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Only Joking. Boris and the Pits

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Written by Graham Gudgin

Boris Johnson’s quip about Thatcherite pit closures being a help to climate change may have been intended as a joke but it reveals a poor understanding of the history of decline in the UK coal industry and also of Mrs Thatcher’s role in that decline. Some clarity is required on whether the current government approves of free-market solutions to major industrial change.

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As Boris Johnson’s Tories move to the left, attracting more working-class support than doe Keir Starmer’s Labour Party, he faces two problems. One is keeping his traditional supporters on board and the recent Chesham and Amersham by-election suggests this may not be so easy. The other is a feeling among working class voters and especially the Scots that an Eton-educated, Bullingdon club Tory can never fully understand their concerns.  This makes red-seat support somewhat precarious and Scottish support for the Tories a steep uphill task.

It is in this context that the PM’s remarks in Scotland about pit-closures are damaging. Visiting a wind farm, he told reporters that; “Thanks to Margaret Thatcher, who closed so many coal mines across the country, we had a big start and are now moving rapidly away from coal altogether”.  A spokesman later said that the PM recognised the ‘huge impact and pain’ of closures, but this may have been too late to repair the damage.

In one sense the remark was a throwaway line of little importance containing a minor germ of truth. In another sense, it revealed something that many voters suspect is the real Boris. While it is likely that what the Government actually achieves will be vastly more important than individual remarks, voters may be watching more carefully to see if there is a Thatcherite core beneath the jovial facade.  We are told that No 10 is a hive of black humour and this is understandable as a way of dealing with the tension of high-level politics, but any leader must be able to switch consistently from private jokiness to public seriousness.

The remark is important for what it reveals about the PM’s Thatcherism. The current Government appeared to have moved away from 1980s values just as Tony Blair successfully moved away from socialism to span a wider set of voters. The economic response to the pandemic has certainly involved high-spending Keynesianism but this may be temporary. The Cabinet contains a core of free-marketeers and this may prove to be the long-run direction of travel. Was Boris’s remark a nod of approval of Margaret Thatcher or just an attempt to look clever?

In this article we examine what role the Thatcher Governments actually played in the decline of coal.

Thatcher and the decline of coal

The remark gives the impression that Margaret Thatcher closed coal-mines for environmental reasons but of course this was not so. There was little public concern about global warming at the time of the miner’s strike in 1984. More recent public concerns at the time had been global cooling due to shading effects of sulphate particulates in the atmosphere, and acid rain killing Nordic forests.  Margaret Thatcher’s main concerns were instead on efficiency and financial losses in the coal industry and the power of the miners to force governments to subsidise the industry irrespective of its losses.

While it is true that the decline in coal usage is currently helpful in achieving carbon targets, Mrs Thatcher’s aims were not to reduce coal consumption but rather to allow power stations to burn cheap foreign coal rather than heavily subsidised British deep-mined coal. Atmospheric pollution was tackled by switching households to smokeless fuels and the use of the newly discovered North Sea oil and gas, and nuclear power (each power station displaced 4,000 miner’s jobs) plus belatedly electrifying the railways. These trends were well advanced before Margaret Thatcher became PM in 1979.

Nor was it even true the Thatcher administrations were responsible for most closures. The coal industry had been in long-term decline for many years before 1979. The peak of miner’s political power can be said to be in the interwar period when the more than 1 million miners kept industry and transport working and heated most houses. Even then, the general strike of 1926 failed. The miners had resisted the nineteenth-century system whereby wages were reduced when demand fell below supply, in this case due to the overvalued sterling exchange rate introduced by Chancellor Winston Churchill in 1925. Although that strike was lost, the crude system of wage fluctuations was gradually abandoned, and aggregate demand controlled. A second aim of the 1926 strike was realised when the industry was nationalized after the Second World War, beginning an era of energy planning and of cooperation between miners and employers.

This did not mean that pits were kept in operation. Attempts to modernize the industry and to raise productivity meant rapid declines in employment. In the 30 pre-Thatcher years between 1950 and 1980 the number of mining jobs shrank from just under 700,000 to only 253,000 with the closure of 682 mines. Coal production shrank from over 200 million tons a year to 120 million tons. These rapid declines occurred under both Tory and Labour governments and there was a consensus that the process should be carefully managed. The almost complete closure of the large West Durham coalfield in the 1950s and 1960s was an exemplar. Mining villages were merged, with some physically demolished, and new industrial jobs attracted in through a mixture of financial incentives and controls on investment further south in the UK.

The Thatcher era of the 1980’s merely continued the long-term trend, taking employment down from 238,000 to 49,000. By 2010 at the end of the Blair-Brown era there were only 6,000 in the industry and now there are virtually none with the closure of the last deep mine in 2015. The decline could have been a bit slower if imports had been kept out after the miner’s strike in 1984 but after 2010 imports collapsed as much as domestic production. The switch in electricity production to oil and gas firing and most recently to renewable sources and domestic heating to gas are what did for coal.

What was unusual about the Thatcher years was not mainly the pace of decline in the coal industry but the degree of conflict that accompanied the decline. The problem really stemmed from the 1970s in the decade before the Thatcher years. By the early 1970s, the post-war era of cooperation was under increasing stress, for a number of reasons. Increasing difficulty in maintaining the pace of economic growth, led to a devaluation in 1967 which raised import prices. Growing inflation led successive governments to attempt to control wages, particularly of those in the public sector. Together with the bargaining weakness caused by the long postwar rundown of coal, this caused the relatively high wages of miners to slip behind those of comparable workers. Two serious strikes in 1972 and 1974, with widespread power blackouts, led to a political crisis focussed on ‘who governs Britain’.

A dramatic increase in the price and availability of oil in 1974, changed the bargaining power of the miners. Wage differentials were restored and a recovery in coal production was envisaged. The 1974 Bennite Plan for Coal envisaged a growing market through to the mid-1980s, and instigated a major investment programme, involving both new mines and the rapid mechanisation of existing ones. Expansion was planned both to replace collieries which closed as they became exhausted or impossibly difficult to operate, and also to increase total output from the industry.   Although 40 closures occurred during the ensuing five years and manpower declined as productivity began to rise, this took place without major disputes. The context of the Plan for Coal and the assurance that closures could be agreed  with the unions under the industry’s Colliery Review Procedure were powerful influences leading to industrial   harmony.

As late as 1978 a government White Paper expected major increases in coal  output over the following two decades, but  by 1980 the industry was in trouble and planning was set aside to be replaced by the law of the market. The rapid and unexpected fall in demand for coal, led  to a rising mountain of unsold stocks of coal.   Declining revenue led to large   financial losses, and the need for increased government subsidies   None of this was the fault of miners, indeed by then productivity was rising   quickly even if an agreement with the NUM meant that the financial position of individual pits was not identified much less published. The cause lay in the slump, unprecedented in severity since the 1920s, which followed the election of the new Conservative   government.

Although by late 1981 events were overtaken by the international recession which followed the second major global oil price rise. Britain’s slump began fully 18 months earlier. It was triggered by the Government allowing Sterling to rise to absurdly high and uncompetitive levels. The major turnaround in Britain’s balance of trade in oil gave an upward push to Sterling, but the rise could have been prevented by expansionary policies and lower interest rates. Instead, the perverse reaction of the Government was to squeeze spending. The consequences were a huge loss in competitiveness both by exporters and by those competing against imports, and a major fall in demand. Manufacturers cut their production and with it their consumption of coal both directly, and indirectly via falling use of electricity. Similarly, households cut back on coal and electricity as their real incomes stagnated or fell.

Nationalised industries were forced to cut production and reduce employment in order to reduce their losses. As each industry reeled under the spreading recession the Government insisted that the coal industry too should contract. This happened in 1980 when External   Financing   Limits, more popularly known as cash limits, were imposed on the Coal Board to prevent further growth of financial losses. In response, the   Coal Board announced its intention to accelerate the number of pit closures over the next three years and to reassess the Colliery Review Procedure under which the timing of closures was agreed with the unions.

The NUM reacted by calling a strike ballot. A strike developed in South Wales, and the Government backed down. The miners had become the only special case, under a government which prided itself in the inflexibility of its ‘no U turn’ approach. ‘In accordance with the Government’s wishes’ the Coal Board withdrew its programme of accelerated closures and agreed to continue to operate the Colliery Review Procedure.  The original target for the coal industry to break even by 1984/5 was forgotten, and the electricity industry was prevented from buying foreign coal. Round one had been won by the miners.

As the recession continued, the financial crisis in mining simmered on the back burner. Production fell greatly, but not enough to stop total stocks of coal rising from 28 million tons in 1979 to 50 million tons in 1982. Some of these extra stocks were held at the collieries, others at the power stations, with the Coal Board paying discounts to the electricity industry for accepting early delivery. Further efforts to reduce the coal mountain were made by selling abroad. Exports rose from a previous average of two million tons a year to a peak of ten million in 1982. Although the Coal Board strenuously denied allegations of dumping, these sales are unlikely to have been very profitable. Falling sales and  prices caused the financial losses to continue, and the deficit grants to rise.

By 1984 Government subsidies to the coal industry remained in excess of £500 millions, equivalent to almost £3000 per miner. Also, due to the Government’s own determination not to launch anything but the smallest expansion of economic activity, there was little sign that the scale of losses would diminish. However, by this point the Government had won their other industrial battles, were electorally secure, and had not been further troubled by urban riots. Little now prevented them from tackling their most feared opponents. Ian MacGregor had already been appointed head of the Coal Board with a reputation acquired in the steel industry for closing unprofitable units. This move saw the beginning of an acceleration in pit closuress. NCB employment fell by 20,000 during 1983, and in 1984 stood at 20% below the level of the last pre-recession year, 1979.

In March 1983 the Government restated its intention to make the coal industry break even, this time within four years. As the next stage in achieving this objective, and with demand still well below supply, in March 1984 the Coal Board ordered a reduction in output totalling four million tons during 1984/5. This would involve the loss of a further 22 pits and 21,000 jobs. Coal stocks remained 25 million tons above normal levels and a considerable amount of new capacity was due with ten million from the new Selby complex alone. Taken together, these things meant that many existing mines and 60-70,000 would not be needed unless demand revived. Operating results for individual collieries were normally confidential, but figures for 1981/2, revealed in the Monopolies and Mergers Commission Report on the NCB, showed that 35 collieries, mostly in Wales and producing only 6% of total output, accounted for virtually the whole of the deficit of £207 million. Losses continued to grow and were thought to be largely accounted for by pits producing about 12% of the industry’s output.  It is these pits in the so-called ‘high-cost tail’ which would need to close if the deficit is to be eliminated.

After the strike pit closures accelerated. Coal production halved to 50 million tons by the end of the Tory Governments in 1997, but only a third of this drop was due to imports. The demise of the industry continued under Labour, and subsequent concerns about climate change have led to the phasing out of almost all coal use in the UK. Mrs. Thatcher’s contribution was to allow coal imports. These reduced the price of coal and electricity but banning imports would have only delayed the inevitable disappearance of UK coal production. The decline should however have been managed much better. It could have been recognized that pit villages were single industry places often isolated from other centres of work. The loss of jobs and reduction in incomes was associated with a growing drug problem in former mining villages just as has occurred in former industrial towns in the USA.

Conclusion

Leaving changes of this magnitude to market forces which have no responsibility for the social consequences is something which should not be repeated.  Boris Johnson’s well publicized but vague levelling up agenda appears to promise that the mistakes of the Thatcher era will not be repeated but little is clear. Remarks which appear to praise the Thatcher experience in reducing coal production in the UK are unhelpful. If the red-wall seats are to be retained, more clarity is needed on the extent to which the current Government intends to be interventionist when it needs to be.

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About the author

Graham Gudgin