BBC On The Record - Broadcast: 12.03.00

Film: COAL VT. Iain Watson reports on the threat to the coal industry if the Government refuses to subsidise it.



JOHN HUMPHRYS: In a few weeks from now the government will decide the fate of Ellington Colliery, the last pit in north-east England. Its owners say it can't survive without government subsidy... a word that's been written out of the New Labour lexicon. Nine more mines are under threat and, as Iain Watson reports, the government has to decide between alienating some of its loyal supporters and jeopardising its own credentials. IAIN WATSON: This is living history - The last working pit in Northumberland. It's already been granted one reprieve by its owner. The 380 miners here feel they are living on borrowed time. They know that, very soon, they could be clocking off permanently. Time is running out at Ellington ...this pit will close by the end of the month unless the government steps in with enough subsidy to secure its future. And its owners - RJB mining - say that nine more pits could close over the next two years unless the government intervenes. Labour's core supporters - those who kept faith with the party during the long years of Conservative government - are now saying 'it's payback time.' KEVIN CHARLTON: Everyone's down, really down. I mean you've seen one or two lads there coming through, their heads is down, you know. Miners have always voted Labour we're labour through and through, bit disappointed with the response we're getting from the Labour Party, we're expecting them to do something. DENIS MURPHY MP: Whether it's a debt of honour, or it's just, I think the phrase is 'fairness not favours,' I think it is perfectly reasonable for people here to ask for their government's help, a government and a party that they've supported for many, many years loyally.. Equally I think the government have a responsibility to ensure public money is spent wisely. I could think of no better way of spending public money than supporting the miners here GEOFFREY ROBINSON: I think the Prime Minister and the Chancellor have difficulty subsidising the coal industry, traditional Labour, extractive industry and we wouldn't make that a major point of policy but it does seem to me we have the coal, we have the miners, once you close them you won't , you won't open them again you won't get people to go back down again, so we've got the coal, the miners, we've got the communities, and supplying a very valuable part of our energy needs at the moment - why close it down? WATSON: The coal industry is, once again, in crisis. With a strong pound, it's cheaper for the electricity generators to buy their coal from abroad. So, RJB Mining - the private owners of most of Britain's deep mines - has asked for government help. The Department of Trade and Industry say that they are still sifting through the figures. But a former Ellington employee is urging his government to overcome any ideological barriers to state subsidies. DENIS MURPHY MP: We haven't yet recovered from the colliery closures of the 1980s and 1990s. Unemployment within the region, within the constituency has remained stubbornly at more than twice the national average. We are very good at mining coal - this is the last colliery in the great northern coal field - I would like to see it remain, not just for emotional reasons - though I think that's part of it - but because it provides and helps underpin the local economy. WATSON: Back in the eighties Ellington was at the sharp end of the action in the miners strike. When Ian McGregor took over as coal boss, the industry employed around 200,000 people. This has fallen dramatically - just 12,000 are left today. The fight to save the remnants of the industry has moved on and government is being asked to provide subsidy. They say they might face resistance from the European Commission. Bailing out an industry from scratch is more difficult than simply continuing with firm state support. But a former Treasury minister says all they have to do is ask. ROBINSON: We can - without any problems in Europe, I'm quite sure subsidise our coal, it's not a huge output, it's not a huge industry any longer - I mean the Germans subsidise theirs to the tune of about two and a half billion pounds a year. There's no problems if we want to subsidise ours, nobody is going to challenge it in the courts or with the Competition Commission in Brussels - no I don't think there is any danger to that at all. WATSON: But the attitude of the European Commission has yet to be put to the test. The Department of Trade and Industry has not even applied for permission to subsidise British Coal. They say that, morally, it would be more difficult to argue against foreign coal subsidies if they start pushing for some of our own. But the European Commission is keen not to be seen as the excuse for British government inaction. In a series of letters they've sent to the mining unions they clearly state: "the decision on whether to offer financial assistance to the coal industry remains the choice of the government of the member state concerned." If the government does ask for permission to subsidise coal, some say that Europe may not process the application quickly. Subsidy sceptics like the Competition Commissioner Mario Monti may demand that the industry goes further in improving productivity. MARTIN O'NEILL: I think the issue of state subsidy is very much one of yesterday's debates and I think that the Director General in the commission and the commissioner himself, they are all antagonistic to allowing this. If the government is minded to provide support for the coal industry it will have to be a scheme which enjoys the confidence of Europe or it will founder, and it ought to, I think, in order to protect the interests of the British tax payer, it ought to impose strong conditions on the current coal owners whose performance to date has not impressed anyone. WATSON: The Selby constituency in Yorkshire is dominated by smokestack industries. The local MP wants short term government support for the local coal mine, and says Europe should not be used as a get-out. JOHN GROGAN: I think the real obstacle to the DTI is Treasury funding, whether the Treasury would approve funding. because ultimately it's a British government decision and its a convenient argument , if you like, that all these evil people in Brussels who might not agree to a coal subsidy, but I think they would, and having gone over there and spoken to the officials it's not, the problem isn't in Brussels it's the political argument here in Britain whether we want to subsidise coal or not. WATSON: The control room of the mighty Drax power station recalls the denouement of just about every James Bond film. And, in the traditions of the genre, there is a countdown to disaster. In 1998, the government brokered a deal which locked Drax into buying coal from the nearby Selby superpit. But that deal is now coming up for renewal. In other words, Drax will have a licence to kill the local mine. DAVID MCMILLAN: We have to make a decision by the end of the month to extend an option with RJB to continue using coal for another couple of years or not. There are very intense negotiations occurring right now to try and make that work; we are going to London to see some people about what we can do to get some government help. If we do not get that sort of help, at least in the short term, that come the end of the month, we'll have to tell our people that we're not going to utilise the option. That -and I think that when that happens that the Selby coal fields will be in extreme danger of shut down almost right away. WATSON: Coal arriving at Drax from nearby Selby costs 15% more than coal which could be bought on the world market -even with higher transportation costs. The owners of both Drax and Selby will meet the Energy Minister Helen Liddle later this month to ask for government help, to keep their current agreement on track. But it may not arrive on time. The man who sealed the deal two years ago warns against having image, and not industry, uppermost in ministerial minds. ROBINSON: Why I got involved was because I woke up one Sunday morning to read that half the pits were going to go and I think it was ten thousand redundancies, something like this, five or ten, I can't remember now, but large numbers of redundancies and I thought, why are we doing this? And the only concern at the time was how the thing should be presented, not whether it was the correct policy or not. WATSON: With problems in the coal industry piling up once again, Geoffrey Robinson hopes the landscape has now changed. He says it's time the government came clean on its long term energy strategy. If coal has a part to play, then so too should short term subsidy. ROBINSON: I do think the country has to seriously think about, does it want to have a balanced mixed coal, energy policy or not, or is it quite prepared to face a future which will be within a couple of decades or so, within a couple of decades where our own gas reserves are exhausted and we are dependent for imported gas from dangerous parts of the world. If on the other hand you want a balanced output, you want alternative fuels which I happen to think is the sensible commercial policy then you may have to pay some small premium in times when sterling is particularly high to enable the generators to buy coal which isn't prohibitively expensive. WATSON: But others say that it is those who run the coal industry who should carry the can for the current crisis - the government itself has little room for manoeuvre. O'NEILL: We're not in a position to restrict imports in a globalised liberal market. You can't do that. You can't restrict imports and you're severely constrained in subsidising the indigenous mining industry. So really the mining industry has got to become more efficient and it's a question then of whether good money should be thrown after bad. WATSON: The government intends to take the heat off the coal industry in the Autumn. They say any bias in the energy market against coal-fired power stations such as Drax will be ended. But critics say that this does not address the fundamental problem - the electricity generators may still find it cheaper to use foreign coal - placing mining communities under pressure. GROGAN: I think there would be real anger in the Selby area if the Selby coal field was forced to close because the new owners of AES decided to import their entire coal requirement and I don't think the new owners of Drax particularly want to do that neither, though they are under some financial pressure I think to cut costs WATSON: So a powerful new coalition has been forged. Both big business and the traditional Labour left are uniting to pile on the pressure to get government help to save British coal. But others say that these 'unlikely bedfellows' represent the dreaded forces of Conservatism and that Britain's energy policy must make a decisive break with the past GREEN: Most people in the energy world accept in the long term there's a transition to a non fossil fuel based economy. I think ministers have got a responsibility, the government's got a responsibility to be clear with voters, to be clear with consumers about the direction of policy to make it clear there are going to be the costs of transition. The government is not abandoning those communities, it is going to invest in new opportunities and new enterprise in those communities, and that way to give people the confidence to move from where we are now, the traditional industries of yesterday to the future industries that will stimulate jobs for the long term for those communities. WATSON: But this view does not go down too well in Labour's heartlands. While MPs who represent industrial workers would be keen to attract new jobs into their constituencies, they are equally insistent that traditional industries could have a bright future too. ROBINSON: If we have another twenty years of good coal I see no point phasing it out ahead of time with all the community distress and hardship that would cause, so I think we really have to move away from old Labour and new Labour and take a view. O'NEILL: They know that three years ago the Labour Government responded to the call from the miners to give them support and the transition into the new contracts. That support was given by government. The breathing space was given to the coal owners. The have done nothing with it and I think that the people in mining communities across the country like my own recognise that unless the coal miners rise to the challenge it is not the fault of the government or the workers. WATSON: But others say Labour's traditional supporters might not be so understanding. They need at least a glimmer of hope from the government. GROGAN: New Labour has to give clear signals to Old Labour if you like, to the more traditional Labour areas that New Labour cares not just about the new industries but also about the old industries, so I think it's extremely important that new Labour doesn't let coal mining die. WATSON: Labour doesn't want its long standing supporters to vote with their feet. Subsidising coal won't be easy. But failure to do so may prove more costly. If our remaining mining jobs disappear, Labour's support in its heartlands may also begin to fade
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.