Rescue plan for UK coal mines
The TUC has today written to government ministers asking them to secure a future for UK coal mining and the 2,000 jobs it supports by applying for EU state aid – a policy that could also save taxpayers money.
The alternative is the so-called “managed closure” of two of Britain’s last three coal mines – Thorseby in Nottinghamshire and Kellingley in Yorkshire – by the end of 2015. This will cause 1,300 skilled job losses, as well as hundreds more in supply chain jobs linked to the mines, and leave Hatfield Colliery as the last remaining deep mine in Britain.
A new report, Merits of UK Coal State Aid Application, by Orion Innovations for the TUC and NUM, makes the economic case for a government bid for EU state aid approval, so that:
- Both mines stay open until at least 2018.
- The UK reduces its dependence on imported Russian coal.
- The pits have the prospect of longer term viability as Carbon Capture Storage (CCS) technology reduces the environmental cost of coal fired power generation.
Keeping Britain’s mines open through state aid could also save the taxpayer money. The cost of state aid – estimated at around £63-£74m – could easily be covered by the £86m of extra profits. This is the likely benefit between 2015 and 2018 from over £500m in coal revenues, according to the study.
But an early closure of Thoresby and Kellingley mines would be bad for the workforce, their local communities and the wider economy. It says that an early closure would cost:
- 2,600 years of lost employment given the expected time taken for miners to find new employment, with significant costs in social security payments
- a £163m loss in employee income, and a £75m loss to the exchequer in terms of income tax and national insurance contributions
- a £1bn loss in company revenues.
In a letter to Energy Minister Michael Fallon and Business Secretary Vince Cable, the TUC has also warned that allowing the mines to close by failing to apply for state aid would jeopardise the UK’s energy security, not least given our high reliance on Russian coal in a time of troubled relations between Europe and Russia.
TUC General Secretary Frances O’Grady said: “Recent events in the Ukraine should have made clear the importance of having a secure domestic energy supply. Instead the government is allowing two of Britain’s three remaining coal mines to close, causing the unnecessary loss of 1,300 skilled jobs and leaving us even more exposed to fluctuations in the price of imported coal. But British coal mining does have a future if the government wants it to. An application for state aid would be cost neutral, save jobs and help ensure that UK mined coal supports our emerging CCS industry. The profits from extra coal production would save the taxpayer money too.
“With thousands of jobs and the UK’s energy security at stake, ministers must put aside their reluctance to intervene and apply for EU state aid. It would madness to allow the closure of British mines when countries like Germany and Spain are using far greater amounts of state aid to bolster their own domestic coal supply.”
Director of CoalPro, the UK Coal Producers’ Association, Phil Garner said: “There is a strong case for the UK government to provide financial aid to our remaining underground coal mines.
“This would maintain access to significant coal reserves, ensure that the employees continued in work and provide additional security of supply of fuel. If we are to develop CCS projects it would be ironic if there were no indigenous coal to supply them. Market prices will change and UK production can help to ensure that consumers are not exposed to coal price spikes in the future.”