Business Comment: Don't waste any tears over Asfordby, Minister

Once the great white hope of the British coal industry, Asfordby Mine in North-east Leicestershire, is to close. A copy of a confidential memo on the matter, written by a senior civil servant for the benefit of John Battle, the Industry Minister, has fallen into our hands. In the interests of open Government, we here reproduce it. Given the hurried nature of its preparation, it is uncharacteristically blunt.

"I wouldn't waste any tears over Asfordby if I were you. To tell the truth, everyone knew all along it was a bit of dog; it was only ever built as a sop to the Union of Democratic Mineworkers, who demanded it as part of their price for supporting the Government during the miners' strike. There were actually better sites available, but there you go. As you are no doubt learning, government is all about compromises.

"Actually it's turned out to be a rather higher price than any of us anticipated. Not that you should believe old Budgie's claim that because of adverse geological conditions, it has become impossible to make it safe. Volcanic sills - I ask you! More investment on top of the pounds 300m already spent would undoubtedly have done the trick.

"The real problem here has little to do with safety. As usual it is much more about commerce and the fact that RJB's contracts with the electricity generators come to an end at the beginning of next April. So far Mr Budge has only been able to sign up one contract to support his mines thereafter, and that's only a short-term one. What Mr Budge is saying here is, I've closed Asfordby and I'll close more if you don't force the generators to pay me a decent price for my coal. They don't have to, you see. They are progressively switching to gas and anyway they can buy imported coal much cheaper. With the strength of the pound, these alternative sources of fuel get cheaper by the day. Asfordby is already a lost cause; it's never going to be economic. But the rest is still up for grabs.

"So there you go. If you don't step in and force the generators to pay up, what little is left of the coal industry might all but disappear. There is a perfectly respectable line of argument to say that this would be no bad thing. Your predecessor, Tim Eggar, certainly thought so. Coal is nasty, environmentally unfriendly stuff and nobody could possibly enjoy working in a mine. As for RJB, well the Government certainly doesn't owe Mr Budge a living. He's already made back most of what he paid for British Coal. In any case, the generators will have to buy some coal from him, if not on quite the same lucrative terms as before. They cannot buy all their needs on the spot market.

"If you were wise, then, you wouldn't intervene."

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