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Barnburgh Colliery

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Kenneth Carlisle.]

10.23 pm

Mr. Terry Patchett (Barnsley, East) : I appreciate the opportunity to discuss in the House a matter that dramatically affects my constituents. In an area that already suffers from high unemployment, the loss of another 775 jobs is a dramatic blow. Barnburgh colliery is covered by the review procedure and its closure is a matter for discussion between unions and British Coal, which will listen to the ideas and propositions of the unions and will go away and think about them. I do not intend to interfere in any way with the negotiations. I know that the Minister tends to take a Pontius Pilate stance on the issue because the Government take the view that colliery closures are matters for the commercial judgment of British Coal. We are speaking about social problems, real human problems that affect my constituency. The Government should accept some responsibility because perhaps they have been involved in misleading the country in the last few years. I recall that, during the miners' strike, a duly elected president of the National Union of Mineworkers was called a liar and a scaremonger when he prophesied a huge pit closure programme if the miners were unsuccessful in that dispute. History proves who was telling lies and who was telling the truth. Many hon. Members owe Arthur Scargill and the British public an apology because that pit closure programme took place.

We had thought that it was over, but virtually every month we find that it keeps rolling on. In pits that we thought, and had been told, had some sort of future, union officials are suddenly sent for and virtually given a closure date. Barnburgh colliery falls into that category. We were promised that it had reserves of 15 years, and then the officials were called in. The manager suggested that there was no need to go through the review procedure, a procedure accepted by all sides. This I find despicable. Nevertheless, because of pressure from the union, the procedure has been used.

The work force are told that, regardless of money that has been spent, a seam is unworkable because of geological conditions, even though there is evidence to suggest that the management was told that it was using the wrong mining techniques. So after all that money has been spent, we find that suddenly, for geological reasons, the reserves have gone. I have had some experience in mining--26 years of it--and I find it unacceptable that, with today's mining and surveying techniques, such a view should be put forward. It just should not happen.

We have finally reached the point where we must ask who is managing our pits and who makes these incompetent blunders. It is rather ironic that the last pit managed by Barnburgh's manager was Cortonwood. He seems to be an unfortunate manager. It was in his last pit that the Government organised the dispute with the miners. Quite apart from the question of reserves, the unions were sent for, shown the financial position and told that the pit had lost £600,000 over a period of time. When the union officials looked through the books they found a figure of £125,000 for transport from the washery plant associated with Barnburgh shown as an expense for

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transport from that washery plant to another colliery for blending purposes. When the officials argued that the receiving colliery normally accepted that expense, British Coal said that the book-keeping arrangements had been changed.

British Coal, therefore, seems to be in the business of making unprofitable any pit that it chooses. It is very distressing. Hon. Members may have difficulty in understanding that point, but the truth is that, while British Coal appears to lurch from crisis to crisis and react only with further pit closures, it really knows just what it is doing. If it does not, the question of its competence should be raised.

British Coal talks of problems with market forces and competition in the energy industry when I sincerely believe--or I would not say so here--that it is preparing the industry for privatisation by these closures. It may seem strange to speak of closing pits to prepare for privatisation, but I believe that British Coal, on behalf of the Government, is preparing nice, neat little parcels, ripe for the picking by the Government's friends on the stock exchange. The Government may say that they believe in free market forces, but that is inconsistent with their actions, because they have more sympathy for other sources of energy. We have only to look at the protective cocoon that they have thrown around the nuclear energy industry in the Electricity Bill to establish that. It is a fact that market forces prevail in one energy industry--coal--but the nuclear industry is cocooned.

Without a mandate, the Government and British Coal are using taxpayers' money to prepare the industry for privatisation. That is their declared intent if they are returned to government after the next election. I am sure that the Minister will laughingly deny that and speak of the investment that the Government have put in. In fact, they have clawed more back in debt charges than they have put into the industry. That is another burden which the industry has to bear. Many hon. Members and I are concerned, and if the Minister says that our fears are unfounded, I challenge him to set up a public inquiry into the management of British Coal and its directors. Constituents such as mine already have high unemployment as a result of the policies of the Government and the coal industry. We have a right to know the truth.

I shall not go into the specific problems at Barnburgh, but Government policies have contributed to its proposed closure. Without a mandate from the House or a general election, the way is being prepared for privatisation. That is the truth. If the Minister wants to prove that I am wrong, and allay my fears, I would welcome a public inquiry into the management of British Coal, because I cannot accept that it is so incompetent as to come up with the old ideas about unworkable resources. I have worked in the pits and know that modern technology protects them from that. If modern management has brought about such a state of affairs, questions should be asked. 10.32 pm

The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer) : The hon. Member for Barnsley, East (Mr. Patchett) has quitproperly raised the question of the future of Barnburgh colliery, which he also discussed, in his capacity as chairman of the miners' group of Members of Parliament, with my right hon. Friend the Secretary of

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State on 21 February this year. My right hon. Friend said at that meeting that individual colliery closures were matters for the judgment of British Coal, in which Ministers did not intervene. That remains the position. Barnburgh colliery, which started producing coal as long ago as 1917, is one of 18 deep mine collieries at present operating in British Coal's south Yorkshire area. Generally, the south Yorkshire area has reserves of good quality coal, although these have been extensively worked on the western side of the coalfield, and operations are now increasingly concentrated on the deeper reserves to the east.

The hon. Member for Barnsley, East may make snide comments about this, but it is a fact that massive amounts are being invested by British Coal on expanding production on the eastern side of the coalfield. For example, £140 million--no small sum--is being invested in Maltby colliery to double its output to 2 million tonnes a year. Large sums are being invested in heavy duty equipment at Silverwood and Rossington. Nationally, a massive investment programme continues to run at over £2 million every working day. The resulting increases in productivity are the reason why we are confident that, if the pace of improvement can be maintained, the British coal industry will be able to compete with imports for the bulk of its business. That process does imply the closure by British Coal of pits that are uneconomic.

Although decisions about the closure of individual units are the management responsibility of British Coal, that does not mean that British Coal closes pits without prior consultation with the work force. The modified colliery review procedure, agreed between the mining unions and British Coal, provides for the detailed review of the performance of individual collieries, including where appropriate the scrutiny of proposals for closure at three levels : local discussions, national appeals and ultimately the independent review body. The last stage is chaired by an eminent independent individual who is acceptable to both sides and whose report, while not binding, is given full weight by the corporation in reaching its final decision. Barnburgh colliery has reached the stage of national appeal.

The consultation procedure for considering closure proposals is the most comprehensive process of its kind available to any industry. It allows representatives of the work force to submit evidence throughout the three stages of the proceedings. The Government are not at any stage a party to these arrangements.

I shall not prejudge the outcome of the review procedure, and in particular of the national appeal meeting between the unions and British Coal that is due to take place tomorrow, but the House may find it helpful if I give a few financial facts about Barnburgh. At the end of December, the Yorkshire area as a whole made an operating profit, before capital charges, of £40 million for the first three quarters of the financial year. Barnburgh had contributed an operating loss of around £1.5 million. Barnburgh's performance in 1988-89 was not exceptional. In the two previous years it had made losses of £1.4 million and £2.2 million respectively.

In the quarterly review meeting on 24 January, British Coal's south Yorkshire area director referred to five collieries within his area that were giving him cause for concern. One of those five was Barnburgh. The other four were Brodsworth, Dinnington, Thurcroft and Shireoaks.

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All four of those pits have subsequently been the subject of their own reconvened colliery review meetings. In each case British Coal has suggested an alternative to closure which has received the backing of the unions. For Brodsworth, Dinnington and Thurcroft, revised production targets were agreed. The fourth colliery, Shireoaks, was placed on development work only.

A reconvened colliery review meeting was arranged for Barnburgh on Friday 3 February. At this meeting, at which the National Union of Mineworkers, the British Association of Colliery Management and the National Association of Colliery Overmen, Deputies and Shotfirers were all represented, the area director said that there was no method of working the remaining reserves that would result in the colliery being viable. Therefore, he proposed that the colliery should cease production in June once the remaining faces were worked out. The Manvers central coal preparation plant would also have to close. The area director also took the opportunity to pay tribute to the efforts of the work force, particularly, in relation to the work carried out on the Meltonfield and Newhill workings. He added that there would be no compulsory redundancies. Those wishing to remain in the industry would be offered alternative jobs at other collieries within the south Yorkshire area.

It is worth emphasising that no compulsory redundancies would be involved and--perhaps equally important--no moves of necessity to collieries outside south Yorkshire. Men who wished to be transferred to other units would receive the short-distance transfer payment. Men opting for redundancy would be eligible for the enhanced terms that are available from British Coal until 26 August.

The voluntary redundancy terms offered by British Coal are of course a matter for the corporation. Last November it announced improved redundancy terms for mineworkers that included an additional £7,500 lump sum payment for those with 15 or more years' service. British Coal calculated that a mineworker aged 32 with 16 years' service would receive total benefits upon redundancy of more than £17,000. A mineworker aged 51 with 25 years' service would receive more than £33,000. Those terms are without doubt very generous and compare favourably with those available in any other industry.

Following the reconvened review meeting on 3 February, NACODS and BACM members decided to accept the closure, while NUM members voted by a narrow margin to fight the closure proposal--52 per cent. against to 48 per cent. for. Under the terms of the modified colliery review procedure, the unions are given one month following the announcement of closure to request that the proposal be referred to a national appeal meeting so that they can give their reasons why the pit should not close. To help them prepare their case, British Coal offers them every assistance. The unions are given the opportunity to undertake a technical inspection and study market performance and financial prospects data.

At the meeting on 28 February, a detailed survival plan was submitted by the NUM. On 3 March, the two sides met again so that British Coal could give its reaction to the survival plan. British Coal estimated that the NUM plan would lead to an operating loss of more than £9 million. In view of that massive projected loss, British Coal felt that it had no alternative but to confirm that its decision on closure should remained unaltered.

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As the hon. Gentleman said, we now await the outcome of tomorrow's national appeal meeting to see whether the union has managed to modify its plan in such a way as to make the pit profitable.

Mr. Allen McKay (Barnsley, West and Penistone) : Is not the bottom line at review meetings the expenditure line? Is the profit line ever questioned? I accept and acknowledge that, as the Minister said, there has been massive investment in the mining industry. Barnburgh is one of those involved. Barnburgh has served as an in-taking colliery for miners who have been affected by closures once, twice or even three times. Although the Minister's claim that there have been no redundancies is true to a certain extent, it is questionable. However, I will not take up with him at this stage what is or is not compulsory redundancy.

Will the Minister explain what is deemed to be an economic mine or an uneconomic mine? The word "economic" is one we have been hearing since Lord Robens' days. The top five or six mines are skimmed off as being economic, the next five or six become uneconomic, and the five or six after that are again deemed to be economic. However, those collieries take on the burden of expenditure associated with the closed collieries. When will it stop?

Mr. Spicer : One of the reasons for the situation that the hon. Member accurately describes is that the industry still receives enormous subsidies. There is nothing new about that. There is no great revelation being made in saying that a pit has become unecomonic. Subsidies have been going to the industry for a long time.

The Government take the view that that process of subsidisation must ultimately cease. It was implicit in the speech of the hon. Member for Barnsley, East and was mentioned by the hon. Member for Barnsley, West and Penistone (Mr. McKay) that the industry has many debt obligations. That aspect may lie behind the question of the hon. Member for Barnsley, West and Penistone as to whether it is fair to include loan interest payments in the calculation of what is or is not economic. The Government say that the time may come when we must examine the industry's financial and debt structure.

We also must bear in mind the fact that those debts or uneconomic investments are real. They have not appeared out of the blue but represent moneys which have been spent and which the industry finds it impossible to recover from its operating revenue. They are not artificial burdens on the industry. At some point the Government will have to decide whether to restructure those debts. But it cannot properly be argued that the pits to which those debts are attributed are not uneconomic as that would be a faulty assessment.

The Government will be examining British Coal's debt structure at some point in the future, but in the meantime, in every way in which operating costs can be set against operating revenue, it is the view of British Coal- -the facts speak for themselves--that certain pits are simply not paying their way. Unless we can achieve an industry which is genuinely paying its way, and in which each pit is paying its way in a marginal sense, the entire industry will be

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dragged down, and ultimately questions will have to be asked about its ability to compete with imports, for example.

The Government consider that a slimmed-down, efficient industry such as British Coal, with good coal reserves and backed by high investment, is well able to compete with imports and will be a great source of pride to the country in the years ahead.

Mr. George J. Buckley (Hemsworth) : In his reply to my hon. Friend the Member for Barnsley, East (Mr. Patchett), the Minister said that British Coal's regional director in south Yorkshire had five collieries which were causing him great concern and local reviews had been taking place. If those collieries were to be closed, 13 collieries would remain in south Yorkshire. Does the Minister agree that the burden of debt spread over 13 collieries instead of 18 collieries would make some of the remaining collieries uneconomic and inevitably that redistribution of debt would put some of the remaining 13 collieries in jeopardy?

The Minister mentioned the review procedure. Does he accept that there has been a breakdown of that procedure in the negotiations at area level in Barnburgh? The area director and the British Coal team did not accept the NUM's proposals. The Minister said that tomorrow a national review will be carried out. Inevitably it will reach the same conclusion as a consequence of the evidence presented by the NUM. Does the Minister accept that there is a case for some independent arbitration that, for whatever reason, might consider that Barnburgh colliery should not close, and that the decision to close the colliery should be taken on the basis of an independent assessment of the future of the jobs at that colliery?

Mr. Spicer : On the hon. Gentleman's first point about the focusing of debt, I certainly did not say anything about the future of the other pits. That is a matter for British Coal, which no doubt will review their performance, but no clear decision has been taken on whether they should be closed. There is some merit in what the hon. Gentleman says about the need to examine the capital and debt structure of British Coal, and the Government fully concede that. When assessing the viability of a pit it is probable that the assessment will be made upon genuine operating costs and against genuine revenue. I would not want to dispute with the hon. Member for Hemsworth (Mr. Buckley) that the time may come for a reassessment of British Coal's debt, but I do not believe that one can ignore the fact that uneconomic investments have taken place in the past. One has to take that into account when assessing the viability of the pits.

On the review procedures, there is a third level at which the matter can be considered, and the hon. Member for Hemsworth is aware of that. This is the eve of the appeal, and I would not want to prejudge what I am certain will be an objective assessment of the circumstances. As the hon. Gentleman said, the NUM has, up to now, disputed the position at local level, and it will put its views tomorrow. If it comes up with a plan that is credible and acceptable to British Coal, it will cast a new light on the matter. I do not want to go into that any further, as I do not want to inhibit the objectivity of the discussions. Hopefully, on the basis of that response, we can await tomorrow's events and see what they bring forth.

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There is no doubt about the Government's intentions for the British coal industry. Our intentions are often misinterpreted. The Government are, rightly, piling money into the coal industry because it is a great national asset. The Government want that asset to reach its full potential in the interests of the British economy. It is our desire that the industry will beat off imports. However, for the purpose of efficiency and the well-being of electricity consumers particularly, we will allow imports to compete, but, as I have said, we hope that the British coal industry will beat them off. Question put and agreed to.

Adjourned accordingly at nine minutes to Eleven o'clock.

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