Open-cast Coal Sites (Restoration)

Sandra Osborne Excerpts

Thursday 29th January 2015 Commons Chamber

[Mrs Moon]

My hon. Friend is right. It does not reflect well on the Major Government or on Celtic Energy, which has had a good reputation in Wales. Now its reputation is deeply tarnished, and I am sure it will want to make whatever restitution it can to restore that reputation because I know that it wants to keep operating in Wales.

Will Watson says that

“had escrow funds been put away for Parc Slip at today’s level of around £10m per year for the years 1994 to 2004, then that fund would now stand at around £155m (assuming it was invested to simply cover inflation).”

My hon. Friend and I would be very confident if we had £155 million to restore that site.

Mr Watson also said that

“the Government in 1994 had £100 million in their restoration fund, (worth around £178 million today) that could have been made available for restoration.”

In his opinion, it seems reasonable to ask the UK Government to contribute to a solution at Margam and potentially at East Pit. If Mr Watson is correct, the Government took money that would otherwise have gone to restoration. There was a significant benefit to the Treasury in 1994. Where did that money go? How do we get it back?

My local residents argue:

“The Coal Authority, the government’s agent which sold the leases and licences was empowered to impose obligations on the private companies to ensure restoration and it failed to do so.”

Can the Minister confirm whether this was the case and why no obligations were imposed? Can he confirm the existence of a British Coal lump sum for this site? Where was it held and when was it imposed? What happened to it and how much was it worth?

The Scottish and Welsh Governments have published papers on failure to restore open-cast sites and talk of a £2 per tonne levy imposed by the Coal Authority. Despite questions to the Treasury and the Department of Energy and Climate Change, I have been unable to clarify if the levy was imposed at Parc Slip Margam, how much was collected, where it was held and which mines were affected.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

My hon. Friend obviously has some knowledge of what happened in the Scottish situation. She will be aware that we have asked for some of the coal levy to be returned for restoration, but the Government have refused to do that. Does she agree that that is unreasonable?

[Mrs Moon]

I have awful news for my hon. Friend. DECC has informed me—this is such a sad thing to hear—that much financial information was unavailable because it relates to business practices from nearly 20 years ago. I have friends who have their bank accounts from 20 years ago! I find it incredible that the Department does not have records just because this happened 20 years ago under another Government. Unbelievable.

Parc Slip Margam is mostly in the constituencies of my hon. Friends the Members for Aberavon and for Ogmore, but the residents affected are mostly mine. Cynffig Hill is about 300 metres south of the void. The site is over a mile long and half a mile across, and includes a huge void that is filling with water. A pump in an old mining shaft that was supposed to send water into the nearest water course failed to function, and Celtic Energy began pumping on 20 January as the water had filled to 40 metres. When it went above that it posed a risk to the community below.

Mr Watson informed my office that Celtic Energy will be pumping water out of the void for at least three months, and would give three months’ notice before stopping. He stressed this was a good-will gesture. He indicated no liability and that his company would not be willing to continue to incur these costs. The water, I am told, goes through filtering ponds into tributaries of the River Kenfig. Water samples have been taken, although the analysis is not yet complete.

I have to admit family connections to these developments. My husband, when county ecologist for Mid Glamorgan, opposed the extension sought by British Coal in 1993. If only he had been successful. I spoke against the extension in 2007. If only I had been successful. Coaling ceased in 2008. At one point, it was hoped that the problem would be resolved by the opening of the drift mine by Tata. My hon. Friend the Member for Ogmore will remember being at the meeting when that was discussed. Coal from a slip mine into Margam mountain would have put the spoil into the Margam Parc Slip void. That failed to happen.

In 2010, Celtic Energy sold the land rights of Margam and three of the sites to Oak Regeneration, a company based in the British Virgin Islands, for £1 each. The Serious Fraud Office investigated the transfer, but legal proceedings failed twice as they were found to be wrong in law. According to Private Eye, after the sale, Celtic’s owner, finance director, solicitor, assistant solicitor and senior partner—five individuals—received bonuses and loans in excess of £10 million pounds from companies in the British Virgin Isles.

According to Celtic, however, it has no funds available and the restoration has become entirely the legal responsibility of Oak. My local authority, in a report to its development control committee, referred to Oak on 8 January, stating:

“it is…evident that serving an enforcement notice is unlikely to secure restoration of the site, nor do either of the Councils have the financial means behind them to secure the restoration of the site in default.”

Mr Watson yesterday said I was misinformed when I stated on 13 January that in 2010 Celtic Energy had £136 million in a restoration fund, and that the fund had reduced by £63 million by 2011. He said:

“This is simply not correct. The figures you quoted are ‘provisions’ for liabilities on the balance sheet and do not represent assets in any form...The provisions were reduced when the land was sold along with restoration liabilities to Oak Regeneration Incorporated in September 2010. That transaction was the subject of the SFO investigation which has now closed. During the course of the SFO investigation it was not clear whether the transaction had been effective in transferring liabilities and so the accounts were amended to put back the provisions until the matter was resolved. That position will now be re-visited once more.”

Wherever the money is, let us have it back in some form of restoration fund for Parc Slip Margam.

“None of these changes in the provisions in the statutory accounts make any difference to the cash the company is holding, nor to the restoration escrow funds”,

which it claims are £46 million and

“held by local authorities.”

Bridgend county borough council has said that the restoration fund for Parc Slip Margam, which is in an escrow, stands at £5.7 million and that the estimate to secure the full restoration is between £30 million and £40 million. Oak Regeneration has submitted planning proposals, which have been rejected, including for the building of 2,500 new homes, heated and cooled using geothermal energy; a railway station; a new road to the M4; and five years of open-cast coal extraction.

The mining company Hargreaves has proposed tax exemptions, and my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) has argued that these proposals be considered. I do not want to steal her thunder, but I would be interested to hear more about those issues.

Coalpro represents the majority of UK coal producers. It supports any mechanism that helps to restore sites left behind by former operators. Although opposed to the carbon price support mechanism, it is in favour of a short-term exemption if this would ensure that abandoned and orphaned sites are restored for beneficial future use. The industry supports this, which is important, and I look forward to hearing what the Minister has to say.

--- Later in debate ---

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

I will try my best to cut down my speech to five minutes. To be fair, I did secure a Westminster Hall debate on this subject on 6 January, so the Minister has heard it all before, but he will have to hear it again.

The situation in Scotland is far worse than in the rest of the UK, and the situation in my constituency of East Ayrshire is far worse than anywhere else in Scotland. I do not need to say any more to emphasise just how bad the situation is. We have almost 20 sq km of disturbed and unrestored land, which has been abandoned. East Ayrshire council commissioned an independent assessment of the true cost of restoring the land and a cost of £160 million was identified for East Ayrshire. Hargreaves estimated a cost in excess of £300 million for the whole of Scotland. But the bond to carry out the restoration work in East Ayrshire totals just over £28 million, and even that is not settled. Clearly, there is an enormous funding gap.

I have pressed the Government to return funding to Scotland from its contributions to the coal levy, but that has not been forthcoming. I am not aware of any other fund that is available, but if my hon. Friend the Member for Bridgend (Mrs Moon) is right and that money exists, I would certainly support the idea of devolving it to the Scottish Government. The Scottish Government have responsibility for this matter, and they are not coming up with any money either, so we have problems at both UK and Scottish level.

Any money that is available will pay for a greatly reduced quality of restoration. That is why the proposal by Hargreaves for a technical change to extend the coal slurry carbon price support exemption to include coal derived from schemes supporting restoration projects is well worthy of serious consideration. I cannot over-emphasise the urgency of the situation. I will not go into all the technical details as I had originally planned, but people can read Hansard for 6 January if they want more details.

Obviously, there are pros and cons to any proposal, but this is the only game in town of which I am aware. The recent proposals from other members of the Confederation of United Kingdom Coal Producers have come in only at the last minute and they have not been thought through. I know that the Treasury has received a detailed analysis of the net economic impact and potential benefits of the scheme. I am pleased that the Minister responded well to my debate on 6 January and said that he and Treasury officials would meet a group of us, and perhaps some of my colleagues, to discuss the proposals. I look forward to that meeting taking place as soon as possible.

My main emphasis is that this is a disaster for our communities. It cannot be ignored; it must be dealt with as soon as possible.