Loan deal to keep Kellingley open ‘still on the table’ says minister

Minister Michael Fallon
Minister Michael Fallon
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A £10 million loan from the Government to delay the closure of Britain’s last deep-pit coal mines is “still on the table”, the energy minister has confirmed.

The £20 million UK Coal-managed closure programme was scuppered last week when Hargreaves, one of its private backers, pulled out of talks, increasing uncertainty for the workers at Kellingley in North Yorkshire and Thoresby in Nottinghamshire over their immediate future.

But Michael Fallon told the House of Commons yesterday that the money was still available if another viable plan was put forward.

“I understand the uncertainty this is causing,” he said. “The exceptional offer we made of a Government loan of £10 million to the consortium that was leading the rescue remains on the table despite the withdrawal of Hargreaves.

“We continue to work with UK Coal and its directors to explore what other sources of private investment might be available.”

Shadow energy secretary Caroline Flint asked whether the Government would consider an employee buyout scheme to secure a future for the pits.

She said: “The redundancy process is already under way but there may still be time to find a way forward.”

Mr Fallon, who met the unions on Monday, said all viable options would be looked at including an employee buyout, but insisted any plan would have to represent value for money for the taxpayer.

“We are prepared to look at any new plan that comes forward that will enable us to continue the operation of these two collieries into next year.

But any contribution from the Government has to represent full value for money,” he added.

“Of course we have been considering the state aid case ... but we need to see a subsequent plan. We can only act on the basis of a plan put forward by UK Coal, which is a private company.

“UK Coal has already had nearly £140 million worth of taxpayers’ support over the last 10-12 years so it’s very important any new loan represents good value for money for the taxpayer.”

Around 1,300 people are employed at the sites, which were to be wound down by autumn next year under the programme.

As well as Government support, the plan was reliant on money from mining group Hargreaves Services and Harworth Estates, landlord of the two mines.

In a statement last week, Hargreaves said: “It has not been possible to secure a plan that it is able to support.

In these circumstances the company is no longer able to provide loan finance and has now withdrawn from the process.”

The news comes after Trade Union bosses that they were looking an employee buyout.

Chris Kitchen from the NUM said the mine is around £1m and just over 10,000 tonnes ahead of its production targets over the last five weeks, and the union is fighting to keep it open for another four years.

Both the NUM the TUC believe that a larger state loan to keep the mines open until 2018 could be cheaper in the long run than letting UK Coal close the mines down, with increased tax revenue and unemployment benefit savings.

The TUC commissioned a report that said state aid - in the region of £63m to £74m - could be covered by projected profits from future coal sales if the mines were kept open longer.

UK Coal announced plans in April to close Kellingley Colliery in North Yorkshire with the loss of 700 jobs.