Coal Industry: Osborne’s Coup de Grace


I have already written about UKIP’s exuberant and hugely successful 2014 Party Conference at the Doncaster Racecourse.

On the Saturday, I had been invited by Blair Smillie, UKIP candidate for Alyn & Deeside, to address a fringe meeting on the coal industry.  David Douglass of the Durham Miners was also to be on the speakers’ panel.  It was remarkable to have a UKIP conference in the former mining area of South Yorkshire, with a representative of the Durham Miners as a speaker.

But it was not to be: David Douglass came under great pressurefrom sections of the mining unions and the Labour Party, to the point where he felt he had no option but to withdraw.  It is a sad comment on today’s political scene that these sorts of pressures can be put on a speaker in what we still regard as a “free country”.

Blair Smillie himself has a fascinating background.  He’s the great-grandson of Robert Smillie, a miner and a co-founder of …. the Labour Party!   It says a lot about the way the Labour party has let down working people, and become a sort of metropolitan intellectual élite, that the great grandson of the co-founder of the party has now decided to stand for UKIP.

But despite losing Mr. Douglass, we still had an excellent panel, including Blair himself, plus Luke Warren, CEO of the Carbon Capture & Storage Association,  and Tony Lodge, Energy specialist at the Centre for Policy Studies. And as so often at such events I found I understood a great deal more by the end of it.

In the former coalfields there is still much resentment against Margaret Thatcher, who is held responsible for closing the mines – though there are those who would argue that it was economic circumstances (and to an extent the folly and axe-grinding of Arthur Scargill) that hastened the demise of the industry.  Ted Heath before Margaret had asked, rather plaintively, “Who governs Britain?”.  Maggie gave an unequivocal answer.

But it now rather appears that George Osborne is delivering the coup de grace to the remaining deep mines in Britain.

Back in 2010, soon after the General Election, the then Energy Minister, Conservative Charles Hendry, announced that no new coal fired power stations could be built in the UK without Carbon Capture & Storage (CCS).  The intention was that new coal fired plants should have CCS.  But CCS adds 20 to 25% to the cost of energy (or put it another way, reduces efficiency by the same factor).  So – surprise surprise – there have been no takers.  The unintended consequence has been no new coal capacity at all.  It’s maybe worth adding that CCS does not yet exist on an industrial scale in this type of application, although carbon capture has been used where there is a practical use for the CO2, and in residual oil recovery operations.

I am often asked how Germany can be building a couple of dozen new coal-fired power stations, and we in Britain can’t.  This is how.  It’s a self-inflicted injury, and our Coalition government is directly responsible for it.  I understand that the Germans are nodding to the orthodoxy by designing plants that can – sooner or later – be retrofitted with CCS.  But very sensibly they’re not fitting it now, and taking the hit to costs.  CCS is a bit like “subsidiarity”.  Something we talk about to soothe fears, but never actually do.

And Osborne’s coup de grace?  In deep mines, you need to plan ahead.  If the mine is to stay in production, you need plans to exploit new seams and open new coal-faces.  That’s a hugely expensive and capital-intensive activity.  No one will commit to it unless they can be sure that in a few years’ time, when the new seams are in production, there will be a market for their coal.

Osborne has completely undermined this planning and investment programme with his “carbon floor price”.  This carbon floor price results in turn from the utter failure of the EU’s ETS scheme.  ETS was supposed to establish a “market price” for CO2 permits, which would send suitable signals to the market to favour low-carbon generation.  But across the EU, the project has failed.  The criteria were too loose, and that, taken with the recession, meant that the carbon price was derisory.

Osborne has responded by adding a uniquely UK tax – with the immediate effect of making energy in the UK even less competitive than the rest of Europe.  This hits industry generally.  But it especially hits the remaining deep mines.  They can’t realistically predict carbon taxes or coal demand in five years’ time.  So they can’t invest in new seams and coal-faces.  So the remaining deep mines in the UK are condemned to death.

I think that George Osborne is the sort of chap that Lord Lawson had in mind when he spoke about “teenage scribblers”.  Neat ideas on the back of an envelope.  Perverse incentives.  Unintended consequences.  And the final blow for a once-great industry.

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8 Responses to Coal Industry: Osborne’s Coup de Grace

  1. David Douglass (NUM) has a letter in the Weekly Worker – he says he was “Defringed”. I have posted it below, rather long, but interesting. All the best Fay

    “A number of friends and comrades will have been highly surprised to have found my name and that of the Durham miners linked to the UK Independence Party’s national conference. A number of nationals and the TV news ran the story on September 27 that we were speaking at a Ukip fringe event.

    Let me say from the outset that I have no problem discussing and debating my principles and politics with anyone on a public platform, and that includes Ukip. I don’t consider them ‘fascist’ or even particularly ‘racialist’ and I don’t buy into the ‘no-platforming’, ‘safe spacing’, ‘ban them’ or ‘bar them’ anti-democracy of some on the far left.

    The Campaign for Clean Coal asked me if I would enter a debate on energy and the energy options and put the case for coal. Originally, they were talking of lining up some academic bods and environmental campaigners in some academic setting. I said: “Of course, nay bother”. I was therefore a bit surprised when they told me they had organised a fringe meeting around these subjects at the Ukip conference, which was in Doncaster.

    In the last few weeks, the British coal industry had been reduced to three deep mines, and two of them were up for closure due to the government refusing to advance a loan to them to ensure their survival. I should say, by the way, the problems are not at the pits, which have an ocean of coal reserves and ready markets, but in the international financial situation, the strength of the pound and the fact that the USA is now self-sufficient in oil and is moving dramatically away from its coal market, leaving masses of US coal to be dumped on the international coal market at break-even prices. The company had asked the government to advance a loan of £15 million, which would be paid back, and they were told they could have £10 million to close them. So the mines are planned for closure next year.

    Hatfield, my own colliery, is the last of the line, hit by a sudden face gap and therefore no coal coming out. They had no revenue to pay their loans, the banks withdrew their credit and the pit could have closed in a week. The National Union of Mineworkers had the courage to loan the pit, which is a cooperative, £4 million on normal commercial terms. Again, the mine has some of the largest coal reserves in Britain and is capable of accessing literally hundreds of years more, given the finance and will to do so.

    We need political decisions and energy policies which will give our last mines the chance of surviving. In this endeavour, we have talked to government energy ministers and I have spoken on three platforms in the last year with Labour’s energy spokesperson, Caroline Flint. Hatfield mine is in Ed Miliband’s own constituency and we have held public meetings with him. We have lobbied and shouted.

    Ten years of TUC conferences have confirmed support for clean coal developing but, at the end of the day, nothing comes of it. There is a conspiracy of silence among the establishment parties and, of course, utter hostility from the ‘greens’, who hate us as much as they do.

    So, with that in mind, yes, I would speak at the Ukip fringe. My theme was to be against carte blanche fracking, against new nukes and for British deep mined, clean coal.

    However, the plan was that the fringe meeting would be external to the conference and open to the public and other unions. I only learned the morning of the meeting that it was actually in the conference venue and restricted to Ukip delegates. Worse, Farage was using the presence of ‘the miners’ at the conference, in Miliband’s own constituency, as two fingers to wave at him. Needless to say, I was suddenly in the eye of the storm. Then it got worse. The Durham miners never were speaking at the event; the NUM NEC had decided to have nothing to do with it, but the organisers assumed me to be a member of the Durham area and billed me as such. Not too chuffed. The Durham miners weren’t alone, as I was blanket-bombed by phone calls from comrades, friends and the media. I would not speak at the fringe in these circumstances, as that wasn’t what I had agreed to. A debate I don’t mind. The front of a publicity stunt aimed at embarrassing Ed, and promoting that lot? Not bloody likely.

    So I attended instead the anti-Ukip march and rally organised by the Socialist Workers Party’s Stand Up To Ukip in the centre of Doncaster and spoke on their platform, making it clear I had never agreed to address a meeting of the sort they had organised and had no intention of being used to further the fortunes of a party whose politics couldn’t be further away from my own. I also made the point on behalf of the Durham miners that they were never attending in the first place and their listing was simply false.

    Ee well, that old tale about the road to hell seems sound. Will it shake up the debate on coal? Well, getting it mentioned would be a start. Time will tell, although Ed’s conference speech spoke only of ending fossil fuel generation by 2030, so it doesn’t look like it will come from that quarter.”

    David Douglass
    (Letter in Weekly Worker 2 Oct 2014)

    • catalanbrian says:

      A fascinating exposure of UKIP spin. Inventing alternative stories when the facts don’t suit.

      • ferretman555 says:

        If you want to talk spin, consider Tony Blair and his spin doctor Mandy, they are the classic examples of spin, burying the truth, and weapons of mass destruction.

        You wan’t to talk morality, have you ever seen the list of socialist sex offenders?

        You want to talk injustice lets consider Rotherham, Islamic Pedophiles grooming vulnerable children from care homes. I remember Nick Griffin was charged twice, two long and expensive political prosecutions and he was acquitted both times. Griffin may not be to your political taste, but he deserves an apology and his court costs paid.

        Too much to hope for by any socialist who believes, the means are always justified by the ends.

        Brin Jenkins

  2. Ex-expat Colin says:

    So the coal stays where it is and the children play along. Remember it from the 60s/70s/80s.

    Useless Britain!

  3. Ex-expat Colin says:

    CCS…isn’t that the game whereby a power station along the end of either the Thames or much further south is to pump its smokey stuff via a pipeline up to the North Sea. Whereupon a couple or 3 old oil wells will be fed with the dastardly effluent.

    Technology not proven ?

      • Ex-expat Colin says:

        A momentous day for CCS,,,brought to us by DECC:

        Counter argument at Bishophill (but I can’t post 2 URL’s here):

        …of the total $1.4 billion plant cost, the reports put the actual cost of upgrading the 30-year-old plant at $400 million, putting the CCS at a cool billion, tripling the capital needed to provide a modest 110MW generating capacity. And so on with the plant reduced by 30% capacity to power the CCS bolt on…Then there is the trip to the old oil wells.

        No doubt Davey will be pumping this as a template for UK today.

  4. Ian Terry says:

    Why do people show surprise at the lack of common sense from our three stooges and their lieutenants? They have not got a clue.

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