Regional power firms ready to strike coal deal: Breakthrough in talks raises hopes for threatened pits

THE TWELVE regional electricity companies have told Whitehall officials that they are now prepared to sign a coal contract for the coming year - a key component in any package to save some of the 31 pits threatened with closure.

A senior government source said last night that weekend progress represented something of a breakthrough for the negotiators. But he warned that National Power and PowerGen were still not ready to sign.

Nevertheless, the possibility of agreement on the coming year's 40 million-ton core contracts, followed by contracts of 30 million tons for future years, could provide the basis for further negotiation on top-up contracts that could offer the prospect of a secure future for some of the threatened pits.

Industry sources have warned that all 31 pits could still face closure within two to three years if the core contracts are not bolstered by supplementary orders.

Against that background, John Smith warned yesterday that John Major was ready to kill communities and throw 100,000 miners and other workers on the 'slag-heap of unemployment'.

Michael Heseltine, President of the Board of Trade, opens the final day's debate on the Budget in the Commons this afternoon, and is bound to be pressed for an update on his six-month review of the pit closures.

But miners, ministers and MPs face a cliff-hanger in the run-up to the end of the coal year on 31 March. The worst scenario is that next year's 40 million-ton contracts are still unsigned by the time Cabinet meets on 1 April - the day before the Commons rises for its Easter recess. In that event, Mr Heseltine would be forced to make a holding statement, reporting defeat.

Bracing his party for bad news, Mr Smith told a regional Labour conference in Skegness: 'What this Conservative government doesn't seem to understand is that entire communities wither and die when their lifeblood is taken out of them.

'The long-term interests of this country are not served by closing 31 collieries, destroying the jobs of 100,000 workers, decimating entire communities and writing off our most valuable energy resource.'

The Labour leader also attacked the 'scandalous betrayal' of election promises in last week's Budget. But Norman Lamont said on BBC television's Breakfast with Frost: 'It would be a real betrayal. . . if I did not face up to the problem of our borrowing, and I believe the country understands that.'

The Chancellor will wind up tonight's Commons debate, under continuing pressure to explain the terms under which low-income pensioners and families will receive relief from Value Added Tax on domestic heating and power bills.