HC Deb 03 November 1987 vol 121 cc907-14

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Alan Howarth.]

12.5 am

Mr. Eric Illsley (Barnsley, Central)

The announcement recently by British Coal of the closure of Woolley and Redbrook collieries is a cause for great concern, not only in my constituency but in those bordering mine — notably, Barnsley, West and Penistone, Barnsley, East and the Wakefield constituencies. The area is one of high unemployment and declining industry which can ill-afford the job losses and loss of job opportunity which the closures will inevitably bring.

The closures are further evidence of British Coal's complete antagonism towards the industry. Since 1985 there has been closure after closure of collieries with extensive reserves; closures which are made on economic grounds only, simply to save money and reduce the costs of British Coal — short-term measures rather than a planned future.

The industry is suffering because of the conditions placed on it by the Government — the imposition of break-even and individual colliery self-sufficiency targets, which have resulted in British Coal cutting costs in as many short-term ways as it can think of, rather than looking at ways to make the industry profitable on a longterm basis. The closure of Woolley and Redbrook collieries are two such short-term measures which will lose jobs and waste millions and millions of pounds of taxpayers' money which has only just been invested in both collieries.

Targets have been imposed on the industry, not to reduce costs for the industry in general but to break up the industry with a view to making a decision on privatisation in the future. However, to do that the Government have to break the National Union of Mineworkers; hence the disciplinary code and the chairman's recent statement that he wants to get rid of union activists, and the refusal to negotiate nationally on any issue.

The Government also have to remove the safety standards of the industry, which are a bulwark against the dangerous practices which British Coal wants to import from America. More importantly, the industry has to be made an attractive proposition — collieries which are profitable will be sold off while the older ones, which have higher production costs, will simply be closed down. That is to be the fate of Woolley and Redbrook collieries despite investment in them over the past few years of hundreds of millions of pounds.

It is the desire of British Coal to achieve self-sufficiency of individual units, which is the main reason for the economic closures — short-term measures rather than planning the best possible use of one of the nation's assets. Cost-cutting through manpower reductions has left many collieries, including Woolley and Redbrook, with insufficient manpower to produce coal properly. Since the end of the miners' strike in 1985, 20,000 men have been moved out of the coal industry in Yorkshire alone. The work forces at both Woolley and Redbrook collieries have co-operated with management on the recent merger of management services at those collieries and a rundown in manpower of several hundreds. Despite that, the board has announced closure without allowing either colliery to show its potential, even though Redbrook recently achieved productivity levels that left it without replacement face room.

British Coal and the Government are not interested in whether the collieries can produce coal efficiently or cheaply, they are simply to be closed to reduce the overheads of the industry generally. British Coal is forced to cut costs further and further to compete with cheap imported coal from exploited labour in South Africa and child labour in South America. Our own industry is to be wasted to pave the way for some people to line their pockets when the industry is sold. There is no point competing in the market place when the competition is so grossly unfair. A report shortly to be considered by the European Parliament shows the subsidies given to our European competitors.

The coal industry is carrying the costs of the capital investment introduced under "Plan for Coal" in 1974, but which has been reneged upon by the Conservative Government since 1979—partly as a reaction to what happened to the previous Conservative Administration and partly because of previous miners' strikes. Woolley and Redbrook are both casualties of the Government's rejection of "Plan for Coal". Both received heavy investment with the crippling capital charges with which the industry has been burdened. The industry needs those capital charges to be restructured or written off because of the failure of "Plan for Coal". That subsidy is not favouring coal against other energy industries, and comparisons can be drawn with the hidden costs of the decommissioning of nuclear power stations and nuclear waste disposal.

Let us consider the subsidy to the Central Electricity Generating Board last year, when the cost of supplying coal to it was reduced by £3 a tonne. The latest target set for the coal industry is to produce coal at £1.50 per gigajoule. A gigajoule is a unit of energy, and it is equivalent to 227 kilowatt hours. A kilowatt hour is sold by the electricity supply industry at 5.7p per therm, so 227 kilowatt hours multiplied by that figure gives a total of about £15. Therefore, the coal industry is supplying coal at £1.50 per gigajoule, but the electricity boards are selling it at 10 times that amount. Why is there such a differential between the cost of coal per gigajoule produced by British Coal and the level at which the electricity supply industry sells that energy in kilowatt hours?

The targets set for Woolley and Redbrook collieries and the rest of the industry have been made worse, if not impossible, by the changed accountancy praactices of British Coal, resulting in capital charges being imposed on individual collieries. Those charges relate to capital invested over the past decade under "Plan for Coal", which at that time forecast a market of 150 million tonnes. The reality is that the market is 90 million tonnes and falling, yet the industry is still required to carry those crippling capital charges.

At Woolley and, in particular, Redbrook, millions and millions of pounds of taxpayers' money is to be wasted. Are those costs to be transferred? Will other collieries in the area have to carry the burden of capital investment wasted at Woolley and Redbrook? What will happen to the coal washery plant at the Woolley complex? About £106 million is involved in that unit. Redbrook colliery has only recently had its refurbishment completed. An investigation into the investment in those collieries should be undertaken, but British Coal is attempting to prevent any investigation that would come under the review procedure. The revised redundancy proposals, which have once again been increased to encourage men to leave the industry, will not he available to the men at Woolley and Redbrook unless they agree to accept redundancy before Christmas.

British Coal is blackmailing men into accepting the closure of a unit by threatening to withdraw redundancy payments, thus preventing the review procedure from operating properly because it cannot be completed before Christmas. British Coal is circumventing the review body that it agreed to after the recent miners' strike. Why cannot British Coal allow the review procedure to go ahead and then, but only then, if the decision is the same—nobody doubts that it will be, because the independent review body has not prevented the closure of one colliery yet—allow the men to accept redundancy or apply for transfers? Woolley and Redbrook collieries are to be closed because of the Government's short-term, short-sighted strategy for the coal industry, which is to reduce costs as quickly as possible. It will result in a loss of jobs and a loss of job opportunities in my constituency. The closures are short-term panic measures that have been forced on an industry that needs to be given proper political direction, with a policy to increase production, reduce imports and reduce opencast coal. Redbrook and Woolley collieries should be allowed to remain open to demonstrate their potential, instead of being wasted as part of the Government's headlong rush towards the destruction of the industry.

12.17 pm
Mr. Allen McKay (Barnsley, West and Penistone)

I congratulate my hon. Friend the Member for Barnsley, Central (Mr. Illsley) on obtaining this debate. I am pleased that my hon. Friend the Member for Barnsley, East (Mr. Patchett) and my hon. Friend the Member for Wakefield (Mr. Hinchliffe), are present in the Chamber. While Redbrook is in my constituency, Woolley colliery and its washery are in the constituency of my hon. Friend the Member for Wakefield. Some 95 per cent. of the men who will be affected by these closures live in the Barnsley, West and Penistone constituency.

It is ironic that about 10 or 12 years ago I had a hand in planning the Woolley-Redbrook complex. As deputy head of manpower for the Barnsley area it was my job to bring the unions together to take part in the meetings and to deal with the problems of the reorganisation of the Barnsley area, which cost £450 million. Redbrook cost £29.5 million, Woolley cost about £10 million for drivages, and the washery cost £106 million.

It was then envisaged that manpower would be reduced from 17,000 to 13,000 and an understanding was struck with the area deputy director that the reorganisation would take the Barnsley area into the 21st century as a strong and viable industry. The trade unions and men cooperated, even though it meant a vast reduction in manpower and a vast reorganisation.

However, that figure of 13,000 men has now been reduced to 7,000, so something has gone tragically wrong. The paint is hardly dry at Redbrook and the contractors have only just moved out. Why is all of the expenditure that was planned some time ago to be wasted? What is the future of Redbrook as an organisational unit if it closes? Will it be leased to private enterprise?

Underground, drivages have been made into a large area of coal reserves. This brand new colliery, with its shafts widened and deepened and new shafts drilled is to be closed. Further, there are massive reserves just to the east of Woolley colliery.

What will be the capital cost of this reorganisation? The coal preparation plant that was built and planned for 12 collieries will now feed into three—Park Mill, Denby Grange and a new plant on which £30 million has been spent, Calder, which becomes part of the Denby Grange complex—if Woolley and Redbrook close. It is feared that the £106 million of investment in the coal preparation plant, which was planned and built for 12 collieries, will be the next item to be lost. Is the capital cost to be borne by the three remaining collieries that feed the plant? If so, even with a new colliery—the production figures came out for the first time last week—the remaining collieries will immediately be uneconomic.

It is clear that British Coal and the Government have continually moved the goal posts. What was once economic has therefore proved uneconomic. It is no good the Government saying that the matter is not one for them. They should be ashamed of themselves if they think that. It should be a Government concern. The Secretary of State for Education and Science disbanded the Burnham committee and put another in its place, saying that he has the biggest say in what goes on because so much Government and taxpayers' money goes into education. Government and taxpayers' money has gone into the Barnsley area, and the Government should be thoroughly ashamed of themselves if they shy away from having a say in what happens.

As the situation is so serious, the Minister should discuss with his colleagues whether the Barnsley area should be given development area status. We hope that the worst does not happen, but the Government should not wait until it does. The trade unions will put forward an alternative strategy such as they did for Darfield main, in the constituency of my hon. Friend the Member for Barnsley, East, where it worked.

We are asking for a review and, for heaven's sake, let the men off the hook regarding the £5,000, which is worrying them sick. They are in a dicey position. They must apparently accept the decision before Christmas or lose £5,000.

12.21 am
The Parliamentary Under-Secretary of State for Energy (Mr. Michael Spicer)

I and my right hon. Friend the Secretary of State — it must be very unusual for a Secretary of State to be here at this time of night—have heard with interest what the hon. Members for Barnsley, Central (Mr. Illsley) and for Barnsley, West and Penistone (Mr. McKay) have said. I notice that the hon. Members for Barnsley, East (Mr. Patchett) and for Wakefield (Mr. Hinchcliffe) are also in their places. I recognise their obvious sincerity in bringing before the House the future of the Woolley/Redbrook colliery.

There is absolutely no question about the colliery review procedure not going through. The hon. Member for Barnsley, Central said that there was some question about it, but there is none. The procedure will be gone through with full rigour. He will know that the future of individual collieries is a matter for the British Coal corporation, in consultation with the appropriate mining unions.

It has not been acknowledged fully that the Woolley/Redbrook combined mine has lost more than £92 million in the past five years, despite efforts to achieve an operating performance which would have secured the future of the unit. In November 1985, in line with British Coal's strategy of maximising the production of low cost coal and the income from coal sales, Redbrook and Woolley were identified as requiring improved performance both at the coal face and in surface facilities if they were to survive and have a future. In an attempt to reduce overheads at Woolley, the colliery was merged with North Gawber in January 1986, although—and this also has not been acknowledged fully — due to the lack of agreement by the unions, that happened seven months after the proposal was first made.

Despite measures to reduce costs and a policy of concentrating production in the more efficient seams, both Woolley and Redbrook continued to make heavy losses. In August 1986 it was first proposed that Woolley and Redbrook should be merged to streamline administration and reduce overheads. Some eight months later — months in which results continued to worsen — the unions finally agreed to the merger. It seems that the delay in implementing the merger proposals, which included a run-down in manpower, can only have damaged the prospects for the unit. In July 1987 results were still not showing the hoped for signs of improvement. Development work at the Redbrook end of the unit suffered from industrial relations problems, so-called ragouts, of which again no mention has been made, and—

Mr. Terry Patchett (Barnsley, East)

Says who?

Mr. Spicer

That is perhaps the view of the hon. Gentleman, but it is worth reminding not only Opposition Members but union members outside the House that those ragouts and industrial relations problems eventually come home to roost, and here we have an example.

Mr. Patchett

What is the Minister's interpretation of a ragout?

Mr. Spicer

I am sure that the hon. Gentleman is able to answer that question for himself. A ragout is a well-known expression that—

Mr. John Cummings (Easington)

Never heard it before in 29 years.

Mr. Spicer

The hon. Gentleman has never heard it before. In that case, I am about to educate him. He has been in the industry 29 years and he has never heard the expression. It is part and parcel, unfortunately, of the industry today that there are one-day call-outs and walkouts, often at very little notice, for often irrational reasons — and this case is a perfect example — that do the industry no good at all, to say the very least. In this seam, not only is it true that there were bad industrial relations but, as I am sure hon. Members who have studied this know, there was adverse geology. Seams were abandoned with local agreement. The whole future of the unit had to be reviewed and, unfortunately, the combination of poor operating performance, disappointing development work and a relatively high level of disputes, whether the hon. Gentleman agrees with that or not, together with increasingly adverse geology and a decline in the demand for coking coal, have resulted in an output per manshift so far this year of 2.93 tonnes, one of the lowest in the area. Production costs are even worse—Redbrook coal costs £2.34 per gigajoule, which is over one and a half times the industry target. Area management has, therefore, concluded that the unit should be closed on economic grounds. In reply to the point made by the hon. Member for Barnsley, Central, that proposal was put to the unions at the reconvened colliery review meetings on 16 October. Agreement was not reached. It is now open for the three unions involved to take the matter to a national appeal. I understand that the NUM has appealed against the closure.

Both ends of the merged unit are very old. Woolley dates back to 1869 and the original Redbrook shafts to 1850. Reserves have been extensively worked — for instance, Woolley has mined a total of 11 seams. It is hardly surprising that the best coal has been worked out. In addition, working, as the colliery does, under the heavily built-up area of Barnsley, a number of seams have been and will continue to incur heavy subsidence costs. Redbrook has the highest costs in the area. This combination of factors has resulted in losses for the merged unit of just under £12 million for the first half of the year.

Mr. Cummings

The Minister mentioned the NUM and the three unions involved. What is the BACM attitude to closure?

Mr. Spicer

All I am saying at the moment is that, on the colliery review procedure, the NUM has appealed against the closure. I am not aware of the position of the other unions. The NUM has appealed and, therefore, no doubt the procedure will go into effect. The point was made by the hon. Member for Barnsley, Central that the review procedure was not being conducted properly, and that is an absolute travesty of the facts.

Mr. Illsley

I said that the review procedure was not beng implemented properly. I intended to point out the fact that British Coal would defeat the procedure by telling men that redundancy would not be available to them unless they agreed to accept it by Christmas. The men will, therefore, be bought off. They will apply for redundancy before the review procedure is allowed to run its full course.

Mr. Spicer

I am glad to be able to answer that point. The special redundancy terms that British Coal is offering—the £5,000 addition to the basic redundancy terms, which are already generous—will be available until next March. I do not know where he got the idea—

Mr. Illsley


Mr. Spicer

The hon. Gentleman has put his point of view. I understood that 220 people had already applied.—[Interruption.] It is a purely voluntary matter. They, unlike the hon. Member for Barnsley, Central and some of the unions, may take the view that that pit has become uneconomic. That is the view of British Coal. British Coal is going through the review procedure that is laid down and the unions have every right to appeal against that. There is now a well-established procedure for arguing that point. It is perfectly right that the hon. Member for Barnsley, Central should publicise that fact in the House of Commons. No doubt he has done the cause a good service. However, the review procedure is a matter between British Coal and the unions. British Coal believes that it is an uneconomic pit. It had been made even more uneconomic by industrial disputes and the problems that have existed in industrial relations.—[Interruption.] If the hon. Member for Barnsley, East disagrees with the facts perhaps he should check them himself to see exactly what industrial disputes there have been. For example, when the question of mergers between the various pits occurred there were tremendous delays in implementing those mergers. In fact, the mergers were finally acknowledged to be the best way of trying to solve the problems of the pits. I agree that it has not worked. Part of the problem is that the combination of factors has resulted in the losses from the merged units being just under £12 million for the first half of the year. Every tonne of coal produced from the pit is losing almost £30.

The hon. Member for Barnsley, West and Penistone raised the question of the possible loss of investment at Woolley-Redbrook. Investment decisions are a matter for the management of British Coal. I cannot and should not be involved in day-to-day decisions. But I understand that the investment in the Woolley-Redbrook complex and the new washery were approved in 1978 under the then Labour Government.

The project regretfully reflects the optimistic assumptions of Labour's "Plan for Coal", which envisaged a coal market of 150 million tonnes in 1985. In fact, only 105 million tonnes were sold in 1985, and 114 million tonnes in 1986, the first full year after the strike. Investment which is based on unrealistic assumptions is unlikely to pay the dividends expected, whether in the coal industry or elsewhere.

I say unashamedly that this Administration attaches great importance to realistic investment decisions, as I know does British Coal. While it is not for the Government to take decisions on particular investment, we do have a duty to assure ourselves and the House that British Coal adopts the best possible procedures and practices in its investment appraisal. In 1983 the Monopolies and Mergers Commission examined, among other things, the corporation's investment procedures and made recommendations which British Coal accepted. The further Monopolies and Mergers Commission reference of British Coal, which my right hon. and learned Friend the Chancellor of the Duchy of Lancaster announced recently, is likely to include investment appraisal in its investigation.

The colliery review procedures are being conducted. The procedures laid down are being carried out. It is ultimately a matter for British Coal as to whether the pit is finally closed. No doubt it will read carefully the report of the debate that has taken place tonight, and I congratulate the hon. Member for Barnsley, Central on having raised the matter.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to One o'clock.