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9 Jan 2007 : Column 68WH—continued
1.41 pm
John Mann (Bassetlaw) (Lab): I congratulate my hon. Friend the Member for Sherwood (Paddy Tipping) on securing the debate and on the breadth of knowledge that he brings to the debate. I endorse and shall not repeat his points, but add some of my own because Harworth and Welbeck collieries are in my constituency.
Men have come to me to say goodbye before emigrating to Australia having been given well-paid jobs by a country that recognises that the coal industry still has a future. It is absurd that men with great skills are moving to a high-paying economy such as Australia’s—the other side of the world—to dig coal, when there is coal beneath the very houses in which they were living in this country and in my constituency.
There seems to be a shortage of Tories and Liberals here—we are used to the latter never turning up, but the Conservative party ought to be represented because it is responsible for the current problem. It gave away the coal industry to Budge and then it was sold on to various other people who got the land assets. As for UK Coal’s share price—apparently they are among the shares to buy. The reason is that when it exits coal it is left with land stock worth a lot of money. That is a national scandal. It has failed to invest in its own and British industry. It has sat on a land bank and no doubt it will be approaching local and national Government in various guises suggesting that it should have help bringing the land into industrial use. I do not think that anyone here would have a problem with land being used effectively for industry, but it must be based on continued deep-coal mining and on keeping open existing collieries and reopening Harworth colliery where there are 30 years of good coal reserves.
I shall raise some further crucial points. I cannot envisage the Minister or future Ministers, or this Prime Minister or future Prime Ministers, wanting a situation like the one in California where the lights go off because there is no power. That is one of the possibilities if we rely on imported coal for our energy needs for the foreseeable future, in which it is recognised that coal will continue to play a key role. There is already a problem with peak capacity. Why shift coal five miles from Harworth to West Burton and Cottam power stations by train? Bringing it in from such large distances is nonsense.
I shall finish on two critical environmental points. First, future technology dictates that, at some stage, oil-based cars will go—the sooner the better—and that hydrogen cars are potentially the solution. That will require coal and mining skills in order to create the hydrogen cells needed to run those cars. That will be the car of the future—be it in five, 10 or 15 years. We will not be in the race for that mass-production vehicle if we exit coal at this stage.
Finally, China and India are burning coal, and Africa, which has the largest reserves off all, will also burn it. So who will provide the clean-coal technology? The emissions from the vast number of outdated and cheap power stations those countries are building will affect the environment worldwide. We could take the lead in that clean-coal technology, but will not if mining does not continue in this country. We need to
keep those collieries open for our industrial future and I hope that the Minister has some good news on how he intends to intervene to ensure that that happens.
1.45 pm
The Minister for Science and Innovation (Malcolm Wicks): I congratulate my hon. Friend the Member for Sherwood (Paddy Tipping) on securing the debate today. He is an authoritative and committed supporter of this important industry, as are my other colleagues who have spoken.
The Government believe firmly that access to a range of energy sources is essential to the security of energy supplies and that coal will play a continuing role in meeting this country’s energy needs for many years to come. That is provided, of course, that its environmental impact can be managed satisfactorily. Reference has been made already to emerging technologies such as clean-coal technology, carbon capture and storage. Perhaps I should add that no one needs reminding of the importance of a nation’s energy security to its wider national security.
The Government believe also that UK-produced coal should play a role in meeting our total requirements. Again, reference has been made to our statement on that in the recently published energy review. This country still has substantial coal resources, which represent an important national asset. We need to put those resources to optimum use, provided that they can be worked at acceptable economic and, as I have mentioned, environmental cost.
I believe that the Government have demonstrated their support for the coal industry by making more than £200 million available in coal state aid since 2000. Of that, some £33.8 million has been paid to mines in Nottinghamshire, including £18.9 million to Harworth colliery. Welbeck and Thoresby collieries have also received coal investment aid. Welbeck was awarded some £7.78 million, of which £5.7 million has been drawn down, and Thoresby £4.97 million, of which £1 million remains to be claimed.
Despite this support, UK output has continued to fall. Production in 2005 was 20 million tonnes—down some 18 per cent. on 2004. That was made up of deep mine production of 9.5 million tonnes, including 9 million tonnes from English mines, and surface mine production of 10.4 million tonnes, of which just 1.5 million tonnes was produced in England.
Nottinghamshire's contribution to those totals was almost 3.2 million tonnes of deep-mined coal—up from 2 million in 2004—from three mines: Harworth, which stopped production owing to geological problems in August 2006, and Thoresby and Welbeck, which between them employed almost 1,500 people at the end of 2005. The long-term pattern for coal production, as has been acknowledged in Nottinghamshire, is one of decline. Although since 1996 the county has produced a total of 51.6 million tonnes of deep mined coal, three mines have closed due to stock exhaustion.
The situation is different at Harworth, in that it might have further reserves in an unworked area of the top hard seam. However, UK Coal judged that it would cost more to access those reserves than the coal would earn, which means that it is not economically
recoverable at the moment. Nevertheless, UK Coal is taking steps to maintain the possibility of re-entering the mine if circumstances change, rather than closing it.
So what could change? I think that that is the question posed by my hon. Friend the Member for Sherwood. Harworth's main customer, as for most UK coal producers, has been the electricity-generating industry. Coal-fired generation supplies about one third of UK electricity needs across the average year, which can rise to more than 50 per cent., often at very short notice, to meet winter peaks in demand, as it did last winter. Coal is therefore a flexible fuel. The generators know how important their coal-fired plants are in meeting UK electricity needs. Many have already invested to keep their existing plants in operation to at least 2015, and some are planning the next generation of cleaner coal-fired stations.
Generators have shown their commitment to coal in the generating mix, but what about their commitment to UK-produced coal as part of their feedstock? I understand that in contract negotiations the generators attach considerable importance to reliability of supplies, but deep mining is inherently high-risk. Geological problems, or a longer-than-forecast or unplanned break in production can easily put a producer in breach of a contract to supply.
David Taylor: The Minister refers to risks. Not least among those is the risk to life and limb for the men who work the coal. Does he recognise the perilous position of the mines rescue service, based in north Nottinghamshire, and if so, does he endorse a role for the MRS in future, which is equally crucial?
Malcolm Wicks: With respect, my hon. Friend repeats a point that he made earlier, to which I of course intend to respond a little later.
To continue my analysis, added to those problems, the recent decline in production from surface mines has reduced UK suppliers’ ability to switch to that source to make good shortfalls resulting from problems at deep mines. As a consequence, producers have found it increasingly difficult to give generators the reliable deliveries that they need. The generators’ response has been to turn to imported coal, even though the costs of shipping it to the UK and transporting it from port to plant can make it more expensive than UK-produced coal could be. The generators see the world market, which draws supplies from a number of countries, as a more reliable source of coal than the UK, with its declining number of deep and surface mines, and steadily falling output.
However, the world market is not risk free. Competition for cargos and shortages of suitable vessels can drive up international prices, just as pressure on rail and port facilities at each end of the supply chain can mean missed deliveries. It should therefore make sense for major UK coal users to work with the producers to find a way forward in which UK output, which is less vulnerable to international market volatility, plays a continuing role in meeting UK demand.
Those are the issues that the coal forum should help to solve. Like my hon. Friend the Member for Sherwood, I believe that such discussions are a major step forward. The coal forum first met on 14 November 2006 and is due to meet again on 23 January. In addition to representatives of the coal producers and coal-fired generators, it includes trade union representatives and officials from relevant Departments. As was suggested at the forum’s first meeting, there has also been a private meeting between the producers and the generators outside the scope of the forum. That discussion will continue. The forum’s objective is to promote dialogue and so help all the interested groups better to understand each other’s perspectives on the problems that they must solve together if we are to have an ongoing coal industry in Britain. The forum has formed sub-groups to look at three issues of interest—planning, infrastructure and cleaner generation—and report back to the main forum with analysis and advice.
But we must face facts: the geological map of Britain may make it look like “an island built on coal”, to use the familiar phrase, but none of that coal has real economic value unless it can be recovered at an acceptable cost. There are two aspects to acceptable cost. The first is the cost to the mine operator of winning the coal—of opening a mine and keeping it open to recover its reserves. As I have already signalled, operators will do that only while they can sell at a price that gives them a commercial return on their investment. The second aspect is the cost to the locality and the nation of working or not working the coal. Like any other mineral, coal can be exploited only where it is found. For that reason, we must strike the right balance among the legitimate interests of the coal producers, the potential environmental impacts of development and the needs of the community, both in the immediate area and at the wider national level.
My hon. Friend the Member for North-West Leicestershire (David Taylor) also raised concerns about the future of the mines rescue service. Colleagues will know that we had one or two discussions about that important service when I was Minister for Energy. The statutory scheme is provided by Mines Rescue Services Ltd, which is a not-for-profit private company based in Mansfield. It has made great strides in generating income from third parties to cross-subsidise the core rescue function. The financial pressures on my Department mean that we are unable to help meet any shortfall that the company might face this year. I wish Mines Rescue Services Ltd every success in generating more income, and I understand that, although it would be unpalatable to the deep mine sector, the funding framework provides for an increase in the tonnage levy to ensure that the statutory scheme costs are met.
Before closing, I reiterate the Government’s belief that there will be a continuing role for coal in meeting our energy needs, particularly as cleaner generating technologies come on stream. We are all encouraged by recent announcements to that effect. UK-produced coal, deep and surface mined, can continue to play a part in meeting national coal demand, provided that there are reliable supplies at competitive prices. I should also like to take this opportunity to commend the work force at Harworth colliery for the drive and
determination that they showed in trying to find a way forward for the mine, only to be defeated by adverse conditions in the working seam.
John Mann: Is the Minister prepared to talk again to Mr. Spindler, the head of UK Coal, about the possibilities of maintaining coal production in the foreseeable future by reopening Harworth colliery?
Malcolm Wicks: We discuss wider issues with Mr. Spindler through the coal forum; we also have regular meetings with him, not least at official level, and I am sure that the issue will be discussed in the future.
I should like to thank my hon. Friends for their contributions to the debate. The issue is difficult, and I note my colleagues’ pessimism about the future, but I know that my hon. Friend the Member for Sherwood feels that the establishment of the coal forum is a step in the right direction, as I do. I also feel that the private talks that are now taking place between the generators
and the coal companies—talks that various colleagues urged on me when I was Minister for Energy—are a further step in the right direction.
Paddy Tipping: As always, I am grateful for the Minister’s comments. Towards the end of my speech, I discussed a target that was agreed at the coal forum and raised some questions that I should like the forum to address. Will the Minister and his officials refer those remarks to the coal forum?
Malcolm Wicks: Of course we shall refer them to the coal forum. As my hon. Friend knows, I am no longer Minister for Energy, although I moonlight in the House of Commons on that subject rather a lot, but I shall also draw the matter to the attention of the two Ministers with the relevant responsibilities. This has been an important debate and it has been a pleasure to serve under your chairmanship, Mr. Pope.
Adjourned accordingly at two minutes to One o’clock.
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