Hatfield Colliery: 2nd July 2015

Edward Miliband
Let me explain how we got here. I want to place on record my thanks to Vince Cable and to the former Minister of State at the Department for Business, Innovation and Skills, the right hon. Member for West Suffolk (Matthew Hancock), for what they did before the election. As the mine faced a serious crisis, they agreed at least to prolong its life until summer 2016, with up to £20 million of closure aid. Unfortunately, even after the aid was granted, things deteriorated quickly for Hatfield. In April, the Government doubled the carbon price floor, a tax on high carbon fuels. The levying of the tax at point of sale rather than when the coal is burned means that the energy companies have an incentive to stockpile coal, and they did so in advance of April to avoid the higher levy. Companies had huge stockpiles of coal and orders at Hatfield dried up.

That was the grim situation the Minister discussed with me two weeks ago. My argument to her was not that the Government should not have increased the carbon levy, but that they should take responsibility for its effect on Hatfield. We needed to piece together orders that might have made it possible for the mine to ​remain open. Thanks to the effort of the management, one energy company did offer to buy half the coal and part of the rest could also have been sold. In the end, however, there was a fundamental stumbling block to the mine remaining open.

In contrast with what was said before the election, the Minister said that not a penny more of Government aid could be provided. My argument to the Minister was, and remains, that early closure will end up costing more, not less, when we take into account the revenues that would come back to the Government if the miners were employed for another year. Calculations made by the company suggest that the extra investment required to keep the mine open as planned to summer 2016 would have been more than offset by tax and VAT revenues coming back to the Government. That calculation does not even take account of the money the Government will now pay out in benefits to miners who do not find work; nor does it factor in the impact of early closure on the 100 companies in the local supply chain or on the local economy, never mind the social effect of what has happened. The miners feel they have had the rug pulled from under them. I do not believe the decision makes economic or industrial sense, and nor is it morally right. I believe the Minister should think again.

I also want to use the debate to raise specific issues on which I hope the Minister can be of help. As I do so, I hope she will consider the context. Historically, we have asked the miners throughout our country to put themselves at some risk, in dangerous conditions, to help the rest of us to power our country. We therefore owe them a special duty of care. The miners at Hatfield were led to believe that they would have another 12 months of work and could therefore plan their futures. However, that situation changed in large part due to a Government decision. Inevitably, this chain of events leads to a deep sense of grievance against the Government. That grievance is compounded by the fact that the Treasury has benefited to the tune of £300 million from the high carbon tax. Our ask, therefore, is that the Government accept their share of responsibility and use a small part of the Treasury’s windfall gain to help the miners and their families. One option is to extend the life of the mine, but there are other things the Minister could do and I want to raise them with her.

First, I want to raise the issue of redundancy. Hatfield miners will be getting the minimum statutory redundancy of as little as £475 for every year worked, rather than the £900 for every year worked that was the norm in the industry. Since the mine closed briefly in the early 2000s and only reopened in 2006, the maximum service any miner can claim for is nine years. We are talking about very small sums of money that the men will receive. It means they have a very small margin to support them as they seek other employment. The Minister will want to reflect on that. I ask her to do so.

In those circumstances, and as a gesture of goodwill to the miners at Hatfield—as well as at the last two remaining deep mines, Kellingley and Thorsby, which are due to close in the coming months—I hope the Minister will seriously consider the possibility of enhanced redundancy.

I also believe that the miners at Hatfield deserve the best support to find fulfilling and well-paid work, as well as retraining. Will the Minister undertake that the work of the Employment Service will continue—not ​just for a short period, but at least for the eight weeks that the mine will remain open and beyond? I hope she will work with the Coal Authority, which will take over running of the site, as it might be able to take on some of the former workers. I ask the hon. Lady, as a BIS Minister, to use her good offices to work with the owners of the site, ING, to think about what a creative and possible future for the site would look like.

Those are some specific asks about Hatfield that I put to the Minister, but I want to make a broader argument about Hatfield and the low-carbon transition and what we should learn from this episode. Coal is definitely a polluting fuel, and it is right that environmental standards are applied to it as part of the battle against climate change. That means that there is no viable future for unabated coal, but there is a future for clean coal technology through carbon capture and storage as part of our potential armoury in the transition to a low-carbon economy. [Interruption.] As my hon. Friend the Member for Easington (Grahame M. Morris) says, there are tens of thousands of jobs along with it.

However, the Government’s energy policy does not add up. There is a plan for a CCS plant at Drax by 2020. It will be burning coal, and it could be coal from Hatfield colliery, which is less than 20 miles from Drax. Yet it will not be: it will be coal imported from thousands of miles away, from Colombia or Russia, with all the associated environmental costs.

Projections from the Department for Energy and Climate Change say that by 2029 we are set to burn 26 million tonnes of coal or natural gas through CCS, but none of that will be from deep mines in the UK. I think people will look back on this and wonder how we got to this position. I would like the Minister to reflect in her reply on whether she believes that is a rational or sensible state of affairs and on what it says about the Government’s energy policy. I would like her to reflect, too, on how we got here.

The first CCS plant was due to be up and running by 2014. The last Labour Government committed to two to four CCS projects, and agreed a small levy to fund them. At the time, when I was the Secretary of State, I remember the Conservative Opposition criticised me—Oppositions tend to do this—for not being nearly bold enough. They said there should be four projects—never mind two to four—and asked why I was not getting on with it. What then happened is that the coalition Government came to power, dithered for two years and decided to scrap the previous Government’s plan and start all over again. As a result, as the Climate Change Committee noted in its report earlier this week, CCS will be up and running not by 2014 as projected, but by 2020.

That delay has been fatal for Hatfield and the other deep mines in our country. I say that not to score points, but because I hope the Minister will learn lessons for the future. My constituency has an interest in a gas-fired CCS project at Hatfield—the Don Valley project, which has secured European resources. Yesterday I met the director of Sargas Power, which owns the site and is now overseeing the project, and he emphasised above all the need for timely decision making by Ministers, so we cannot afford more dither and delay.

This takes me to a wider point that I hope the Minister will consider. In the two discussions we had—I hope the Minister will allow me to say this—the most ​heated moments were about whether the Government’s decision was motivated by ideology. [Interruption.] I see that she agrees from a sedentary position.

The Minister for Small Business, Industry and Enterprise (Anna Soubry)
Only about having the conversation.

Edward Miliband
Only about the conversation. The ideology I referred to was one of a narrow view of faith in the market. The Minister said that that was not the case and not her motivation. In fact, she vehemently and perhaps characteristically denied it. In some sense, the issue goes well beyond what she believes and into a deeper issue about the ethos of government, particularly the ethos at the Treasury, which has controlled so much of what the Government do—not just under this Government, but under previous Governments.

If we look at the history, we find that until 2007 there was no Government Department that even had “energy” in the title—and there had not been since 1992. Why was that? It was because the prevailing assumption had been that energy could be treated more or less like most other markets. Of course, that is all changed by climate change, because without serious intervention by the Government we will not make the low-carbon transition. Part of the incoherence of energy policy at the moment is that we are stuck in a halfway house where at times the Government pretend that this is a market-oriented system, when the truth is that in large part it is not any more.

Let me give the House an example. The Government have negotiated a 35-year fixed price for new nuclear power stations. The last time I looked, price fixing was not an intrinsic part of a free market ideology. I do not blame the Government, because the risks associated with new nuclear and the difficulty of low-carbon transition demand a different response. However, I find it frustrating when new nuclear is given a multi-billion-pound bill payer subsidy, but a few million more for a coal mine is seen as an option that either cannot be afforded or should not be entertained—particularly in the context of the extra revenue from the carbon levy, and the billions that the Government have received in surpluses from the miners’ pension fund.

My appeal to the Minister is this. The reality that the Government need to embrace is that we are moving towards a much more managed market. They need to drive that logic through everything they do, not just some of what they do. That takes me to the issue of how we can prosper economically, and how we can create jobs that are worthy of the skills of the men who went underground at Hatfield and other mines in the country. How can we use those precious skills?

There is another tension that the Government need to resolve. The Chancellor of the Exchequer, who drives so much of what the Government do, famously said, referring to climate change,

“I don’t want us to be the only people out there in front of the rest of the world.”

He has presented environmental progress and a strong economy as being in conflict, but in my opinion he is dead wrong. It is that view that has led to uncertainty, dither and ambiguity in the Government’s approach to the environment. We have seen that in the delays on CCS, and in the recent decision on onshore wind.​

Quite simply, the more mixed messages the Government send, the fewer jobs—jobs that could be taken by the men at Hatfield and elsewhere—and successful businesses will be located here. I hope that the Minister, in her new job at BIS—and as someone who cares about good-quality jobs—will see it as her role to champion the environmental cause. I hope that she will think of that cause not as the enemy of a successful economy that some consider it to be, but as its friend, because that, I believe, is the reality.

Let me finally return to Hatfield. I want to record my thanks to the National Union of Mineworkers, to all the management who sought to keep the mine open, and to my former parliamentary colleague John Grogan, who chaired the employee benefit trust and made a herculean effort to save the mine. Without all their efforts, it would undoubtedly have gone under earlier. I also pay tribute not just to the current work force, but to all who have worked at Hatfield during its 99-year history—the tens of thousands of miners who have gone underground and worked in the most difficult conditions to power our country, and who have risked their lives over the years—and to their families. I thank them for their sacrifice, their service, and their hard labour on behalf of our country. They created strong and vibrant communities that were built on the mining industry. Theirs is a legacy of hard work, solidarity and comradeship, for which they deserve respect and admiration.

The Minister for Small Business, Industry and Enterprise (Anna Soubry)
I congratulate the right hon. Member for Doncaster North (Edward Miliband) on securing the debate. I also pay tribute to all the men who have served at Hatfield and who now face the end of that work, and to their families. I say “served” because there is a service in the working of coal, especially when it takes place underground in a deep pit.

I absolutely understand about the age of those men, and, as the right hon. Gentleman knows, I understand—perhaps better than many Members, including those on the Opposition Benches—the effects of coalmining, and of the closure of a mine, on a community. I was brought up in Worksop, next door to Manton colliery, and I went to the comprehensive school that served the Manton estate. Because of my background, I fully understand the huge sacrifices made by men when they work underground. I will be frank: they are indeed lions, often led by donkeys in my experience.

I have never understood, however, why there has been such an over-sentimental attachment to working underground in, often, the most appalling conditions. As a girl, I was never allowed underground, but at Manton we built a coalface on the top: we could all visit, and see the photographs and understand the experience of men who were stripped to the waist and often worked squatting for long shifts in the most appalling conditions, as these men will have undoubtedly done at some stage in their lives. It is indeed darned hard work and it is a service.

I want to make it absolutely clear, however, that the right hon. Gentleman is effectively saying that millions of pounds of taxpayers’ money should now go, and continue to go, to keep open this mine until next August ​even though, unfortunately, it has failed to secure a single contract, despite all the hard work and efforts of its board and the will and determination of all those involved in the pit.

Angela Rayner (Ashton-under-Lyne) (Lab)
My right hon. Friend the Member for Doncaster North (Edward Miliband) talked about the economic benefits of keeping the mine open at the moment. The Minister’s earlier rhetoric was really positive, but what comes out of this same old Tory Government are ideological attacks on the miners. When will the Government give them a break and give them what they deserve?

Anna Soubry
I am afraid I am going to treat that contribution with the contempt it deserves and will continue with my speech.

We have made a commitment, and this is what we have done. In May 2015 the Government announced we had agreed to provide Hatfield with a longer-term repayable grant of up to £20 million to enable the colliery to continue operating until its planned and agreed closure in August of next year. This funding is state aid which has been approved by the European Commission. Further funding would require further state aid approval.

Last week the directors of Hatfield Colliery Partnership Ltd told my officials they had been unable to secure sufficient customers for their coal, thus calling into question the viability of the original closure plan. Since being advised of this position, the Government have done all we can to assist the directors of Hatfield, including reiterating our earlier commitment to provide up to £20 million to help the company achieve an orderly and safe closure, and accepting that this funding is, in the light of developments, now unlikely to be repaid. Despite this, the directors concluded it was not economically viable to continue mining and so took the decision to stop coal production on 30 June. It was their decision.

To understand the cessation of mining at Hatfield, it is important—[Interruption.] No, we did not pull the plug on it; absolutely not. We said we would give £20 million. We will continue to give up to £20 million. The decision was taken by the directors because they failed to secure the contract. This is the history, which I hope the hon. Member for Hemsworth (Jon Trickett) will listen to.

Hatfield’s difficulties go back some time. I believe it closed in 2001 and 2004. Most recently it entered administration in 2010—[Interruption.] If the hon. Member for Ashton-under-Lyne (Angela Rayner) continues to mutter in the way she is doing, I will take great exception, especially if she makes sexist comments.

Angela Rayner
rose—

Anna Soubry
And no, I will not give way. I have already heard what the hon. Lady has to say.

Hatfield was restructured at the end of 2013,and in September 2014 had to secure a £4 million loan from the NUM to allow mining to continue. Owing to the continued deterioration in world coal prices, together with production issues, the NUM funding was fully utilised by November, so all that money had already been spent.​

Unable to secure further funding elsewhere, Hatfield approached the Government in November of last year to request funding. In January of this year, the Government provided Hatfield with a short-term commercial bridging loan of £8 million. The intention was to provide time for the Government to consider options for longer-term financial support, which would allow mining to continue at Hatfield until 2016.

In undertaking the due diligence, and owing to changing conditions in the coal markets, it became clear that Hatfield would require funding in excess of the initial £8 million bridging loan and that longer-term support could not be delivered commercially. The Government worked extensively with the company directors and the European Commission to facilitate further support, and approval for state aid was quickly agreed with the Commission. I know that the right hon. Member for Doncaster North has paid tribute privately to, and I know he will join me in thanking publicly, all the officials in my Department for the really hard work that they put in to secure that arrangement.

It has been suggested that the Government could have provided Hatfield with additional support in the light of possible offers to buy Hatfield coal which might have kept the mine open until August 2016. The directors’ managed closure plan had assumed that replacement contracts, from June this year onwards, would be secured for all Hatfield’s coal output at pricing similar to what had been achieved before. I am aware that there was a possible offer—I have seen the email—from one company for about 50% of Hatfield’s coal output, in addition to other possible commitments and bridging loans. Those offers were at a significantly lower price than the previous contracts that were being replaced. That level of interest was deemed insufficient by the directors—it was they who made the decision—to support the planned closure through to August 2016, and, as we know, no contract was even drafted, even less signed.

Edward Miliband
I attempted in my remarks to make the tone of this debate as constructive as possible. It is correct that the mine would have needed more money to keep going, but does the Minister or her officials dispute the central proposition that more money would have come back in tax and VAT revenue? That is the central economic question that faces the House.

Anna Soubry
I do take issue with the right hon. Gentleman, and absolutely undertake to provide him with all the figures. My argument—it is not just my argument; it is the argument of the officials—is that there is effectively no market for that coal. It would be wrong to mine that coal and stockpile it for—what?—six years on the off-chance that perhaps somebody might come along and buy it. If there had been any way in which any company might have thought it could buy that coal, those contracts would have been secured, but, despite best efforts, they were not. It would be wrong—it would be a complete failure of the Government’s duty to the taxpayer—simply to hand over over and above the £20 million that was originally a loan, but which we now accept will never be repaid.

Edward Miliband
Forgive me, Mr Deputy Speaker, for intervening on the Minister again. With respect, she acknowledges that contracts were possible for 50% of ​the coal from one company. I have the email and could read it out, but I will not trade emails with her in the House. Another significant part of the coal could have been sold. It is acknowledged that more money would have been required, but, on the basis of the contracts that she has acknowledged could have been put in place, my contention is that more money would have come back to the Government. That is why it does not make economic sense.

Anna Soubry
That is where we completely fall out, unfortunately, because there was not even a draft contract. The email I saw was not even the beginnings; it was couched in terms of “perhaps”, “maybe”—

Jon Trickett (Hemsworth) (Lab)
No.

Anna Soubry
The hon. Gentleman says “No” from a sedentary position. He has not seen the email—

Jon Trickett
I have seen it.

Anna Soubry
Well, we will talk about it later. If the hon. Gentleman wants to intervene, he should stand up and do it in the right place.

In the emails I have seen, there is no contract. There is, unfortunately, no possible contract.

Edward Miliband
rose—

Anna Soubry
No, I will not give way, because I want to finish this point.

Kevin Barron (Rother Valley) (Lab)
Give way!

Anna Soubry
No, hang on, hang on. I have given way. [Interruption.] Hang on. This is a debate. I need to finish my sentence, and I am running out of time.

There was no possibility of a contract. The right hon. Member for Doncaster will accept that the directors and others—all involved in the future of the pit—were doing everything they could to secure a contract, but the one thing that nobody has been able to do is to secure a contract. There is no debate about that.
 
Edward Miliband
rose—

Anna Soubry
I will give way again, but I will run out of time.

Edward Miliband
I hope the hon. Lady does not run out of time.

I shall read an email from the head of generation liaison at the company concerned—I will not name the company but the Minister knows it. Let me just read this paragraph, because it is important:

“with the objective of working with you to support a managed closure of the mine with dignity, we have reviewed our procurement strategy and have determined upon a higher risk/higher stock approach that we could manage within to facilitate contract volume with you. Indicatively, subject to internal approvals, we could therefore commit to procuring”.

Then it lists the procurement of, essentially, half the coal. If that is not an offer, I do not know what is.

Anna Soubry
That is the same email that I have seen, and the whole point about it is the “coulds” and the “maybes”. Why did they not draft the contract? They had more than two weeks to do so, so why was it never done? If there was any chance of a contract being put in place, the process of deciding terms and conditions would have begun, but it never did. Why? Because the reality is that the companies knew that they could not afford to pay the prices to get the coal and to keep the colliery open.

Let us dig further into that email and make it clear that the offers involved a significantly lower price than those in the previous contracts that were being replaced. The level of interest was deemed insufficient by the directors, and that is the point. The right hon. Gentleman seeks to have a debate with me, and of course he is entitled so to do, but he should be having that debate with the directors. They were in possession of this information, and they were in contact with this particular company. They are the people who should have been getting the contract, but they did not do so. That is because they knew that they could not achieve what they wanted.

Edward Miliband
The contracts were not put in place because the Minister was saying, “Not a penny more.” That is the whole point. It was a chicken-and-egg situation. An offer was made by the company concerned but it required the Minister to agree to further aid. My contention is that that would have been economically rational.

Anna Soubry
If the right hon. Gentleman is right, why did the directors never say that to me? They certainly did not say it. They knew that if there was any chance of a contract, they would have pursued it. They did not do so. Why did the right hon. Gentleman not have this debate with the directors? Why did he not say to them, “Come on, guys, you’ve got an offer here. Get it written down in black and white. Get the contract signed.” That never happened because the directors had taken the honourable and the right decision. I am sure they took that decision with bucket-loads of regret, but the mine cannot continue because it is no longer financially viable, notwithstanding the fact that up to £20 million of taxpayers’ money will undoubtedly help to ease it, as it has done in the past. That money has been spent far more quickly than was ever anticipated. It was due to last all the way through to next August, but unfortunately, at this rate, there could be only a few weeks left, if that. And of course that includes the £4.5 million to ensure that the mine is put good.​

I reiterate that Hatfield has been unable to secure contracts to sell sufficient volumes of coal at the price necessary to support its closure plan. That is why the directors decided that it was not economically viable to continue mining. It is not a question of the Government putting in additional short-term funding. We have reiterated our continued commitment to make up to £20 million available—that was originally announced in May—to assist the company in achieving a managed closure. The reality is that there is a lack of economically viable contracts to sell the coal that is mined. I am running out of time, but I promise to answer in writing all the other questions that the right hon. Gentleman has rightly raised about the carbon price floor and other matters. He also asked about carbon capture and storage, which I will try to deal with in a moment.

I noticed on yesterday’s news that the first step had been taken towards opening a £1.7 billion potash mine in north Yorkshire, with the local authority giving its approval for the mine. That will provide 1,000 permanent jobs in the area. Those of us who have lived in or represented a coalmining area will know that there is a history of coalminers travelling to find work. I remember that one of the first National Union of Mineworkers officials I met was Jimmy Hood. He was at Ollerton at the time. He had travelled down from Scotland to work there, and many miners across the country came to Nottinghamshire or travelled to Wales to find work. I very much hope that some of the new jobs in north Yorkshire will go to the men of Hatfield.

I want to deal briefly with the question of carbon capture and storage. It has been claimed that the closure of Hatfield is short-sighted because it could have been used to supply the proposed new power station at Drax, which will be fitted with carbon capture and storage capabilities. The long-term future of coal is inextricably linked to CCS, and the Government have committed significant resources to facilitate its commercialisation, including committing £1 billion to our CCS competition, plus operational support under contracts for difference. However, on current plans, the coal-fired CCS project at Drax, one of the two CCS projects being supported through the Government’s competition, is unlikely to be generating until 2021, so that would not have been of assistance to Hatfield. I reiterate—