HL Deb 22 January 2002 vol 630 cc1382-4

2.45 p.m.

Lord Dormand of Easington asked Her Majesty's Government:

Whether they propose to provide additional assistance to the coal industry.

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville)

My Lords, the Government have spent nearly £140 million so far under the UK Coal Operating Aid Scheme. We currently have no plans to extend it, or to introduce a new scheme beyond July 2002.

Future policy will be informed by the PIU Energy Review, the Clean Coal Technology Review and the House of Lords' report into security of supply. If the conclusions of those reviews suggest that a further coal subsidy scheme may be appropriate, we shall of course give further consideration to the issue.

We are also working to ensure that the new EU regime gives us the flexibility to pay suitable types of aid if appropriate.

Lord Dormand of Easington

My Lords, I thank my noble friend for that reply. The Government are to be congratulated on the much needed assistance which they have given recently, in spite of strong opposition from the European Union.

Is my noble friend aware that there are still some 6,000 jobs involved in what remains of the industry and that there is continuing pressure for more redundancies? Is he further aware that Britain's power stations are consuming more coal because of the new electricity trading arrangement, and that the extra 20 per cent of coal that is now being consumed comes entirely from imports? That is surely something that he is looking at. Is it the Government's intention to retain a British coal industry in the review that is taking place on the energy industry in this country?

Lord Sainsbury of Turville

My Lords, there is clearly a question of security of supply here. A strong case can be made for maintaining a level of coal-fired generation for that reason. It is more difficult to do that in terms of the coal supply because there is a wide diversity of coal supplies across the world. Therefore, it is difficult to argue on security of supply arguments. Our particular scheme very much related to the particular problems that the coal industry was facing at the time when it was introduced—there were low international coal prices; the introduction of NETA; and the lifting of the gas consents policies. These factors do not operate now. Therefore, any policy that we take forward will be in the light of the PIU report.

Lord Marsh

My Lords, will the Minister not agree that his reply produces a sense of déjà vu to quite a lot of us? Massive subsidies have been poured into the coal industry in this country and others for the last 40 years. The industry has consistently proved that it cannot compete with market forces. It is time that all governments woke up to this.

Lord Sainsbury of Turville

My Lords, the UK Coal Operating Aid Scheme was introduced to deal with a particular situation. As I have said, it had a number of very specific factors. It was clearly right at that moment to introduce the scheme to make certain that the industry, where it was viable—that was a key part of that scheme—would be able to survive that short-term situation. As I have also made clear, those short-term factors do not at this moment apply.

Lord Elliott of Morpeth

My Lords, is the noble Lord aware that in the North East of England, where there used to be so many collieries, there is just one left? Ellington Colliery in east Northumberland is still producing 7,500 tonnes of quality coal every year. It has a direct workforce of 400 people with many more from associated companies. The pit also has an estimated supply available for the next seven years. Does the noble Lord appreciate that in an area of Northumberland—I happen to know it very well; I have lived there practically all my life—where new industry is very difficult to attract, that the continuance of coal production at Ellington will be very socially desirable?

Lord Sainsbury of Turville

My Lords, where coal-mining is viable, there is no problem. The problem arises if it is not viable in the long term. In such cases, we are concerned about the impact of any closure on coal communities. That is why the Government introduced a series of schemes originating from the Coalfields Task Force. The Coalfields Enterprise Fund and the Coalfields Regeneration Trust were introduced to help communities that were affected by coal closures. During the time that the Government have been in power, the number of coal-miners has not decreased enormously, whereas, under the previous government, it declined from 230,000 to something like 7,000.

Lord Ezra

My Lords, does the Minister agree that one of the most important ways in which the Government could assist the coal industry is to set up without delay a clean coal technology plant, together with CO2 separation? That process has been developed successfully in other countries, and, if developed over here, it would open up an exciting new chapter in the long history of the coal industry, put it on an equal footing with renewables and contribute substantially to the Government's climate change objectives.

Lord Sainsbury of Turville

My Lords, the noble Lord, Lord Ezra, and I have debated the question of clean coal technology; it is an extremely important issue. On the energy side, it is important to show that we can have generation with clean coal technology. However, as I hope that I have made clear before, that does not necessarily imply that the coal supplied would come from this country if it is produced more cheaply in other parts of the world.

Lord Hardy of Wath

My Lords, does the Minister accept that the Government's policy has, no doubt, encouraged the relatively few remaining pits in Britain to maintain high levels of productivity and an acceptable regard for safety? Does he also accept that there have been recent reports that petro-coke is to be imported into this country? That may provide someone else with profit, but it will hardly help the coal industry or the British environment.

Lord Sainsbury of Turville

My Lords, in cases in which international coal is cheaper, it is difficult to see the basis on which the Government could make certain that that coal did not come into this country.