Bidders fear British Coal pay deal

REVENUES from the privatisation of British Coal will be reduced by tens of millions of pounds because of the redundancy package agreed with the workforce, writes Mary Fagan.

The deal, guaranteeing staff up to pounds 27,000 if they are made redundant in the next four years, will have to be honoured by the successor companies to British Coal.

One potential bidder said all companies interested in buying into British Coal will expect the cost of the agreement to come off the price demanded by the Government. No price has been put on British Coal but there have been estimates that the mining assets could fetch several hundred million pounds.

Potential bidders include RJB Mining, Ryan, and Coal Investments, the company run by Malcolm Edwards, the former commercial director of British Coal. They remain concerned about a range of costs they may have to shoulder, including the redundancy deal, the clean-up of defunct mines and the provision of concessionary coal to employees.

The situation has been complicated by rising claims for compensation from British Coal by private mining contractors. The claims, linked to the terms of the contracts, are thought to amount to hundreds of millions of pounds.

British Coal said that the liabilities for the private sector would be reduced through the implementation of at least 2,500 more job cuts before the company is sold at the end of this year. The company said that most of the jobs would go at offices in London, Nottingham and Yorkshire.