Heseltine fuels Cabinet row over coal pits rescue

MICHAEL HESELTINE yesterday fuelled the Cabinet row over the pits rescue, as John Major began a tour of India by playing down the Cabinet in-fighting.

One senior minister said: 'Some scores are being settled with Hezza for getting rid of Thatcher. But John Major was chosen because he was not Mrs Thatcher. It's unfair to criticise John for allowing the Cabinet to debate issues.'

Cabinet battles are continuing over the cost of rescuing some pits from closure, whether the public sector borrowing requirement should be reduced by raising taxes or cutting public spending, and plans by Kenneth Clarke, Home Secretary, to put the police on a more national footing.

With a ministerial wrangle still raging over the U-turn on the pits, the President of the Board of Trade made it clear a subsidy would have to be paid.

He also insisted that he had informed Gillian Shephard, Secretary of State for Employment, about the closures, which threatened 100,000 jobs. Colleagues pointed out that being told was not the same as being consulted.

The battle that has divided the Cabinet is over the extent of the subsidy. The Cabinet committee is moving towards a direct subsidy rather than a levy on electricity prices or a transfer from the existing nuclear levy.

Mr Heseltine's bid for a subsidy of pounds 10 per ton for five years is being whittled down to half that sum over three years by Cabinet colleagues, including Michael Howard, Secretary of State for the Environment, and the Secretary of State for Employment.

Mr Heseltine said on BBC radio there was a 'price tag' on all the options being considered for the rescue of some of the 31 pits.

'There isn't any free way forward. All there can be is a way of recognising that there was a very considerable controversy; that you might have to move more slowly; and if you give British Coal a significant period of time and subsidise them, they may well get to a point where they are competitive. But all these options have a price tag,' Mr Heseltine said.

By asking for a 'significant time', Mr Heseltine was holding out for a five-year subsidy - a view expected to be supported by the cross-party Commons select committee on trade and industry in a report next Friday.

He said the industry was already subsidised at a cost of pounds 1bn. But Robin Cook, the Labour spokesman, rejected that figure as misleading; it was the current contract price for coal supplied to the electricity companies compared to the spot market price.

Warning that the Cabinet rescue of some pits would be a 'short-term fix', Mr Cook said: 'Only Conservatives would regard burning our own coal for our own use as a burden on our economy.'

Labour called on the Government to 'come clean' on the extent of the rail closures that could result from the privatisation of British Rail. John MacGregor, Secretary of State for Transport, said any closures would have to go through existing statutory procedures. Lines reported to be at risk include Swansea to Shrewsbury; Inverness to Kyle of Lochalsh, Wick and Thurso; Skipton to Lancaster; and Ipswich to Lowestoft.

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