Coal Authority (Compensation Procedures)

Andrea Leadsom Excerpts

Thursday 26th May 2016 Commons Chamber

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

I sincerely thank the hon. Member for West Bromwich West (Mr Bailey) for securing this debate on what I fully recognise is a very serious issue for his constituents. I will start by providing some background on the work that the Coal Authority undertakes and, in particular, on its procedures relating to subsidence and compensation, which are highly relevant to his constituents’ situation.

The coalfield areas of England, Scotland and Wales cover some 26,000 sq km, or 11% of those countries’ surface area. Since the start of the industrial revolution, human settlement has followed natural resource availability, industry and employment. The coalfields are consequently some of the most densely populated parts of the UK. Some 7 million properties lie within them; 1.5 million properties lie above workings where coal has been mined at depths of less than 30 metres, and at least 172,000 coalmine entries are known about.

Although there is little active coalmining today, centuries of underground and surface extraction have created a huge legacy of environmental issues and public safety hazards. The Coal Authority was therefore created under the Coal Industry Act 1994, when the previously state-owned coal industry was privatised, to regulate the industry and manage those legacy issues. It helps DECC to manage the UK’s energy legacy safely and responsibly.

A substantial legacy of mining hazards remains in many major conurbations. One third of the 172,000 documented coalmine entries are in urban areas. Surface collapses above abandoned workings and shafts present the most common risks to the public. A 24/7 hazard line allows the public to report mining hazards around the clock, enabling immediate responses. Approximately 1,000 surface and subsidence incidents are reported each year, about half of which are found to be mining related.

The scale of the issue means that costly proactive remediation of the surface effects of shallow mineworkings and mine entries is carried out only where there is a higher risk to persons or property. Known shafts represent zones of risk. In 2008 the Coal Authority therefore began a mine entry inspection programme to identify such areas for proactive remediation. To date some 130,000 shafts have been inspected, 1% of which have required remedial treatment.

That brings me on to the remedies for property owners where coalmining-related damage occurs. In a coalmining area, a home or property may be damaged by coalmining-related subsidence. If a property has suffered such damage, there are powerful remedies under the Coal Mining Subsidence Act 1991, as amended by the 1994 Act. Responsibility for dealing with a claim rests either with a mining company or with the Coal Authority.

The authority manages the effects of past coalmining, including those subsidence damage claims that are not the responsibility of licensed coalmine operators. That includes responsibility for remedying and meeting the costs of subsidence associated with coalmines, for public safety and for administration of claims for coalmining subsidence damage from property owners.

The authority’s work on handling subsidence and safety issues associated with former coalmines is a statutory duty under both the 1991 Act and the 1994 Act. Those duties were established to protect the public and their property from the potential impacts of past coalmining. The 1991 Act sets limits to that liability by defining coalmining subsidence damage and setting time limits for liability.

Where a claim is made and the Coal Authority is found to be liable, in general it will carry out repairs to a property. Those repairs should make good the damage, but in certain circumstances the Coal Authority will pay compensation instead of making repairs. If a home becomes unsafe or uninhabitable because of subsidence damage, there are arrangements for people to be provided with, or receive payment for, equivalent alternative accommodation. If a home has been damaged by subsidence and cannot be sold at its former undamaged value, the Coal Authority may—depending on the circumstances—be under an obligation to buy it for its undamaged value. Where property has been so badly damaged that it has to be demolished, the Coal Authority will either rebuild it, or pay compensation based on its full market value in its undamaged condition. I hope that background has been helpful in setting out the size of the issue and how it is dealt with in statute.

Turning to the hon. Gentleman’s constituents in Myrtle Terrace, it is important to note that there is no statutory basis for the award of compensation for any perceived loss of market value due to the mere existence of a shaft or coal workings in the vicinity of a property. The legislation and protection that it affords covers only actual subsidence damage that has been caused by a shaft or mine entry. For the residents of Myrtle Terrace—and other residents in coalfield areas—future prospective purchasers of their properties are afforded enormous protection first by the powerful remedies of the subsidence legislation, and secondly by an insurance product on a prospective buyer’s mining search report that offers protection against loss sustained by the owner of the property, and the lender, if any new problems or adverse conditions are revealed in a subsequent coal and brine search report that were not revealed by the original report to which the policy was attached. Thirdly, the Council of Mortgage Lenders advises that the presence of a mine entry within 20 metres of a property will not, in principle, be a barrier to obtaining a mortgage.

Compared with other types of risk, such as flood risk or other types of mining, purchasers are significantly better off. No house insurance policy is required for coal subsidence, as all expenses are paid for actual damage. Although it is a matter for individual lenders and insurance companies, they have the reassurance offered by the powerful remedies of the subsidence legislation to manage their risks.

At the point of last inspection, there was no actual subsidence damage to the properties under discussion. However, if residents are aware of any issues caused by the presence of those shafts, the Coal Authority will re-inspect properties for any signs of coal mining-related damage. I completely sympathise with the hon. Gentleman’s constituents, and I realise that this will be a disappointing reply for them. However, I hope he will appreciate that it is not affordable or practical to underwrite non-existent damage for 7 million properties.

Question put and agreed to.