Coal compensation bill may hit pounds 1.3bn

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The cost of compensating former mine workers for personal injury and industrial diseases could exceed the pounds 1.3bn raised through the privatisation of British Coal, it emerged yesterday.

Legal judgement is expected this autumn on the extent of the corporation's liability in respect of chronic respiratory diseases caused by exposure to coal dust and a painful, debilitating condition known as vibration white finger, which is caused by excessive use of vibrating tools.

Although British Coal has declined to put a figure on its potential exposure, its final set of accounts, published yesterday, said the liabilities could be "very significant". The Government has agreed to fund whatever compensation the corporation has to pay.

The legal action against British Coal over what are known collectively as chronic obstructive airways diseases such as bronchitis, emphysema and asthma began last October. It is the largest single piece of industrial disease litigation undertaken in the UK.

Lawyers have brought a small number of lead cases against the corporation as part of a class action. Depending on the court's ruling, it could open the floodgates to thousands of compensation claims. The corporation said it had not been able to make a special provision in its accounts because of the "considerable uncertainty" over its liability and the size of any damages.

The report and accounts show that property sales and disposals of non- core businesses last year raised a further pounds 143m for the Exchequer, bringing total revenues to over pounds 1.3bn. Among the disposals were CIN Management, the company which manages the pounds 15bn held in the two main coal pension funds, which was bought by Goldman Sachs. Richard Budge's RJB Mining bought the English coalfields in December 1994 for pounds 815m.

British Coal also announced that Neil Clarke, its chairman since 1991, had retired on 1 July. He has been succeeded by Philip Hutchinson, the corporation's former secretary and director of legal affairs, who will continue in the job until the end of this year. In his final year Mr Clarke was paid pounds 126,722, compared with pounds 230,618 the previous year, while Mr Hutchinson received pounds 125,307.