The economy in crisis: Pit closures may lead to the loss of 78,000 jobs

THE CLOSURE of 31 mines will mean the loss of 78,000 jobs in the coal industry and in other sectors directly supplying British Coal, according to an analysis by Andrew Glyn, an Oxford economist.

Mr Glyn, who has carried out research for the National Union of Mineworkers, believes more than 2,500 of the jobs will be lost in mining equipment companies and almost 1,100 in business services. Hundreds will go in electricity production, road haulage and iron and steel, he adds.

His analysis concludes that the balance of payments will be worsened by between pounds 500m and pounds 1bn as coal from the 31 pits is replaced by coal imports and natural gas.

The problem with gas is that some is imported from beyond the UK continental shelf, where the reserves are in any case limited, and that many UK fields are worked by foreign-owned companies whose profits go overseas.

Dr Glyn says that his figures took into account the gradual running down by generators of existing stockpiled coal, which currently stands at 47 million tonnes.

The report claims that the cost to the Treasury will be pounds 1.3bn in the first year because of redundancy, unemployment benefit and lost tax revenue from former employees. Thereafter it will run at about pounds 600m and could result in cuts in other public spending, further exacerbating unemployment.

Mr Glyn says that over the last decade, the tonnage of coal produced by each miner on a shift has increased by 121 per cent to 5.31 tonnes from 2.40 tonnes, while manufacturing productivity has grown by only 50 per cent. Productivity in the finance and business services sector has grown by 14 per cent over the same period.

He warns that without a change in government policy the closure process will continue with further serious consequences for the economy and employment. 'The programme of closures should be cancelled and replaced with an energy policy within which UK coal can make a contribution reflecting its true potential,' he says.

Mr Glyn says that the Government cannot claim large compensating savings as many of the pits earmarked for closure are profitable. 'The latest figures available show that in aggregate the 31 pits named were not generating sufficient cash flow to cover operating costs by pounds 8.5m. So the overall level of loss from these pits is very small,' he says.

The privatisation of BR's only profitable rail freight operation is also likely to be jeopardised by the pit closures. Yesterday, Robert Adley, the Tory MP for Christchurch and chairman of the Commons transport select committee, said that Trainload Freight, which carries BR's bulk freight, 'would lose a substantial amount of business that was irreplaceable'.

Last year, Trainload Freight made a profit of pounds 67.5m on a turnover of just over pounds 505m, but the closure of the pits is almost certain to send it into the red.

The cleaning firm Sketchley made 30 staff redundant yesterday at the firm's factory in Old Basford, Nottingham, where 40,000 miners overalls are cleaned each week. The number will be halved by the closure programme.