Letter: Coal crisis: market fallacies, short-term subsidies, energy policy

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The Independent Online
Sir: The Government should not be forced into providing a subsidy to the coal industry as a result of its PR failure ('MPs throw lifeline to pits', 26 January). Neither should it consider a subsidy because one is given to the nuclear industry. A subsidy should only be given if the economic considerations justify it.

It can only be justified if the measure is short term, to enable restructuring to take place, thereby creating an industry that can compete in world markets and flourish in the private sector. Any subsidy whose sole purpose is to preserve jobs by supporting uneconomic industry without tackling the cause cannot be justified. Such an approach may be politically expedient in the short term, but will merely store up existing problems and create long-term nightmares for the industry and the country.

If it is concluded that the industry can be modernised to enable it to compete on a level playing field, then subsidies should be welcome. They should however be accompanied by an acceptance of new working practices.

Intervention in any other form would be viewed sceptically. Restricting imports will smack of protectionism and could lead to retaliation. Restricting competing sectors may give the wrong impression and discourage investment for the future and in itself lead to job losses.

Yours faithfully,

ANDREW WILLIAMS

Walsall, West Midlands

26 January

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