British Coal denies seeking subsidy to save miners' jobs: MPs have been asked not to 'fudge' the pits issue. Mary Fagan reports

NEIL CLARKE, the chairman of British Coal, has attacked reports that the Government plans to introduce large subsidies to help save miners' jobs.

Mr Clarke, who called on ministers to avoid a 'fudge' in meeting the public's demand for a fair deal for coal, said: 'It has been suggested that our coal needs a massive subsidy to stay in the market. That is nonsense.

'We have not sought a subsidy and it is mischievous to plant the notion that very large amounts of electricity users' or taxpayers' money is needed to featherbed our mines.'

He said that British Coal would welcome limited and temporary funding but only to displace 10 million tons of imports while UK mines became more efficient.

'That would only amount to the equivalent of a penny in the pound on the average electricity bill, reducing to nothing over five years.' There have been reports that a pounds 10-a-ton subsidy is favoured by some ministers, which would add 8p in the pound to electricity bills and cost pounds 700m.

Malcolm Edwards, the former commercial director of British Coal, also attacked the notion of a massive coal subsidy, which he regards as a Government ploy. He said that some people in Government were seeking to fatten up British Coal for privatisation while at the same time diverting attention from the high profits made in the electricity industry.

The industry watchdog, Offer, has questioned whether National Power and PowerGen are charging more than is necessary for electricity generated from coal - a suggestion which both companies deny.

Mr Edwards said: 'A lot of people do not want to look at that because there is still 40 per cent (the remaining Government stake in the generators) to sell.

'Boosting British Coal's receipts over and above what the market would bear makes it much more attractive to prospective buyers. It also projects the image. . . that sentiment has a price and if you want the coal industry you have to pay for it.'

Mr Edwards said that there were many ways of expanding the coal market for very little cost, including slower running down of coal stocks held by the generators and British Coal. He said that the decision to close 31 pits assumed that gas-fired plants with a capacity of 16,000 megawatts would be built. Now, most industry insiders believed that little more than 10,000 megawatts would be built.