Coal Industry (Restructuring) (Hansard, 13 May 1991)

§ The Parliamentary Under-Secretary of State for Energy (Mr. Colin Moynihan)
I beg to move, That the draft Coal Industry (Restructuring Grants) Order 1991, which was laid before this House on 15th April, be approved. The order, which was laid before the House on 15 April, is the fifth annual order under section 3 of the Coal Industry Act 1987. The House may recall that section 3 was amended last year by section 2 of the Coal Industry Act 1990 which extended by one year up to March 1993 the period over which the Government may pay restructuring grant and increased the total limit on grant from £750 million to £1,250 million. The ceiling is further increasable by order up to £1,500 million.
The order has three main purposes.

§ Mr. Andy Stewart (Sherwood)
I am sorry to interrupt so early in the Minister's speech. I have a copy of the schedule; can the Minister explain why heads 3 and 4 have been left out?

§ Mr. Moynihan
I shall attempt to explain. Head 4 was excluded last year. The House may recall that the Coal Industry Act 1990 provided for the corporation's accumulated group deficit at the end of March 1990 to be covered by a deficiency grant, if my memory serves me correctly. That included an exceptional provision for about £1,500 million for concessionary fuel supplies. That deficiency grant provision extinguished the need for the Government to pay restructuring grant for concessionary fuel liabilities. My hon. Friend also raises the question of the social welfare activities heading in the schedule. British Coal has never claimed under that heading.
The order specifies the restructuring expenditure for which grant may be paid in respect of costs incurred in the present financial year 1991–92. After the explanation that I have just given about the types of expenditure set out in the schedule, I must point out that they are the same as those of last year.
The order establishes the proportion of this year's restructuring costs which will be met by grant. The corporation's financial results are sensitive to the rate of grant contribution towards restructuring costs. Although it remains our policy to transfer the costs of restructuring to the corporation at a rate that reflects its ability to bear them, the market conditions faced by British Coal continue to be difficult and to affect the rate at which the corporation can move towards full commercial viability.
I trust that hon. Members will agree that it is desirable for the corporation to be able to continue its policy of carrying out the necessary restructuring of the industry through a process of voluntary redundancy. That is possible only by offering generous redundancy terms. To safeguard the industry's longer-term financial prospects and not to jeopardise the financial position in the short term, we propose to continue the rate of restructuring grant of 90 per cent., which applied in 1990–91, for the current financial year.
The third main provision, which I touched on earlier, is that paragraph 6 seeks to increase the limit on the aggregate amount of grant that may be paid from £1,250 million to £1.5 billion, as empowered by the 1990 Act. The total restructuring grant payments made by the 65 Government between April 1987 and March 1991 have been £1,045 million. The Department's estimated provision for 1991–92 is £300 million. If the full provision is drawn down this year, the total payments will be over £1.3 billion and the ceiling needs to be raised to allow payments above £1,250 million to take place.

§ Mr. Kevin Barron (Rother Valley)
I welcome the opportunity to raise a number of issues of great importance to the British coal industry and its communities. The Minister made claims about the difficult market that British Coal now faces. In our debate last July on the 1990 restructuring grants order, I expressed our concern at the lack of progress on the start of negotiations between the generators and British Coal on the post-1993 contract. I said that the negotiations were vital for planning the future of the coal and electricity industries, and for boosting the morale of everyone in the coal industry.
We are still waiting for progress to be made. In March this year, the new chairman of British Coal said: Everybody is aware that the power contracts—their length, tonnage and price involved—are the key to the future of British Coal. Indeed, they will determine whether there is to be a future for coalmining in Britain at all. Once again this weekend, we have seen negotiation by press release. The Financial Times says that PowerGen will cut its order from British Coal by half to between 10 million tonnes and 15 million tonnes, and that National Power will follow suit.
Real negotiations, not informal talks or threatening rumbles through the media, must begin now. If they do not, we shall have not only a coal industry unprepared for the demands that it will face, but an electricity industry that will rush to fuel its power stations with no thought for the long-term needs of its customers or the nation. In such circumstances, the Government cannot continue to stand aside and allow the continued contraction of the industry, the loss of national resources and the effects of increasing coal imports on our balance of payments. The Government would be better off spending their time bringing about negotiations rather than holding competitions to appoint a financial adviser on the privatisation on the coal industry.
As in previous years, the order contains an element for expected redundancies in the industry this year. Over recent years, the industry has had to react to the shock waves of threatened and real pit closures and job losses. Every miner who picks up his newspapers to read headlines such as "British Coal strategy—a further 16,000 jobs at risk" must wonder how long his job will last. The industry has recently forecast that another 5,600 jobs will be lost in the coming year with the closure of another seven collieries.
Those are not ideal circumstances for urging British miners, as the hon. Member for Wells (Mr. Heathcoat-Amory), the Parliamentary Under-Secretary of State for Energy did last week, to increase productivity, which he acknowledged to have increased already by more than 90 per cent. over the past six years. It is vital for miners and their families and for the country that a new era of stability should be heralded in the industry as soon as possible.
The order also makes provision for the money for British Coal Enterprise Ltd., for opportunities for retraining and resettlement and for attracting a diversity of 66 industries and employment chances. Those are of major importance to the coalfield areas. We have registered our concern——

§ Mr. Spencer Batiste (Elmet)
The hon. Gentleman referred to the work of British Coal Enterprise Ltd., in helping to retrain people and to mitigate the consequences of the closure of collieries. In the past, the Opposition have been less than complimentary about the work of British Coal Enterprise. Will the hon. Gentleman now take the opportunity to confirm his and his party's full support for its work?

§ Mr. Barron
If the hon. Gentleman will contain his excitement a little longer, he will find out what I have to say about British Coal Enterprise.
We have in these debates in the past registered our concern that the opportunities offered by BCE are inadequate to meet the needs of the areas in which it operates. The shortcomings of BCE's job and career change scheme, or JACCS, are of particular concern. The main shortcomings are that the training period that can be funded is often insufficient to enable people to get recognised industrial qualifications, that before training is made available they have to show that there is a job to go to at the end of the training period and that the time limit within which funding must be secured is only six months from the date of accepting redundancy. Anyone who has studied long-term unemployment in the coal mining industry before the scale of redundancies of the past five years will know why the JACCS scheme is not meeting the needs in mining areas.
Other problems are the slow and cumbersome process of determining applications, and the fact that anyone who takes short-term work soon after the closure of a colliery can easily find himself ineligible for assistance. The JACCS scheme is out of step with most other organisations in training and economic development which emphasise the enhancement of the individual's skills irrespective of the immediate availability of appropriate employment.
BCE's operations, despite the shortcomings, have been allocated approximately £5 million and British Coal itself another £1 million or so from the European Coal and Steel Community funding under RECHAR. All the evidence points to the funds being used to replace British Government funds instead of supplementing them.
About £3 million is earmarked for JACCS. To demonstrate additionality—a word that crops up regularly when discussing European Community money for mining areas—some or all of the training places funded, the length of training and the unit costs of training should be increased. BCE has yet to explain how it intends to use the new RECHAR money.
Nearly £1 million is allocated to BCE's job shops—the advice centres set up at pits that are closing to counsel redundant mineworkers about job vacancies in their area. Once again, BCE has not been able to show any increase in the scale of job shop services. Is this another case of non-additionality for the Government?

§ Mr. Batiste
The hon. Gentleman referred to the RECHAR programme. He will be aware of my concern last year, when the map for it was being determined by Commissioner Bruce Millan of the European Community. Parts of my constituency that were facing pit closures were not included in the map. I understand that the Coalfield Communities Campaign and the Labour party have made 67 representations to Commissioner Millan. Will the hon. Gentleman support representations made by the Government to include my constituency in the RECHAR map?

§ Mr. Barron
I shall obviously do that. I shall deal with recent developments relating to the RECHAR programme and say what we expect of the Government. At this stage, I am more concerned about the money that comes through the RECHAR programme directly to the Department of Energy, and about what the Department does with it. Notwithstanding the money that I have just mentioned, nearly £1 million is allocated for subsidising BCE's operating losses.
The subsidy is to be calculated in proportion to the ratio of former mineworkers to all jobs in BCE-supported businesses and managed workshops. As BCE is supporting these jobs anyway, it is hard to see that the subsidy is anything other than a straight substitution of EC funds for United Kingdom Government funds.
British Coal is destined to receive some RECHAR funds, partly for its early retirement scheme for non-industrial employees and partly for its skill scope scheme, which gives employees an opportunity to take up specific training packages to enhance their skills. Unless British Coal can demonstrate that the £300,000 that it is to receive from RECHAR will represent additional training for its employees, we can only assume that it is another example of the substitution of the source of the funds.

§ Mr. Allen McKay (Barnsley, West and Penistone)
My latest information on RECHAR is that Commissioner Millan will not let the money come into this country unless the Government give assurances that it will be additional money and will not go into the Treasury by the back door.

§ Mr. Barron
That is right. Bruce Millan knows exactly what has been going on for a long time regarding European Commission grants for coal-mining areas. On this occasion, he will not let the Treasury get away with it. He has my full support on that, and the support of the Coalfield Communities Campaign and many local authorities.
We need to ensure that assistance is getting to the places where it is most needed, and questions need to be answered. The Government have totally mismanaged the RECHAR programme. First, they have refused to pass on in full the EC aid to coalfield local authorities in Britain—over £100 million. I agree with the hon. Member for Elmet (Mr. Batiste) that any areas in his constituency that are losing coal-mining jobs should be covered by the RECHAR programme. We should ensure that the Treasury does not hold that money once it has been allotted.

§ Mr. Batiste
The hon. Gentleman's comment does not sit well with the comment that he made a few moments ago. He has said that he fully supports Commissioner Millan's decision to withhold money from the United Kingdom.

§ Mr. Barron
If the hon. Gentleman wishes to represent the mineworkers in his constituency—as does my friend Colin Burgon, whose name the hon. Gentleman has heard before—he should not be a stooge for the Treasury, which 68 has withheld £100 million from coal-mining areas. Labour Members will not do that, and the hon. Gentleman should think again.

§ Mr. Peter Hardy (Wentworth)
The hon. Member for Elmet (Mr. Batiste) challenged my hon. Friend, who responded properly. My agent, Mr. Richard Russell, has been assisted by British Coal Enterprise Ltd. Some of us appreciate the work done on the ground, but do not necessarily relate that to the sort of people with whom the hon. Gentleman associates.
We responded to the hon. Gentleman's challenge; now would he care to respond to that offered by my hon. Friend? Will he join us, and make it clear to the Government that people in ex-coalmining areas bitterly resent attempts by the Treasury, and other Departments, to stop Brussels sending money to help us—or to allow any money sent to us to assist the Treasury to extricate itself from the mess that it has got into?

§ Mr. Barron
Yes, that is what we should ensure. The Treasury's intention to sink the money into its coffers has forced the European Community to withhold the cash, delaying or stifling completely the grants and cheap loans that would be of such benefit to mining areas.
It now appears that the money designated to help redundant mineworkers acquire new skills, and consequently new employment prospects, is not going to British Coal and British Coal Enterprise as additional funds, as was intended by the Commission, but is being substituted for British Government funding. Can the Minister demonstrate the additional character of the funding provided to British Coal and British Coal Enterprise Ltd. under the RECHAR programme? If not, only one conclusion can be drawn; not content with trying to get their hands on the money that should be going to coalfield local authorities, the Government are ripping off redundant mineworkers.

§ Mr. George J. Buckley (Hemsworth)
My hon. Friend makes a significant point about the Treasury creaming off money from the EC. I understand that, if a local authority receives this money, it will be taken into account when the Government decide whether the authority should be poll tax-capped. It is a double indemnity against the Government's putting money into mining communities.

§ Mr. Barron
My hon. Friend makes a good point. If the Government do not change their attitude, the money will not come into the country to go into the Treasury's coffers. I support the Commission's stand on that. Conservative Members who say that they represent coal-mining areas should have the courage to tell Treasury Ministers that it is wrong to withhold help to coal-mining areas that have suffered job losses in the past five years under the Tory Government.

§ Mr. Andy Stewart
The Treasury and the Department of the Environment calculate the additionality money on the same basis as other European countries. The local authority grants have been top-sliced by an additionality of £46 million. A large slice of that will come to my constituency through my local authority, yet Opposition Members would deny my constituents some of that £46 million.

§ Mr. Barron
The only people who are denying the hon. Member's constituents such help are the Government he 69 supports. A few months ago, I went with representatives of my local authority to the Department of the Environment to discuss funding from the European Commission and additionality. The Minister said that he fully supported our view that money should not be withheld by central Government; that money should be provided in addition to the moneys paid from the Exchequer. The only people who will not change their minds are those at the nasty Treasury.
The hon. Members for Elmet (Mr. Batiste) and for Sherwood (Mr. Stewart) may have to face the consequences of the Government's actions in the next few weeks or months. They now want to move the responsibility from the Treasury to Brussels.

§ Mr. Batiste
rose——

§ Mr. Andy Stewart
rose——

§ Mr. Barron
I shall not give way again.
The debate gives us an opportunity to refer to some crucial and important matters concerning the coal industry. Restructuring grants have been the order of the day since 1987—£1,500 million for restructuring the coal industry. Nothing has been said about the long-term consequences for the industry and the country.
During Question Time today, my hon. Friend the Member for Bolsover (Mr. Skinner) asked the Minister about a ballot within the industry on its future. The Minister said that we would have such a ballot shortly: the next general election. That may solve many of these problems. We cannot wait for that ballot to take place.

§ Mr. Andy Stewart (Sherwood)
The order shows yet again our Government's continuing support for the coal industry. Since 1975 almost £7 billion of new investment has been committed. The significance of that——