BREAKING - Government rejects £338m bid to extend life of Kellingley Colliery

In a written statement to parliament Matthew Hancock, business secretary, said a state aid funding bid to keep Kellingley and Hatfield collieries open for another three years “is not affordable and does not represent value for money to the taxpayer.”

The announcement means the UK Coal pit will close by the end of the year as part of a £4m ‘managed closure’ plan already agreed.

Mr Hancock said: “I know how important UK Coal mines are for the communities in which they are based, and that their closure will affect many people.

“But having carefully considered the case for providing significant additional funding, we have concluded that committing public sector funding on the scale necessary to extend the company’s closure plan by three years is not affordable and does not represent value for money to the taxpayer.”

UK Coal first announced plans to close the pit in April and a planned workforce buyout fell through in July.

In September, the company secured the ‘managed closure’ deal to ensure gradual job losses.

One state aid application would have seen the pit remain open until 2018 and another would have helped provide further funding for the closure of the business including the retraining of the miners.

Mr Hancock added: “The £338m requested approximates to a cost of more than £75,000 per UK Coal employee per year over the three year closure plan.

“The company has also recently indicated an additional funding requirement of £10m to keep its existing managed closure plan for 2015 on track. The government remains committed to support the company in its efforts to deliver this plan. To this end, I can confirm that the government is willing in principle to provide additional support to help deliver the plan, subject to conditions including state aid approval and appropriate support from other stakeholders. We are working with the company to determine the amount, timing and form this additional assistance could take.”