Coal Industry (Hansard, 16 July 2002)

§ Ms Hewitt

The future of coal policy must be considered both within the context of the new European coal state aid rules which are to come into force following the expiry of the ECSC treaty on 23 July, and in recognition of today's announcement by UK Coal on the future of the Selby complex.

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Mineworkers and their families will obviously feel great disappointment at the news that production at the Selby complex will be phased out over the next 20 months. The chief executive of UK Coal, Gordon McPhie, said today that

`there was no prospect of the Selby complex becoming viable'.

Our analysis supports this conclusion: the independent review undertaken on our behalf by IMC Group Consulting Ltd. has endorsed UK Coal's assessment that there is little prospect for a later closure date, concluding that there is now an inevitability of a cessation of production at the complex. Seeking to prolong the life of the pit would be hugely expensive, and become increasingly so over time, for no long term gain. Therefore it seems to be unavoidable that the mine will have to close, and it would make little sense to seek to delay this by paying extra money to the pit. I very much regret this situation.

I am committed to providing for the welfare of Selby's mineworkers and their families. The Government have worked closely with UK Coal and the local Member of Parliament, my hon. Friend the Member for Selby (Mr. Grogan), and are today announcing a substantial closure package for regeneration and retraining, on top of an extended redundancy settlement. UK Coal's current redundancy agreements end in March 2003. UK Coal wanted to extend the current redundancy terms to cover the whole period of job losses at Selby, but were unable to bear the full costs of doing so at a time when it is making substantial losses and when such a large programme of redundancies is in prospect. We will contribute £10 million to enable Selby miners to receive the pre-privatisation "British Coal" redundancy terms.

I can also announce a multi-agency Task Force to combat the impact of the pit closures in the Selby coalfield to be led by Yorkshire Forward member, Lord Haskins. As a major local businessman he brings broad experience to the role. By taking action now, we will be able to offer the regeneration and reskilling packages exactly when they are needed.

The terms of reference for the Task Force will be:

to ensure a comprehensive package of services are available to individuals directly affected by closure to help them access new training and job opportunities; to produce an action plan based on detailed analysis of the socio-economic impact of the closures on the local and regional economy;to identify and prioritise required short, medium and long term key actions to address the socio-economic impact on affected communities;to allocate responsibility for their delivery to relevant agencies and to identify new economic opportunities locally;to galvanise existing and to identify new resources and opportunities for support from Government and European sources and to make recommendations by October 2002;to co-ordinate and monitor delivery of agreed actions up to October 2004.

Membership will include: Yorkshire Forward; English Partnerships; Jobcentre Plus; GOYH; Selby council; Selby Strategy Forum; North Yorkshire county council; the North Yorkshire Learning and Skills Council; UK Coal plc; NUM; NACODS; the Coalfield Regeneration

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Trust; Ricall Regen Centre; North Yorkshire Business Link; Wakefield First; Barnsley metropolitan district council; and the Association for Voluntary Services.

The remit of the Task Force will not include UK Coal's responsibilities to its work force, such as arrangements for redundancy and pensions.

Yorkshire Forward will lead the multi-agency Task Force, with an immediate £1.5 million injection of funding for set-up costs and commissioning of initial research, in response to the announcement of the closure of the Selby coalfield with further funding promised in the future. A comprehensive retraining programme will be required to minimise the impact of the closure on local economies.

Jobcentre Plus will provide advice and guidance to help individuals return to work as quickly as possible. It has experience of supportive involvement in major redundancies in a number of large organisations including Corns, Rolls Royce, Vauxhall and Unipart. It will co-ordinate its input to the support package for Selby via the Task Force. Specific measures provided will include the Rapid Response Service, through which a range of direct support to redundant workers at Selby will be provided, including: provision of advice, guidance and support—if possible by placing staff on site; skills needs assessments for all workers, identifying skills held, future training needs and help seeking appropriate work and training; access to existing training provision, if necessary through the Work Based Learning for Adults programme, which can address basic skills, soft skills and vocational skills needs; and where necessary by arranging additional provision.

Jobcentre Plus will also co-operate with key partners to help ensure other necessary support measures are identified and a cohesive response package is developed to provide appropriate support when it is needed.

The North Yorkshire Learning and Skills Council (LSC) and the Government office for Yorkshire and the Humber will contribute fully, both to help the Task Force develop its strategy and to secure the effective implementation of the agreed actions.

The North Yorkshire LSC, working with the local learning partnership and others, is already heavily involved in the Selby area, helping to re-engage people into learning. It will consider in particular what re-skilling packages might be needed to help regenerate the local economy and will seek to provide funds by applying a range of funding flexibilities from its:

core funded provision;
Local Initiative Fund;
partners use of European budgets.

In addition to support Selby workers, the Government will make payments on a similar basis to mineworkers at Longannet transferred from British Coal at privatisation and not already in receipt of "British Coal" redundancy payments. This will amount to £5,000 per person.

The principle of Government support for redundancy payments in the coal and steel sectors lies in the European Coal and Steel Community Treaty, which expires on 23 July. The Government have already made use of the provisions of the ECSC treaty in similar circumstances

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to make special payments to steel workers following the announcement of a programme of job cuts and closures throughout the UK by Corus in 2001.

All payments are subject to agreement from the European Commission. No further coal or steel redundancy schemes will be put in place by the Government once the European Coal and Steel Community Treaty has expired.

We have the most efficient coal industry in Europe, but to date European rules have prevented us from supporting viable investment projects through Regional Selective Assistance. My hon. Friend the Minister for Energy and Construction, has therefore secured agreement at a European level to the flexibility to pay investment aid for pits that have a viable future and we will shortly be consulting on the case for introducing such a scheme in the UK.

Such a scheme could allow for coal to be treated on a level playing field with other industries. We need to be clear that any new scheme will be cost-effective and make a real contribution to the capacity of the industry to exploit viable reserves of coal in the UK. As part of this analysis we will also commission an independent study of the remaining reserves at existing deep mines to help identify where investment support might be directed. Subject to the conclusions of our work and to the availability of resources we may be in a position to make specific proposals by the end of the year. The details of any scheme will of course need to be agreed with the European Commission consistent with the new EU regime.

I am also announcing a targeted extension of the current operating aid scheme, to the end of 2002, in order to help secure the long-term future of viable mines under exceptional short-term pressure and will consult on the details shortly. Aid has been paid under the current scheme on the understanding that recipients are viable without aid beyond July 2002, so a general extension of the scheme would not be appropriate. However real concerns have been raised about the risk that short term pressures at a small number of pits may force operators to change existing mining plans in such a way as to close off for good access to significant and otherwise viable reserves of coal. I therefore intend to seek the European Commission's agreement to a modified extension of the current subsidy scheme targeted to address these specific concerns.