved in the campaign to secure the operating subsidy. We are glad to see it brought before the House.

The link between Ellington and the subsidy is rather complex. It rests upon a pledge made by Richard Budge that if an operating subsidy was available to the industry and to the significant part of it that his company owns and operates, the colliery would remain in operation until 2004. We are having a curious discussion because all of us who represent the area are welcoming the subsidy on the basis that Richard Budge's pledge will be honoured. I have no reason to believe that it will not be, but the importance of the pledge must be put on record.

It was slightly more than a year ago that the closure announcement was made. It was not the first, because Ellington colliery was closed by British Coal in nationalised days and reopened by Budge. About a year ago a closure announcement was made, and I and others discussed the matter with the Minister, who was courteous in listening to us. However, the initial response of Ministers was that it would be impossible to get a legally watertight scheme that would go through the European Commission.

It took much discussion, considerable pressure and a lot of thinking—we are all grateful that the thinking took place—to take the Government to the point where they said that there was a basis on which there could be an operating subsidy. Members from other coalfield areas played a large part in helping to secure that outcome. I am grateful for the help that Ellington had from other areas in that respect. Of course, other areas will benefit significantly from the operating subsidy.

The story has been further complicated by the fact that in the meantime there have been all sorts of bids for RJB Mining and its assets. We have the extraordinary Mr. De Stefano, who had suspicious links with Milosevic, and who was taking a rather worrying interest in RJB Mining. Thank goodness that fell through. I believe that he was under arrest at one point as a result of charges being pursued by the British. In fact, he was arrested in Italy. There was the slightly less disreputable but still worrying Renco bid, which again raised anxieties about the fate of Ellington.

We have the operating subsidy in place and RJB Mining appearing to be continuing as a British-based company. That is a relief to a work force which, having achieved wonders in productivity, have been put through the mill in terms of anxiety about the future of their jobs and their industry. If the jobs of Ellington miners are taken out of the area, £10 million a year will be taken out of the area's economy. Given all the local regeneration measures of which we can think, it is extremely difficult to come up with something that would build up to that level, even over a reasonable period, let alone in the short term. The announcement of the subsidy is accompanied by a great sense of relief, given that it has been cleared at European level and is going ahead.

The Budge pledge runs to 2004, but what will happen after that? I share the view that there are potential reserves that could be accessed from Ellington colliery, the quality of which we do not entirely know. Budge's first experience in getting beyond the Causey Park dyke and operating from that part of the pit was not encouraging because of the sulphur level and the state of the coal found there. There may be significant reserves further on. I want to see some real development work taking place between now and 2004 in an attempt to give the pit a future thereafter.

The pit is associated with Alcan power station and smelter, which is next door to it. There has been an increase in employment recently at Alcan, and that is great news for the area. We want to see the future of that industry secure as well. However, we must take action to deal with the job losses that have already happened. At Ellington alone, the work force are a fraction of what they used to be. There were 2,000 men there at one time, as well as the thousands of men in other pits within the Northumberland coalfield.

We must deal with the general deprivation, which all the figures and indices show, of the former Northumberland coalfield, and we must prepare for the day when the Ellington pit is no more. Even if my ambitions and hopes, and those of other Members, for the future development of the pit are fulfilled, it must be understood that no pit lasts for ever. The history of the coal mining industry is one of considerable difficulty in replacing jobs lost. Sometimes they have been replaced, but mining villages were not always built in convenient places for other industries.

However, there has been success in some communities. It is time for us to see some success in Northumberland where, as for much of the northern region, we still fall way behind all the favourable and positive indices that Governments like to claim as marks of success. Work must therefore continue on regeneration in the area. Road and rail transport links, for example, could help the area, new industries must be brought into the area, small businesses must be strengthened, and there must be public investment in the infrastructure. The scheme is good news for us, but it must not deter us from the work that needs to be done and which the Government, in particular, must undertake to give the area a future.

I have a happy footnote on the Ellington colliery band, of which I am president. It has been told that it will get some subsidy from RJB Mining. I am rather pleased about that, as the band does a great job in the community, not least in attracting young people, of whom there are a considerable number in its junior band. The band has a happy link with the colliery, and we look forward to the colliery succeeding in future.

Photo of Rachel Squire Rachel Squire Labour, Dunfermline West 9:10 pm, 22nd November 2000

May I say that it is good to be in the Chamber to hear good news for the coal mining industry after 18 years of devastation under the previous Government.

Access to Longannet mine is in my constituency and, as the local Member of Parliament, I pay tribute to everyone who has worked hard on the Mining (Scotland) Ltd. application to the coal aid scheme to try to achieve a future for the only deep mine left in Scotland. I pay tribute to my right hon. Friends the Minister and the Secretary of State for Scotland, as well as to the late First Minister, Donald Dewar, who, tragically, is no longer with us. He did all that he could to help to give Longannet a future. I also pay tribute to Mining (Scotland) Ltd.—especially its chairman, Professor Ross Harper—Scottish Power, Scottish Enterprise, Fife council and my UK and Scottish parliamentary colleagues who have given consistent support.

I pay special tribute to the National Union of Mineworkers (Scotland) and the miners at Longannet, who refused to give up and be defeated. They have stuck there, determined to give that mine a future. The aid scheme will help to provide a future to the 450 or so miners who remain at Longannet and, hopefully, it will create new jobs and possibly some apprenticeships.

The miners and Mining (Scotland) Ltd. fully appreciate the challenges ahead. They must grasp this opportunity to develop an up-to-date, modern and competitive mine, as there will be no second chance. We all believe that Longannet is a mine with a future, as there is 20 years' worth of coal waiting to be extracted and a customer committed to buying that coal, namely, Scottish Power. Detailed seismic surveys have shown that there is coal ready for extraction; they will help the mining company to avoid the geological faults that have led to so many difficulties in recent months.

Longannet is a financially and economically viable mine. Picking up on points made earlier, may I point out that it is an environmentally friendly mine that produces the lowest sulphur coal in the United Kingdom. That coal is transported underground by conveyor belt directly to Longannet power station, which has received heavy investment from Scottish Power to make it environmentally friendly through gas re-burn and flue gas desulphurisation.

Knowing how keen my colleagues are to speak, I shall end by saying that I look forward to hearing from my right hon. Friend the Minister about when we can expect the cheque to arrive. I express my full support and that of the communities of Dunfermline and west Fife, other parts of Scotland and areas across the UK, for the continuation of our deep-mining industry and the motion on the coal operating aid scheme.

Photo of Jon Trickett Jon Trickett Labour, Hemsworth 9:14 pm, 22nd November 2000

Those of my constituents who work in the Selby pits, the Prince of Wales and Kellingley, their families and communities, welcome today's announcement. I congratulate my right hon. Friend the Minister. Neither I nor anyone in the industry underestimates how complicated it was to unpick the Tory legacy. My right hon. Friend's work and determination are to be applauded. Everyone in the communities that I represent recognises that she is a true friend of the industry.

It is good to see the Government's commitment to the industry being echoed in the private sector. Ferrybridge power station, which takes coal from the local collieries, is to benefit from £100 million worth of new plant for desulphurising coal, which clearly shows the private sector's long-term commitment to coal from the Yorkshire pits. That is welcome, although it remains for the Secretary of State for the Environment, Transport and the Regions to determine the matter.

I listened with incredulity to the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb). He cries crocodile tears for the industry that his party sought to destroy. Not only did the Conservative Government close the vast bulk of the pits, decimating the mining industry with no sense of compassion or commitment to the nation's interests in terms of its energy needs, but they created the mad dash for gas. The electricity pool was rigged so that we built gas power stations, to the detriment of coal. Yet they knew then that indigenous supplies of gas were limited. They probably have fewer than 12 years to go, and we shall then have to import gas from the former Soviet bloc and the middle east, regions which are politically and geologically unstable.

The Tories pursued a foolish nuclear energy policy. The nuclear power industry is now costing billions to decommission and its legacy will last for generations. The Tories also failed to pursue the issue of the interconnector, a technical device by which the French can pump energy into Britain, with no reciprocal arrangement by which energy produced with British coal can be pumped back to the continent. The Tories also failed to prevent the subsidies given elsewhere in the EU—£3.5 billion a year in subsidies for French, German and Spanish coal, which is three times more expensive to produce than British coal.

All this shows the extent to which the Tories were motivated by a sense of vindictiveness towards the mining communities, particularly towards the National Union of Mineworkers. We all know that their real target was the destruction of the union.

I do not know whether you, Madam Deputy Speaker, read the Mirror, but I am sure that many others do. That august newspaper has revealed a secret plot among the Tories. It states:

The Tories are secretly plotting to close Britain's remaining coal mines … they want subsidies to coal-fired power stations axed in a plan which would spell disaster for the 17 remaining deep mines and the thousands of men who work there.

The report continues:

The plan was revealed in a secret Tory briefing paper— produced over the road in Smith square—

which condemns the coal industry as "dirty" and "inefficient"

despite all the investment that has been made.

The Tories are determined to close the rest of the pits, despite the fact that British coal is more efficient than that of any other country—one third of the cost of German or French coal. Now that the pool has been disaggregated, the cheapest source of energy is coal, even within the United Kingdom. Those facts, more than anything, demonstrate the political rather than economic determinants of Tory policy.

The aid that we hope will be agreed this evening is short term and transitional. We need aid over the next two or three years, but we then need a longer-term, strategic review of energy. I know that my right hon. Friend the Minister is concentrating her efforts on that.

I want to make three points. First, British coal needs a level playing field in the European Union if it is to have a future. I am not in favour of shutting pits in Germany or France, but if subsidies continue elsewhere on the current scale, we must support British coal.

Secondly, someone must tackle the issue of the interconnector, which allows French and German coal-generated energy to be pumped into the United Kingdom. My third and perhaps most important point is about clean coal technology. If decommissioning Dounreay will cost £4 billion, surely we can find resources for clean coal technology. I appreciate that the Minister is already considering research into that.

Those points and others will doubtless contribute to a longer-term view now that we have managed to secure the short-term transitional funding.

Photo of Michael Clapham Michael Clapham Labour, Barnsley West and Penistone 9:21 pm, 22nd November 2000

As the chairman of the all-party coalfield communities group, I can tell my right hon. Friend the Minister that the aid package that she has announced today is welcome in mining communities. The group campaigned for the package; she knows that we campaigned hard, and that we lobbied her. The package will be extremely helpful to the coal mining industry.

The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) said that the Government were all rhetoric. It should be put on record that the Government have honoured their commitment to the mining communities. The Coalfields Regeneration Trust has approved approximately 320 applications, which will mean some £50 million for trying to regenerate some of the coalfield communities that the previous Government neglected so badly.

It should also be put on record that the Government have introduced compensation schemes for vibration white finger, and for chronic bronchitis and emphysema. They are likely to pay out some £2 billion to miners who were subject to negligence by British Coal. [Interruption.] I stress to the hon. Member for Bognor Regis and Littlehampton that had the previous Government remained in power, the court case that went to appeal would probably have gone to the House of Lords. In an Adjournment debate in January 1996, I proposed a scheme to the previous Government. They replied that they believed that smoking was the bigger cause of chronic bronchitis and emphysema. That implies that they would have fought the case through the House of Lords, and that compensation would not yet have been made available.

The package will give the operational pits stability, and encourage companies to invest further in mining communities. That will bring opportunities to areas such as the constituency of my hon. Friend the Member for Wansbeck (Mr. Murphy), where there is little industry other than the coal mine. In the long term, investment in that coal mine will ensure its durability.

I have some anxieties, which are due to lifting the gas consents. I believe that they have been lifted early; I understood that they would continue until the new electricity trading arrangements were established. Those are not likely to operate until March next year, and the consents should have been retained until then. A level playing field will be created, which will give coal a little more help.

We are moving towards overdependence on gas. My right hon. Friend is aware that 40 per cent. of electricity in the UK is generated from gas, and lifting the consents is likely to generate another 5 GW of gas-fired electricity. Gas prices are increasing throughout the world. In America, for example, they have tripled during the past two years, and they have been increasing in this country. Becoming more dependent on gas threatens the competitiveness of British industry.

Work on proven and possible gas reserves shows that such reserves are likely to be used up significantly by 2003, and we are likely to be importing gas by 2005. Indeed, the 1998 White Paper pointed out that we will probably import up to 90 per cent. of our gas by 2020. That, too, will pose an enormous threat to the competitiveness of British industry. We know from what environmentalists tell us that coal-fired power stations have a detrimental effect on the environment. We should therefore have the foresight to develop and use clean coal technology.

My right hon. Friend the Minister will be aware that a multiplicity of technologies are available, but one stands out—the integrated combined-cycle gasification system. That system, it is held, could generate electricity from coal efficiently and cleanly—all pollutants would be removed from emissions. Will my right hon. Friend ask her officials to examine the commercial possibilities of that system? It could be the way forward, and if we invest in it, we could secure a sustainable future for the coal industry.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee 9:27 pm, 22nd November 2000

We ought to put on record the fact that it is 10 years to the day since Mrs. Thatcher got chucked out—she was kicked out like a dog in the night. The interesting thing is that she was kicked out by the Tories, although I had been trying to do that for years. It was Heseltine—I should not refer to him in that way. It was the mob of the right hon. Member for Henley (Mr. Heseltine) and, in the end, all those Cabinet members who did it. She was sat there, crying her eyes out, and Kenneth Clarke and all the rest came up to her and said, "You'll have to go."

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

Order. I remind the hon. Gentleman, although I am sure that he is very well aware of this and needs no reminding, that we should be discussing the motion on the Order Paper.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

As I was saying, Mrs. Thatcher has got a hell of a lot of responsibility for what we are doing here today. Mrs. Thatcher, those who followed her—including the right hon. Member for Huntingdon (Mr. Major)—and the others got rid of all those pits, with the result that at the end of the strike we were left not with 170,000 jobs, but with about 10,000 jobs and 17 pits.

Almost none of the people who were thrown out of the pits in the 1980s and 1990s were in the same position as we were in when I changed pits in 1962. I got shifted from a pit because it closed, but I went to another, and I had a choice of four or five. What really scarred the pit villages in the 1980s and 1990s was the fact that miners had nowhere else to go. The Tories should always be held to account for that and for the fact that they were so full of revenge that they chucked thousands of miners out into those villages, without any alternative work.

This Government, having come in 1997, have decided to introduce a scheme to save about 10,000 jobs and 17 pits, for a few years at any rate. I do not go a bundle on the specific proposal because some of the money will end up in Richard Budge's pocket; it might even finish up in Rennco's pocket, or in the pockets of anyone else who buys the pits. I wanted a more satisfactory settlement, but I know that the world ain't perfect. When I tell the miners or ex-miners in Derbyshire about the plan, they say, "Christ, Dennis, I wish we'd had one before Shirebrook, Bolsover, Markham and all the rest were shut."

I tell my right hon. Friend that, yes, saving the jobs is welcome. It is interesting that coal mining is one of the few heavy industries left. All the talk in the House today is about the internet, but many internet companies are not worth a row of beans. We are talking about a massive industry. It employed 700,000 people when I started work in the pit, but now only a tiny proportion is left.

According to my hon. Friend the Member for Hemsworth (Mr. Trickett), some Tories in central office are now talking about axing the remaining subsidies and shutting the last 17 pits. They should be made to walk to those pit villages month after month to see the injury that they have caused, with hidden unemployment of 20 per cent. In the constituency of my hon. Friend the Member for North-East Derbyshire (Mr. Barnes), some miners finished up at Biwater, and now they have conspired to shut that down as well. The women became the breadwinners in the pits areas, but the textile workers have lost their jobs because of the Tory party's friends.

The scheme is not a lot, but it is better than a poke in the eye with a big stick. We would have liked it in Derbyshire, where there is not even one single deep mine left. I will vote for the measure, as will my hon. Friends.

We hear the Tories rabbit on about subsidies, but they have just taken a subsidy—almost 4 million quid of Short money. That is a subsidy from the taxpayer, and they have the cheek to talk about subsidies being evil. What have they done with some of that subsidy? They have got tin-pot people at central office trying to devise schemes to get rid of pit subsidies. That shows the hypocrisy of the Tories. They will take money from the taxpayer and set up schemes to sack more people. That really is criminal.

I hope that none of the money will go to opencast mines. I heard my right hon. Friend's speech, and it sounded as though they might get some of it. We do not want opencast to desecrate the countryside; we have had enough of it. So if she finds a method—a ploy—to ensure that the money does not finish up there, we will give another cheer. We must stop the imports, to ensure that the Ellingtons, the Hatfields and all the rest have an even longer life.

I have said my party piece. I have had this in my craw for all the years that the Tories were ripping the guts out of my constituency.

Photo of Mr Joe Ashton Mr Joe Ashton Labour, Bassetlaw

What about farmers' subsidies?

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

They are a different story altogether. BSE cost us 5 billion quid, and they then moan about the Common Market and God knows what else.

We have had a bit of cheer tonight. Now that my right hon. Friend has done that, she has got another job to do, and my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) referred to it earlier. There is a £3 billion ring fence around chronic bronchitis, emphysema and vibration white finger. Hon. Members will notice that I have put it up from £2 billion to £3 billion already. Now that we have got that heavy load off our minds, we must start to get the lawyers, the doctors and the others who are holding back the claims of those miners who worked all their lives in the pits, many of whom are now coughing their lungs up. My right hon. Friend is a busy woman, but she has another job to do. She has made a bit of a fist of this job; we think we can trust her with that one as well.

Photo of Eric Illsley Eric Illsley Labour, Barnsley Central 9:35 pm, 22nd November 2000

I want to reinforce some of the points that my hon. Friends have made. I welcome the subsidy that is being given to the coal industry, and I hope that my right hon. Friend the Minister will consider not only the coal mines owned by Richard Budge, but some of the private mines that have also struggled to remain in operation in the past few years. The energy companies—PowerGen, National Power and the others—have screwed down the price of coal over the years and have caused real problems for private mines and the price that they can achieve for their coal for generation.

I echo the comments of my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) about the relaxation of the gas consents. Ever since 1912, the biggest competitor of British Coal has been gas, be it town gas or natural gas. Gas will eclipse the coal industry if the dash for gas is allowed to run riot, as it has been in past years.

The demand for gas, the price of oil, the Asian economies that are sucking in oil and gas, thus increasing the price, and OPEC's refusal to increase production have meant that coal is at the moment in a slightly privileged position. Gas and oil prices make coal quite competitive on the energy market. However, I caution hon. Members that our good news could be soured somewhat if more and more gas-fired power stations are allowed to enter the market.

My hon. Friends have argued that we should examine clean coal technology. More than 10 years ago, the Energy Committee, as it then was, produced report after report on clean coal technology, but the previous Administration refused to countenance that technology. They even closed down the last experimental clean coal technology station at Grimethorpe, and refused to consider buying technologies from other countries. So our use of clean coal technology was stopped many years ago. I ask my right hon. Friend to reconsider that technology, and I caution against the release of gas consents.

Photo of Mrs Helen Liddell Mrs Helen Liddell Minister of State (Science, Energy and Industry), Department of Trade and Industry, Minister of State (Energy and Competitiveness in Europe) 9:37 pm, 22nd November 2000

I shall not try to follow my hon. Friend the Member for Bolsover (Mr. Skinner) because I doubt whether I could inject quite as much passion into the issue as he did, but I think that he knows that I have more than a sneaking sympathy with everything that he said.

It may help hon. Members if I go through the details of the applicants. As shown on the Department of Trade and Industry website, applications have been received from RJB in respect of its operations at Selby, Maltby, Harworth, Rossington and Welbeck. Applications have also come from Blenkinsopp collieries and Scottish Coal at Longannet. It would be churlish of me not to mention in the presence of my hon. Friend the Member for Doncaster, North (Mr. Hughes), who because of his position on the Treasury Front Bench cannot speak on these matters, that the gem of his eye, Hatfield Coal, is also an applicant for subsidy.

There is a maximum of £75 million per company. We have put forward an application for approximately £17.5 million for Longannet. Applications from other companies are still under discussion or are yet to be received. I draw hon. Members' attention to the order, which relates to subsidy in excess of £10 million, because subsidies above £10 million must be cleared on the Floor of the House.

Other applications will undoubtedly be made before the end of the year. If pits in hon. Members' constituencies think that they are eligible for subsidy, they must get their applications in before the end of the year.

Photo of Michael Clapham Michael Clapham Labour, Barnsley West and Penistone

As my right hon. Friend read through the list of collieries, I noted that there was no reference to Tower colliery in Wales. Could that colliery be prompted to submit an application?

Photo of Mrs Helen Liddell Mrs Helen Liddell Minister of State (Science, Energy and Industry), Department of Trade and Industry, Minister of State (Energy and Competitiveness in Europe)

I know that my hon. Friend has been anxious to secure assistance for Tower. My officials are in discussion with Tower and will continue to be so. As the House knows, all Labour Members are proud of what has been achieved at Tower—a considerable achievement indeed.

My hon. Friend the Member for Dunfermline, West (Ms Squire) asked when the cheque would be in the post. I cannot be specific about that because the Commission must consider the application. However, at the weekend, I spoke informally to the commissioner. She is well aware of the importance of the application from Longannet. I know that her officials are anxious to proceed on those matters as quickly as possible. My officials have gone to considerable lengths to ensure that applications are fully compliant.

The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), who skimmed over the fact that many of the difficulties faced by the coal industry are directly as a consequence of actions by the previous Administration, asked about the Government's position on state aids in general. We continue to take a tough stance on state aids. The Commission is examining the issue of operating aid to Germany. We are pleased, too, that the Commission is examining aid to France. We will continue to prosecute those issues in so far as it is necessary.

The issue of the stricter gas consents policy has been raised on several occasions. The policy was always viewed as a temporary measure. One of the discoveries that we made when we took over government was the extent to which the energy market was tilted away from the coal industry. The electricity market operated with a distinct bias against it. That is why the stricter gas consents policy was introduced.

The policy is now being lifted because the Government are satisfied that the programme of electricity market reform that was outlined in the White Paper is substantially in place. That was always our position. We have arrived at the point where we recognise that the policy should be lifted, but we are taking significant action to assist the coal industry through the period of transition.

The hon. Member for Twickenham (Dr. Cable), who has made his apologies to me, raised the issue of the environment. I wish to make it clear that the subsidy scheme is not expected to have a significant environmental impact, mainly because the subsidy will not enable purchasers of coal in the United Kingdom to buy coal more cheaply than they could have bought it in the absence of the scheme. Consequently, the scheme is not aimed at increasing overall demand for coal in the UK; nor will it affect consumers' choices between coal and other fuels. Therefore, in that respect, we see no prospect of environmental damage.

Several hon. Members have raised the issue of cleaner-coal technology. The Government are well aware of that and are anxious to see research into the technology. A considerable amount of work is going on in the private sector. We are conducting an analysis and will do so in even more detail as we proceed with examining the technology. I hope shortly to be in the constituency of my hon. Friend the Member for Wansbeck (Mr. Murphy) specifically to look at developments at Blyth. If the opportunity arises, I shall be happy to seek to meet a delegation.

I say to the right hon. Member for Berwick-upon-Tweed (Mr. Beith) that no application for aid for Ellington has been received. He is right to draw attention to the fact that it is for RJB plc to take action to protect Ellington. I notice that he has been specific about ensuring that that is read on to the record.

In relation to the overall operation of the subsidy scheme, my Department stands ready to give what assistance it can. My hon. Friend the Member for Bolsover asked about the opencast industry. It is clear from European Union rules that the scheme must be non-discriminatory. We cannot discriminate between one source of coal and another.

My hon. Friend the Member for Hemsworth (Mr. Trickett) referred to a recent article in the Daily Mirror. I, too, noticed it. I note that the hon. Member for Bognor Regis and Littlehampton, when pressed by hon. Friends as to his policy on the future of the coal industry, was extremely quiet about what that would involve.

My hon. Friend the Member for Hemsworth also raised the question of the interconnector, as did a number of my hon. Friends. I share their anxiety about its operation, and am prosecuting the issue with some vigour because I believe there may be superficial evidence of unfairness. We shall probe, in order to find out whether the evidence is more than superficial.

Tonight's debate has been important to many Labour Members who have a long-standing connection with mining. My hon. Friend the Member for Dunfermline, West recognised the great contribution made by the late Donald Dewar to the future of Longannet. Indeed, the last conversation that I had with Donald Dewar, days before he died, concerned Longannet's future. I am sure that all Labour Members recognise Donald Dewar's commitment to the industry, and I feel that the future of Longannet constitutes a memorial to the work that he did.

Labour Members have always recognised that the coal industry has an important part to play in future energy development. Let me say to my hon. Friends the Members for Barnsley, Central (Mr. Illsley) and for Bolsover that we also recognise the sacrifices made by men and their families in contributing to the industry. I say this to my hon. Friend the Member for Bolsover: yes, the issue of coal subsidies has taken up a great deal of my time, but nothing has taken up more of my time than ensuring that there is justice for the miners. I will not rest—I will not give up—until I am confident that we are moving forward, so that the men and their families who so desperately need compensation are given the right to that compensation.

Photo of Mr Harry Barnes Mr Harry Barnes Labour, North East Derbyshire

May I raise something that has not been mentioned yet? In her opening remarks, my right hon. Friend said that additional applications would be considered, including applications relating to small mines. The losses experienced by such mines may mean that they cannot survive, whereas RJB Mining could possibly subsidise one plant from, for instance, opencast operations. Is it possible to take that into account?

Photo of Mrs Helen Liddell Mrs Helen Liddell Minister of State (Science, Energy and Industry), Department of Trade and Industry, Minister of State (Energy and Competitiveness in Europe)

That was a useful question. The decision on aid is made per production unit, regardless of whether the mine is small or large and regardless of its ownership. The key is the ability to show that, notwithstanding present losses, the pit concerned will be in a position to be viable by the time the coal subsidy scheme ends. That is a way of giving a future to an industry that was ignored by the last Administration.

This is a significant night for coal communities. I am very pleased to commend the order to the House.

Question put and agreed to.

Resolved,

That this House authorises the Secretary of State to pay, or undertake to pay, by way of financial assistance under section 8 of the Industrial Development Act 1982, and in respect of coal mining qualifying for aid under the UK Coal Operating Aid Scheme, sums exceeding £10 million for each of Hatfield Coal Company Ltd, Mining (Scotland) Limited, and RJB Mining plc.