Beckett pledges cut in power bills

CONSUMERS COULD see their electricity bills fall by more than 10 per cent over the next two years, but 5,000 miners whose jobs were at risk were told yesterday that they will have to compete to survive.

Margaret Beckett, President of the Board of Trade, gave no guarantees to the miners that their jobs would be safe after announcing a package of proposals designed to allow the coal industry to compete fairly with gas and nuclear power in the supply of electricity.

The proposals bought a breathing space for the coal communities, who were threatened with the loss of thousands of jobs and the closure of up to eight pits if their contracts with the big power generators were not renewed next month. "I am in no doubt that the proposals we are announcing today and the way in which we are unrigging the market does give a real space for coal," Mrs Beckett told MPs.

The package failed, however, to satisfy the "Old Labour" MPs from the coalfield communities led by Tony Benn and Dennis Skinner. And it disappointed the electricity industry, which will be forced into some painful restructuring to give coal the chance to survive against other energy sources.

The main points of the announcement were: pressing the major generators, National Power and PowerGen, to sell their coal-fired plant; a halt to most new gas-power stations to prevent the "dash for gas"; coal-fired generators to fit desulphurisation equipment to cut down emissions so that they meet the Government's "green" targets; reform of the electricity "pool" trading system which allegedly is geared against coal; and a temporary moratorium on all new power station consents until 20 July to allow consultation on the plans.

John Redwood, the Tory trade and industry spokesman, last night dismissed the package as "empty" and warned that jobs could still be lost to foreign imports, if the power generators switched to more coal.

Mrs Beckett accused the Tories of hypocrisy. If their policies had been followed, she said: "The coal industry would have disappeared and I don't think they would have given tuppence."

The measures were welcomed by a broad alliance of Labour MPs from modernisers to traditional backbenchers, who had campaigned for the coalfield communities to be protected. More help could be targeted at the pit villages after the mid-July comprehensive spending review.

The package fell short of the direct intervention that was originally planned by Geoffrey Robinson, the Paymaster General, to guarantee the coal industry a market. The Prime Minister had ordered the plans to be rewritten because they were too "Old Labour" and interventionist. Mrs Beckett told MPs there would be no state subsidies for coal.

Mr Robinson had proposed a moratorium on all new gas-power plans, but Downing Street ordered a compromise because of fears of legal challenges by the power generators.

Those fears were confirmed in Mrs Beckett's statement which said that Professor Stephen Littlechild, the Director-General of Electricity Supply, "has reservations about restrictions on consents" for new gas plants but "recognises the Government's responsibility for energy policy, including diversity issues".

With the Chancellor sitting by her side to demonstrate his support for her proposals, Mrs Beckett made it clear there could be no guarantees for failing pits. But she claimed that changing the market, so that it was no longer rigged against coal, would give them them the chance to survive. "A coal industry that is able to achieve its own competitive advantage should make its own way fairly in the market place," she told MPs.

DTI officials privately admitted that the number of jobs to be rescued in the coal industry will depend on Richard Budge, the owner of RJB Mining, who plunged the Government into crisis at Christmas by warning that pits would have to close unless ministers intervened. Mr Budge will now have to win fresh contracts for coal from the threatened pits by convincing the power generators that they can buy coal more cheaply than gas.