Parts of UK Coal may be nationalised after colliery fire closes pit

Ministers discuss returning parts of UK Coal to public ownership in attempt to save retirement savings for 6,000 members

Troubled parts of UK Coal, Britain's largest coal mining business, could return to public ownership under plans being discussed by ministers that would protect some or all of the company's ailing pension scheme.

Ministers are in daily contact with the company and union representatives, acutely aware that a failure of the business would wipe almost £360m off the value of retirement savings for 6,800 pension scheme members and saddle the government-sponsored Pension Protection Fund (PPF) with a £540m bill.

The future of UK Coal, which runs three of Britain's last remaining deep pits, was plunged into uncertainty in February when a fire broke out causing the closure of its largest deep-pit colliery, Daw Mill in Warwickshire. The underground blaze, which is still burning, has resulted in 650 miners being put out of work and has cost UK Coal £160m in lost coal and a £100m in equipment losses.

Before the fire, Daw Mill supplied 28% of the group's output and about 5% of national energy needs.

Discussions in Whitehall are being led by the energy minister, Michael Fallon, who is understood to be working closely with colleagues from the Shareholder Executive, part of the Department of Business, Innovation and Skills, which is already responsible for taxpayer holdings in businesses such as Royal Mail, Channel 4, Eurostar and the Royal Mint.

Fallon is exploring whether the Coal Authority, the publicly owned successor body to the National Coal Board, might take over assets or operations linked to Daw Mill in order to allow the rest of UK Coal to escape financial crisis. UK Coal, which employs 6,000 workers, also has deep mines at Kellingley in North Yorkshire and Thoresby in Nottinghamshire as well as six surface mines.

Fallon told the Sunday Times: "We are looking at whether the ownership of Daw Mill can be transferred back to the Coal Authority."

UK Coal is largely debt-free following a complex restructuring of its parent group Coalfield Resources last year. However, as part of the deal, large pension liabilities from across the group were ringfenced solely within the UK Coal unit, which is committed to a demanding schedule of pension deficit repayments.

It was reported over the weekend that a deal to spin off Daw Mill might involve a transfer of some of UK Coal's pension obligations, though such a move may prove difficult for pensions regulators to sanction.

John Ralfe, an independent pensions consultant, said: "Although the devastating fire has brought things to a head very quickly, [last year's] convoluted restructuring – approved by the Pensions Regulator – only managed to paper over the cracks.

" The regulator has estimated that the PPF would lose £540m if UK Coal's pension scheme was wound up so the government will be bending over backwards to avoid this."

Earlier this month, UK Coal was forced to deny claims that it was seeking voluntary liquidation after HM Revenue & Customs turned down a request for a delayed tax payment. Fallon said: "The cross-government response, coordinated by my officials, has ensured that we have been able to respond to the company's needs, and help facilitate its financial position.

"Our priority remains to assist the company's efforts to ensure that, as far as possible, the viable parts of the business are maintained and that those who are regrettably likely to be made redundant following the fire at Daw Mill receive appropriate support."

Miner issues

UK Coal emerged from the privatisation of the coal industry in 1994 when the Tory businessman Richard Budge bought the majority of Britain's still functioning pits from John Major's Conservative government for £815m.

In a deal with RJB Mining, British Coal sold off 16 deep and 18 surface mines, saving around 10,000 jobs, with the company rebranded as UK Coal. It was also given an exemption under EU competition laws over its monopoly status.

The future of UK Coal is uncertain after a fire caused the closure of its largest deep-pit colliery, Daw Mill in Warwickshire

However, within one month of the purchase, bosses said it planned to close the Bilsthorpe pit, in Nottinghamshire, and so started a steady decline in the coal industry's fortunes. At present, the business runs two deep mines, the Kellingley and Thoresby collieries – in North Yorkshire and Nottinghamshire respectively, producing 2m and 1.2m tonnes of coal last year – six surface mines in Butterwell and Potland Burn, Northumberland; Huntington Lane, Shropshire; Park Wall North, County Durham; Lodge House, Derbyshire and Minorca, Leicestershire. They produced a combined 2m tonnes last year.

The coal produced generates about 6% of the UK's total power supply, and 16% of all coal used in the UK, with the majority now being imported.

Output is 7.5m tonnes a year with a staff of 2,000. By comparison, a century earlier the UK was producing 300m tonnes annually using 1.25m workers.

Britain still fires 40% of its power plants using coal, although the decline set in during the 1960s when the government started turning to cheaper alternatives such as North Sea oil and gas, and nuclear.

Since privatisation, shares in the listed company hit an all-time high in 1996 of 618p and 558p as recently as the summer of 2008, but are now worth 3.1p.

In recent years UK Coal has been on its knees as it has struggled under the weight of an ever-growing pension deficit, while coal from its mines became depleted and losses started mounting.

Last year the company, which also has a significant property portfolio of industrial sites and homes used by workers, underwent an eight-month restructuring to save the business from collapse. It was renamed Coalfield Resources and the profitable property business and the loss-making mining business were separated.

A fire in February at the Daw Mill deep pit that burnt through £160m-worth of coal and destroyed £100m-worth of equipment has exacerbated the decline. However, bosses still believe the company has a future and that the remaining mines can be successful.

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Article source : http://www.guardian.co.uk

UK's top companies condemned for prolific use of tax havens

• Only two of FTSE 100 have no subsidiaries in havens
• Big four banks and Tesco among biggest users 
• ActionAid findings described as shaming by Lib Dem peer

The UK's 100 biggest public companies are running more than 8,000 subsidiaries or joint ventures in onshore and offshore tax havens, according to research published on Monday, raising fresh concerns about the full extent of corporate tax avoidance.

The figures, published by the charity ActionAid, show that only two of the companies listed on the UK's FTSE 100 have no subsidiaries in tax havens – while companies such as Barclays and Tesco own hundreds.

Corporate use of offshore subsidiaries has been roundly criticised by tax campaigners as a tactic to legally reduce corporate tax bills, with Vodafone, Starbucks and Amazon attracting widespread protests and criticism from MPs.

Barclays, which has more than 120 subsidiaries in the Caymans alone, said it is continuing to reduce the number of its operations in low-tax jurisdictions.

David Cameron has pledged to put tackling the issue of tax avoidance and offshore secrecy at the heart of next month's G8 summit, which Britain chairs this year.

Speaking after Saturday's meeting of G7 finance ministers, the chancellor, George Osborne, said international action was needed, adding it was "incredibly important that companies and individuals pay the tax that is due".

But many of the offshore jurisdictions used by the FTSE 100 have close ties to the UK, illustrating the challenge facing Cameron and Osborne ahead of negotiations with other G8 leaders.

In total, FTSE 100 companies have 1,685 subsidiaries in UK Crown dependencies such as Jersey, or overseas territories such as the British Virgin Islands (BVI), Bermuda and Gibraltar.

The Treasury recently secured a deal to share more information on potential income-tax evaders operating out of British overseas territories. But campaigners warn that agreements so far do little to tackle offshore corporate secrecy and structures.

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Cold snap boosts profits at British Gas owner

Centrica says it will try to avoid more price rises for as long as possible as it faces protests at annual meeting on Monday

British Gas's owner, Centrica, enjoyed a huge boost from the cold snap as consumers turned up the heating, driving consumption up by almost a fifth compared with last year.

The company, which raised prices by 6% shortly before the harsh winter set in, said any benefit from the "exceptionally cold weather" would be used to prevent further price rises "for as long as possible".

The finance director, Nick Luff, said: "The fact is we make a margin selling gas. We will have made a higher margin because of the extra volume and we will use that to keep prices down during the rest of the year."

But he said the cost of implementing the government's energy efficiency scheme and higher transport costs would hit profits, while the gas price remains unpredictable – meaning there may be little extra to invest in keeping prices low.

The energy comparison and switching service uSwitch.com still welcomed the news at a time when consumers are struggling to pay bills. Ann Robinson, director of consumer policy at uSwitch.com, said: "British Gas has recognised the pressure facing customers and is using the financial gain from the extended cold weather to maintain its competitiveness. In plain English, this means that British Gas customers should expect no further increase in prices at least for the foreseeable future."

Gas consumption has surged during the cold snap

Centrica faces protests at its annual meeting in London on Monday afternoon as campaigners gather to challenge the company on price hikes, multimillion-pound payouts to British Gas bosses and plans for a new generation of gas power stations instead of cheaper, clean renewable energy.

Households' average gas consumption was 18% higher in the first four months of 2013, compared with the same period last year, while electricity consumption was 3% higher. Residential customers in the UK also rose by 28,000 in the first four months of the year, which Centrica put down to competitive pricing and good customer service.

The company said this "strong performance" put it on course to meet expectations and deliver full-year profits before tax of £602m, down 1% on last year.

As an oil and gas producer, Centrica also benefited from higher commodity prices, and the group's full-year earnings after tax are expected to be 2% higher at £1.4bn.

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UK economy picking up, surveys suggest

CBI sees signs of rising business confidence, while Lloyds data shows growth in seven of England's nine regions

 Britain is starting to see green shoots of recovery as business activity picks up, companies continue to hire new staff and consumers start to spend again.

A series of surveys published on Monday suggest the UK is on the road to recovery after its double-dip recession, providing a boost for chancellor George Osborne.

Business lobby group the CBI expects the economy to grow by 1% this year and 2% in 2014. That contrasts with the IMF, which recently slashed its growth forecast for the UK from 1% to 0.7%, and suggested Osborne should rethink his austerity programme.

The CBI has consistently supported the chancellor on austerity, although it has called for more measures to boost growth. John Cridland, director general of the CBI, said on Monday: "The UK economy is moving from flat to growth."

But he warned that the country continues to face big challenges. "Although recent data suggests rising business confidence, the economic climate remains tough, hampering demand here and overseas. Meanwhile, consumers remain under pressure, as inflation continues to outstrip wage growth."

In April, business activity grew at its fastest rate in eight months, according to Lloyds TSB's purchasing managers' index. The PMI – which is based on data from 1,200 manufacturing and services companies – came in at 52.2 in April, up from 51.6 in March, moving further above the 50 mark that separates growth from contraction.

The survey showed growth in seven of England's nine regions, led by Yorkshire & Humber with a reading of 55.7. Only the West Midlands and the North East reported a slight reduction in business activity, hit by a weaker performance of the manufacturing sector and spending in those regions.

Cast members at the premiere of 'Star Trek Into Darkness' at The Empire cinema in Leicester Square in London, May 2013. Barclaycard said spending rose 3.6% last month compared with April last year, led by 21% growth in spending on cinema and theatre tickets

 Elsewhere, it seems Britons are going out more and parting with their cash, cheered by the warm weather. Barclaycard said spending rose 3.6% last month compared with April last year, led by 21% growth in spending on cinema and theatre tickets. Restaurants also benefited with an 11% increase in spending, as did DIY stores, up 8.5%. Growth in spending online continued to outstrip the high street, up 11.7% on last year, compared with just 1.7% in bricks and mortar shops.

Valerie Soranno Keating, chief executive of Barclaycard, said: "Although economic data is generally mixed, this is the first time since 2011 that we've seen growth above 2% for three consecutive months, which may suggest a more sustained improvement in sentiment."

A forward-looking survey of the jobs market suggests it too is looking healthy, with growth in employment set to continue in the second quarter. The Chartered Institute of Personnel and Development said more employers are expecting to increase headcount than those who intend to cut jobs, with a balance of +9, up from +5 for the previous quarter.

Gerwyn Davies, CIPD labour market adviser said: "Even though last month's official figures showed a slight dip in the level of employment, these findings suggest that further employment growth is possible."

But he notes that the number of jobs being created may fail to keep pace with the population growth, meaning unemployment could still rise.

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Article source : http://www.guardian.co.uk