Open-cast Coal Sites (Restoration)

Huw Irranca-Davies Excerpts

Thursday 29th January 2015 Commons Chamber

[Mrs Moon]

It most certainly did. Money went to the Major Government, and our community has been left with the financial responsibility for restoring the sites. It is shocking.

[Huw Irranca-Davies (Ogmore) (Lab)]

My hon. Friend’s constituents in Pyle, my constituents in Cefn Cribwr—whom she used to represent—and others are deeply affected by this. They think it is totally unjust that the company seems able to walk away from its responsibilities for remediation and doing well by that community. Does she agree that it is astonishing that at some point in the distant past a deal was done—which our constituents regard as a dirty deal—to allow the company to renege on its responsibilities and walk away? It is not good, and it does not reflect well on the Government of the time either.

[Mrs Moon]

My hon. Friend is right. It does not reflect well on the Major Government or on Celtic Energy, which has had a good reputation in Wales. Now its reputation is deeply tarnished, and I am sure it will want to make whatever restitution it can to restore that reputation because I know that it wants to keep operating in Wales.

Will Watson says that

“had escrow funds been put away for Parc Slip at today’s level of around £10m per year for the years 1994 to 2004, then that fund would now stand at around £155m (assuming it was invested to simply cover inflation).”

My hon. Friend and I would be very confident if we had £155 million to restore that site.

Mr Watson also said that

“the Government in 1994 had £100 million in their restoration fund, (worth around £178 million today) that could have been made available for restoration.”

In his opinion, it seems reasonable to ask the UK Government to contribute to a solution at Margam and potentially at East Pit. If Mr Watson is correct, the Government took money that would otherwise have gone to restoration. There was a significant benefit to the Treasury in 1994. Where did that money go? How do we get it back?

My local residents argue:

“The Coal Authority, the government’s agent which sold the leases and licences was empowered to impose obligations on the private companies to ensure restoration and it failed to do so.”

Can the Minister confirm whether this was the case and why no obligations were imposed? Can he confirm the existence of a British Coal lump sum for this site? Where was it held and when was it imposed? What happened to it and how much was it worth?

The Scottish and Welsh Governments have published papers on failure to restore open-cast sites and talk of a £2 per tonne levy imposed by the Coal Authority. Despite questions to the Treasury and the Department of Energy and Climate Change, I have been unable to clarify if the levy was imposed at Parc Slip Margam, how much was collected, where it was held and which mines were affected.

[Mrs Moon]

I have awful news for my hon. Friend. DECC has informed me—this is such a sad thing to hear—that much financial information was unavailable because it relates to business practices from nearly 20 years ago. I have friends who have their bank accounts from 20 years ago! I find it incredible that the Department does not have records just because this happened 20 years ago under another Government. Unbelievable.

Parc Slip Margam is mostly in the constituencies of my hon. Friends the Members for Aberavon and for Ogmore, but the residents affected are mostly mine. Cynffig Hill is about 300 metres south of the void. The site is over a mile long and half a mile across, and includes a huge void that is filling with water. A pump in an old mining shaft that was supposed to send water into the nearest water course failed to function, and Celtic Energy began pumping on 20 January as the water had filled to 40 metres. When it went above that it posed a risk to the community below.

Mr Watson informed my office that Celtic Energy will be pumping water out of the void for at least three months, and would give three months’ notice before stopping. He stressed this was a good-will gesture. He indicated no liability and that his company would not be willing to continue to incur these costs. The water, I am told, goes through filtering ponds into tributaries of the River Kenfig. Water samples have been taken, although the analysis is not yet complete.

I have to admit family connections to these developments. My husband, when county ecologist for Mid Glamorgan, opposed the extension sought by British Coal in 1993. If only he had been successful. I spoke against the extension in 2007. If only I had been successful. Coaling ceased in 2008. At one point, it was hoped that the problem would be resolved by the opening of the drift mine by Tata. My hon. Friend the Member for Ogmore will remember being at the meeting when that was discussed. Coal from a slip mine into Margam mountain would have put the spoil into the Margam Parc Slip void. That failed to happen.

In 2010, Celtic Energy sold the land rights of Margam and three of the sites to Oak Regeneration, a company based in the British Virgin Islands, for £1 each. The Serious Fraud Office investigated the transfer, but legal proceedings failed twice as they were found to be wrong in law. According to Private Eye, after the sale, Celtic’s owner, finance director, solicitor, assistant solicitor and senior partner—five individuals—received bonuses and loans in excess of £10 million pounds from companies in the British Virgin Isles.

According to Celtic, however, it has no funds available and the restoration has become entirely the legal responsibility of Oak. My local authority, in a report to its development control committee, referred to Oak on 8 January, stating:

“it is…evident that serving an enforcement notice is unlikely to secure restoration of the site, nor do either of the Councils have the financial means behind them to secure the restoration of the site in default.”

Mr Watson yesterday said I was misinformed when I stated on 13 January that in 2010 Celtic Energy had £136 million in a restoration fund, and that the fund had reduced by £63 million by 2011. He said:

“This is simply not correct. The figures you quoted are ‘provisions’ for liabilities on the balance sheet and do not represent assets in any form...The provisions were reduced when the land was sold along with restoration liabilities to Oak Regeneration Incorporated in September 2010. That transaction was the subject of the SFO investigation which has now closed. During the course of the SFO investigation it was not clear whether the transaction had been effective in transferring liabilities and so the accounts were amended to put back the provisions until the matter was resolved. That position will now be re-visited once more.”

Wherever the money is, let us have it back in some form of restoration fund for Parc Slip Margam.

“None of these changes in the provisions in the statutory accounts make any difference to the cash the company is holding, nor to the restoration escrow funds”,

which it claims are £46 million and

“held by local authorities.”

Bridgend county borough council has said that the restoration fund for Parc Slip Margam, which is in an escrow, stands at £5.7 million and that the estimate to secure the full restoration is between £30 million and £40 million. Oak Regeneration has submitted planning proposals, which have been rejected, including for the building of 2,500 new homes, heated and cooled using geothermal energy; a railway station; a new road to the M4; and five years of open-cast coal extraction.

The mining company Hargreaves has proposed tax exemptions, and my hon. Friend the Member for Ayr, Carrick and Cumnock (Sandra Osborne) has argued that these proposals be considered. I do not want to steal her thunder, but I would be interested to hear more about those issues.

Coalpro represents the majority of UK coal producers. It supports any mechanism that helps to restore sites left behind by former operators. Although opposed to the carbon price support mechanism, it is in favour of a short-term exemption if this would ensure that abandoned and orphaned sites are restored for beneficial future use. The industry supports this, which is important, and I look forward to hearing what the Minister has to say.

[Huw Irranca-Davies]

I commend the forensic way in which my hon. Friend has researched and is explaining this complex situation. It often seems like one of those conjuring tricks with the three cups and trying to find the pea—only in this case, it is money, not a pea. Will she reflect on the fact that although pumping is taking place—temporarily at least—and people should not be worried at the moment, this is not a long-term solution? I hope to hear a way forward from the Minister, because we cannot keep pumping this stuff out when it is so close to the top.

[Mrs Moon]

My hon. Friend has been sneaking into my office and reading my speech. In fact, when I originally wrote it, I used the words “pass the parcel”, because every Government agency and Department I have spoken to has passed the parcel. It has been shocking.

The scheme will relate only to orphaned restoration liabilities where owners and operators are bankrupt or liability has fallen back on the state, meaning no breach of the “polluter pays” principle, and the exemption would be limited to the amount of restoration coal necessary to make the scheme viable. If it is not the responsibility of companies, it cannot be right for the responsibility for open-cast coal sites to be devolved to the Scottish or Welsh Governments, or even to the mineral planning authorities, without the finance also being devolved. That is just not right. As I have demonstrated, the Treasury and its agencies have benefited before and since privatisation. The funding must go with the responsibility.

The problems affect everybody living close to the mines. Peoples’ lives have been blighted by ideologically driven legislative failures. As a Parliament, we have to give people a plan of action and a sense of hope that we are taking responsibility and tackling this problem, and we need a grown-up Government who will co-operate with devolved Governments. Gwenda Thomas, the Assembly Member for Neath, has issued a statement, which I fully concur with, as I am sure my hon. Friend the Member for Ogmore does, calling on Celtic Energy to take decisive action to demonstrate its commitment to restoration. Celtic used to have a reputation in our area as a model of responsible mining. It needs to stand up and rebuild the respect our communities had before it ripped the profits from the valley, endangered local people and walked away.