The economy in crisis: Parkinson puts the blame on 1984 strike: The former Secretary of State for Energy is at odds with the economists over the crisis in the coal industry. Steve Boggan and Mary Fagan report

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The Independent Online
LORD PARKINSON, the Secretary of State for Energy from 1987 to 1989, yesterday laid the blame for the decline of the British coal industry at the feet of Arthur Scargill, the miners' leader.

'Arthur Scargill's decision to force a strike in 1984 meant that sooner or later the job losses and pit closures announced this week became inevitable,' he wrote in the Times.

The cost of holding massive stocks of coal 'so that the lights could be kept on, if ever again the miners chose to take on the Government, has been enormous', he went on. Affirming that he had announced the privatisation of the coal industry in 1988, Lord Parkinson added: 'Nothing that has happened this week makes me regret that decision.'

The article dwelt on the importance of choice and market forces in the success of electricity privatisation, the factor viewed by some as the single most significant in consigning the mining industry to the dustbin. But there was no mention of the fact that his proposals for electricity privatisation were described by the Commons Select Committee for Energy as 'half baked'.

When it considered the electricity proposals, the Tory-dominated committee appeared horrified by what it saw. In its report, published in July 1988, it criticised the speed of the Government's determination to push through such radical proposals. 'It runs the risk of producing ill-considered, spatchcock legislation . . . electricity is too important an industry for the country to gamble that everything will come out right,' it said.

An early draft of the report described Lord Parkinson as a 'dilettante', which was later deleted.

Many believe that it was privatisation, the splitting of the Central Electricity Generating Board into PowerGen and National Power, the provision for new generating companies to move onto the national grid and the establishment of 12 independent regional suppliers, that allowed the move away from coal.

In 1990, the EC lifted a ban on the use of gas for power generation. The directive had been imposed in 1974 to encourage the use of coal after an oil crisis. Since it was lifted, independent companies have made plans to build 29 gas-fired power stations in Britain. Seven are already under construction.

The move towards gas, coupled with the use of cheap coal imports, has harmed the domestic coal industry.

Miners and their supporters argue that domestic supplies of gas will be fully committed by 1996, resulting in imports and higher prices.

They argue that a diversification of energy policy is essential to safeguard jobs and future prices and supplies. The Government and the electricity companies argue that the British coal industry cannot compete; the generators will not take British Coal's output and it is too expensive to export.

John Meads, the general secretary of the British Association of Colliery Management, said: 'Privatisation is the root cause of today's problems. The Government was warned about its effects two years ago . . . As we did our sums, we became more and more worried because the market for coal was being abstracted by gas.'

But others believe the economic truths are proven, if brutal. Mike Unsworth, head of UK research for the City securities firm Smith New Court, said: 'The simple fact is that British Coal can't compete with imported coal. Despite what has been said in the papers, in all of the economics I have seen, electricity generated from coal costs more than electricity generated by gas.'

Sir Ian Lloyd, chairman of the parliamentary committee that criticised Lord Parkinson, agreed that the closures were necessary and that the power of Mr Scargill and 'a refusal to bite the bullet' over the need for a realistic

approach to the coal industry