Carbon Price Support (Land Reclamation)

Matt Hancock Excerpts

Tuesday 6th January 2015 Westminster Hall

[The Minister for Business and Enterprise (Matthew Hancock)]

It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) on securing this debate on an important issue in her constituency and other surrounding constituencies. I know that this has been a significant concern since the 2013 failure of the two major open-cast operators in Scotland.

I recognise the enormous contribution made to the coal industry north of the border and its historically vital role in respect of the UK’s wider energy needs. Scotland has a proud deep-mining heritage, brought to an end in 2002, when flooding closed the last remaining deep mine. Since then, the torch has been carried for many years by a vibrant surface mining sector. However, over the last year and a half it has become all too apparent that operators of considerable significance within that sector have not been managing the full range of their responsibilities with the care and rigour that could reasonably be expected of them.

Healthy production levels had been masking a growing backlog of unfulfilled and inadequately underwritten restoration obligations. At the same time, it emerged that in some cases those tasked with monitoring the compliance of operators had fallen short in their duty of care towards open-cast mining communities. Against that backdrop of an industry making an important contribution to local economies where alternative job opportunities are often limited, it would appear that more weight was sometimes given to retention of employment than to ensuring that operators were properly keeping their houses in order. The root causes of the significant problems that have emerged as a result have been independently and comprehensively examined by a team led by the Scottish Government’s former chief planner, Jim Mackinnon. Its report, published in January last year, looked into the particular circumstances in east Ayrshire.

Since the events of April and May 2013, action has been taken. I pay tribute to my counterpart in the Scottish Government, Fergus Ewing, for the prompt action he took in establishing and convening the Scottish coal task force—as the hon. Lady said, many of these issues are devolved—which brings together a broad range of stakeholders including not only those affected by the industry’s collapse, but those in a position to mitigate some of the immediate impacts and offer solutions for the future. The task force has met seven times since May 2013 and has been a catalyst for positive action. Many of its members have worked hard in other forums, not only to address the employment and environmental consequences of the 2013 events, but to look at how safeguards can be put in place to ensure that the same circumstances do not arise again.

[Sandra Osborne]

As I said in my speech, I am a member of the task force and I fully appreciate all the work that has been done, not least to try to prevent such things happening again. That does not, however, substitute for the amount of funding needed to deal with the problem. I have raised that point several times in meetings of the task force. It is the elephant in the room. We still do not get a positive answer. Does the Minister agree that we need to look at the funding situation?

[Matthew Hancock]

Of course, I was going to come on to that point. Action has been taken and needs to be taken through the task force, especially on the employment side. We have to recognise the role that the industry continues to play and has to play in the future. As the hon. Lady said, in particular we have to recognise the role that Hargreaves plays and the significant commitment and investment in the Scottish sector that it made in stepping into the shoes of the failed companies. As she said, it is not the fault of Hargreaves. It is part of the solution and should be thanked for its continuing contribution, along with others, to local economies. Hargreaves provides 500 direct employment opportunities where there might have been none, had it not acted as a replacement for the companies that went bust.

[Mr Spencer]

Since the Minister’s appointment, he has built a long record of knowledge of and support for the coal industry, particularly in Nottinghamshire. Does he recognise that the industry can help itself if the Treasury assists in changing some of the tax laws around the carbon floor price? Can we assist him in lobbying Treasury Ministers and getting that message across to the Treasury?

[Matthew Hancock]

I am glad my hon. Friend said that, because I was just about to come on to that issue. Carbon taxes bear down on carbon-producing industries, and that has an impact on coal, which is at the core of today’s debate. The carbon price floor policy sets out the future cost and the trajectory to 2030. We have brought that trajectory down in recognition of the impact on carbon-intensive industries. The carbon price floor is designed to drive the uptake of low-carbon investment.

The question of whether we should look for an exemption is at the core of the debate on the future. There are a number of different issues, including the question of whether using a tax offset to deal with what is essentially a problem of spending is the best solution. I am happy to meet with the hon. Lady, Treasury colleagues and the Under-Secretary of State for Scotland, my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), whom I spoke to this morning about this issue, in which he takes a close interest. There is also the vital question of value for taxpayers’ money. We are living in times when taxpayers’ money is scarce and there is not much money around.

[Cathy Jamieson]

I am listening closely to what the Minister is saying. If he thinks that a tax offset is not the correct solution, will he commit to exploring other solutions with Treasury colleagues, given that our constituents are left with these massive holes in the ground?

[Matthew Hancock]

I am not ruling out a solution through tax; I am merely saying that there are several ways to tackle this problem. We should work in partnership with the Scottish Government in dealing with it, because the question of where liabilities fall is complex. We should also work in partnership with the local authorities involved, which have already put a huge effort into trying to resolve the situation. I propose that we work with the Scottish Government, local authorities, the Scotland Office and the Treasury. I am happy to set up that meeting with the Members here today to see whether we can find a policy solution that works and is technically feasible, whereby the financial issues can be resolved while being consistent with the need for value for money in public spending. Our estimate is that the tax proposal put forward by Hargreaves would cost the Exchequer a minimum of £200 million. Obviously, we would need to be convinced that it is the most effective way to address the issue.

[Sandra Osborne]

I point out that Hargreaves says that the number of people who would be employed, the tax take from that and the knock-on effects for the local economy would help offset some of those costs.

[Matthew Hancock]

I am thrilled to hear that another Member of the Opposition has been converted to the principle of the dynamic scoring of taxes. On whether a reduction in tax, which is essentially what the hon. Lady is calling for, would have a positive impact on the economy and would feed through positively, perhaps I can persuade her with some good old Scottish Adam Smith—that a low-tax economy is the way forward. However, it is not only the wider benefits for employment and the economy that have to be taken into consideration in the question of value for money; there is also the environmental impact of doing nothing and the question of how we resolve the legacy.

Two hundred million pounds is a lot of money, and there is not a lot of money around at the moment. The issue will require hard work and some lateral thinking. I suggest that the next step is to get together with different Departments in the UK Government and the Scottish Government, as well as local authorities and concerned MPs, to work with the UK Treasury, which I have met on this issue, to try to achieve some kind of resolution. Whether that is this specific proposal or a wider package that can be put together, we should look at all the options. We should work out on whom the liability falls. We should work with the industry and Hargreaves in particular—it plays an important role in this and in mining elsewhere, and I work closely with it—to try to achieve a resolution.

I give the hon. Lady this commitment: I will work towards that solution alongside Ministers in other Departments to see what we can do to resolve what is clearly an unhappy circumstance that has a big physical impact on her constituency, as well as on her constituents and those in neighbouring constituencies.

Question put and agreed to.