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Andrew Glyn

Closures – economic nonsense

(June 1984)

From Militant, No. 705, 22 June 1984, p. 4.
Transcribed by Iain Dalton.
Marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

ONE ARGUMENT which the miners and their supporters often meet is that the NUM’s struggle against pit closures flies against the laws of economics. Labelling pits as ‘uneconomic’ suggests that to keep them open only benefits the miners who keep their jobs, with the rest of the country picking up the bill.

This view is quite wrong, it is far better for the rest of society, even from a narrow economic view, that miners be digging coal rather than drawing dole. ‘Unprofitable’ the higher cost pits may be, according to how the NCB does its accounts; ‘uneconomic’ they certainly are not.

In its drive for pit closures the NCB has harped on the fact that a small proportion of its pits are responsible for much of its losses. Last autumn it claimed that the highest cost 12% of colliery output occurred £275 million losses (about half the total loss in 1982–83).

These collieries employed about 40,000 miners. In addition a further 35,000 or so other jobs were dependent on these pits. Around a quarter of these were other NCB jobs (at pit, area or HQ levels). The rest were in industries such as electricity, steel and engineering, which supply fuel and materials needed by the pits.

If the pits were to be closed and their losses eliminated, all these 75,000 workers would lose their jobs. But the country would lose the coal. The coal produced in these pits was worth around £475 million in 1982–83 (more than £120 per week for every worker involved, both in pits and in the supplying industries).

Whilst part of the coal was stockpiled, this could have been avoided by substituting coal for the more expensive oil still being burnt at the power stations. So even in the depressed conditions created by the Thatcher government the coal would have been productively used.

Nor would the loss of the coal be balanced by extra production elsewhere in the economy made possible by the closures. With mass unemployment, miners would either not find a job, or, if they moved to another pit or found work in another industry, then someone else would remain on the dole queue. And the same is true of the other NCB staff and workers in supplying industries. The country would simply have less coal, and would have to use more imported fuel.

Country worse off

The miners and other workers losing a job obviously bear the brunt of the cost of the closure. They would be much worse off. The Department of Energy calculated (before the recent increases) that the average redundant miner would receive around £60 per week over a 10-year period under the redundancy scheme.

But some of this would replace other state benefits and of course by no means all of those who end up without work after a pit closure would be eligible. A young single person, living at home, who lost the chance of a job after a pit closure would receive in dole or supplementary benefits only a fraction of what they would get at work. On average those without work could be as much as £70 per week worse off.

But even this figure is hardly more than half the value of the coal lost by closure. The rest of the costs of not having the coal would be spread throughout the rest of society. Far from gaining from these pit closures the rest of the country would be more than £200 million worse off.

This would be felt in the government being that much more in the red after the pits were closed. Whilst it would ‘save’ the £275 million it pays to the NCB to cover its financial deficit on the pits, the government would lose £480 million in lost tax revenue and from having to pay out dole and redundancy money.

There is an irrefutable economic case for keeping open even the higher cost pits. The profits of the NCB, like the profits of any private firm, are no guide at all to what is in society’s economic interests.

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