Kellingley Colliery

Andrea Leadsom Excerpts

Wednesday 9th December 2015 Commons Chamber

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

I congratulate the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) on securing this debate. I also recognise the long-standing efforts of my hon. Friend the Member for Selby and Ainsty (Nigel Adams) in representing the interests of the Kellingley mine, as well as those of my hon. Friend the Member for Brigg and Goole (Andrew Percy), whose constituents have formed part of the Kellingley workforce for many years. On behalf of myself and the Government, I acknowledge the enormous contribution to UK energy security made over many decades by the UK Coal miners. At both Kellingley and Thoresby, which completed its mining operations in July this year, they have shown professionalism and commitment over many decades, as well as a determination to ensure the safe delivery of UK Coal’s managed closure plan.

Let me outline the support that both this Government and the previous Government have provided to UK Coal. Due to geological and performance issues at Kellingley, and a deterioration in global coal prices, UK Coal approached the Government in January 2014, seeking financial support to help it to deliver a managed closure plan. That original plan envisaged Kellingley and Thoresby closing in autumn 2014 and autumn 2015 respectively.

The right hon. Member for Normanton, Pontefract and Castleford has been critical of the Government, alleging that we prevented UK Coal from applying for state aid, but that simply is not true. On the contrary, we have been very supportive of the company throughout its difficulties. At the time of the original approach we were told that the company could last only “a matter of weeks” without an offer of support. The most pressing issue, therefore, was to provide financial support by the quickest means possible, and to deal with the immediate threat to the company and secure its short-term future. The state aid route was judged to be longer and riskier, which left a commercial solution as the best option. Structuring the solution in a commercial manner also had the benefit of not tying the company to a fixed closure date—something that a state aid solution would have done. Instead it would give the company flexibility and time to seek additional investment to extend the life of the mines.

[Yvette Cooper]

The fixed date that the Minister mentions under the EU state aid rules would have been 2018, which is in three years’ time. That was not a reason not to go down the EU state aid route. The deal she mentions that was supposedly the quickest route to go down took more than six months to resolve. The briefing that she has received from her civil servants does not seem to stack up.

[Andrea Leadsom]

The view was that it was a matter of only a few short weeks, and at that time it was considered that a state aid route would take too long and not work within the timeframe needed.

In April 2014, the Government agreed in principle to provide the company with financial support. In delivering on that commitment there were many twists along the way, including a failed sales process by the company and the withdrawal of an offer of support from a mining competitor. That process concluded with the Government providing a total of £6.5 million of loan funding in September 2014.

By supporting the company’s managed closure plan, we aimed to mitigate the worst impacts of closure on the workers, local communities and the supply chain. Without that support, UK Coal would have failed earlier in 2014 with the immediate loss of more than 1,900 jobs. UK Coal did subsequently present a state aid proposal in January 2015 to the Government. That sought state aid support of £338 million to prolong the working life of the mines by three years through to 2018. It is worth reminding the House that state aid approval represents the European Commission’s permission for the Government to spend UK taxpayers’ money, and consequently it has to be affordable and represent value for money. The state aid request did not pass the value-for-money hurdle, but we have continued to support the company.

[Mr Skinner]

There is another figure that the Minister is failing to mention. She is trying to argue that this Conservative Government have tried to save the pit. In truth, since 1984, 170 pits have closed, including Kellingley, and fewer than 10 of them were closed during the 13 years of the Labour Government. I think that tells a story: the Tories like closing pits.

[Andrea Leadsom]

As I said, the Government sought to support the managed closure of the pit. Following weak coal sales last winter and a deterioration in world coal prices, UK Coal approached the Government again in February 2015 requesting additional funding to keep its closure plan on track. As a result, the Government committed in March 2015 to providing up to a further £10 million of financial support and the provision of concessionary coal entitlements for eligible miners, estimated at £18 million, subject to state aid approval.

The Government, as a further commitment to the miners, also agreed to the deferral of all repayments on the previous loans until after the miners had received their redundancy and other contractual entitlements at both Thoresby and Kellingley.

[Yvette Cooper]

rose—

[Andrea Leadsom]

I am sorry, but the right hon. Lady will appreciate that I want to respond—

[Yvette Cooper]

What about enhanced redundancy terms?

[Andrea Leadsom]

There have not been enhanced redundancy terms since 2012, as she will be aware.

The funding requirement was £10 million, but we were aware of the riskiness of the mining industry, which could have seen this requirement increase. Ensuring the company had sufficient funding to pay the miners’ contractual rights was our key priority. We applied for and received permission to provide up to £20 million specifically for statutory redundancy and contractual notice pay, with £10 million to be available as a contingency in case of need.

Following state aid approval, £10 million was injected into UK Coal in August 2015. The right hon. Lady was concerned that the Kellingley miners were at risk of not receiving the same package as that received by the Thoresby miners. I would like to emphasise to her that, thanks to the excellent work of the miners and the £10 million cash injection, UK Coal has enough cash to pay the Kellingley miners being made redundant this month with the same severance package as the Thoresby miners received.

I would like to turn briefly to the non-financial support provided to the affected miners both at Thoresby and Kellingley. One of the many benefits of having a managed closure, rather than one which is sudden and unplanned, is that it gives the time to develop a joined-up approach between Government and UK Coal. Department for Work and Pensions representatives have been proactively working with Kellingley for several months to provide a fully joined-up service. Several drop-in support sessions have been hosted, most recently last week, enabling the DWP to bring together local employers with vacancies, local colleges offering training and qualifications, financial advisers and local district council business advice teams offering support on business start-ups. On the back of those sessions, more than 140 training applications have been received for vocational training, such as HGV training, occupational health and safety, fibre optics, forklift truck operations and copper cabling maintenance and installation.

In conclusion, the successful delivery of the closure plan at Kellingley has been made possible because of the hard work of the men, Government support and the favourable fixed-price contract UK Coal has had with the power companies, as my hon. Friend the Member for Selby and Ainsty pointed out. That has enabled the company to be cash generative and have sufficient money to pay all employee entitlements. I acknowledge, however, that the closure of the Kellingley mine, being the last deep operational coalmine in the UK, represents the end of a long and proud era for the UK’s coalmining industry.

I would like to finish as I started by reiterating my gratitude and that of the Government to all those who have served at Kellingley and elsewhere in the mining industry over the years. It has been a difficult job in a hostile and trying environment, and they can be proud of the part they played in heating and lighting our homes and powering our businesses and economy. Their professionalism and good humour in carrying out their job should be acknowledged by this House.

Question put and agreed to.