Orphaned Open-cast Mines

Andrea Leadsom Excerpts

Wednesday 9th September 2015 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

It is a pleasure to serve under your chairmanship, Mr Davies. I congratulate the hon. Member for Bridgend (Mrs Moon) on her efforts in getting the debate on this very important subject. She will be aware that I have also met Welsh Minsters to discuss the topic. I am delighted to be meeting her and some of her constituency colleagues later today.

I fully appreciate the concerns of hon. Members and their local communities about the lack of restoration work at the former open-cast sites. I can understand that they are looking to local and national Government to address the remediation of the sites so that they can become local assets. My office has looked carefully at what was said by the previous Energy Minister, and I can confirm that he agreed that the Treasury and the Department for Business, Innovation and Skills would look at potential solutions, including tax exemptions. To clarify the situation, the Exchequer Secretary sent a letter today confirming that a tax exemption would not be possible for future coaling in those open-cast mines.

As the hon. Lady explained, of particular concern in Wales are the sites that transferred at privatisation in 1994 to the Welsh successor company to British Coal. The new company acquired a number of operational sites and also British Coal’s land ownership and planning consents at a number of “prospective” sites. Having developed and worked those sites for several years, the company transferred the freehold ownership of the remaining sites to another company, which is registered in the British Virgin Islands. As I understand it, that company has taken the view that they cannot afford to restore some of the sites unless they are awarded planning consent to undertake further surface coaling. That of course places the local authority and the Welsh Government in a very difficult position. On the one hand, there is local resistance to yet more coaling in the area and on the other hand, any attempt to enforce restoration risks precipitating the insolvency of the company involved. Such an insolvency could allow the liquidators to “disclaim” the land assets, rendering them effectively ownerless; the land would be left unrestored unless there were costly public sector intervention.

As set out by the Prime Minister and in the Wales Bill announced in the Queen’s Speech, the UK Government are committed to delivering extensive new powers to Wales, building on the Government of Wales Act 2006, though which the National Assembly for Wales took on responsibility for town and country planning. As the hon. Lady knows, part of those responsibilities is the need to meet the liabilities, both future and historical.

Obviously the issues do not affect communities only in Wales; in Scotland and England there are other examples, and we can all learn from each other’s experiences. One such experience is that of Northumberland County Council, which in July this year approved an extension to the existing Potland Burn open-cast site, so that UKCSMR Ltd—the not-for-profit company established to deal with a number of UK Coal’s mines—could mine an additional 164,000 tonnes of coal and 50,000 tonnes of brickshale, to help meet the financial commitment of restoring the site.

I listened carefully to the hon. Lady. I truly admire her strong support for her constituents. Although I appreciate that hon. Members and their local communities will be disappointed, I find it difficult to see that it would be right for the Government to intervene in Wales while there continues to be a solvent site owner and while discussions with local planning authorities are ongoing. I am looking forward meeting the hon. Lady, along with the hon. Members for Ogmore (Huw Irranca-Davies) and for Aberavon (Stephen Kinnock), after the debate to discuss the matter further. That will follow on from the meeting I had with the Welsh Government Minister for Natural Resources recently, at which I offered the support of my officials to look at other private-sector led possibilities to address the funding required.

[Mrs Moon]

The Minister still has not addressed the fact that a 10-year bond-free period was given to Celtic, with an advance payment made to the Major Government, which would otherwise have been put into an escrow account that would have paid towards the restoration. Some of the money for restoration rightly rests with Westminster because the Government had the money for restoration in advance.

[Andrea Leadsom]

I would have to take up that specific point separately with the hon. Lady. It is not something that I particularly addressed. Obviously, she is telling me that, and it may indeed be the case, but I would want to look into that carefully with the Department.

My officials will shortly visit Wales to see one of the sites for themselves and have discussions with interested parties. I am sure that the hon. Lady will want to be involved with that.

[Jonathan Edwards]

Many of the problems our communities experience are a result of the privatisation of coal by the Coal Industry Act 1994 and the fact that the restoration protocols were not watertight. The UK Government have been receiving the revenue for the Treasury from the mining activities, so I find it very difficult to understand why the Minister thinks responsibility falls on the Welsh Government.

[Andrea Leadsom]

Governments do not allocate specific revenue lines to specific activities. I do not accept the premise of the hon. Gentleman’s point.

Importantly, my Department’s non-departmental public body, the Coal Authority, now provides to local authorities its expert advice on calculating the level of bonds required for future surface mine operations, to ensure that restoration costs are covered should the mining company in future no longer be in a position to carry out the work. The Welsh Government have recognised that work. The Minister for Natural Resources announced in April 2015 that the authority would continue that work and provide further advice on active surface mine sites in Wales. The authority is also working with the coal industry, national Governments and local authorities to provide the specialist skills needed to manage sustainably the risks presented by the decline of the industry. The Government have done as much as possible to support the coal industry throughout its recent challenges. They have provided financial support to help UK Coal and Hatfield colliery, for example, with their efforts to avoid insolvency and achieve a more orderly closure of their deep mines, and with the impact on those directly affected.

With the closure of Thoresby and Hatfield earlier this year, and impending closure of Kellingley later this year, surface-mined coal is now our major remaining source of indigenous supply. Production of surface-mined coal has been relatively static over the past four to five years, when it overtook deep mine production as the majority source. The future of the industry is closely linked to that of the power sector. Coal generation has been a critical element of our electricity generation mix for a long time. As hon. Members know, there will be no long-term role for unabated coal as we move to a low-carbon energy environment, and the Prime Minister has publicly pledged to end its use for power generation. As we move to decarbonise the power sector substantially, the role of unabated coal will diminish. Coal supplied 29% of our electricity in 2014, which is down from 40% in 2012. We expect that trend to continue.

[Alan Brown]

I presume that the Minister is aware that in the current climate most coal burned in the UK is imported from Russia and Colombia. There is therefore still a market for UK domestic coal. Moving towards carbon-free energy provision in the future is not necessarily an argument against further coaling in the UK at the moment.

[Andrea Leadsom]

I thank the hon. Gentleman; I completely accept his comments and I will address his point.

Any longer-term role for coal will be dependent on the successful deployment of cost-competitive carbon capture and storage. The Government have put in place one of the most comprehensive programmes on CCS in the world; we have committed £1 billion to our CCS competition, plus operational support under contracts for difference. There could still be demand for coal in the UK power generation sector in future, but, unfortunately, continued demand for coal for power generation has not necessarily translated into opportunities for domestic production, as the hon. Gentleman points out. The industry as a whole is in decline, with indigenous production at less than 12 million tonnes in 2014—around 95% lower than the levels some 60 years ago.

That point brings me back to the heart of the matter we are debating today: balancing the challenges facing the industry going forward and addressing the significant legacy it has left behind. There is an important role for those involved in the industry in achieving that balance. I assure the hon. Lady that the Government will continue to provide support and advice wherever we can.

Question put and agreed to.