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Selby Coalfield

12.30 pm

Mr. John Grogan (Selby): My task today is to outline my view of the future of the Selby coalfield. To do so sensibly, I must examine the context of both British Government and European policy.

The coal industry in general and Selby in particular have had a real friend in this Labour Government. Time and again since 1997, when questions have been asked about the future of the Selby coalfield and the industry in general, the Government have responded with policy initiatives. The coal lobby has always had to argue its case hard with Ministers, who have never been slow to challenge our assumptions robustly, but that is as it should be. The demand has always been for fairness, not favours.

The argument that British coal has a significant role in the energy mix, not least so that the nation does not become completely dependent on imported gas, has won the day. It was this Government who gave the industry a vital breathing space by imposing a temporary moratorium on new gas-fired power stations while the electricity trading market, which was rigged against coal-fired power stations, was reformed. It was this Government who introduced a scheme of coal operating aid, which expires in July this year and has paid out more than £140 million to the coal industry—I understand that the figure will be £170 million when the scheme expires—and more than £40 million to Selby. There can be little doubt that without that aid Selby would now be closed. It was also this Government who steadily addressed the legacy of issues of basic justice in the coalfields, notably by introducing the largest ever industrial compensation scheme in the world to provide assistance to miners affected by vibration white finger and chest disease.

The Selby project is the largest deep coal mining project ever undertaken in the world. It covers about 110 square miles in the Vale of York and when it was developed in the 1980s productivity was five times that of the national average for United Kingdom mines. It took 20 years to plan and bring the complex into production. The project included the sinking of 10 shafts and driving some 124 miles of underground roadways at a cost of about £1.3 billion. The shaft sinking and access drifts had to pass through heavily watered ground, involving major ground treatment at different horizons and in different conditions. The mining engineers involved produced innovative solutions to those problems—solutions that had never been seen before but have since been copied all over the world.

The Selby mining complex is an example of a highly technological, flexible, modern industry. It is an example of which new Labour should be proud, and I urge my hon. Friend the Minister and my right hon. Friend the Secretary of State to visit it.

All the coal produced at the original five mines—Wistow, Riccall, Stillingfleet, Whitemoor and North Selby—is brought to the surface at one point, Gascoigne Wood, from where it is prepared and dispatched to Drax, Eggborough and other major power stations in the region. Its direct work force, supplemented by contractors, totals more than 2,500, making a major contribution to the local economy in

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rates, wages and the provision of goods and services. Last year, wages, salaries and related costs were more than £100 million.

Wistow was the first of the five mines to begin production in 1983. At its peak in 1993–94, the Selby complex produced 12 million tonnes of coal a year and was the jewel in the crown of the coal industry. Output and productivity records were set as the complex harvested coal from the single Barnsley seam that it was authorised to work. As The Times commented only last month,

However, in the face of increasing geological disturbances, some reserves had to be discounted and production began to tail off in the mid-1990s. Whitemoor and North Selby mines merged with their close neighbours Stillingfleet and Riccall to concentrate mining activities in areas with more favourable geology and fewer uncertainties.

By the millennium year, annual output, which five years earlier had been 11.4 million tonnes, was down to 4.4 million tonnes. That was also the output for 2001, by which time the Selby complex had produced 110 million tonnes of coal since production first began. Reducing output and falling coal prices have turned the once-profitable Selby mine into a heavy loss-maker. If UK Coal received the same value for its coal as the previous owners, British Coal, it would receive more than £40 per tonne, which would be about half the cost of mining 1 tonne of coal in Germany. However, UK coal prices are now less than £30 per tonne. As a result, the Selby complex lost more than £35 million last year, bringing losses in the past three years to £93 million.

On Thursday 7 March, I met the chief executive of UK Coal, Gordon McPhie, at the House of Commons. I received much the same briefing as union officials in Selby had received from UK Coal management some days earlier. UK Coal does not see the Selby complex being economically viable beyond 2005 at the latest. At about that time, Wistow mine will be exhausted. It would be possible to access some new reserves from Riccall and Stillingfleet, but the huge costs of maintaining Gascoigne Wood, which was designed for five mines rather than two, would mean increasing losses. Wistow coal is essential to the composition of the overall mixture offered to Drax, and Gordon McPhie could not rule out closure taking place much earlier than 2005.

Over the following weekend I pondered what to do. There are still millions of tonnes of coal left to mine at Selby, but with high standing charges and increasing geological risks, unit costs increase as output diminishes. More than 2,500 miners and contractors and their families are currently living with desperate uncertainty, and they expect the worst. Many of them told me that they fear a closure announcement within weeks, with a closure date of autumn 2003. That would mean that the industry's relatively generous redundancy terms would no longer apply, as UK Coal has guaranteed them only until March 2003.

Men who have rejected redundancy offers, in some cases on three or four occasions, in order to keep working in the industry, would lose their jobs with only

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the minimum state redundancy terms to fall back on. An early closure announcement would bring chaos to the Selby coalfield. Electricians and engineers, whose skills are crucial to managing the complex, would bail out and secure alternative employment as soon as they could, and the complex would shut itself. The legacy would be one of bitterness and hardship, and Selby's economy would have to brace itself for an abrupt and devastating blow to its very foundations.

I had further telephone conversations with UK Coal in which I stressed that it was imperative that the coalfield stays open until at least 2005. It agreed to submit a further application for a subsidy to the Government to enable that to happen. On Monday 18 March, Gordon McPhie wrote to my right hon. Friend the Secretary of State for Trade and Industry asking for a meeting to discuss a package of closure aid for the Selby coalfield. He said that the company needed to come to a decision on how it proposed to operate the Selby coalfield in the next three months; the first of those three months is nearly up.

I have agreed to back the principle of closure aid, although I want the Coal Authority to undertake an independent analysis of whether 2005 is the economically viable limit for the Selby coalfield. Closure aid is an important weapon in the French, German and Spanish Governments' armouries to provide assistance to coalfield communities. It is allowed under the existing coal and steel treaty, which expires in July, and will be an important part of any new coal aid regime. We should embrace it and not shun it, not least because of its flexibility and practicality.

Devastated former mining communities do not exist in the rest of the European Union as they do in Wales, Scotland, South Yorkshire and West Yorkshire, which is largely because of closure aid. As The Times business leader recently put it:

Or, as the Yorkshire Post put it:

As far as I am aware, UK Coal has not yet had a reply from the Secretary of State. Indeed, a brief perusal of the press seems to indicate that she needs to be convinced of the case for further state aid to the coal industry, perhaps more than other Ministers do. It is time that serious discussions started between Department of Trade and Industry officials and UK Coal in preparation for such a meeting. Mr. McPhie's letter makes no mention of the precise cost of any closure aid scheme. The costs and benefits need to be fully explored, and the Government, whom I support, owe it to the miners and the community of Selby to start the discussions.

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In the rest of the European Union, redundancy payments are an essential element of closure aid. The miners in Selby who have worked in the industry from pre-privatisation days are still entitled to a relatively generous redundancy scheme, worth £900 for each year worked, with a cap of £27,000. The scheme was inherited by RJB Mining, now UK Coal, and was subject to Transfer of Undertakings (Protection of Employment) Regulations 1981 until 1998. The company has guaranteed to honour the redundancy package but only until March 2003. It would cost the Government just short of £40 million in closure aid to guarantee the redundancy payments.

The average age of a Selby miner is 44. Many have refused redundancy on several occasions to keep working in the coalfield. After a lifetime of undertaking what is still a physically demanding, back-breaking job, some are of an age that they are unlikely to work again once the mine is closed. However, for younger miners, resources will be needed for a closure aid package to fund the most ambitious retraining scheme ever seen after closure of a British coalfield.

We need time to make such a project effective. The Selby bypass is due to be completed by Christmas 2003. It will open up a huge amount of development land at the edge of Selby town with the potential for creation of a large number of jobs. On behalf of Selby district, I plead with my Government to give us time to bring those jobs on stream before the coalfield closes. If we had until at least 2005, perhaps we could avoid the despair, family breakdowns, hardship and suicides that have been a feature of other pit closures. Every miner must be offered a personal interview to examine the options for the future and then be assisted to seize that future. Every expert I have consulted tells me that it will take two or three years for such a project to be effective. If Selby mine closes abruptly, we will be left with a sticking plaster of regeneration and retraining money that cannot cover the gaping wound in the local economy.

As part of a comprehensive closure aid package, the Government should be prepared to consider further subsidies to UK Coal itself. As the complex moves towards closure, it may be that the current losses will diminish as development costs decline. Moreover, if a closure aid package is agreed, it is likely that morale will improve and productivity will increase. Clearly, the Department should carefully scrutinise UK Coal's projections, but it must get around a table to do so.

The Secretary of State for Trade and Industry forcefully asks why the Government should pick up the tab for closure aid. What is different about the coal industry or Selby? Just because it is good enough for Jospin and for Schröder, why should new Labour get involved? Such robust questions deserve robust answers. There is a joke—sort of—going around the pits in Selby. I overheard it in a local pub recently and felt a deep sadness. "What is the difference between Mrs. Thatcher and Patricia Hewitt? At least when Mrs. Thatcher closed the pits she made sure the men got their redundancy money." At that point, I stoutly defended the Secretary of State's honour, saying that that was a premature judgment, but the joke may be a salutary warning to us. How the Labour Government respond to UK Coal's request for closure aid for Selby will have a resonance across Labour's Yorkshire heartlands. I am

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grateful to my Yorkshire colleagues for being here to support me on the day of a one-line Whip. If our values mean anything, we cannot pass by on the other side of the road. We must close Britain's largest remaining coalfield in a way that gives our movement pride—in a better way than occurred in the 1980s and 1990s.

Why should Selby be the first British coalfield to receive closure aid? None has ever asked before. For me, it is a credit to the local community that it is prepared to face up to its future. It has always been apparent that when Selby closed, because of its size, Government help would be needed to honour the redundancy payments.

Moreover, we have noticed in Selby that the Secretary of State is quite prepared to finance generous redundancy payments for postmasters and postmistresses. If we say no as a Government, and say that it is all the company's fault, what good will all the regeneration in the world be to a 55-year-old miner whom I know, who has worked most days of his working life down the pit, and tells me that there has never been a day when he has not dreaded it, despite the camaraderie of good mates? What shall I tell him when I say that he cannot have the redundancy of £27,000 that he has counted on and that, unlike his manager, he will have to wait until he is 60 to claim a pension? The Secretary of State for Trade and Industry needs to provide me with a better answer than that he should apply for a computer training course and write a letter of complaint to UK Coal.

The Government must ensure that ordinary miners get a full pension at 50, if made redundant, as the pit deputies and the management currently do. At the time of privatisation, in order to try and keep the management on board, the Tories ensured that the British Coal staff and supervisors' pension scheme was more generous than the miners' pension scheme. It is simply unjust that if the Selby complex or the Prince of Wales colliery shuts, management get a full pension at 50, but the miners who labour at the coal face do not.

If a Selby miner can leave the industry with guaranteed redundancy terms and a full pension at 50, it will be with dignity. He will continue to be able to spend in local shops and the local economy and consider his options for the future. If he is thrown out of work next year with no additional redundancy or pension rights, many families will suffer badly. It will not just be mining families who feel the pinch, as turnover in local shops and pubs declines sharply and with little warning. The cost to the pension fund of making this change has been estimated by the actuary to be £99 million. The Government incidentally are currently receiving about £200 million each year in surplus from the miners' pension scheme—enough by itself to fund a closure aid package and to give a full pension at 50 if made redundant.

I have spoken today largely about closure aid, but as secretary of the all-party group on coalfield communities I am equally passionate about the need for investment aid. I hope that the Minister will be able to confirm that the Government are arguing in Europe that for the first time it should be possible to provide finance to help open up new seams and faces rather than simply to cover losses. Such investment aid would provide jobs at other mines for some men from Selby.

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It is worth noting that, according to the European draft regulations, all Governments must say by October 2002 which mines will be given what type of aid between now and 2010. All closure aid must expire by 2007. The Government's stance that they will consider whether to give further aid to the industry at the appropriate time will not carry credibility much longer. They need to get involved and engage with the issues pit by pit. That is why I have written to both the Prime Minister and the Chancellor of the Exchequer seeking meetings with coalfield MPs. That is why the all-party group will be organising a seminar in May in the Commons on the future of coal, and why a delegation of Selby miners and the wider Selby community will be coming to the House of Commons.

Our first challenge as a coal mining group was to persuade our own communities to face up to the future: to campaign for both investment aid where possible, and closure aid where necessary, in order to achieve a sustainable industry. Our next challenge is to persuade the Government to change their policy. Dylan Thomas famously wrote:

In Selby, I hope that there is enough rage and righteous anger to persuade the Government to change their mind. Before the current children of miners in Selby's primary schools are fully grown, mining will have ceased. The proud memory of the craft and toil that went into making this huge project a success will long linger. The memories of the strike will linger, too, as will the many contributions of miners and their families to our community and our civic life. The current leader, chairman and vice-chairman of Selby district council work in the mines, or did so in the past. I hope that a final memory that will linger will be the way in which it all ended—not in chaos, despair and hardship but with dignity, planning, courage and foresight.

12.48 pm

Jon Trickett (Hemsworth): I associate myself totally with the comments of my hon. Friend the Member for Selby (Mr. Grogan), who speaks with passion and knowledge about the industry and is a distinguished advocate for his constituency. There is anger in communities that were devastated by Thatcher and the Tories, and have still not recovered. I represent villages that have never recovered from the pit closures, and that the present Government have barely touched yet in terms of regeneration. Those villages now face further job losses. My constituency still encompasses many miners who work in the Selby complex, and I estimate that about £75 million a year in wages is paid into the Yorkshire coalfield from Selby alone. The prospect that the Government would tolerate early closure and the sterilisation of resources is too horrendous to contemplate, yet rumours come from the Secretary of State's office that she intends to allow it to happen.

I am angry, as are the communities that I represent, that a Labour Government should betray the party's historic mission to regenerate those communities and to protect coal reserves. It will cause devastating political damage. I warn the Minister as gently as I can that the anger will spill over not only into the Chamber—I shall express my anger on every available opportunity should

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the Government proceed down that course—but into the streets. Demonstrations will take place the like of which we thought we had seen the last of when we saw the end of the Tories. I shall join those demonstrations—I believe that other hon. Members will, too—and damage will be done to the Government in the heartlands. I do not wish to see such damage, but it would be self-inflicted if the Government proceed as rumour suggests.

I associate myself entirely with my hon. Friend's comments on pensions for manual workers and miners. It is a question not only of coal closures but of justice. It is not right that white-collar workers who have never worked down a pit should be able to retire at 50 on a full pension, but that manual workers who have worked for 30-odd years should not be similarly entitled. I ask the Minister, in all justice, to consider that issue.

12.51 pm

The Minister for Industry and Energy (Mr. Brian Wilson) : I, too, congratulate my hon. Friend the Member for Selby (Mr. Grogan) on securing this debate. It has been an interesting one, although it was slightly curious in adopting a somewhat different tone from that which I had expected. I point out to the wider audience that it is somewhat unusual in that my hon. Friends the Members for Selby and for Hemsworth (Jon Trickett) have already taken 21 minutes, which leaves me only nine minutes to reply. However, I shall do my best within those limitations.

As my hon. Friend the Member for Selby was good enough to acknowledge, no one can seriously question the Government's commitment to the coal industry. We introduced reforms to the electricity market that were designed to correct some of the distortions that were, among other things, penalising coal. To help the United Kingdom coal industry over particular short-term structural and market problems, we introduced the coal operating aid scheme. As has been said, approximately £140 million has been paid out under that scheme so far. Selby has been a major beneficiary, with £23 million in the first tranche of aid and another £20 million in the second.

When UK Coal applied for subsidy under the scheme, it appeared that Selby had a viable future without aid beyond July 2002. On that basis, it satisfied the scheme criteria to comply with European rules on coal state aid. In the light of expert mining advice, Selby was judged to have a realistic prospect of a viable future without aid.

The chief executive of UK Coal wrote to my right hon. Friend the Secretary of State for Trade and Industry on 18 March requesting a meeting to discuss, among other things, the possibility of the Government supporting a closure aid package. We have replied agreeing to such a meeting. As has already been suggested, however, it is fair to say we shall have a lot more to discuss at that meeting than closure aid. That letter was the only formal approach made to us by UK Coal—we were given a few days' warning that the letter was coming, but it is the only indication that we have had that the company is carrying out a review, which is expected to be completed within three months.

That, formally, is the position as far as the Government are concerned. We have put in £43 million of aid under the scheme, and we have now been told in

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a letter of 18 March that UK Coal is reviewing the future of Selby, and a meeting will be held. The Secretary of State and I will be happy to participate, and we shall presumably hear more then about the thinking of Selby's owners.

The case for operating aid under the scheme that is now drawing to a close was that it would create a future for pits such as Selby, which had clear longer-term prospects of profitability and viability. My hon. Friends have referred to closure aid, but that raises very different issues. It is claimed that it could soften the blow for the Selby area by allowing a phased reduction in jobs. As my hon. Friend the Member for Selby said, it would be the first time that such an approach had been taken, and we would obviously have to ask many major questions before going down that road.

Would closure aid really be the most cost-effective way of dealing with the issue, if and when it arises? We should note that the benefits would go primarily to the company, not to those who suffer the redundancies. There must also be a read-across from Selby to other pits where the same questions will arise for geological reasons that are beyond the control of any of us. There is also the valid point that closure aid gives companies a direct incentive to shut down mines, so the very subsidy that is designed to help the industry and those who work in it could bring about its demise earlier than might otherwise have been the case, and we must take account of that when considering the arguments for such aid. None the less, I understand my hon. Friends' attachment to closure aid at this juncture, and I shall be happy to hold further discussions to hear the case for it—assuming that the context set out in the letter of 18 March remains the same when UK Coal comes back to us.

There has been widespread support for the idea of investment aid, and I can confirm that we are continuing to negotiate in Brussels to put in place a framework for possible national subsidy schemes after July 2002. Our aim is to secure an outcome that gives us the flexibility to put in place arrangements if they become necessary in specific cases. It is not certain that we will succeed in the EU in securing provisions for the payment of investment aid. Just as some countries are very much attached to different kinds of subsidy schemes, others are very much opposed to investment aid. However, we are pursuing the ability to pay investment aid when the current scheme expires. If we are successful, we can expect it to be limited to a proportion—perhaps 20 per cent.—of the investment costs associated with a project. Even if we are able to pay such aid, further work will need to be undertaken to ascertain the circumstances in which it might be applicable.

There are many issues on which I would like to comment, but let me briefly say something about cleaner coal technology. As my hon. Friends will be well aware, the Government believe that the future of coal is very much tied up with the movement towards cleaner coal. A review that ran parallel to the energy review considered the issue and concluded that the case for building a demonstration plant was weak, but that funding and support for specific technologies that are retrofittable to existing plant may be appropriate. It will be for those interested in demonstrating such technologies to make their case to the cleaner coal technology programme. We are also investigating

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several important geological, engineering, economic and legal issues around carbon dioxide capture and storage to ensure that it is a feasible option.

To summarise, as matters stand, we have had one letter from UK Coal. We gave the firm £43 million in subsidy under the present scheme in the belief that that would give it a viable long-term future. If the situation has changed, UK Coal will doubtless inform us, and we shall take discussions from there. Frankly, however, some of my hon. Friends' statements about the Government's attitude to the coal industry and some of the direr warnings that I have heard are utterly incompatible with the Government's record. I hope that in the future we may be able to proceed on a more measured basis to achieve what we presumably all want—the best possible future for coalfield communities.

For reasons that have nothing to do with the Government, and in spite of the aid that they have given to the deep coal mining industry, other difficulties may arise as the context changes. Let us proceed on the basis of what is best for the industry and the communities, bearing it in mind, as my hon. Friend the Member for Selby said, that few of the pits would still be there if it were not for the scheme introduced by the Government. If—

Mr. Deputy Speaker (Mr. Edward O'Hara): Order. Time is up.

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