I beg to move,
That this House has considered financial support for restoration of opencast coal sites.
I thank the Backbench Business Committee for facilitating this debate. I also thank Jan Adamson, Councillors Huw David and Philip White and fellow south Wales MPs and AMs, among others, as well as many right hon. and hon. Members who have altered their travel plans to be here today to fight for their communities.
We have a national problem. There are currently 34 open-cast mines across the UK—17 in Scotland, nine in south Wales and eight in England. There are also an unknown number of unrestored and orphaned sites, where developers have declared bankruptcy and disappeared. The fate of all those sites is of great importance. The Coal Industry Act 1994, passed under the Major Government, privatised the remains of British Coal and gave the then Department of Trade and Industry powers to ensure full continuity from the coal corporation to private companies.
In 1995 the then Minister for Industry and Energy, when pressed by my hon. Friend the Member for Lanark and Hamilton East (Mr Hood) on the issue of Coal Authority responsibility, replied:
“I assure him that those matters are being dealt with. The Coal Industry Act 1994 gives the Department of Trade and Industry powers to ensure full continuity from British Coal to the successor companies, which have the same rights and obligations as British Coal. Planning consent and the enforcement of planning conditions remain matters for the planning authorities. With regard to…concern about the ability to meet obligations for opencast sites, the Department checked carefully the financial status of the successor companies as part of the bid process.”—[Official Report, 8 February 1995; Vol. 254, c. 334.]
More recently, in March 2011, my hon. Friend the Member for Aberavon (Dr Francis) asked what assessment had been made of
“the effectiveness of land remediation following the closure of open-cast mining operations”.
He received the following reply from the then planning Minister, the hon. Member for Bromley and Chislehurst (Robert Neill):
“This Department has not carried out an assessment of this type but we would expect mineral planning authorities in England, when granting planning permission for open-cast mining, to set site aftercare and restoration conditions…to secure the high standard of restoration of the land concerned.”—[Official Report, 9 March 2011; Vol. 524, c. 1127-28W.]
Those are mixed messages about the responsibility for restoration.
Yesterday, I received an e-mail from Will Watson, chief executive of Celtic Energy. That company took over 13 south Wales sites in 1994. Nine have completed coaling and been restored, two are working, one pit is subject to a planning application and one, Parc Slip Margam, is a highly controversial site located in my constituency and that of my hon. Friend the Member for Ogmore (Huw Irranca-Davies). When Celtic Energy took over Parc Slip, also known as Margam, it did not provide a restoration bond. According to Will Watson, that was due to the Government’s decision in 1994 to take a larger cash receipt for the sale to the company in return for a 10-year bond-free period.
Does my hon. Friend find it extraordinary that Celtic Energy was given an exemption from any form of restoration bond, whereas all the other private operators in the area had to pay such a bond? It made for a completely uneven playing field.
My hon. Friend’s constituents in Pyle, my constituents in Cefn Cribwr—whom she used to represent—and others are deeply affected by this. They think it is totally unjust that the company seems able to walk away from its responsibilities for remediation and doing well by that community. Does she agree that it is astonishing that at some point in the distant past a deal was done—which our constituents regard as a dirty deal—to allow the company to renege on its responsibilities and walk away? It is not good, and it does not reflect well on the Government of the time either.
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.
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?
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.
I commend the forensic way in which my hon. Friend has researched and is explaining this complex situation. It often seems like one of those conjuring tricks with the three cups and trying to find the pea—only in this case, it is money, not a pea. Will she reflect on the fact that although pumping is taking place—temporarily at least—and people should not be worried at the moment, this is not a long-term solution? I hope to hear a way forward from the Minister, because we cannot keep pumping this stuff out when it is so close to the top.
My hon. Friend has been sneaking into my office and reading my speech. In fact, when I originally wrote it, I used the words “pass the parcel”, because every Government agency and Department I have spoken to has passed the parcel. It has been shocking.
The scheme will relate only to orphaned restoration liabilities where owners and operators are bankrupt or liability has fallen back on the state, meaning no breach of the “polluter pays” principle, and the exemption would be limited to the amount of restoration coal necessary to make the scheme viable. If it is not the responsibility of companies, it cannot be right for the responsibility for open-cast coal sites to be devolved to the Scottish or Welsh Governments, or even to the mineral planning authorities, without the finance also being devolved. That is just not right. As I have demonstrated, the Treasury and its agencies have benefited before and since privatisation. The funding must go with the responsibility.
The problems affect everybody living close to the mines. Peoples’ lives have been blighted by ideologically driven legislative failures. As a Parliament, we have to give people a plan of action and a sense of hope that we are taking responsibility and tackling this problem, and we need a grown-up Government who will co-operate with devolved Governments. Gwenda Thomas, the Assembly Member for Neath, has issued a statement, which I fully concur with, as I am sure my hon. Friend the Member for Ogmore does, calling on Celtic Energy to take decisive action to demonstrate its commitment to restoration. Celtic used to have a reputation in our area as a model of responsible mining. It needs to stand up and rebuild the respect our communities had before it ripped the profits from the valley, endangered local people and walked away.
Order. I hesitate to interrupt the hon. Lady, and I do not want to take time doing so, but she has exceeded the normal time for a speech of this kind, and she will be aware that many of her colleagues also wish to speak. I do not suggest she stops immediately, but perhaps she can draw her remarks to a conclusion soon.
Madam Deputy Speaker, you too have been looking at my speech. It is not fair. People are sneaking into my office.
The Treasury has profited. Businesses have profited. Somebody has to hold up their hand and take the moral, social, political, financial and ethical responsibility. Nothing will change unless politicians do that. We must accept responsibility. We cannot let the private companies get out of this with a responsibility-free zone. Inadequate legislation failed; inadequate regulation failed; the mining industry has failed. We have passed the parcel of responsibility for too long. Let us stop the music, and make the changes our communities need, expect and deserve.
The House owes a debt to the Backbench Business Committee and particularly to the hon. Member for Bridgend (Mrs Moon) for bringing up this subject. The situation she reviews in south Wales is a really dreadful one, and a source of anxiety to any area where open-cast is currently contemplated.
My constituency was the last deep-mining constituency in the north-east, and it also has a large amount of open-cast mining—it has had for many years, it still does and it is committed to having more in the future, as permissions have already been given. In the early days of open-cast mining, whole villages were removed to make way for it. The villages of Radcliffe and Chevington Drift in my constituency were totally removed in order to enable open-cast mining.
More recent applications have in many cases been even more controversial because some of the earlier ones related to areas with a fair amount of dereliction from deep mining or for other reasons, and there was a net benefit from the restoration process. Open-cast mining now, however, is moving to areas that will suffer for a considerable period and, when restored, they will not be in any way better than the areas they replaced—even if the Banks Mining restoration on one of the sites on the estate of Lord Ridley, which features a large figure of a lady from the former Northumberlandia park, has had 100,000 visitors. I suppose that is one way of making a success of restoration.
Around Widdington and Widdington station in my constituency, people have lived with open-cast for 40 years, and it looks like they will be doing so well into the future. Permission already exists for the Ferneybeds site, another Banks site, with three years of excavation, three quarters of million tonnes of coal and 200,000 tonnes of fire clay expected to be taken out of the surface mine. Banks has a projected application for Highthorn, close to the magnificent Druridge bay and the villages of Cresswell, Ellington and Lynemouth. Local people are worried that this might be granted either by the planning authority or on appeal, and that the planning authority might be frightened of losing it on appeal and so might grant it in perhaps a more limited form. That fear exists even before the application has been formally submitted.
Where surface mining does take place, people are entitled to certainty that restoration will be completed to high quality and on time. The major sites in my constituency have been UK Coal sites—and we all know what has happened to UK Coal. The Butterwell and Steadsburn/Maidens Hall sites are UK Coal sites. The Butterwell site has to cease operation by July this year, while the Steadsburn/Maidens Hall site ceased operation some time ago. The soil has been replaced but no cultivation has yet commenced, and residents have complained about the delays in restoration and aftercare.
Following the demise of UK Coal, Harworth Estates has become the freeholder, and an organisation made up of former UK Coal directors—UK Coal Surface Mines Ltd—has become the operator in these areas. We are dependent on dealing with those organisations for the kind of restoration that the sites need either now or for the future. Coaling ceased at the Stobswood site in 2008, but site buildings and haulage roads still have to be removed, and footpaths reopened. In fact, Harworth Estates has now applied for planning permission to keep the site offices and use them for another purpose. There is therefore anxiety about sites that have already ceased coaling; anxiety about sites for which permission has been granted; and anxiety about potential further sites.
The hon. Member for Bridgend talked quite extensively about restoration bonds. These are clearly vital, but they do not appear to be enough. If he catches your eye, Madam Deputy Speaker, my parliamentary neighbour, the hon. Member for Wansbeck (Ian Lavery) will probably want to refer to the Potland Burn site in his constituency, which we are all looking across at with some anxiety. At one point there was a £1.67 million restoration bond for that site, but I understand that the actual cost involved is more like £3.6 million. It is one thing to have a restoration bond, but another to have a huge shortfall, and we are very anxious lest the same situation should arise in our own area. Restoration bonds are particularly attractive to my constituency, where there has just been a fire in a waste site. There was no restoration bond, and there is no money to deal with the consequences, because the company is bankrupt. We do not want that to happen on open-cast sites. However, it is not enough to have a bond; the bond itself must be sufficient.
I do not want to take up too much time, because many Members with direct constituency experience wish to speak, but I do want to reassert a principle. Residents are entitled to assurances that all the promises made when open-cast permissions are granted will be fully kept, and that restoration aftercare will be carried out and carried out on time. If there is doubt about the money, if there is doubt about who will be around to see it through if a company goes bankrupt, or if there is doubt about whether the planning authority will be able to enforce the terms, permission should not be given in the first place.
Residents need cast-iron assurances. There is a huge burden of worry for people who have already borne the burden of surface mining near their homes, which presents a great many practical problems. The mining is quite important for the economy and for our energy supplies, and it generates some employment, but it is very difficult to live alongside, and those people have had to live alongside it because permission has been granted. The very least that they deserve is for restoration to be completed, and for the process to be guaranteed.
I hope to speak for much less than six minutes, because I have only one and a half examples to cite, although I want to ask the Minister some very specific questions about them.
I thank my hon. Friend the Member for Bridgend (Mrs Moon) for initiating the debate, because it is very important. It concerns a legacy in coalfield areas that already contain some of the most deprived communities in the country. To be hit again after all these years makes things even worse for those communities.
I want to talk about a 204-acre site near Clay Cross, which was very toxic. An exciting plan was submitted by a company called Maximus, which proposed not just to restore the site, but to excavate the coal and build 1,000 new homes, as well as sports fields and changing rooms for which there was a large amount of section 106 money. People were very excited because there would be plenty of affordable homes. However, after the coal had been extracted, not 1,000 but 100 very high-end houses were built and sold for a great deal of money, and then the company went into voluntary administration. About 200 of the 204 acres are still uncapped, and the site is an enormous eyesore. Grey shingle has just been left on the ground, and, because the site is very high up, it is very visible from every angle.
To add insult to injury, the company—under a different name, Provectus—moved a mere few metres down the road to the neighbouring village of Tupton, and submitted another planning application for a very similar development. It will take ages for that application to be put together. The local residents, all of whom live very close to the site, are aware of it. Derbyshire county council is in a terrible bind, because it is having to spend a lot of time and money on offices and lawyers. The company itself is much wealthier than the residents. Meanwhile, house prices have dropped, people cannot move, and they are very worried about an increase in traffic. There is a 2,000-pupil secondary school right on the doorstep. People are very worried about this. Once the planning application goes to the county council, even if it overturns it the applicants will appeal, and it will go to the national Planning Inspectorate and the chances are that it will be overturned.
That would disregard the feelings of local people, and it does not take into account what these people have done only metres down the road. I want to know from the Minister what can be done to stop these people, who can only be called cowboys. They are going to do exactly what they have done in Clay Cross in Tupton. This is a big issue for local residents, and they are really worried about it.
As the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) just said, we are looking at other sites beyond our borders and seeing what is happening there. It is very alarming to hear what is happening in Wales, and this pattern is being replicated up and down the country. The worst thing about it is that it is the people who are living on the doorstep who are having to suffer all the air pollution, the lorry-loads and everything else. And who ends up paying for capping off those open-cast sites? It is the local taxpayers. I would therefore like to know what the Minister is planning to do about this.
First, I want to say that we need to dispel the myth that coal is a fuel of the past. I am a bit of a geek now and I was looking at the app on my iPhone 6 just before we came in, and, as of only 20 minutes ago, coal is producing 36.2% of the electricity generated in the country. That is 16,767 MW, and that shows the importance of coal.
Coal is not going away either in the UK or globally. Last year we imported about 42 million tonnes of coal, and we burned about 50 million tonnes. We imported about 50% of that 42 million tonnes from Russia—hardly a politically stable country, to say the least—and we also imported coal from Colombia, where they use child labour to mine the coal.
We need to embrace the fact that coal is not going away. As I have discussed with the Minister on numerous occasions, we need to ensure that coal is embraced—indigenous coal, together with carbon capture and storage, which will ensure we can continue burning coal with zero emissions. We must also secure state aid for Kellingley, Thoresby and Hatfield in the deep-mine sector. We have had discussions on that with the Minister as well.
I welcome this timely debate on open-cast sites and restoration, and the lack of it in some areas, some of which have been blighted for quite some time now. That is of great concern. This issue and the needs of the communities concerned were raised by the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). They need assurances, and why not? When it is said that an area is to be open-casted, the people there deserve the right to be assured that the land will be restored to a state at least as good as that before the open-casting. We must ensure that.
We cannot have private companies raiding the countryside, ripping it back like the proverbial sardine-can and taking the coal out, and then leaving without restoration. We cannot accept that. From now, any company, or any director who is involved in a company, that produces coal and then leaves things in such a state should never be allowed to be part of an application in the future. That should be fundamental—it should be basic—and it would protect the people we represent.
I have a huge problem with Potland Burn in my constituency. It has already been mentioned by the right hon. Member for Berwick-upon-Tweed. It is a perfect example of the chaos that a private company can cause by abdicating its responsibilities. Potland Burn was operated by the then UK Coal. Somebody mentioned cowboys. “Cowboys” and “UK Coal” are often said in the same sentence. UK Coal operated this site, and then it went into liquidation. It then formed a new company called UK Coal Surface Mines, and it is now in charge of the open-cast site in my constituency. The company says that there is a £3.86 million shortfall, which means that it cannot restore the land. It has a £1.67 million fund with the county council, and £60,000 with the Coal Authority. That means that the site might never be restored.
The only option would be for the local authority to step in to help a private company, but that would mean that taxpayers would be paying out of their backside pockets to restore an open-cast site after the company has been in and raided it, exploited the coal and run away with the profits. That would be totally unacceptable. It would not happen in many other industries, but it is happening in the UK coal industry. The companies are blackmailing the local authorities by saying, “Sorry, we can’t restore this one, but if we get planning permission for another one, we will have the money to do it.” That is happening, and it is an absolute disgrace. It should be illegal. We should be putting these people in front of the general public.
This is happening at sites across the country. Scotland and Wales have their own huge problems. I am aware of a letter having been sent to the Secretary of State for Energy and Climate Change about a potential deal on carbon price support, with a request that the tax be withdrawn for certain coals in and around open-cast areas. At least that is an attempt to find a solution, which would help, but it raises many questions as well. We need a UK-wide pot. Coalpro, the trade organisation, has come up with a wonderful idea. It has proposed a £1 levy on every tonne of coal burned in the UK. That would provide £50 million for a communal pot for the UK, which could be used by the Coal Authority to ensure that local authorities had enough money to restore every site, regardless of whether it was in England, Scotland or Wales.
I fully agree with that, but I am looking at this from the perspective of the people who live next to those sites. They have had to endure the conditions created by the open-cast mines for quite some time. If there are legal processes available—as there should be—they often take a long time, but that is not to say that we should not challenge those companies for every single ha’penny we possibly can.
Coal has been a political football for quite some time; it has been kicked from pillar to post for generations. It has much to offer, however. Perhaps the real answer to the question of the cost of obtaining the indigenous coal reserves that we are blessed with would be to abolish the carbon price support in its entirety. I am merely suggesting that. I am not sure whether the Minister would consider it, but I would welcome his views on the matter.
Order. May I suggest that each Member speaks for five minutes? That will allow everyone to get in comfortably and give us enough time for the wind-ups before we have to stop. I am not going to put the clock on, so please be vigilant.
I was born and raised in the mining communities of the Amman valley. Those communities were built around the coal industry, with villages developing around underground pits. In my formative years, apart from the Betws drift mine and the Cynheidre drift mine in the neighbouring Gwendraeth valley, those underground operations had all but ceased, apart from a scattering of small private mines. However, open-cast mining affected all the communities I am proud to represent in the industrial half of my constituency. I remember the noise of the huge machines that worked on those sites and the dust that accumulated when the weather was dry.
Today, someone who drives up Mynydd y Betws, past the Scotch Pine, and looks down at the lower Amman valley will see an extraordinary sight: a giant former open- cast site which swallows the communities of Ammanford, Llandybie, Penybanc, Tycroes, Capel Hendre, Blaenau, Caerbryn and Penygroes. The industry was advanced around these communities in staged developments, and life went on much as usual in the villages I just mentioned. The scene resembles a giant US plain or a Russian steppe, with a patchwork of villages within it, linked by roads. It is completely out of character with the rest of the Carmarthenshire countryside developed by the agricultural industry. The view from Mynydd y Betws symbolises the failure of the restoration processes of the open-cast industry to return the environment to its previous state.
In 2009, Plaid Cymru Assembly Member Bethan Jenkins held a debate in the National Assembly for Wales regarding open-cast restoration. She called for a report into the failure to restore open-cast sites in Wales. During the debate, Plaid Cymru called for the guidelines issued to local authorities, minerals technical advice note 2—MTAN2—to be overhauled. Four years later, the Welsh Government finally commissioned a report, and “Research into the failure to restore opencast coal sites in south Wales” was published in April 2014.
The report identifies the Coal Industry Act 1994 as a fundamental problem where restoration is concerned. The report’s authors, ERM, suggest that prior to privatisation there were few issues concerning restoration, apart from the quality of the completed sites, and certainly no question as to whether restoration would go ahead or not. The fact that restoration protocols were not watertight in the Act reflects the carelessness and haste in which the Act was composed and passed through Parliament. The Act should have contained many more measures to protect coal communities, and has parallels with the debates on fracking that we have had recently in this place.
The status quo, where the law effectively permits operators to walk away from sites that they have no inclination to restore, can no longer remain an option. The Welsh Government have had to increasingly commit resources to public inquiries because, as the report suggests, the expertise to determine open-cast applications does not necessarily exist within mineral planning authorities. The Welsh Government should consider bringing determination of open-cast planning applications under the direct control of Welsh Ministers. Doing that would reduce the resources committed by local government, would allow particular expertise to be developed in one place and would help end the different interpretations of Welsh Government guidance which operators and their lawyers have been so adept at exploiting.
Let us consider the example of East pit in the upper Amman valley, which borders the villages of Brynamman, Rhosamman, Cefnbrynbrain and Ystradowen in my constituency. The latest planning application proposed the creation of a lake in the current void after use. Neath Port Talbot county borough council, as the responsible mineral planning authority, has had to contend with the Reservoirs Act 1975 and the Mines And Quarries (Tips) Act 1969. As the report suggests, mineral planning authorities cannot realistically be expected to retain such expertise in-house, and that is before we get to the vexed issue of the Commons Act 2006. The question has to be asked: at a time of swingeing cuts to local authorities with already stretched resources, can a mineral planning authority properly discharge its duties if it does not command the expertise to do so?
Bonds and enforcement are also topics covered in the ERM report. It notes that the Dynant Fawr site, which engulfs the communities of Drefach and Cefneithin in my constituency, is not adequately bonded or assured. The Dynant Fawr site poses a problem to the planning authority because it has been abandoned in an unrestored state and insufficient bond is reported to exist to meet the cost of its restoration. Carmarthenshire consultees to the report felt that the transfer of ownership of operating sites may cause problems for planning authorities, in that they have difficulty in making effective contact with the new owners or getting adequate responses from them.
Early disposal of restored sites to multiple owners, sometimes on completion of basic restoration or at the commencement of the aftercare period, has also been a problem. That was the big problem in Gilfach Iago site in my constituency. There was no bond and the operators sold the land in parcels before the restoration process was completed. Promises to restore roads linking the villages of Saron, Blaenau and Penygroes have not been kept. Promises to replant trees and hedgerows also were not kept, resulting in the plain effect I referred to earlier and devastating the natural habitat of much wildlife. Carmarthenshire county council has taken legal action against the operators, Celtic Energy, at a cost to local taxpayers, yet the operators have been able to escape fulfilling their obligations although the local planning authority won the case. It is an insult to local people to be treated in that way, given what they have had to endure to accommodate the industry.
We need more than fine words. The Welsh Government can and must deliver meaningful action to protect communities. The UK Government should also be ready and willing to assist by sharing expertise, supporting the devolved Governments in tackling the issue and helping fund restoration work not completed largely as a result of the loopholes left by the coal industry privatisation legislation, supported by this House. That fund should be funded by contributions by the UK Government and open-cast operators, and the trustees should include members of communities affected by open-cast operations. If we do not get that, given that these planning issues are devolved, the Welsh Government should set up a national open-cast fund based on historical and new contributions to repair the damage caused by the failures of the past.
I did want to make a far more detailed speech, but time has escaped me.
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.
I congratulate my hon. Friend the Member for Bridgend (Mrs Moon) on securing the debate and pay tribute to the Welsh Government for commissioning the review, “Research into the failure to restore opencast coal sites in south Wales.”
Restoration of open-cast sites pre-privatisation was relatively assured because British Coal, the then controlling body, managed the contract cash flow by holding a restoration lump sum in reserve, which was tantamount to a restoration bond. Furthermore, in the event of all such precautions failing, British Coal, as a Government body, could, as a means of last resort, restore an abandoned site at public cost.
At privatisation, Celtic Energy acquired the British Coal open-cast operation in south Wales but it was not required to provide any restoration bonds, for reasons that have already been explained. It is staggering to think that for the first 10 years after privatisation, 1995 to 2005, there was no effective mechanism to require the restoration of open-cast sites, but that is precisely what happened.
My hon. Friend the Member for Lanark and Hamilton East (Mr Hood) raised with the then Department of Trade and Industry Minister responsible the issue of the enormous burden that was to fall on local planning authorities as a result of privatisation, and how right he was. It has been an enormous burden. Following privatisation, it is absolutely clear that all large open-cast coal sites should have been the subject of adequate restoration bonds.
The situation in which we find ourselves today is that we have five large sites in Wales, which may have insufficient bond cover at some stages in their operating life. They are Ffos-y-Fran in Merthyr, Tower at Hirwaun, Nant Helen at Coelbren, East pit at Gwaun-Cae-Gurwen and Margam at Kenfig. In my constituency, we have Dynant Fawr in Tumble. That is a smaller site, extending to some 33 hectares. Coal extraction has finished, having removed some 100,000 tonnes of coal in total. However, the operator Carmarthen Mining Ltd has been dissolved and the site ownership is spread between a number of owners. My local planning authority, Carmarthenshire county council, has released some of the bond to achieve some restoration and currently holds a bond of some £176,000, but that falls short of the full restoration costs, which the local authority believes could exceed £250,000. There are some lessons to be learned from that situation.
I should explain that Dynant Fawr is not a former British Coal site. It was run by a separate private operator. Although the local authority required a bond and the operator was to pay into an escrow account, the bank was slow to alert the authority that payments were not being made. The lesson to learn is that although the local authority tried its best to get the right mechanisms in place, the situation is much more complex than it might at first appear. Making bonds work is not easy when companies disappear and play all sorts of dirty tricks.
The local authority now faces the situation that both the operator and the landowner have conveniently disappeared, so the job of managing the restoration is left to the county. The money that has accrued from the bond is less than the council estimates to be ideal, so it has been looking at different ways of making sure that bonds are more effective. It is not that easy. One has to be certain that the money that is paid in is ahead of the restoration costs. That is quite a hard bargain. Likewise, the council does not accept insurance as cover unless the premiums are paid up front to the county, because if the company does not pay the premiums, the insurance company obviously will not pay out. The council might accept assurances from an insurance company that it would pay up whatever, but that is much more difficult to achieve because insurance companies are also extremely wary.
This is a highly technical area and, as the World Bank has said, a lot of expertise is needed to set up, control and run bonds properly, and to ensure that the restoration is done properly at the end. This is extremely costly and in the current economic climate local authority expertise does not just come from nowhere. Carmarthenshire helps out Powys, which does not have the expertise. Many of the people who are there now may not be there for ever, and they have other pressures on their time. The head of minerals planning in my local authority is working with colleagues from Natural Resources Wales and from Neath Port Talbot, and he is also chair of the group of planning officers across Wales who come together on mineral issues to develop some guidance on making the bond mechanism as effective as possible. That could be incorporated into guidance such as a technical advice note for planners.
The way forward is very much to work together and do whatever we can, but we still need the money to restore the communities that have suffered devastation from people just ripping them off for open-cast.
I want to speak in this afternoon’s debate because this is very much a live issue in my constituency. I am one of those people to whom my hon. Friend the Member for Bridgend (Mrs Moon) referred who have delayed their travel home, so important do we think this is. Given the weather, I am not going to get home tonight, and probably not this weekend.
I am not against open-cast per se. I know that there is more coal under Durham county now than was ever taken out, and with advances in technology more and more coal reserves become accessible all the time. There are good open-cast companies and poor open-cast companies. Reference has been made already to Banks. I have no interest, vested or otherwise in Banks, but if it makes an application we at least know that it will go to great lengths to disturb residents as little as possible, will invest millions in the north-east and will employ local people, and that its records show that it restores 100% of its sites.
There are companies like Banks and then there is UK Coal. I want to refer to the Pont valley in my constituency by way of illustration. It is a beautiful valley full of ancient woodland, rare flora and fauna and local heritage going back centuries. It is a real amenity for local people, and it is under threat. UK Coal, in its various manifestations, has applied four times in 20 years to open-cast the valley. There have been four public inquiries and so far a further appeal allowed on a technicality. Local people have won in every one of those public inquiries, and we await the outcome of the latest inquiry. I know that I and others in the House would like to see some kind of legislative protection for local people who win public inquiries and simply face the same thing again a couple of years later. Some legislative protection is needed to ensure that companies such as UK Coal cannot just keep coming back, blighting lives and threatening surroundings.
One reason for the objections to open-cast in the Pont valley, but not the only one, is the huge question mark over UK Coal’s financial status, which totally undermines any certainty that the company can meet its obligations to restore the site after the coaling phase is complete. At the same time as making further applications to open-cast in my constituency, UK Coal has several existing sites either in development or with planning permission that are up for sale, yet it continues to pursue further planning applications, knowing full well that it does not have the finance to develop or restore its existing sites, but arguing that it needs to open-cast more sites to restore those already complete. The Park Wall North surface mine near Crook in my constituency is available for sale as part of a package consisting of six surface mines, yet the juggernaut of applications from UK Coal for new sites continues, with the threat that if the company cannot get the profit from new sites, it cannot restore the old ones. It is like some sort of bizarre Ponzi scheme. Earlier, a Member said that there has to be a law against this, but I understand that there already are laws against blackmail and Ponzi schemes.
The Minister will be aware of the MacKinnon report on what happened in Scotland—as my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) said, the situation is far worse in Scotland than in England, but we are getting there. It is as strongly worded and critical a report as I have ever read. It paints a terrible picture of what can happen when an applicant is in financial distress and faces a choice as to what to do with its limited resources: does it focus on coaling on newer sites, or commit to proper aftercare? That is the picture facing people in constituencies such as mine from companies such as UK Coal. I think it is absolutely unacceptable that beautiful parts of my constituency and others, places like the Pont valley, should be attacked by a series of open-cast applications that not only place huge pressure on local people, but put those areas and the people who live in them at ongoing risk of intrusive open-cast extraction and the very real danger that their surroundings will never be restored.
This has been a really important debate. I thank the Backbench Business Committee and all who have participated, particularly my hon. Friend the Member for Bridgend (Mrs Moon), for ensuring that the debate took place.
Ensuring that sufficient resources are available to restore open-cast coal sites to a proper state is important. It is universally agreed, I think, that a key principle for the approval and ongoing use of open-cast mines is that operators have an obligation to both local communities and the environment to clean up after themselves, and that financial provision should be made to allow that to happen. The debate has rightly and expertly focused on what happens when the obligation breaks down and what can be done to make sure it is fulfilled.
It is clear from the debate that all parts of the United Kingdom are affected, with speeches from Members representing Northumberland, Durham, Derbyshire, Scotland and Wales, although I was surprised that no Scottish National party Members attended to discuss the subject. Seven mines in Ayrshire, Lanarkshire and Fife closed when Scottish Coal ceased operations in 2013, and my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) has worked diligently to make sure that operators are held to account. Rising water levels, contaminated lagoons and erosion lead to increased health and safety risks, environmental damage and the threat that the taxpayer will have to pick up the bill.
I was pleased to hear the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) talk about Northumberlandia. I have visited and walked my dog there. It is a fantastic example of what restoration and open art can do. My hon. Friend the Member for North West Durham (Pat Glass) rightly raised concerns about the financial viability of UK Coal and the fire sale of several open-cast sites, calling into question the operator’s ability to meet its obligations to restore the sites after the coaling phase is complete. We have also heard from Wales. My hon. Friend the Member for Bridgend (Mrs Moon) has mentioned two sites—East Pit in Neath Port Talbot and Parc Slip in Margam. There is huge concern about how the restoration of those sites will be paid for. I understand that only £2.5 million of the estimated £115 million has been identified and allocated for East Pit, while at Parc Slip about £5.5 million has been set aside against a total estimate of £57 million.
We have heard time and again in the debate that local communities often had to deal with disruption and pollution for some considerable time while the open-cast mines were operating. Now that the mines have ceased operating, I think the whole House agrees that we do not want the communities to suffer a permanent and dangerous scar on their landscape. I have a number of questions to put to the Minister arising from the debate. They essentially fall into two main categories: how did we get into this position, and what do the Government need to do next to resolve the problem?
My hon. Friend the Member for Bridgend said with regard to the Parc Slip site that nothing illegal had taken place between Celtic Energy and Oak Regeneration. I do not want to say anything that compromises the ability of the judiciary to make independent rulings, but I have a number of questions. My hon. Friend mentioned that in 2010 Celtic Energy held a sum of money for restoration purposes totalling £136 million. Within 12 months, that sum had been reduced by £63 million, with no evidence or assurance that it had been spent on restoring the mine. It is perfectly legitimate to ask where that money went. My hon. Friend said that it was considered a provision within the accounts of Celtic Energy. That brings me to my old accountancy past.
I consider that a liability is a current obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. There seems to be quite a clear liability rather than a provision that is unknown. I am surprised that that entry in the accounts has been reduced. What conversations took place in 2010-11 between Ministers, officials and the company to determine what was being done with that money? Is the restoration fund for operators routinely monitored or audited by the Minister’s Department to ensure that any liabilities can be matched by sufficient resources? What work takes place between his Department and counterparts in the devolved Administrations to ensure that this is adequately dealt with across the United Kingdom? What assessment has he made of the adequacy of other restoration funds at other sites? In the light of question marks over the sufficiency of funds to cover the costs of restoration, does the Minister believe that the existing framework for guaranteeing the maintenance of a restoration fund is adequate? What reforms and recommendations need to be put in place to ensure that it does meet the needs of local communities?
Unrestored sites are unacceptable as they pose a risk to local communities. Equally, I would question whether it is for taxpayers to pick up the bill, especially when the selling of the coal generated cash and profits for the company, a proportion of which should have been apportioned to the costs of restoration. An additional complication is the falling world price for coal, which means that operators may not generate the revenue anticipated, but will quite rightly be expected to bear the costs of restoration.
How do we settle this matter? My hon. Friend asked what assessment the Minister and his Department have made of the original 1994 agreement, and how the Government can ensure that its terms are complied with. Can we see the original agreement? If the purchase of the land from British Coal and the granting of planning permission were conditional on restoring the site on decommissioning, who, in the Government’s view, remains liable for ensuring that this is done? What powers will the Government use to ensure that this liability will be met?
I understand that UK Coal has submitted a state aid application. Will the Minister update the House on what progress has been made on that specific matter? I have questioned him several times on state aid approval, and on matters of urgency and priority on steel and energy costs. I hope that he can update hon. Members today on the current status and expected progress of the state aid application with regard to UK Coal.
My hon. Friend the Member for Ogmore (Huw Irranca-Davies) summed this up succinctly when he said that a company can walk away from its responsibilities without any repercussions. The debate today has shown how the House rages against that and wants to make sure that appropriate procedures are in place so that companies cannot walk away from their responsibilities. I think the Minister will agree. What steps will he take and what measures will he put in place to ensure that those liabilities are met and the restoration of open-cast coal sites is undertaken, leaving less of a blight on the local community?
I join others in congratulating the hon. Member for Bridgend (Mrs Moon) on bringing this debate to the Floor of the House and opening it so clearly and strongly. I agree with the shadow Front-Bench spokesman, the hon. Member for Hartlepool (Mr Wright,) that there is broad consensus across the House on the scale of the challenge, which I acknowledge and which was described by the hon. Members for Bridgend and for Ayr, Carrick and Cumnock (Sandra Osborne), and by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) in strong and lyrical terms. I acknowledge the scale of the difficulties and I look forward to working with Members on all sides to try to resolve them.
There is also consensus that the operation of open-cast mining involves a resource that can be brought out from under the ground, and therefore that the burden of restoration should fall not on the taxpayer but rather on those who benefited from the excavation and sale of the resource. In the time available I hope to address as many of the questions that were raised as possible.
Several hon. Members, including the hon. Member for Bridgend, commented on the time taken for a planning application to be approved, the different and complicated mechanisms needed, and the number of authorities involved. I acknowledge that and the further complication that the devolution settlement leaves responsibilities both for the UK Government, which are mostly executed through the Coal Authority, and for devolved Administrations. It is therefore important that the devolved Administrations are part of the solution. The hon. Member for Carmarthen East and Dinefwr described clearly the responsibilities of the Welsh Government. I spoke to Fergus Ewing, the Minister for Energy, Enterprise and Tourism in the Scottish Government, about the matter yesterday in advance of the debate today. Although it is disappointing to see that no SNP Members are in the Chamber, I made the Scottish Government aware of their responsibilities in relation to the difficulties that are most apparent in the south of Scotland.
The Chair of the Backbench Business Committee, the hon. Member for North East Derbyshire (Natascha Engel), asked what we can do to ensure that those who do not fulfil their obligations in a reasonable way can be debarred from future operations. I thought that was a good suggestion and I will explore the possibility of the Coal Authority having a role in vetting open-cast licence applications to examine past conduct. I cannot give the hon. Lady the full commitment on policy today, not least because this is the first time the possibility has been raised with me directly, but it is a sensible proposition which I will take away, and I will get back to her on that.
In a debate largely driven by consensus, it was good to have the hon. Member for Wansbeck (Ian Lavery), the representative of king coal, in full flow. He demanded that I reach this Dispatch Box and immediately change the tax regime of the United Kingdom to end the carbon price floor. I am sorry to have to disappoint him by saying that that is a matter for the Chancellor in a Budget, so far be it from me to announce it today. The hon. Gentleman will know that from next year we have frozen the carbon price floor and we have taken action to ensure that although we commit to our international obligations on tackling carbon emissions, we also support energy-intensive industries. As he said, carbon capture and storage represents a long-term future for coal consumption in energy production and potentially for UK production of coal.
The hon. Member for Hartlepool asked about the case for state aid for UK Coal. This debate is about open-cast mining, but of course we have a long and strong tradition of deep mining. We have received an application from UK Coal for state aid from Government. We are currently considering that application, and I do not want to prejudge any decision.
I saw it for the first time this week, and it is under active consideration. I would expect to be able to respond in a matter of weeks, certainly before the Dissolution of Parliament.
As the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) said, restoration bonds are not only about open-cast coal mining; they are also about deep mining, as well as things like the fire in his constituency that raged for months and that he and I have discussed before. It is vital to get restoration liabilities and restoration cash tied together better.
The hon. Member for Hartlepool quite reasonably asked about questions of the past and questions of the future. In getting the future right, it is vital that we have a regime, including depositing money in escrow accounts and restoration bonds, that is watertight. On privatisation in 1994, the calculation of the costs of restoration was part of the decision as to how much companies paid for the opportunities they bought when they bought rights to a site. That was taken into account at the time. It is therefore not reasonable to say that money was put into a fund, with the taxpayer paying for the restoration at the end of the process. The money paid to the taxpayer for the coal that was bought, which was then in the ground and was going to be extracted, had set against it the future costs of restoration. That was encapsulated in the cost at which the companies purchased.
That is exactly the issue at hand for the mines that are reaching the point at which they need restoration. The liability lies with the company, but, as we have heard from the many testimonies today, getting it to act is too difficult. That is the challenge that we face.
I turn now to the future, because the question that we all want to answer for our constituents is how we can solve this problem.
Celtic Energy is saying that it was given a 10-year exclusion from having to carry out any restoration because it paid a higher price for the licence. In 1994, the Government said that it did not have to put money aside. Is the Minister saying that it is wrong, and in fact the price it paid implied that it had to put more money aside rather than put no money aside?
The expected cost of future restoration was taken into account in the amount that the companies paid at the time for the right to mine.
We will work with all parties on this. I look forward to working with Treasury civil servants and, I hope, Ministers, but also with Members in the House today, with the Coal Authority, which has an important role to play, and with devolved Administrations and local government. I confirm the offer of the meeting that we discussed earlier this month. I will ask the Coal Authority to make sure that it makes itself available to Members to discuss, in particular, the detailed issue of having the often highly specialist expertise needed within mineral planning authorities to tackle these problems.
I want to turn to the Hargreaves proposal, which was recently discussed in Westminster Hall. The suggestion is that if available resources at unrestored sites orphaned by failed companies could be mined and sold exempt of carbon price support payments, sufficient revenue could be generated to restore the sites to a good standard. The proposal is unusual because it suggests using a tax exemption to pay for a cash obligation. Employment creation and retention and the offsetting of tax generated are cited as additional benefits, above and beyond the core environmental question.
We are working with the Treasury on whether there can be exemptions from the carbon price floor. The Treasury has the lead on the carbon price floor because it is a tax, but that issue is worth considering. The CPF exists to enable us to meet our climate obligations, and it is an important part of our armament for tackling climate change. We have capped the carbon price floor—we have fixed it, so to speak—but I am happy to look at that and to continue to discuss it with my hon. Friends.
The carbon price floor is a UK tax, so although the proposal was made in response to the problems in Scotland, it could be applied across the UK. I cannot, however, commit to taking that forward. It may well be that a tax solution to what is essentially a spending liability is not the most resource-efficient policy for a Government who do not have much freely available finance, for reasons that we all know and understand.
I want to turn to the payments or restoration funds available. Under British Coal, once coaling ceased and restoration began, the restoration lump sum was released progressively to the contractor to finance the process. We must remember that British Coal primarily operated on a commercial basis, and the revenue it derived from licensing coal for extraction was offset against its operating costs. The fact that that has now moved to a private company does not change the fundamental question of whether enough has been put aside to ensure that, after the event, we can restore sites where coal was brought out of the ground.
I end by saying that when such a process is done well, it can be very positive for the local environment. In my constituency and others across the country—from Berwick-upon-Tweed to south Wales—sites have been restored effectively and, if anything, they are more beautiful and positive than sites elsewhere. That is a difficult task, but I look forward to working with Members from all parties to resolve this very difficult issue.
This has been an excellent debate. We have been told that good and responsible companies are making tremendous efforts on restoration, and some sites are an asset in their local communities. We have been told not only that we need restoration bonds, but that they must be at the right level. We have heard about far too many eyesores that have blighted lives and communities.
The problem is poor legislation, which is exploited by cowboy builders. Now is the time for joint working, and for accepting that the problem exists and that solutions must be found. I am worried that we seem to have moved from pass the parcel to hunt the thimble. Where is the money? Money has clearly been generated, but we need clarification of how we can make it available to the local authorities that have been left with the problem of restoration.
Question put and agreed to.
That this House has considered financial support for restoration of open-cast coal sites.