Government in Crisis: Case for closures 'remains compelling': This is the full text of Michael Heseltine's statement to the House of Commons yesterday

LAST WEEK, I agreed that British Coal should announce that it would cease production at 31 pits over the course of the next five months with the loss of up to 30,000 jobs. I very much regretted that British Coal had had to reach this decision but I accepted their advice that these steps were necessary in order to bring supply closer into line with demand. I then announced myself the outline of a package of redundancy and special assistance measures, the further details of which I am now able to give the House.

Originally, I intended to announce details of the new coal contracts with the electricity supply industry and the future employment prospects for British Coal to the House before the summer recess. This timetable was not achieved. I would have liked to have made the announcement to the House today. But the electricity industry have still not agreed contracts for coal after 1 April 1993. In the meantime, pressure on British Coal fuelled by reported leaks intensified and I therefore agreed to allow them to proceed. I regret this discourtesy to the House.

I accept full responsibility for that decision as I do for the consequent events.

Madam Speaker, remorseless changes in circumstances have been reducing demand and employment in the coal industry for the last 80 years. The fastest rate of decline was in the 1960s when 300,000 jobs were lost in a decade, including 186,000 under the Labour governments of 1964-70. At present, British Coal is producing 88 million tonnes, with 65 million tonnes going to the electricity generators. It is most unlikely that British Coal will be able to sell more than 40 million tonnes to the generators as from next April. The economic case for a substan tial reduction in capacity therefore remains compelling.

Nevertheless, the Government recognise the concern at the speed of the run-down and about the very great difficulties it would cause to the communities involved. We have therefore concluded that, for the time being, British Coal should be allowed to proceed with the closure of only 10 pits which they have told me are currently loss-making and have no prospect of viability in the foreseeable future. The pits which fall into this category are: Vane Tempest, Grimethorpe and Houghton Main, Markham Main, Trentham, Parkside, Cotgrave, Silverhill, Betws and Taff Merthyr.

Nevertheless, it is clearly important that British Coal demonstrably meet their statutory duties to consult and notify and take account of the result of consultation. No closure will therefore take place until after the statutory consultation period has been completed.

In the case of all other closures and redundancies, I have asked British Coal to introduce a moratorium until early in the new year except for those which may be agreed by the workforce at the pits concerned. This will provide time for negotiations to continue, and hopefully to be concluded, on the new coal contracts. During this period there will be no compulsory redundancies, although voluntary redundancies will be allowed to proceed under the terms announced by British Coal last week.

During this moratorium, the Government and British Coal will set out the full case for the closures which British Coal planned and to which I agreed. The Government will also provide an opportunity for Honourable Members to debate the issues.

In addition, we will carry out widespread consultation with all those concerned over the next three months. We will then announce our conclusions following these consultations to Parliament in the new year. If, following this process, the Government and British Coal's judgement is confirmed then British Coal will proceed with a phased programme of colliery closures aimed at reducing surplus capacity as soon as possible.

Madam Speaker, it is clear that many coalfield communities will continue to suffer significant job losses. I am now able to give the House more details about the package of measures to assist those communities.

In the short term, people will need immediate help to find jobs, to retrain and to construct a new future for themselves. In the longer term, these areas will need help with infrastructure to attract new industries and business.

My Rt Hon Friend the Secretary of State for Employment has written to the chairman of the Employment Select Committee with details of a package of measures. A copy of the letter has been placed in the library.

The Training and Enterprise Councils in the areas concerned will have a major part to play. They will want to ensure that all those affected are offered help from the relevant agencies including British Coal Enterprise and government departments. My Rt Hon Friend the Secretary of State for Wales will be taking similar action in Wales.

One of the best ways of attracting new industries and long-term investment is the creation of enterprise zones. The Government intends to introduce new enterprise zones, in the areas where they would be most effective.

Last week, I said that we would ask English Estates to advise on a programme of property and sites provision. On the basis of preliminary discussions with English Estates, the Government have decided to make available to the corporation - and in due course to the Urban Regeneration Agency - pounds 75m of additional money over the next three years. In addition, the corporation will in this year spend around pounds 10m in these areas.

My Rt Hon Friend the Secretary of State for the Environment is also making nearly pounds 2m available today to the Tyne and Wear Development Corporation. This will enable them to make an early start on the further extension of the Sunderland Enterprise Park and the new Viking Industrial Park in South Tyneside.

We have already announced that three areas - Doncaster, Barnsley and Mansfield - will get enhanced status when the new Assisted Area map is announced in the new year. More areas will be upgraded in the review. This will ensure that firms interested in investing there are eligible for grant assistance. We will continue to look at other areas.

These major initiatives will be underpinned by further smaller regeneration measures. I intend to extend the coverage of Regional Enterprise Grants to all coal closure areas. This will help small businesses there with investment and innovation projects. I will strengthen inward investment efforts in these areas. I will see that additional resources are available to Local Development Agencies.

My Rt Hon Friend the Secretary of State for Environment is also acting immediately to alleviate the effects of the closures. He is today setting up a Coalfield Areas Fund.

Up to pounds 5m will be made available for expenditure in this financial year and next. My Rt Hon Friend is writing to all the local authorities in the affected areas asking them urgently for proposals on how this money can best be spent to help those made redundant. My Rt Hon Friend the Secretary of State for Wales will be making a separate announcement on resources in Wales. I am aware that these closures will have a serious impact on coal industry suppliers and we are already discussing with them ways to assist diversification and the identification of new markets.

These measures will all bring new money to the affected areas. We are talking about pounds 165m altogether. I know that this will make a major impact in transforming the economies of these areas.

These programmes will be carried out by a number of separate agencies, each with established expertise and a track record of achievement in their field. But it will be important to ensure that the programmes mesh properly together, leaving neither wasteful overlaps nor damaging gaps.

For this reason I have decided to appoint a distinguished national figure, who will be an adviser in my department, to act as co-ordinator and facilitator at the national level. He will also assist my Rt Hon Friend the Secretary of State for Wales. I am pleased to tell the House that Lord Walker has agreed to accept this important responsibility.

The decisions which I have announced today have been difficult. I understand the anguish that will be caused for the coalfields concerned but there is no economic alternative. The Government will now proceed to work for the long-term future of all those concerned.