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9.52 am
Mr. A. J. Beith (Berwick-upon-Tweed): I am grateful that the hon. Member for Barnsley, West and Penistone (Mr. Clapham) has been able to arrange the debate for today. It could not have been more timely for Ellington colliery in my constituency. The hon. Gentleman referred to its closure in his remarks. The Ellington problem is part of the coal industry's wider problems, and I shall begin by considering Ellington specifically.
When I was elected, there were three working pits in my constituency which employed 3,500 men. We retain the last working pit in the north-east of England where 430 men are in work and make a massive contribution to a local economy that currently has little else. The closure of Ellington colliery would be a disaster for an area that stretches for many miles; it would affect several other constituencies. The pit had more than 1,000 jobs when it was closed by British Coal and reopened by RJB Mining. The much smaller work force profitably produces larger quantities of coal than its predecessors. That is a remarkable achievement. The pit employs people from a wide area--from Alnwick to Amble, Hadston, Widdrington, Lynemouth and Ellington, as well as many men in adjoining constituencies such as Blyth Valley and Wansbeck.
A wider north anxiety--that the economy of the north is far behind that of the rest of the country--forms the background to the worries about Ellington. Newspaper headlines such as, "What about the North, Mr. Blair?", reflect a general feeling that the north is in no position to cope with a blow such as the closure of Ellington colliery. The measures that have been announced so far cannot deal with the consequences.
The pit is in an area of serious unemployment, and many of the measures that the Government propose as alternatives to keeping the pit open have been used in dealing with earlier pit closures. They have not created anything like the increase in the number of jobs that the area needs to cope with the 1,000 jobs that have already been lost at Ellington colliery, let alone the 400 that will be lost if the pit closes in February.
Ellington feeds its coal directly to the Alcan power station, which powers the Alcan smelter. It would be hard to imagine a more efficient arrangement for coal. There are no transport costs and thus no environmental consequences of transporting coal around the country. Ellington uses the best method of transferring coal. However, the coal contract with Alcan belongs to RJB Mining and the idea that someone else could buy the pit without the contract is ludicrous. The RJB press release stated that the company would be interested in offers to take over the pit. No one will take it over without the contract to feed the coal straight to Alcan.
RJB Mining has massive opencast resources in Northumberland. It has the lion's share of the large amount of opencast mining in Northumberland. My constituency has the largest amount in the country. Local residents were told that they had to accept opencast mining because it was necessary to keep the deep mine
open; that, without the sweetener of opencast coal and its lower price, we could not keep the deep mine open. Now, we have opencast, but we will not have the deep mine unless drastic action is taken.
As the hon. Member for Barnsley, West and Penistone pointed out, the coal market is unnaturally depressed at the moment. No one believes that the coal price will remain at its current low level. No one assumes that the coal market will be easy in future, but it is generally accepted that the current price is unrealistically low. The state of the market is assisted by massive subsidies, such as £3 billion to £4 billion a year in European Union countries and those in other countries too--leaving aside the current level of subsidy in Poland.
Therefore, we must put the case for some assistance for the coal industry over this difficult period. Otherwise, when the market settles down to a sensible level, there will be no British coal industry to take advantage of it. We cannot simply open and shut down the British coal industry at a moment's notice; pits cannot be closed and quickly reopened. Once pits are closed, they are usually lost permanently. That will happen at Ellington.
We have met the Minister and the Secretary of State for Trade and Industry, who were ready to meet us at short notice and to consider the matter. However, we were presented with the strict doctrinaire view that the Government would not grant any state aid to the coal industry. That is an uncomfortable position for the Government to take when the coal market is in such an unnatural state. The Government's view constituted a curious unilateralism: they claimed that, if we did not provide state aid, all other countries would stop providing it. I can understand why the Government want to end the distortions of the coal market that state aid creates. However, we cannot do that by letting our coal industry go simply to show how damaging a subsidised coal market can be. That is an absurd position.
We must ensure that our coal industry can survive this period at least at a minimal level. Heaven knows, the British coal industry is now smaller than anyone could imagine. Instead of sitting back, allowing the industry to be destroyed and then claiming, "We told you so; we told you that state aid was a bad thing", the Government should take a more pragmatic view and find a way of assisting the industry through this period.
The objective of European-approved aid for the coal industry is viability. Ellington can be viable if it is allowed to continue to fulfil its Alcan contract in the next three or four years, and receives assistance to meet the additional costs resulting from sandstone layers that have been found and to bridge the price gap. That might lead to the possibility of reconsidering the longer-term reserves that exist at Ellington. Although the first move into the northerly part of the pit's potential reserves yielded coal that might have been unsuitable for generation, there is no evidence to suggest that coal a little further away would not be highly suitable for power generation. That possibility could be explored if the pit were kept going.
The previous Government introduced a scheme in 1993--they did not spend very much money on it--and it provides a model for what could be done. However, it is not the only model. As has been suggested already, we do not have to provide a direct subsidy to the coal producer; it could be a subsidy to the generators and many people would feel more comfortable with that. One way
or another, it is essential to try to bridge the price gap in that short period. This country has the lowest production costs for coal in Europe, but we are allowing the industry to go to the wall because production costs are subsidised elsewhere and there is an unnatural condition in the coal market.
I was disturbed that Ministers did not tell us that, although they were worried and although there were legal difficulties, they would consider whether a scheme could be devised to meet European criteria. There has been state aid to the coal industry in Britain, so it is not a question of suddenly introducing it. It existed under the 1993 scheme and £12 million was paid out under it. Therefore, there is a baseline from which we can operate. Ministers did not say that they would consider what could be achieved and that they would consult the Treasury to see whether they could find the money. There was none of that. They simply said, "No. That is not part of the doctrine. We do not do this sort of thing." We cannot take such a rigid and doctrinaire line when we are looking at the possible disappearance of an industry in conditions that are artificial--and that are made artificial in part by subsidies elsewhere.
The wider issues that go far beyond Ellington have already been mentioned and other Members will raise them in the debate. If we have no domestic coal industry, we will almost certainly do fatal damage to our mining engineering industry and to the production of mining equipment in this country. We need a domestic industry to ensure that we are in the forefront in the development of technology in mining engineering and in the sales of mining equipment. Big potential markets for mining equipment will exist particularly in the far east where there will be deep mining. We should ensure that we have an industry that can take advantage of the opportunities presented by that.
In many other parts of the country, closures, such as the one now planned for Ellington, would have a disastrous effect on local jobs. The problem is not peculiar to my constituency, but the impact on my constituency and a couple of neighbouring ones will be devastating. I have seen no evidence that we shall receive the scale of assistance that could begin to match the jobs already lost, let alone those that will be added to the total.
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