Rationality and Politics in Pit Closure Decisions

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Abstract
This paper considers whether pit closure decisions can be justified solely on financial grounds. It examines a variety of approaches drawn from accounting and economics, which may be arranged in a crude ‘hierarchy of sophistication’. The paper's conclusion is that the pit closure problem is far more complex than has generally been portrayed to the public, and that satisfactory solutions to it cannot be derived solely from within traditional accounting or economic approaches. The paper is a pedagogic exercise which exposes the limitations and partiality of accounting and finance by applying them to a particular, well-documented case. The paper argues for the inclusion of externalities and social welfare considerations in a planning framework for British Coal guided by Schumacher's principle of conservation.

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