How the mining industry was targeted for political and not economic reasons

Many argue the demise of the mining industry was premature and say it would still have a future if based on economic, not political, arguments. Mike Kelly reports

The last day of Ellington Colliery..... David Bentley who has been a miner for 25 years at Ellington Colliery which has now closed
The last day of Ellington Colliery..... David Bentley who has been a miner for 25 years at Ellington Colliery which has now closed

No matter what the arguments for preserving the mining industry were, the Conservative Government of Margaret Thatcher had it in for it.

This was the viewpoint of the National Union of Mineworkers in 1984 before the strike, during it and after it ended in 1985. Better to fight and lose than not fight at all, was the union’s received wisdom, although the NUM came closer to victory than many today realise.

In 1992, with John Major having replaced Mrs Thatcher as Prime Minister, his President of the Board of Trade, Michael Heseltine, unexpectedly announced the closure of 31 out of the remaining 50 pits. This despite all that the miners had done to improve efficiency.

It sparked huge protests but a chastened Government was able to retreat until the fuss died down and later follow through on the policy.

Yet viable, cost-effective pits were being shut and so it continued. It did not make sense economically. According to some, it never has.

Dave Anderson, a fitter at Eppleton Colliery, Hetton-le-Hole, during the strike and now Blaydon MP, said: “It had been clear since she was elected that Margaret Thatcher was determined to force a confrontation with the National Union of Mineworkers and their leadership.

“This was a matter as much of ideology as it was of economics. Her whole philosophy was anti-public sector, small government and an iron belief in individualism against collectivism.”

He added: “We have seen the decimation of the UK coal industry just to prove a political point.

“We are left with a nation that is reliant for its energy supplies on some of the most unstable regimes in the world.

“We buy tens of millions of tons of coal from countries where child and slave labour is rife and where tens of thousands of miners are killed every year in coal mines that would have been a disgrace in Dickensian times.”

Some might conclude Mr Anderson would say that, thanks to his affiliations. To go back to 1984, in explaining the extensive pit closure programme, then Energy Secretary Peter Walker, repeatedly said the industry had the year previously been subsidised to the tune of £1.344 billion.

It was unsustainable, he said, for the Government to continue to prop up ‘uneconomic pits’ to this extent. However, not for the first time – and by no means the last – what the Government said about the mining industry and what was actual fact were two different things.

In short, the maths didn’t add up and the sums weren’t done by apologists for the NUM.

Forensic accountant Emile Woolf probed Mr Walker’s figures and concluded that to classify the £1.34bn as subsidy was stretching it. A lot.

He said £634m of the amount was made up of payments for previous closure programmes in redundancy and early retirement pay-outs, not to mention pensions.

A further £403m was interest paid on Government loans. In a strange set-up, instead of getting money through Government equity, the Government borrowed money from the private sector to fund the nationalised NCB which had to then repay it through the Government. The remaining £250m was made up in coal production subsidies.

These subsidies, according to Dave Douglass, former miner and now author, were set at £1.34 a ton compared to Germany’s subsidy rate was £54 a ton and France’s £70.

Aside from Mr Woolf’s researches, a separate report looked into the price the NCB sold the coal to the Central Electricity Generating Board, which took 70% of all it produced.

Compared in like-for-like heat generation, coal was 40% cheaper than oil. The report said if the price was upped to being 20% cheaper than oil, it would have generated an extra £1.5bn revenue a year for the mining industry.

Finally, there were further studies into what the true measure of a pit being ‘uneconomic’ should be. Is it just a plain profit and loss sum or should you have to look at the wider cost, including redundancy payments, the effect on local businesses and the community at large.

Could it have been argued that the mining industry was just too big to fail, like the banks 23 years on from the end of the strike, which got tens of billions of pounds in Government bail-outs?

It is believed it cost the Government £6bn to defeat the miners over the year, while a further £26bn was spent over the following 10 years in redundancy and benefits payments, keeping pits mothballed and taking into account lost revenue from coal.

On top of this, it was also estimated that for every 100 miners’ jobs lost, a further 87 were lost too.

A definitive figure for the actual cost to the British economy overall has, as far we can see, yet to be produced. An extensive report by Sheffield Hallam University published in 2005, 20 years after the strike, tried to answer the question as to whether it made economic sense.

Professor Steve Fothergill, one of the authors of the report, said in an interview after it was published: “I would unequivocally say no because we destroyed so much productive potential in the economy in those years and we did it in sectors we could really do with now to improve our trading performance in the world.”

According to the study the industry shed 222,000 male jobs between 1981 and 2004. But this was offset by an increase of 132,400 male jobs in other industries and services in the same areas.

However, compared with miners’ wages, many of these jobs – in distribution and call centres – were poorly paid.

And the researchers also highlighted the concept of worklessness in these communities.

While claimant count unemployment fell during the 1990s, “hidden unemployment” rose, with big increases in the numbers of men claiming incapacity benefit.

The study revealed that “there are nearly five times as many people of working age in the coalfields who are out of work and claiming incapacity benefits as there are out of work and claiming unemployment benefits”.

Margaret Thatcher always claimed the “uneconomic” mining industry was a drain on the taxpayer and duly privatised it, but any savings made have to be seen in the context of the social costs to the communities affected and the resulting benefits bill.

Even today, according to Mr Douglass, out of the ashes a new mining industry could be borne – if there was the political will.

“There’s 23 trillion tonnes of coal of under the North Sea from North of Whitby to the Scottish Border,” he said.

And, according to Mr Douglass, there was an equal amount off the west coast of the UK and one plan put forward was for eight super pits to be created to take advantage of these resources. If they produced 2m tonnes each a year it would provide work, he said, for 16-18,000 miners “for centuries to come”.

He said progress in clean coal technology in the world – in which the UK was a leader before Mrs Thatcher and Mr Major’s governments withdrew funding for it – would help allay environmental fears.

However when pitching for support, the present Coalition Government instead offered a £1bn grant to fracking which will exploit these reserves despite the fact it is in its infancy, potentially more harmful to the environment than coal, not to mention the fact it is even unclear yet if it will work in the UK.

Mr Douglass said: “I don’t understand the logic of it except that they don’t want to see a massive labour intensive NUM come riding back from the gates of hell to which it was sent by them.

“They’d have liked to have driven a stake through the heart of the NUM which they can’t so long as we’ve got coal in Britain.”

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