Fuel tax will add to pits jobs toll: VAT move to cut market for coal by more than 3 million tonnes

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Indy Politics
IMPOSING VAT on domestic fuel bills will cut the market for coal by more than three million tonnes a year and mean the loss of yet more miners' jobs.

British Coal believes that the reduced consumption of power by cash-strapped customers will mean a fall in coal sales of a million tonnes in the first year, rising to more than three million tonnes by 1995-96. That could mean the closure of one or two pits.

It is also becoming increasingly apparent that Government attempts to expand the market for coal will result in salvation for only a handful of the 31 pits already facing the threat of closure.

Core coal contracts involving sales of 40 million tonnes next year to the generators and 30 million tonnes in each of four subsequent years have not been signed. Unless the stalemate is resolved by the end of this month, British Coal will be faced with having no firm sales at all, let alone extra sales that could save pits.

The problem for British Coal is exacerbated by the fact that the generators, National Power and PowerGen, have enough stockpiled coal to last for months. British Coal has millions of tonnes of already-mined coal on the ground.

Another complicating factor is that the generators cannot sign the coal contracts until the 12 regional electricity supply companies are ready to sign back-to-back contracts to take the electricity generated from the coal.

Michael Heseltine, the President of the Board of Trade, warned on Wednesday that the White Paper laying out the future of the industry would not be published until the core contracts are in place. But more is needed if any of the 31 threatened mines are to be reprieved.

Increasingly, the only possibilities left to Mr Heseltine are the purchase of an additional 40 million tonnes by the generators over the next five years on top of the core amounts, and a subsidy to enable British Coal to compete more effectively with cheap coal imports.

However, Mr Heseltine is understood to have backed off from threatening the generators with legislation to force them to buy more coal.

The prospects of a successful Commons rebellion may have been diminished, however, by the announcement on Wednesday night of a proposed underwater electricity link between Scotland and Northern Ireland.

The move, following UK lobbying of the EC for grant aid, was yesterday viewed as an important factor that would help ensure Ulster Unionist MPs did not join any Commons revolt over the White Paper proposals.

(Photograph omitted)