DTI considers Budge company collapse as pit crisis worsens

The Department of Trade and Industry is considering publishing reports into the collapse of a former company run by the Budge family, including the role played by Richard Budge, who later bought most of England's deep mines. As Chris Godsmark and Michael Harrison report, the move could intensify pressure on Mr Budge, chief executive of RJB Mining, as the group moves towards mass redundancies and pit closures.

According to senior sources, the DTI is looking into the 1992 collapse of AF Budge, the family construction and mining company of which Mr Budge had previously been a director. It comes as ministers face increasing criticism that the Government has done too little to prevent a looming wave of pit closures, with the anticipated loss of around 5,000 jobs.

AF Budge went bust in 1992 with debts of pounds 96m. A BBC Panorama investigation into the affair in 1995 alleged that Coopers and Lybrand, the administrative receivers, had considered some dealings by Mr Budge, while at AF Budge, were "in contravention of the Companies Act."

The receiver's conclusions landed on ministers' desks as the DTI was about to sell most of the coal industry to Mr Budge. A subsequent National Audit Office probe found no evidence that the DTI's privatisation unit had sought to influence the decision not to take action against Mr Budge.

Last year three other former directors of AF Budge, Tony Budge and Janet Budge, Mr Budge's elder brother and sister-in-law, along with Michael Yates, were disqualified from acting as company directors.

Separately yesterday, as RJB directors met in London to consider the coal crisis, it emerged that Mr Budge is to appear before MPs on the Commons Trade and Industry Select Committee on Wednesday. He is expected to face questioning on which pits are most likely to close, including the fate of the threatened Selby "superpit" complex.

John Battle, the Energy Minister, has also been called before the committee and will insist that the DTI has taken action in recent weeks to create a level playing-field to safeguard the market for British coal.

An RJB spokesman declined to comment on the board meeting, which is thought to have agreed to press ahead with moves to cut production capacity to match falling demand. "All we can say is that we are keeping events and developments under review," said the spokesman.

Meanwhile, National Power warned yesterday that forcing the three big coal-fired generators to increase emergency stockpiles of coal at their power stations would be a short-term fix that would not solve the RJB crisis and would penalise its shareholders.

A spokesman said that because of the mild winter National Power's current coal stocks were above minimum security levels laid down in law but also those it normally maintained for commercial reasons.

He also pointed out that if the generators were obliged to increase coal stocks they would have to issue open tenders not only to RJB but other UK coal producers and importers. There would also be a problem of where to stockpile the coal, given the high levels of power station stocks. The three fossil fuel generators - National Power, PowerGen and Eastern - consume enough coal a year to cover 115 miles of the M25 to a depth of 15 feet.

All three generators are due to give evidence before the Commons trade and industry select committee tomorrow. None are understood to have been approached by the Government to discuss a bail-out of RJB. PowerGen, the only one still to agree new coal contracts with RJB, has no negotiations planned for this week.

Outlook, page 25

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