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Mr. Ashton: 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?
Mrs. Liddell: 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.
8.34 pm
Mr. Nick Gibb (Bognor Regis and Littlehampton): 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.
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
One of the worst Labour self-inflicted wounds to the coal industry has come from the Deputy Prime Minister, who raised Britain's CO 2 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 CO 2 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.
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 CO 2 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.
- 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.
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.
- forecast to generate projects worth at least £60 million.
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 CO 2 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.
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