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UK Coal

Volume 594: debated on Thursday 26 March 2015

As I set out in the statement to the House on 4 March, UK Coal Production Ltd (UK Coal) submitted to Government in January 2015 a request for public sector funding of £338 million to facilitate the safe and orderly closure of its two deep coal mines by 2018.

I know how important UK Coal mines are for the communities in which they are based, and that their closure will affect many people.

That is why the Government have already provided significant support to help the company in its efforts to deliver its plan for a managed closure of the mines in 2015. The Government provided a £4 million loan in September 2014, to help avert the company’s insolvency, and on 4 March 2015 I informed the House that, subject to the necessary EU clearances, the Government will meet the company’s concessionary fuel obligations to its employees, with an estimated value of £28 million. This week the House passed the necessary clauses to allow this to happen in the Small Business, Enterprise and Employment Bill, and we expect Royal Assent shortly.

Having carefully considered the case for providing significant additional funding, we have concluded that committing public sector funding on the scale necessary to extend the company’s closure plan by three years is not affordable and does not represent value for money to the taxpayer. The £338 million requested approximates to a cost of more than £75,000 per UK Coal employee per year over the three-year closure plan.

The company has also recently indicated an additional funding requirement of £10 million to keep its existing managed closure plan for 2015 on track. The Government remain committed to support the company in its efforts to deliver this plan. To this end, I can confirm that the Government are willing in principle to provide additional support to help deliver the plan, subject to conditions including state aid approval and appropriate support from other stakeholders. We are working with the company to determine the amount, timing and form this additional assistance could take.

The successful delivery of the company’s existing plan is important to ensure the taxpayer avoids significant losses and liabilities that would otherwise fall to the public sector in the event of an uncontrolled insolvency. We will support those affected as appropriate, including support for staff affected to find alternative sources of employment and if necessary to retrain.

I should also like to acknowledge the ongoing support the company is receiving from its work force, customers, suppliers and creditors during this challenging period.

[HCWS497]