LONDON - In 1926, coal miners led the general strike. In the 1970s, they brought down a government and plunged England into darkness. Eight years ago, the workers' picket led by the British coal miners was Europe's largest strike for over two generations. Now, in 1993, the coal industry is again the source of national economic strife - but this time, the British government has been thrown into crisis without any miner having lifted a finger.
In October 1992, the British government announced the largest mass layoff in its history, as it revealed plans to close 31 coal mines - more than half the country's coal pits - and to axe 30,000 jobs. The speed and scale of the dismissals rocked Britain. As the recession deepened, a storm of protest swelled against proposals that would have put thousands of miners out of work before the end of the week. While the government was reeling from the force of public outrage, British mining unions, including the National Union of Mineworkers (NUM), the Union of Democratic Mineworkers (UDM) and Nacods, the pit deputies union, won a High Court ruling that held the decision to shut the mines to be an unlawful breach of both British and European employment law.
But the unions' victory in the courtroom was limited. The High Court ruled that the manner in which the pits had been closed was illegal, finding that the government broke a consultation agreement with the miners that placed decisions about closures at the discretion of an independent review. The court did not, however, rule the scale of the closures illegal. British coal miners still face pit closures and pressures to accept redundancy, or layoff, packages.
Coal mining has always involved many of the country's most important employment issues. The mining strikes in 1972 and 1974 are linked in the public mind with the three-day week; with a snow-bound and strike-held Britain caught in the "winter of discontent." Much of the public remembers the failed 1984-1985 strike more for its flying pickets (union demonstrators who travel from one pit to another to set up picket lines and to persuade miners to vote for a strike in their regional ballot) and hardline union politics than for the massive layoffs that sparked the strike.
Now coal is back on the agenda. But this time around, the focus is radically different. The announcement of the pit closures became the touchstone of general dissatisfaction over economic policy and rising unemployment. As tens of thousands of miners faced the layoffs that haunted so many workers, the public began to question why the closures had been ordered. Today, the public is incensed over the way the government has treated the miners.
Miners, their unions and some Members of Parliament (MPs) blame the speed and scale of the closures on the government. The most bitter accusations are aimed at the government's privatization of the coal industry; even the state-owned British Coal is critical of government policy. "The way the industry was privatized has had a very long bearing on the situation we find ourselves in. The closures are a consequence of the way the industry was privatized," says a British Coal spokesperson.
The country's most contentious employment debate has begun to turn into a debate on economic policy. Since the failed 1984-1985 strike, the government has succeeded in directing the coal debate away from miners' wages and coal as a national asset, and toward pit productivity and profit. But now the miners are challenging the government's "free market" coal policies on the government's own economic terms.
The right to jobs and wages
British unions have historically fought for better wages and against pit closures at the same time that politicians and industry have argued the need for cheap electricity, leading to a series of clashes between the right-wing Conservative government and the militant National Union of Miners (NUM). The two were poles apart: the NUM focused on the right to jobs and wages and saw the survival of mining as a social issue and British- dug coal as a national asset, while the Conservative government insisted that the coal industry and its workforce had to bend to market forces.
When the Labour government nationalized the British coal industry in 1947, it instructed the miners to produce as much coal as possible. But the advent of cheap oil in the 1950s and 1960s shifted that directive to producing coal as cheaply as possible. Although the country's coal had a near monopoly on the domestic market, a trend of pit closures began.
As the pressure for productivity was increasing, the tension between the government and the unions grew. The NUM moved to the political left and more forcefully pressed for higher wages and better safety conditions in the deep underground pits. The miners' anger finally boiled over in the 1970s, the decade when Britain's unions reached their post-World War II zenith. In 1972, the miners held their first national strike in 50 years, resulting in power cuts that plunged the country into darkness. They successfully destroyed the government's pay policy and became the highest paid workers in state-owned industry as oil prices quadrupled. When oil prices came down, the threat of pit closures rose again. In 1974, the miners went on strike again, forcing an election and bringing down the Conservative Heath government.
In the 1980s, the Conservative Party, returned to power with Margaret Thatcher's 1979 election, decided to break the miners' union as a central component of its right-wing ideological onslaught. Throughout the early part of the decade, the Thatcher government prepared for the intense conflict it had decided to provoke. First, the government began to build up coal reserves at power stations. Second, it appointed a manager who had earned a reputation as a union buster in the United States to the National Coal Board. As president of the U.S. mining company AMAX, Ian MacGregor refused to renew the United Mineworkers of America union contract at the Belle Ayr coal mine in Wyoming in 1974, breaking a strike and threatening miners with the loss of their jobs unless they left the union.
As head of the National Coal Board in the spring of 1984, MacGregor announced the closure of 20 British pits and dismissed 20,000 jobs. Under the radical presidency of Arthur Scargill, the NUM tried to fight back, declaring a national strike. But, with little support from the British left or public and divided internally, the NUM failed. In the wake of the strike, some miners formed a breakaway moderate union, the Union of Democratic Miners.
In 1987, the government transformed the National Coal Board into British Coal; the newly corporatized entity was given a mandate to lead the industry toward privatization. Between 1987 and September 1992, the mining workforce was halved to 60,000. Then-Prime Minister Margaret Thatcher's "no turning back" policies won her respect from large segments of the population for confronting the threat that had dogged the Conservatives for so long.
The Tories came out of the conflicts with the upper hand. With pits closing at the rate of one-a-week in the late 1980s, miners buckled under the new ethos of making the pits pay. And facing stockpiled coal and heavy pressure to take voluntary redundancy payments, the mining unions had little leverage for a strike when the government announced the closures in October.
The drive for cheaper coal
Underlying the pit-closing announcement was the drive for cheaper energy. Business leaders argue from the depths of the current recession that they need all the help they can get to compete in the widened European and world markets. British coal has trouble competing in the international energy market, but that is largely because of a combination of subsidies and artificial market structures biased against it. In the 1980s, the pressure for improved productivity in British pits increased with competition from cheaper coal from foreign markets. But the drive toward privatization may have dealt the hardest blow to British coal - and not just the run up to the privatization of the coal industry. What many consider the bungled and inept privatization of the electricity industry also dug the grave for British coal pits.
As a whole, the British mining industry remains efficient and competitive at a world level: the costs of running the more expensive mines are offset by profits and lower operating costs of other pits. Plans to privatize coal would mean a vast reduction of the British coal-mining industry, however, with the government stripping the assets of the more expensive operations while maintaining the most profitable pits. "Looking at a government-commissioned report, [the government] would privatize coal by reducing the pits from 50 to 12 to make them more attractive to buyers," says a spokesperson for the Coalfields Communities Campaign, an association of local authorities in the mining districts. "It looks as if these closures were geared as a way of providing a quick fix for privatization."
However, the Coalfields Communities Campaign and other critics argue that it is problems associated with the coal market created under electricity privatization that have had the most devastating effects on the coal industry. In 1990, the Thatcher government sold the 12 government-owned regional electricity distribution boards to private investors. These newly privatized companies have a monopoly in each region in which they sell electricity. In 1991, the Conservatives sold off the electricity-generating industry - the main, if not sole, buyer of British coal - to PowerGen and National Power.
This duopoly in the electricity-generating industry puts it in an unnaturally strong bargaining position against the coal industry. "It's a stagnant market. The government set up two massive companies when they could have had twenty. National Power is the second biggest utility in the world," says Andrew Holmes, writer for the Financial Times- published Power in Europe. "PowerGen and National Power dominate nearly three quarters of the country's electricity generation industry," he says.
Because it is not subsidized, British Coal has been protected by an artificially priced five-year contract between the two generators. The contract expires in March 1993, and the "Big Two" are keen to more than halve the amount of coal they buy, as well as cut the price they pay for it. Government plans to round off the duopoly by privatizing a third energy supplier, the nuclear power industry, were thwarted by the reluctance of buyers who refused to touch the nuclear industry because of its massive operating costs. Withdrawn from the market, the industry is now subsidized as a state company, Nuclear Electric. Further, British Coal is now facing stiff competition from cheaper coal imports and from a politically charged move to gas.
The dash for gas
Government policies have squeezed British Coal, both by privatization and by subsidy. The most dramatic switch to another fuel source to replace traditional coal-fired power stations has come in the form of a "dash for gas." After the privatization of electricity, independent generators, threatened by a market dominated by National Power and PowerGen, formed plans to build new gas-burning power stations. The independents turned to gas partly to escape from the two big generators' coal- and nuclear-generated electricity and partly because building gas-fired plants requires less upfront capital. The dash for gas took off as the generators bought the cheapest fuel, with the Big Two joining in the rush. The newly privatized company British Gas found generators pounding at its door, and British Coal's sales were threatened.
Gas-burning power plants are billed for gas whether they burn it or not. Power stations buy coal by the ton, but they buy the right to burn gas. That right cannot be "stockpiled." And so they burn gas constantly, pushing coal to the sidelines. Companies are also obliged to buy electricity produced by the heavily subsidized Nuclear Electric which receives grants of £1.2 billion each year, adding up to nearly 11 percent of the final price of consumers' electricity bills.
The move to gas and the apparent abandonment of coal by independents and the Big Two concerned the government. At a 1992 Select Committee hearing, the recently created electricity regulatory body said it was not in a position to dictate to companies what fuel to buy. And so, with its markets dwindling and the government refusing to pressure generators to purchase coal, British Coal ordered the pit closures in October.
Critics of the pit closures are calling for protection for the industry, not just to save miners' jobs but as the basis of a long-term energy policy. Gas prices will not stay cheap forever. British gas reserves are estimated to last between 30 and 60 years; coal reserves are expected to last for several hundred. Even at current cheap gas prices, the reliance on gas raises economic controversy. It is a cheap fuel, but gas power stations are more expensive to run. Coal is more expensive, but its existing power stations are the cheapest to operate, according to British Coal. An increasingly cheaper supply of British coal could act as a long-term insurance policy against rising costs of imported coal and gas. But like any policy, someone has to pay the price before the policy pays off.
"Since 1988, the coal industry has not received any form of subsidy from the government. If we only got half of nuclear power's subsidy, we would save every one of the miners' jobs. British Coal is very close to beating the market price. The 31 pits are profitable. Give us a chance and we'll run them," says Labour MP Dennis Skinner, secretary of the parliamentary miners' group. He believes the market pressures squeezing British coal are strong enough, without added pressure from government policies, and argues that British Coal is not being given a fair chance to survive.
"The squeeze on British coal has been made tighter by the government's ideological hostility to the miners and the NUM," says Skinner. He says this hostility has blinded it to a sensible energy policy. And this time around, the public has been outraged as the comparative costs of coal and nuclear power have come to light. "The public outcry this time round was the knowledge that nuclear power was subsidized to the tune of £1.2 billion. The government is embarrassed and should save the pits. But coal must be protected not just from the market but from the government as well," Skinner says.
Fueling the outcry
Many of the 31 pits earmarked for closure are profitable. The government's argument that no one wants to buy British Coal is being publicly scrutinized in the light of British Coal's bargaining position with the Big Two. The reduction of Britain's mining industry has been criticized as short sighted and badly managed. British Coal has the lowest production costs in Europe, yet Britain continues to buy subsidized German coal and French electricity.
In light of the negative public reaction to the last coal miners' strike, the government could not have anticipated the extent of public anger over the pit closures, and now finds itself in a no-win position. If it refuses to step in to protect the industry, the Conservative government will have to answer to the public. If it does take measures to hold up the industry, it will face criticisms from its own Conservative backbenchers who introduced the free market policies. Any U-turn in its free market approach will recall the Heath government's weakness in the face of the 1974 strike that pushed the Tories out of power.
"The government created an enemy following within its own Tory Party who [directed] the economy to not rely on British Coal or the NUM. Having defeated the miners in '84 they carried on with privatization. People thought it would work wonders, but now they are saying it's no big deal and they could see British Coal was being privatized out of existence," says Skinner.
A Department of Trade and Industry spokesperson defends the government's privatization policies and argues the electricity companies will not be able to exercise unbalanced market power over the coal industry. "Electricity is a regulated market. The purpose of any market that is privatized is to provide the element of competition and the regulator will promote that," he says.
British Coal itself places the blame for the crisis on its market's doorstep. While it is still beating its costs down to world market prices, its sales are dependent on the Big Two. "The problem has been that the generators won't take the coal. The two big generators have made it clear they won't make the contracts more than 40 million tons next year and 30 million after that. This year it's 65 million tons. If we are restricted to a market of 40 million tons then all those [pits] will have to close," says a British Coal spokesperson.
The state-owned corporation questions the economic argument behind the newly created electricity market, noting that many of the pits earmarked for closure are indeed profitable under the terms of the contract that is due to expire in March. But it is the contracts that set the price and determine which pits make a profit. "Whether coal is profitable or not is not the issue," a British Coal spokesperson told the Monitor. But closing pits that make money makes no sense in the public mind.
Miners' advocates are now calling either for subsidies or a "level playing field" for British Coal. "Mr. Heseltine [Britain's President of the Board of Trade] has hidden all along behind the argument that there is no market for the coal from the threatened pits. Clearly, he has been badly advised. Modest changes to the way the electricity industry operates can ensure that, at no cost to the public, there is a market for this coal and a viable future for these pits," says a spokesperson for the Coalfield Communities Campaign.
While the government brought this crisis upon itself, it is the miners who will bear the brunt of the pit closures. "The government wanted to reduce the workforce by 30,000 to just under 20,000. There's no question the government speeded up the closures. Since 1979 [it has] been running down the coal industry. Union busting has got it into this crisis. Now the market for British coal is being taken away - that's the real crunch," Dave Feickert, head of research at the NUM, told the Monitor. "We have the most technologically advanced underground coal mines in the world and we will be producing coal at competitive market rates from next year. Half our mines now can compete on their prices for coal. Yet the government is on track to throw away the British coal mining industry."
Feickert adds that miners' futures will look even more bleak when British Coal is privatized. Private British mines are already competing with British Coal in the price war. "Wages in private mines used to be linked to wages in the public sector. That was removed by the government two years ago. The safety aspects are worse in private mines - the safety rate is six times worse than it was before, we're back to levels from the 1920s and 30s. You can compare it with South Africa and [the former USSR]," he says.
Ironically, the Union of Democratic Mineworkers, one of the unions that joined in the court action against the closures, had originally spoken in favor of privatization at a Conservative Party conference. But when the pit closures were announced, UDM President Roy Lynk staged a one-man protest in a pit, and it was his union that called for a national strike, not the more radical National Union of Minerworkers.
The NUM has concentrated on appeals to the public, shifting to arguments that focus on national economics rather than employment. "We have been arguing the case for coal with its economic savings, environmental implications and energy requirements. We have lobbied the EC and it wants the British coal industry to stay open. They know we can compete with the world price. We are being supported by a wide range of people and organizations and are concentrating on winning the argument," says Feickert.
Scargill and the NUM are appealing to the public and, in 1993, the public seems prepared to admit they may have a case. Just as the government was on the verge of privatizing the industry, just as British Coal was beginning to compete on the world market and just as the mines were becoming an economic issue, the general public weighed in against the pit closures. The unions, they say, just might be right.
European governments have either chosen to wind down the industry or to implement a series of policies to stem the tide against a flood of cheaper fuel. Europe's deep mines are expensive to operate. European coal cannot compete on the current energy market unless it is protected or subsidized.
In France, the nuclear industry now produces three-quarters of the country's electricity. Two hundred thousand French mining jobs have disappeared since the 1960s. The French government gradually ran down the workforce at its state-run mines through a long-term plan of early and natural retirement, heavy financial incentives and compensations.
After the Berlin Wall came down in 1989, 70,000 East German miners - half the country's mining workforce - lost their jobs. Now the unified country is protecting its coal industry with heavy subsidies to enable it to compete in the European energy market. In real costs, Germany produces coal at up to three times the world price.
The European Community (EC), meanwhile, is pressuring European power stations to cut down dirty emissions. As one of the dirtiest fuels, coal produces high levels of the sulphur dioxide that causes acid rain. De- sulphurization equipment is expensive to install in existing coal power stations and the cost of building a "clean coal" burning station acts as a disincentive for many companies to burn coal.
Environmental pressure for "green" coal has also increased. Indonesia markets Envirocoal, a product with a lower sulphur content and more efficient energy release. But the environmental advantages of burning this kind of coal must be weighed against the environmental costs of its mining methods, says Roger Moody of MineWatch, a British advocacy group. "Clean" coal comes from open cast mines and is imported, while "dirty" coal is deep-mined in Europe. In the long term, Moody says, open-cast mining in both Indonesia and the United States destroys the land surface along with the homeland of many indigenous people. "Deep mining is more environmentally friendly although the coal does have higher sulphur levels," explains Moody. He believes that deep-mined European coal burnt at de-sulphurizing power stations may be the greenest form of coal-fired electricity.
At the same time that the EC is pressing the industry to clean up its act, it is also pushing member states to increase coal productivity and efficiency. Currently, it sets levels on the amount each country can subsidize energy; the countries may spend it any way they want on their energy industries. Virtually all use this to subsidize coal. However, this agreement is due to expire at the end of this year, and the EC plans to cut state aid to coal if the most unproductive pits do not bring their costs down to the European average, currently nearly three times the world price.
Britain contains half of Europe's total coal reserves. British Coal has responded to demands to improve the efficiency and productivity of its pits, producing coal more cheaply than any other nation in the EC. Production costs are almost half those of Germany and nearly one-third those of Belgium. British Coal expects its mines to start producing coal at world prices in the near future. Yet the British government is willing to cut 30,000 mining jobs at a single stroke. Critics argue the cuts are a direct result of Britain's refusal to subsidize its coal industry. It is the only European country not to do so, meaning that British coal, although mined the most cheaply, is not always the cheapest on the market.
The British government has insisted that in order for coal to survive, it must compete in the "free market." Moody says, "Britain is the only country that is not protecting the industry. Trade union opposition in the rest of Europe has been lower than in this country. There have been some strikes in Germany and Poland but changes have tended to be more gradual." In 1984, 170 deep mines in Britain were operating; in 1992, 50 remained, and this year the figure would have dropped to 19 had the government's plans gone through.
The future of coal mining in Europe looks bleak. In Britain it looks bleaker still as a unique blend of social history and economic forces meet head on.
- H.B.