Commentary: Heseltine is caught in a coal trap

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The Independent Online
Michael Heseltine must surely now admit that the crisis in the coal industry looms as large as ever. Whichever way he turns in search of a solution, there are brick walls. The latest obstacle comes in the form of a report from the electricity watchdog, Offer, which gives the all-clear to plans for gas- fired generation.

The report confounds the hopes of those who thought some gas plants could be chopped to make room for more coal. With Offer vindicating the projects as economically justified, it will be hard for ministers to wield the axe.

Equally, Offer yesterday made it clear that its powers are unlikely to stretch to stopping electricity imports from France, even should it wish to do so. Add to that the Trade and Industry Select Committee's opinion that there is no case for scaling back on nuclear power, and it becomes ever clearer that the squeeze on coal is as hard as it ever was.

All of which helps to explain why the Government's White Paper on energy policy and coal, originally expected to appear this week, has been delayed. Rebellious Conservative backbenchers are determined that the paper should save about half the 31 deep mines threatened with closure.

But it is hard to see the mines' salvation when there is still no market for their coal. Circumstances seem to be propelling the White Paper perilously close to Mr Heseltine's disastrous announcement in October of the loss of 30,000 jobs.

National Power and PowerGen, as British Coal's main customers, are one obvious escape route. They have offered to take some extra coal from British Coal - enough perhaps to save half a dozen mines - but far short of what ministers have asked them to buy.

In spite of tremendous pressure from Whitehall (it is believed the generators have been threatened with everything from legislation to the Monopolies and Mergers Commission) the two companies are refusing to budge further on extra coal purchases on the grounds that the coal would just be stockpiled. Even British Coal rejects this as a solution because it merely postpones the evil day.

So what can Mr Heseltine do to avert the closure of almost all the 31 pits and the loss of 20,000 to 30,000 miners' jobs? Open-cast mining will doubtless be cut back. That industry is highly profitable and also employs about 17,000 directly and indirectly. But those job losses may be less visible.

Fiddling with coal imports and cutting open-cast is unlikely to be enough to stifle backbench rebels. Unless Mr Heseltine is suddenly bestowed with divine inspiration, the White Paper, when it arrives, may be almost as explosive as the plan it was intended to defuse.