Rail Freight Traffic

Cathy Jamieson Excerpts

Wednesday 24th October 2012 Westminster Hall

[Sandra Osborne]

I certainly do agree, and I intend to raise that point later in my speech.

The charge would exclude Scottish-produced coal from the English market, resulting in a reduction in output of up to £3 million tonnes a year and, as my hon. Friend said, its replacement by imports. More than 1,000 direct jobs will be lost in an area of already high unemployment, particularly in the west of Scotland. Even the threat of the proposal is constraining investment, and it is imperative that it is withdrawn immediately.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I assure my hon. Friend that I can understand her Ayrshire accent perfectly well this morning, even though she has a cold. Does she agree that it is concerning that the ORR seems to be suggesting that the electricity coal industry can afford to pay the increases, when there are problems in the industry in Ayrshire and jobs are under threat?

[Sandra Osborne]

Yes, totally. I intend to cover that topic later in my speech.

We are only too aware that the charge is proposed in a context of revenue-raising efforts and cuts across the board. The Government seek to end what they regard as a subsidy to the power industry. I argue that the proposal is ill thought out, counter-productive, at odds with existing Government policy and amounts to a possibly fatal attack on the coal industry, especially in Scotland and my constituency.

I will provide some background to the current position of the coal industry in Scotland. It is well publicised that coal mining in the UK is struggling. Contrary to the statements in the consultation documents about high international coal prices, the reality is that coal prices have fallen by some 30% so far this year. The recent trading announcements from a number of coal industry companies, which show an industry under severe financial pressures, reflect that. Margins are wafer thin and there have already been redundancies in Scotland, including in my constituency. Scottish Coal, for example, is consulting on 100 redundancies on top of a 10% cut in wages for the whole work force—hardly a thriving industry.

An increase of £4.50 a tonne in freight charges for supplies to England will lead to an immediate reduction in output, as high-ratio coals within existing sites are abandoned, with the possibility of some sites closing altogether. The suggested track charge increase could double the cost of coal transport from east Ayrshire to customers in England. That increase will impact heavily on the viability of coal operations in Scotland, with the very real prospect of mine closures. If operations involving the three companies in my constituency close, it will have a devastating impact on employment—direct and indirect.

We, of course, have already experienced the devastation of mine closures in our communities, so we know the results only too well. The area has never really recovered from the closure of deep mining in the ’80s, but open-cast mining has thrown us a lifeline, with well-paid jobs and community benefit. History has shown that local people are prepared to tolerate inconvenience and blight on their landscape, because they know how important the jobs are for every generation.

[Cathy Jamieson]

My hon. Friend has rightly identified that people have been prepared to accept the surface mining open-cast industry in many of our communities. Does she agree that that will be put at risk if coal is transferred back to the roads, rather than transported by rail?

[Sandra Osborne]

Yes, and some of the companies are not in a position to do that, even if they wanted to.

In 2012, 1,196 people are directly employed in open-cast mining in Scotland and 704 in east Ayrshire, which has the greatest number of coal sites in Scotland and the highest number employed in the industry. It produces more coal than any other area in Scotland and that is worth some £9.4 million to the local community. Following the decline of the deep mining sector and the devastation that followed, decline has set in and has been difficult to shift. The area has had consistently higher than average unemployment rates, population decline and trends of low economic activity and a high percentage of jobs in the public and retail sectors and areas of high relative deprivation. I am sure that the Minister gets the picture, but, if not, he is welcome to come to see for himself. The bottom line is that under no circumstances can we afford to lose the relatively secure, well-paid, private sector employment and input to the local community that the open-cast mines bring.

The consultation includes a range of suggested charge increases, but an increase of £4.50 a tonne is forecast. The consultation states that coal producers could absorb that increase in track charges, but no evidence base is presented to support the assertion and it appears to be just an arbitrary statement. Furthermore, the consultation proposes that the coal and the nuclear industries be singled out to be burdened with the increased track charges. A cynical view would be that the ORR sees those industries as a captive market without the ability to revert to road transport.