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27 Mar 2007 : Column 391WH—continued

There are many more recommendations from those who have received training from the MRS up and down the country.

What are the solutions? Those testimonials are just the tip of the iceberg. The Mines Rescue Service can provide so much more, but it is in severe danger of collapsing. How do we plug the £250,000 shortfall this coming year and secure the financial future of the organisation with a contracting deep mines industry? Could the shortfall come from the owners of the MRS? Ironically, the deep mines are holding back the MRS, because the fees from the mines do not cover the real costs of providing the service. Fees from other work are much more lucrative. For example, the Crossgates and Houghton stations make a surplus each year, which contributes to the viability of the company as a whole. It is no coincidence that there is no requirement to support the mining industry at those stations.

I therefore believe that the mine owners should be paying more, but can they afford it? Last year, the company that owns most of the country’s deep mines, UK Coal, made a £17.5 million operating profit. However, in the previous year the company made a loss of £33 million. The turnaround was due mainly to the revaluation of the land bank, which returned a £69 million profit.

Paddy Tipping (Sherwood) (Lab): The hon. Gentleman is describing the situation with UK Coal, which is clearly in decline in terms of production. The real renaissance of the coal industry is based in small collieries in south Wales, which cannot afford an increase in production costs.

Willie Rennie: One of the objectives that was set out for the company in the first place was that the cost of the Mines Rescue Service should not fall unfairly on the small mines. That is something that we must consider when we are developing policy. UK Coal has made substantial profits in the past year. Perhaps we need to work out an innovative way to ensure that it pays its fair share towards the development of the service, but we must also ensure that the small mines do not suffer and that we support them.

The £69 million profit from the revaluation of the land bank, the £33 million operating loss from last year and the £17.5 million operating profit from this year gives a confused picture. One wonders what UK Coal can actually afford. However, since it made a profit this year, it should be stepping up to the plate and contributing more.

The MRS has made great strides in securing funding from other markets, including from the Health and Safety Executive for research and the European Union. The difficulty with funding from European Union is that a significant bond is required in case the research is not completed to the satisfaction of the Commission. Perhaps the Government could act as guarantors and provide that bond, thereby releasing the MRS reserves
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for the development of the organisation. I should be interested to hear the Minister’s response on that.

The MRS has also been increasingly involved in the provision of training for a large number of private and public sector bodies. There is so much scope for expansion in that area. I am grateful to the Under-Secretary of State for Communities and Local Government for the introductions to the Chief Fire Officers Association, which resulted from a meeting with a delegation of Members of Parliament last year. I was unable to attend that meeting, but I understand that it was productive, so I hope that there will be some more income for the MRS as a result of it. That should help to secure additional sources of funding, when those other services see the invaluable service that the MRS provides. We need every Department in the whole of Government, at the UK and devolved levels, to think about what further introductions can be made. The more introductions that are made, the greater chance we have to sell the MRS’s wares. I am grateful to the Minister for meeting us last year to explore some of the quite complex issues to do with the Mines Rescue Service. I know that he is keen to ensure that the service continues.

Most important of all is the essential service that the Mines Rescue Service can provide in the event of violent terrorist attacks that require the rescue of civilians from confined spaces. As we have heard from Brian Sweeney, the service provided by the MRS was invaluable at the Stockline Plastics disaster. However, we could face more underground terrorist attacks like the 7/7 attacks. In such circumstances we would need to call on the MRS for expert rescue assistance. When the MRS currently responds to a national disaster it is not paid for that turnout, nor is it paid a retainer. That must change.

Perhaps we should be turning the MRS into the fourth emergency service. The cost of providing the police, ambulance and fire services in the United Kingdom is approximately £15 billion a year. We are not suggesting anything near that level of funding, especially as the MRS is increasingly successful in training, research and other private work. However, surely the Government could plug the projected current annual shortfall of £250,000, so that they could call on the MRS in emergency situations. That figure is only around 0.0017 per cent. of the total budget for the police, fire and ambulance services—not a considerable sum.

I still consider myself the new boy in the House. I recognise the work of hon. Members who have pressed tirelessly on this issue for some time, including the hon. Members for North-West Leicestershire (David Taylor), for Elmet (Colin Burgon), for Houghton and Washington, East (Mr. Kemp), for Rhondda (Chris Bryant) and for Sherwood (Paddy Tipping), and the right hon. Member for Rother Valley (Mr. Barron). They have been strong advocates for the MRS and I can see why. I am very proud to have the Mines Rescue Service in my constituency. It is an excellent example of a professional and innovative organisation that has triumphed against the odds, and in extremely challenging financial circumstances. In this world, there is little room for reward for things done in the past, but the Government should recognise the value of something when it has it.

11.19 am

Paddy Tipping (Sherwood) (Lab): I am delighted to follow the hon. Member for Dunfermline and West
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Fife (Willie Rennie). I hear what he said about his recent interest in the Mines Rescue Service, but he has been a powerful champion of it. My hon. Friends the Members for North-West Leicestershire (David Taylor) and for Houghton and Washington, East (Mr. Kemp) and I have been involved in the campaign for a longer period. My association with the Mines Rescue Service goes back to before privatisation. In 1994, I was involved in the debate about the future of the Mines Rescue Service post-privatisation. The service became a limited company in 1996 and, as has been said, it is in effect owned by the coal mining industry.

The Mines Rescue Service has changed dramatically in the past 10 years because the UK coal industry has changed. I strongly believe that there is still a case for the future of the deep-mined coal industry in this country, but it will be far smaller than in the past. That is the essence of the service’s difficulty. As collieries have closed and production has reduced, the income or levy from production for the Mines Rescue Service has dwindled away. We have heard the figures in this debate.

In Nottinghamshire, there are still three collieries: Thorsby, Welbeck and Harworth, which at present is mothballed and not producing. The Mines Rescue Service headquarters is based in Mansfield. It is important for the coal industry—the three collieries in Nottinghamshire, the 15 collieries nationally and the 30 other mining operations to which the service offers support and assistance. My hon. Friend the Member for Broxtowe (Dr. Palmer) is here, but he is unable to speak in this debate; he knows only too well the value and importance of the Mines Rescue Service and the high regard in which it is held in the Nottinghamshire area.

Under the leadership of Barrie Jones, its chief executive, the Mines Rescue Service has changed dramatically. It has perceived that there is a problem about income and has diversified dramatically. It runs a range of training courses across the country; they are highly valued, seen to be highly professional and provide an alternative income for the service.

David Taylor: My hon. Friend will agree that the issue is about not only the scale of income—although that is clearly the dominant difficulty—but the timing of the cash flows that the MRS receives. The payments that it gets in respect of the coal mines are quarterly in arrears and, given that the triennial valuation of the MRS pension fund is due to report, it is possible that cash flow will be very tight. Will the Minister consider ways of improving how payments are made to the MRS, not least in relation to the frozen £600,000 EU bond in respect of research projects? Perhaps he could talk to the European Commission about whether there is a continuing need for such a security from the MRS, given its great track record.

Paddy Tipping: I have no doubt that the Minister, who has taken a close interest in the issue, will have listened carefully to those comments. As we have outlined, the Department can do things to help the Mines Rescue Service.

I am not confident that income from the levy on production will increase. I am closely involved with UK
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Coal. The company may be in profit this year, but the number of collieries that it operates is declining. The real renaissance in the coal industry has not been through UK Coal, the principal operator, but through the development of small, independent mining operations, particularly in south Wales. I have a lot of contact with the Federation of Small Mines of Great Britain, and I am not confident that it is in favour of an increase in the levy on production. I see very little prospect of extra money coming from the levy.

For me, the clear way forward for the Mines Rescue Service is increased diversification. There are operational difficulties with that; as has been said, the service has a statutory responsibility to respond with the right amount of support within set time scales. The service has a real managerial balancing act to perform in increasing its diversification and making available core support in case there is an accident.

I have to say that accidents still occur in the UK Coal Industry; at Daw Mill, we saw the first fatalities for many years. We cannot underestimate the ongoing importance of the Mines Rescue Service. As has been said, in the current year, income for the service is not sufficient to meet its expenditure. It can continue to operate by drawing down reserves, but they will not last for ever. A projected budget shortfall of £250,000 year on year into the future is a significant difficulty for the service.

What is to be done? Clearly, the service needs to continue to diversify. As has been said, it can offer a lot of support and help to fire and rescue services. The problem is that those services are fragmented across the country. The Government are not able to issue a diktat to each fire and rescue service that it must take on the resources of the Mines Rescue Service. However, Ministers at the Department of Communities and Local Government have been helpful.

What is clearly emerging is the need for specialist underground resources to help in situations such as the 2004 Glasgow fire. In a period of terrorism and uncertainty, Transport for London ought to talk closely to the Mines Rescue Service, and there is a case for a closer relationship between the service and the rail industry.

The service has real skills and I say firmly to the Minister, who I know is aware of and sympathetic to the situation, that the MRS is an essential, life-saving service that will not exist if it goes bust. There is a clear possibility that that will happen in the not-too-distant future. The Government are aware of that and have tried to help through the Coal Authority, an organisation principally funded by them. Some £2.5 million was made available in 2003-04; in 2004-05 the same amount was made available again. The Government recognise that there needs to be transitional funding to move the Mines Rescue Service from an organisation that is funded by a levy on production to one that is able to wash its own face, as they say, by diversifying into training and other work. I am not confident that the service has yet had sufficient time to do that.

My hon. Friend the Member for North-West Leicestershire is right to say that we need to see whether the cash flow from the levy into the Mines Rescue Service can be speeded up. I am conscious that the money being made available from the Government through the investment aid scheme has all been committed but not yet spent. I have asked on a number of occasions
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why that underspent money cannot be allocated to the Mines Rescue Service. I am told that it is because the money does not really exist—that it is hypothetical and not there to be drawn down.

I conclude by saying firmly to the Minister that the Mines Rescue Service has done everything asked of it and more. It is a tremendous and highly professional organisation. We have heard testimony about and endorsement of it today. Most particularly, it is a well managed organisation that knows that it faces a challenge on funding and has responded positively to bring in new sources of income. However, it will not achieve financial balance in the time available while its reserves last, and so the Government must convene discussions between all interested parties—the Coal Authority, the coal producing companies and colleagues in the Department for Communities and Local Government—to consider the way forward.

Conceptually, we want a fourth rescue service, with the Mines Rescue Service more firmly embedded in the fire and rescue service and providing the kind of specialist support that is needed in underground emergencies. We need a debate and a discussion on that. That is what we strive to achieve; it is the future for the Mines Rescue Service. If we are not careful, and do not speed up our discussions or look for new, innovative solutions, there will not be a Mines Rescue Service on which we can build. I do not want to scaremonger. However, it is a serious problem. We all accept that there is a problem, and the Government are willing to address it. Today, we are far from finding a solution to take the Mines Rescue Service into the future.

11.31 am

David Howarth (Cambridge) (LD): I, too, congratulate my hon. Friend the Member for Dunfermline and West Fife (Willie Rennie) on securing this debate on an important subject. As some hon. Members in the Chamber already know, I am the grandson of a miner, and I am fully aware of the effects that mining disasters have on communities. When I was a boy in the village in which my father was born and in which my sister still lives, people still talked about the mine disaster at Pelsall Hall colliery in 1872, which was almost 100 years before then, when 22 people died. The disasters in the 1930s at the Grove colliery in Brownhills and the West Cannock colliery had a similar effect. The Mines Rescue Service is extremely important, and it is right that the coal industry morally and legally should be not allowed to operate without a fully-fledged rescue service in operation.

In 2002, the Health and Safety Executive concluded after considering all the other possible models for running the Mines Rescue Service that the present model was the best. The other options were rejected. That is quite right. The study said, as the hon. Member for Sherwood (Paddy Tipping) mentioned, that one of the long-term problems with the service was financial. As the amount of coal mined declined, the levy per tonne would eventually not raise enough money for the Mines Rescue Service to operate unless the levy were raised or other forms of finance were found. The Mines Rescue Service has been active in looking for other forms of finance.

However, the shortfall of £250,000 needs to be dealt with. The case has been made for extra state funding
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and, given the wider benefits of the Mines Rescue Service, including those mentioned by the hon. Gentleman, I accept that there is a case for doing that. It seems to me that the fundamental purpose of the Mines Rescue Service remains one that arises from the activities of coal mining. Fundamentally, mine rescue is a cost of coal mining and the coal mining industry should bear its fair share of that cost. That brings us back to the levy.

The levy has not been increased since 2003, when it was increased to 16p per tonne. In the two years that the hon. Gentleman mentioned, when the coal authority paid £2.5 million, that was instead of the levy rather than in addition to it. For the £250,000 gap to be closed just by using the levy would require an increase of between 2p and 3p per tonne of coal, depending on the assumptions about how much coal will be mined in future years. In a transitional year there may be some need for transitional funding, but in the longer term the increase would have to be around that amount.

The question has been raised whether the coal industry could afford an increase in the levy of between 2p and 3p. Well, what is the price of coal? At the moment, it is about $68 per metric tonne. It has risen by about 28 per cent. in recent times. Those figures are all taken from UK Coal’s annual financial statement. It seems that an increase in the levy of less than a 10th of 1 per cent. of the price of coal per tonne would not be an unreasonable amount to add to the industry’s costs.

The hon. Gentleman mentioned the difficulty for small mines that are starting up, especially in Wales, but the regulations already allow for some variation to deal with that point. Such an increase would add only a small burden on UK Coal, as the biggest player in the industry. My hon. Friend raised the question whether UK Coal, which is now as much a property company as a coal company, could bear those burdens. UK Coal’s financial results—let us ignore the property aspects of the company for now—state that deep mining is showing “improved operating performance” and that in the last three months of the previous financial year, the company’s coal mining operation was operating at a profit.

I would be interested to hear the Minister’s view on the levy. I accept that there might have to be some blending of public funding and levy funding to get the Mines Rescue Service through the difficult period that it is in. However, we should not let the owners off the hook in the way they have been for many centuries.

11.37 am

Charles Hendry (Wealden) (Con): I, too, congratulate the hon. Member for Dunfermline and West Fife (Willie Rennie) on securing the debate. I pay tribute to the way in which the debate has been conducted, and in particular to the hon. Member for Sherwood (Paddy Tipping) for the great knowledge and expertise that he was able to bring to the debate. As we have heard, the Mines Rescue Service covers some 16 collieries, but only 11 produce coal. Its income for the current year is expected to be about £1.6 million, with an anticipated loss of about £300,000. That follows a loss of about £675,000 last year, having brought the pensions obligations into its accounts for the first time.

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David Taylor: The income to which the hon. Gentleman has referred is the fee income from coal mining. Almost £5 million per year—a growing figure—of income comes from other sources and that is what balances the books at the moment. That is an important point.

Charles Hendry: Indeed, but the service is making an overall loss even when that is taken into account. The hon. Gentleman is right to say that the figures to which I have referred are for the income from revenues from the coal industry.

If the charge is kept at 16p a tonne, the Mines Rescue Service expects the revenue to drop by some £250,000 as less coal is produced. The UK produced 13 million tonnes of coal in 2004-05, which dropped to 9.5 million in 2005-06. It rose again slightly last year, but is expected to drop in the year to come.

Without any doubt, the Mines Rescue Service deserves a great deal of credit for the way in which it has diversified and been able to bring its expertise to bear in other areas, too. The hon. Member for Dunfermline and West Fife rightly quoted Brian Sweeney, chief officer of Strathclyde fire and rescue service, who paid tribute to the work that the Mines Rescue Service had been able to do at the fire at Stockline Plastics in Glasgow.

A submission that we received from the Mines Rescue Service outlines the main risks that it faces. They include any marked decline in the coal industry greater than that already anticipated, the loss of major customers such as the Coal Authority, the actions of competitors, particularly in pricing where roster restrictions impact on the company’s cost base, and the pension scheme obligations. The submission states that

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