PARLIAMENTARY DEBATE
Mineworkers’ Pension Scheme - 16 May 2024 (Commons/Commons Chamber)
Debate Detail
Contributions from Lee Anderson, are highlighted with a yellow border.
Motion made, and Question proposed, That this House do now adjourn.—(Scott Mann.)
16:56:28
Lee Anderson
Ashfield
We have seen many injustices debated in this House. Just today, we have seen the injustice of the WASPI women. In recent weeks, we have spoken about the infected blood scandal and, more recently, the Post Office scandal. Tonight, we are going to debate another scandal: the mineworkers’ pension scheme scandal.
Some 25% of the United Kingdom is on top of old coalmines, so I had hoped that 25% of this Chamber would be full tonight, but it is not. Maybe there are a few reasons for that. The issue has been debated a lot in this place, both before and since I came into Parliament, so maybe certain MPs are getting a bit fed up of saying the same old thing, but we will keep trying.
I started in the pits in the mid-1980s. I went to work at Sutton colliery, in north Nottinghamshire, with my dad Paul Anderson. He was a rope fitter, and I went to work with him underground. I had a good time working with my dad and my friends at Sutton colliery, which was a family pit. It was a small coalmine with small coal seams and difficult conditions. It was a family pit where brothers worked with their brothers, dads and grandads. It was a proper community, but like all coalmines, there was tragedy underground. At Sutton colliery in 1957, there was a methane explosion and, sadly, five men lost their lives. I knew some of the friends, families and descendants of the people who died.
I then went on to Cresswell colliery, in north Derbyshire, to do my coalface training. It was another family pit where, again, men worked with their sons, and brothers worked with their brothers, and it too was tinged with tragedy. In 1950, there was a fire at Cresswell colliery and, sadly, 83 men and boys lost their lives. The mine rescuers had to seal the pit off underground to save the colliery, so that it could produce coal again. They sealed off some of the old workings and left the men inbye, because there was no chance of saving them, but when they took the stops down just a few months later, the men were on the other side. Some of them had scratched their names into the wall. It was terrible, and this sort of thing is hard to explain to people who have not worked down a coalmine. It was a very tight-knit community, and people worked in difficult conditions.
I had just over 10 years of working in awful conditions, but my grandad Charlie had 45 years down the coalmine and finished up at New Hucknall colliery. It would have been 50 years, but he took a break between 1940 and 1945, and went to fight Hitler. Then he came back and went straight back down the pit the following week. When he finished in the pits in 1979, he got a tankard, a certificate, 500 quid and a meagre pension— imagine that.
As miners, we knew about the risks underground when we went down the pit every day. Since mining started in this country in the 1600s, over 160,000 men, women and children have died in the coalmines, so we knew the risks. We knew there was always a chance that something might happen, but these were the risks we took. The miners took these risks for simple reasons: to earn a wage, put food on the table and make sure their kids were well dressed. In 1994, when I was still working in the pits, they were privatised. In my area, it was RJ Budge Mining that took over the pits.
At that time, a big bone of contention was what was going to happen with the MPS, or the mineworkers’ pension scheme. It was probably one of the richest pension schemes in the world at that time, and was worth hundreds of millions, if not billions, in today’s money. It was always accepted that there would be a 70:30 split in favour of the miners. When the then Government sat around the table with the trustees to make an offer to guarantee the mineworkers’ pension scheme, we automatically surmised that there would be a 70:30 split, which would have been fair. But at the last minute, it ended up being—and depending on who you talk to, whether it is the trustees at the time or the mining organisations involved in campaigning, nobody can get to the bottom of it—a “take it or leave it” 50:50 deal.
The Government at the time never undertook a proper financial risk assessment or had actuarial advice on the split. We can never get to the bottom of that—it was a simple “take it or leave it.” When I was working at the pit with my friends, we never really had a say in this. I cannot remember any man I worked with underground being happy with the 50:50 split, because we knew how rich the pension fund was.
Thirty years on from 1994, successive Labour and Conservative Governments have not paid a single penny into the pension scheme, which is a cash cow. They have taken £4.8 billion out of the scheme. Some mining groups say the sum is nearer to £10 billion, but I will take the figure I have here. In just the last three years, the Government have taken more than £400 million out of the surplus, which is a lot of money. This is miners’ money.
In effect, the Treasury’s guarantee is an insurance scheme. It guarantees to make up the shortfall and pay the bonuses, and so on, if there is not a surplus, but I cannot think of any insurance scheme anywhere in this country, or the world, that has never had to pay out. In 30 years, not a penny has come from the Treasury or the taxpayer to top up the mineworkers’ pension scheme. I think that is a bit of a scandal, and so does my mining community.
Some 25% of the United Kingdom is on top of old coalmines, so I had hoped that 25% of this Chamber would be full tonight, but it is not. Maybe there are a few reasons for that. The issue has been debated a lot in this place, both before and since I came into Parliament, so maybe certain MPs are getting a bit fed up of saying the same old thing, but we will keep trying.
I started in the pits in the mid-1980s. I went to work at Sutton colliery, in north Nottinghamshire, with my dad Paul Anderson. He was a rope fitter, and I went to work with him underground. I had a good time working with my dad and my friends at Sutton colliery, which was a family pit. It was a small coalmine with small coal seams and difficult conditions. It was a family pit where brothers worked with their brothers, dads and grandads. It was a proper community, but like all coalmines, there was tragedy underground. At Sutton colliery in 1957, there was a methane explosion and, sadly, five men lost their lives. I knew some of the friends, families and descendants of the people who died.
I then went on to Cresswell colliery, in north Derbyshire, to do my coalface training. It was another family pit where, again, men worked with their sons, and brothers worked with their brothers, and it too was tinged with tragedy. In 1950, there was a fire at Cresswell colliery and, sadly, 83 men and boys lost their lives. The mine rescuers had to seal the pit off underground to save the colliery, so that it could produce coal again. They sealed off some of the old workings and left the men inbye, because there was no chance of saving them, but when they took the stops down just a few months later, the men were on the other side. Some of them had scratched their names into the wall. It was terrible, and this sort of thing is hard to explain to people who have not worked down a coalmine. It was a very tight-knit community, and people worked in difficult conditions.
I had just over 10 years of working in awful conditions, but my grandad Charlie had 45 years down the coalmine and finished up at New Hucknall colliery. It would have been 50 years, but he took a break between 1940 and 1945, and went to fight Hitler. Then he came back and went straight back down the pit the following week. When he finished in the pits in 1979, he got a tankard, a certificate, 500 quid and a meagre pension— imagine that.
As miners, we knew about the risks underground when we went down the pit every day. Since mining started in this country in the 1600s, over 160,000 men, women and children have died in the coalmines, so we knew the risks. We knew there was always a chance that something might happen, but these were the risks we took. The miners took these risks for simple reasons: to earn a wage, put food on the table and make sure their kids were well dressed. In 1994, when I was still working in the pits, they were privatised. In my area, it was RJ Budge Mining that took over the pits.
At that time, a big bone of contention was what was going to happen with the MPS, or the mineworkers’ pension scheme. It was probably one of the richest pension schemes in the world at that time, and was worth hundreds of millions, if not billions, in today’s money. It was always accepted that there would be a 70:30 split in favour of the miners. When the then Government sat around the table with the trustees to make an offer to guarantee the mineworkers’ pension scheme, we automatically surmised that there would be a 70:30 split, which would have been fair. But at the last minute, it ended up being—and depending on who you talk to, whether it is the trustees at the time or the mining organisations involved in campaigning, nobody can get to the bottom of it—a “take it or leave it” 50:50 deal.
The Government at the time never undertook a proper financial risk assessment or had actuarial advice on the split. We can never get to the bottom of that—it was a simple “take it or leave it.” When I was working at the pit with my friends, we never really had a say in this. I cannot remember any man I worked with underground being happy with the 50:50 split, because we knew how rich the pension fund was.
Thirty years on from 1994, successive Labour and Conservative Governments have not paid a single penny into the pension scheme, which is a cash cow. They have taken £4.8 billion out of the scheme. Some mining groups say the sum is nearer to £10 billion, but I will take the figure I have here. In just the last three years, the Government have taken more than £400 million out of the surplus, which is a lot of money. This is miners’ money.
In effect, the Treasury’s guarantee is an insurance scheme. It guarantees to make up the shortfall and pay the bonuses, and so on, if there is not a surplus, but I cannot think of any insurance scheme anywhere in this country, or the world, that has never had to pay out. In 30 years, not a penny has come from the Treasury or the taxpayer to top up the mineworkers’ pension scheme. I think that is a bit of a scandal, and so does my mining community.
16:56:44
Grahame Morris
Easington
I think we all agree. We had a three-hour debate in this Chamber last Thursday, in which over 30 Members contributed, and I think there was unanimity on the unfairness and injustice of the surplus-sharing arrangement.
When the hon. Gentleman was deputy chairman of the Conservative party, the former Prime Minister, Boris Johnson, visited the coalfield in Mansfield and gave certain undertakings and assurances to reform the surplus-sharing arrangement so that the miners would get their money back. As a former deputy chairman of the Conservative party, is the hon. Gentleman aware of any discussions after the 2019 general election on implementing those promises?
When the hon. Gentleman was deputy chairman of the Conservative party, the former Prime Minister, Boris Johnson, visited the coalfield in Mansfield and gave certain undertakings and assurances to reform the surplus-sharing arrangement so that the miners would get their money back. As a former deputy chairman of the Conservative party, is the hon. Gentleman aware of any discussions after the 2019 general election on implementing those promises?
Lee Anderson
When I was deputy chairman of the Conservative party, and even before that, I spoke to the current Prime Minister, who was then Chancellor of the Exchequer, and, to be fair, he looked into the scheme and the surplus arrangement. One discussion at the time was that perhaps the whole pension scheme could be given back to the miners, with the Government not acting as a guarantor at all.
I would have hoped that we could come together a little in this debate and not try to score political points. I am here for my community of mineworkers, for my dad, for my brother-in-law and for the people of Ashfield who toiled underground. I will not get involved in silly, petty politics in this debate.
The 1980s and ’90s were difficult times for the mining community. Pits were closing, people were losing their jobs and men were out of work, and we saw the injustice of this surplus arrangement with the Government of the day. There were other people trying to rip off the miners. These were the spivs, the financial advisers, who rocked up in their new Rovers. They were calling in at miners’ welfare clubs and working men’s clubs, knocking on doors and turning up. These men in shiny suits had never done a day’s work in their life, and they were conning the miners—my dad was one of them—by telling them that the mineworkers’ pension was no good and was not making money. The miners transferred their money to these private pension schemes, and they were ripped off. Fortunately, just a few years later, many of these miners, including my dad, were able to claim compensation against these sharks and put their money back in the MPS, which is probably one of the best pension schemes in the world.
We talk a lot in this place about levelling up and, back in 2019, I stood on a manifesto of levelling up. To be fair to the Government, Ashfield has had lots of money, about £200 million. We have had two new school rebuilds, nearly £100 million in future high streets funding and towns funding, and extra money for police and CCTV, for which I am incredibly grateful to the Government, but real levelling up puts more money into people’s pockets and lets them decide how to spend it. I cannot think of a fairer way of levelling up than giving these miners, their widows and their families a little more money in their pocket.
I would have hoped that we could come together a little in this debate and not try to score political points. I am here for my community of mineworkers, for my dad, for my brother-in-law and for the people of Ashfield who toiled underground. I will not get involved in silly, petty politics in this debate.
The 1980s and ’90s were difficult times for the mining community. Pits were closing, people were losing their jobs and men were out of work, and we saw the injustice of this surplus arrangement with the Government of the day. There were other people trying to rip off the miners. These were the spivs, the financial advisers, who rocked up in their new Rovers. They were calling in at miners’ welfare clubs and working men’s clubs, knocking on doors and turning up. These men in shiny suits had never done a day’s work in their life, and they were conning the miners—my dad was one of them—by telling them that the mineworkers’ pension was no good and was not making money. The miners transferred their money to these private pension schemes, and they were ripped off. Fortunately, just a few years later, many of these miners, including my dad, were able to claim compensation against these sharks and put their money back in the MPS, which is probably one of the best pension schemes in the world.
We talk a lot in this place about levelling up and, back in 2019, I stood on a manifesto of levelling up. To be fair to the Government, Ashfield has had lots of money, about £200 million. We have had two new school rebuilds, nearly £100 million in future high streets funding and towns funding, and extra money for police and CCTV, for which I am incredibly grateful to the Government, but real levelling up puts more money into people’s pockets and lets them decide how to spend it. I cannot think of a fairer way of levelling up than giving these miners, their widows and their families a little more money in their pocket.
16:59:57
Brendan Clarke-Smith
Bassetlaw
I know what a great champion the hon. Gentleman has been for his community and the rest of Nottinghamshire, and indeed nationally, on this issue. I was in many of the meetings that he described earlier, such as with the Prime Minister when he was Chancellor and with other Ministers. The hon. Gentleman was a miner in Manton in my constituency; he has shown me his lamp many times and told me many stories.
Motion lapsed (Standing Order No. 9(3)).
That this House do now adjourn.—
That this House do now adjourn.—
17:00:02
Brendan Clarke-Smith
Motion made, and Question proposed,(Scott Mann.) I want to make a point about the split and the surplus. Does the hon. Gentleman share my frustration about that? At times we have believed that some real progress has been made, whether on the split or the surplus, and there has been a chance to renegotiate—to get some incremental progress to put some money back into the pockets of those widows and to make that change over time. We could have been in a better position now if not for those who really did not want to negotiate and who wanted all or nothing immediately.
17:02:40
Lee Anderson
The hon. Gentleman makes some reasonable points. To be fair, the guarantee scheme has worked in that the Government have been able to take more risks with the pension fund and it has created a higher yield. The problem that I have faced as a Member of Parliament dealing with certain groups is that I cannot get the groups to agree on the best solution or the best way forward. That is incredibly frustrating.
There is still a lot of bitterness, even 40 years on from the miners’ strikes. I come from a family who were on strike—all my family were striking miners—but there is still a bitterness now when I get involved. When I met some of the mining groups, they said, “Keep your nose out. We don’t want scabs getting involved in our business,” because I come from Nottinghamshire. That is not the way forward. We have to have a sensible debate, like grown-ups.
Thousands of ex-miners are dying each year. The pension fund is probably worth £12 billion, £13 billion or £14 billion, so it is a massive pot of money. When the last miner dies—I am 57, so I am probably one of the last miners and one of the youngest ex-miners left—all the money left in the scheme will go to the Treasury. We could give the miners a much fairer deal and a fairer split, and we could carry out the recommendations of the 2021 Business, Energy and Industrial Strategy Committee’s report to give the miners that money, because it will not cost the Government anything. In 50 years, they will get a pension pot worth billions of pounds. As I said, the way to level up in deprived areas such as mine that have suffered job losses, have been deskilled and have gone through the mill over the past 30 or 40 years, is to give the miners and their families a bit more money.
I feel incredibly proud to stand here and represent the people of Ashfield and the mining community of Ashfield—the widows and ex-miners, some of whom are friends I used to work down the pit with. All we want from the Government is a bit of justice. We are not asking for much; we are asking for a bit more money for the miners and their families in this great country of ours before the last miner dies.
There is still a lot of bitterness, even 40 years on from the miners’ strikes. I come from a family who were on strike—all my family were striking miners—but there is still a bitterness now when I get involved. When I met some of the mining groups, they said, “Keep your nose out. We don’t want scabs getting involved in our business,” because I come from Nottinghamshire. That is not the way forward. We have to have a sensible debate, like grown-ups.
Thousands of ex-miners are dying each year. The pension fund is probably worth £12 billion, £13 billion or £14 billion, so it is a massive pot of money. When the last miner dies—I am 57, so I am probably one of the last miners and one of the youngest ex-miners left—all the money left in the scheme will go to the Treasury. We could give the miners a much fairer deal and a fairer split, and we could carry out the recommendations of the 2021 Business, Energy and Industrial Strategy Committee’s report to give the miners that money, because it will not cost the Government anything. In 50 years, they will get a pension pot worth billions of pounds. As I said, the way to level up in deprived areas such as mine that have suffered job losses, have been deskilled and have gone through the mill over the past 30 or 40 years, is to give the miners and their families a bit more money.
I feel incredibly proud to stand here and represent the people of Ashfield and the mining community of Ashfield—the widows and ex-miners, some of whom are friends I used to work down the pit with. All we want from the Government is a bit of justice. We are not asking for much; we are asking for a bit more money for the miners and their families in this great country of ours before the last miner dies.
17:03:32
Stephanie Peacock
Barnsley East
I am incredibly grateful to speak in the debate, which is the second on miners’ pensions in a week—we had a good debate about miners and mining communities last week. I am grateful to the hon. Member for Ashfield (Lee Anderson), who spoke passionately about his and his family’s experience. He will know from his first-hand experience, which is shared by many of my constituents, that mining was dirty and dangerous, but it was well respected. He was right to speak about how dangerous it was—we have several memorials across Barnsley to those men who went to work and did not come home.
In Barnsley, 30,000 men worked down the pit. Our community was built on coal and it powered a nation. It is 40 years since thousands of men were forced to go out on strike to defend their industry—a battle that sadly they lost. It is simply not right that, decades later, they are still fighting for their pension.
In 2021 I was pleased to campaign for, and secure, the BEIS Committee report into the mineworkers’ pension scheme. It was a cross-party report and it very clearly concluded that the Government should not be in the business of profiting from miners’ pensions. Some £4.8 billion has been taken by the Government to date. That has risen by £400 million since that report. The average miner is on a pension of just £84 a week, and widows are on a lot less. I met a man in my constituency a few weeks ago on £1 a week.
I have raised this issue in this place dozens of times. I have met with Ministers and shadow Ministers. I went to the Treasury a few weeks ago to make the case again. I could not be clearer about my commitment to the issue. Indeed, I will continue to advocate not just on miners’ pensions but on miners’ health and support for our coalfield communities more broadly. My constituency of Barnsley East is yet to receive any levelling-up funding.
In 2006, 280,000 miners were in the scheme. The Government financial risk to the scheme is in permanent decline, yet it is costing the same as it did 25 years ago. That deal was done without any actuarial advice, as the Government admitted to me some years ago in answer to a written parliamentary question. I held the last Adjournment debate on this subject in 2019. In that debate, I spoke about how 160,000 men claimed a miners’ pension. Today, that figure is sadly less than 125,000. We need justice for the miners before it is too late.
In Barnsley, 30,000 men worked down the pit. Our community was built on coal and it powered a nation. It is 40 years since thousands of men were forced to go out on strike to defend their industry—a battle that sadly they lost. It is simply not right that, decades later, they are still fighting for their pension.
In 2021 I was pleased to campaign for, and secure, the BEIS Committee report into the mineworkers’ pension scheme. It was a cross-party report and it very clearly concluded that the Government should not be in the business of profiting from miners’ pensions. Some £4.8 billion has been taken by the Government to date. That has risen by £400 million since that report. The average miner is on a pension of just £84 a week, and widows are on a lot less. I met a man in my constituency a few weeks ago on £1 a week.
I have raised this issue in this place dozens of times. I have met with Ministers and shadow Ministers. I went to the Treasury a few weeks ago to make the case again. I could not be clearer about my commitment to the issue. Indeed, I will continue to advocate not just on miners’ pensions but on miners’ health and support for our coalfield communities more broadly. My constituency of Barnsley East is yet to receive any levelling-up funding.
In 2006, 280,000 miners were in the scheme. The Government financial risk to the scheme is in permanent decline, yet it is costing the same as it did 25 years ago. That deal was done without any actuarial advice, as the Government admitted to me some years ago in answer to a written parliamentary question. I held the last Adjournment debate on this subject in 2019. In that debate, I spoke about how 160,000 men claimed a miners’ pension. Today, that figure is sadly less than 125,000. We need justice for the miners before it is too late.
17:06:07
Justin Tomlinson
The Minister for Energy Security and Net Zero
It is a pleasure to serve under your chairmanship, Madam Deputy Speaker. I pay tribute to the hon. Member for Ashfield (Lee Anderson), with whom I have worked closely over many years. It is clear that his personal experience and long track record put him in the best position to continue to fight the good fight, on behalf of not just his constituents but people who worked in this sector. I was struck by his willingness to engage across the political spectrum, finding time for the hon. Member for Barnsley East (Stephanie Peacock) to contribute. She has an impressive track record of raising the issue, having secured a BEIS debate and other debates responded to by former Ministers.
While I am only freshly returned as a Minister, in the whirlwind of a mere three weeks I have been lobbied by many people on the subject, including my hon. Friends the Members for Bolsover (Mark Fletcher), for Mansfield (Ben Bradley), for Bassetlaw (Brendan Clarke-Smith) and for Sedgefield (Paul Howell), and the hon. Member for Easington (Grahame Morris) has been increasing my parliamentary question response rate. I recognise the importance of the scheme, and the strong feelings on the different options that have been and could be considered.
While I am only freshly returned as a Minister, in the whirlwind of a mere three weeks I have been lobbied by many people on the subject, including my hon. Friends the Members for Bolsover (Mark Fletcher), for Mansfield (Ben Bradley), for Bassetlaw (Brendan Clarke-Smith) and for Sedgefield (Paul Howell), and the hon. Member for Easington (Grahame Morris) has been increasing my parliamentary question response rate. I recognise the importance of the scheme, and the strong feelings on the different options that have been and could be considered.
17:07:57
Grahame Morris
I thank the Minister for giving way; he is being very generous, which is completely in character. I do not think any of us wants a pat on the back. What we want is the issue resolved. In common with the previous debate about the Women Against State Pension Inequality Campaign, the issue is the age demographic. My poor mother is 88. Many miners and their widows are coming to the end. We need to resolve this in the interests of justice, and the BEIS Committee’s report from 27 April 2021 gives us that opportunity.
17:08:11
Justin Tomlinson
As I said, I recognise the strength of feeling and I want to set out the Government’s position on where there are opportunities to look further.
It is right that we acknowledge the hard work of coalminers over decades and their contribution to national prosperity, which is exactly what the hon. Member for Ashfield did so well. Since privatisation, the Government have recognised the need to support former coalfield areas through initiatives such as the Coalfield Regeneration Trust. Over the past 25 years, successive Governments have invested over £1 billion in former coalfield areas. The UK Government are committed to levelling up across the whole of the United Kingdom to ensure that no community is left behind and investing in places that need it most, including former coalfield communities. I again credit the hon. Member for Ashfield on how hard he worked to secure the significant levelling-up funds that have reached his constituency.
It is right that we acknowledge the hard work of coalminers over decades and their contribution to national prosperity, which is exactly what the hon. Member for Ashfield did so well. Since privatisation, the Government have recognised the need to support former coalfield areas through initiatives such as the Coalfield Regeneration Trust. Over the past 25 years, successive Governments have invested over £1 billion in former coalfield areas. The UK Government are committed to levelling up across the whole of the United Kingdom to ensure that no community is left behind and investing in places that need it most, including former coalfield communities. I again credit the hon. Member for Ashfield on how hard he worked to secure the significant levelling-up funds that have reached his constituency.
Grahame Morris
I am grateful to the Minister for giving way again—I do not mean to be a nuisance, I promise. It is all very well for Ashfield, which has had £200 million or £300 million. Easington has had nothing. My community of Horden, which bid for levelling-up funding, is in the top 1% most deprived communities in the country. I hope the Minister is not suggesting that £4.8 billion of the miners’ money can legitimately be used by the Government for other purposes, such as regeneration in coalfield or other areas. That is their money. If the reserve investment fund alone was redistributed, it would give them almost £900 a month directly in their pockets.
17:09:55
Justin Tomlinson
I can confirm that the hon. Member is never a nuisance, but, again, I would reflect on the ability to lobby and secure levelling-up funds, and those who do well are directly benefiting their communities. Specifically, this involves a range of projects, including the £20 million to deliver two capital regeneration projects that will revitalise town centres, including in Ashfield.
The Coal Authority has been working with public and private sector partners for a number of years to develop the use of heat in water contained in the former coal mining infrastructure as a resource for heat networks and large space heating. Current schemes are heating multiple homes and businesses at discounts of at least 5% below prevailing market rates for heat.
The Coal Authority estimates that 25% of properties are located on former coal mining areas. Mine water heat can offer a homegrown and sustainable source of heat, boost local economies and also create more local green jobs.
The Government’s commitment to mining communities is also demonstrated through the continued guarantee given to the mineworkers’ pension scheme. The scheme remains a significant undertaking. It has more than 130,000 members, pays pensions at an annual cost of over £600 million and has assets in excess of £7 billion. The scheme is managed by the trustees; the Government’s role is as guarantor. My officials meet the trustees to discuss the operation of the scheme regularly.
When the scheme was set up in 1952, members contributed no more than 20p per week, and benefits were relatively small. From 1975, contributions and benefits were linked to members’ salaries and British Coal made up the difference. At privatisation, the Government took on the guarantor role previously played by British Coal. The scheme had a surplus in 1994, and 50% of this surplus was used to enhance members’ pensions immediately—
The Coal Authority has been working with public and private sector partners for a number of years to develop the use of heat in water contained in the former coal mining infrastructure as a resource for heat networks and large space heating. Current schemes are heating multiple homes and businesses at discounts of at least 5% below prevailing market rates for heat.
The Coal Authority estimates that 25% of properties are located on former coal mining areas. Mine water heat can offer a homegrown and sustainable source of heat, boost local economies and also create more local green jobs.
The Government’s commitment to mining communities is also demonstrated through the continued guarantee given to the mineworkers’ pension scheme. The scheme remains a significant undertaking. It has more than 130,000 members, pays pensions at an annual cost of over £600 million and has assets in excess of £7 billion. The scheme is managed by the trustees; the Government’s role is as guarantor. My officials meet the trustees to discuss the operation of the scheme regularly.
When the scheme was set up in 1952, members contributed no more than 20p per week, and benefits were relatively small. From 1975, contributions and benefits were linked to members’ salaries and British Coal made up the difference. At privatisation, the Government took on the guarantor role previously played by British Coal. The scheme had a surplus in 1994, and 50% of this surplus was used to enhance members’ pensions immediately—
Grahame Morris
That is an interesting chronology. Will the Minister inform the House when the Government stopped paying into the scheme? There was a substantial increase when superannuation came in in 1974, matched by British Coal. Is it not correct that, after 1984, the Government made no contribution to the contribution holiday?
17:12:02
Justin Tomlinson
The hon. Member is passionate to speed ahead. I urge him to be a little more patient. We are exploring all of these points, and I am getting to them—fear not.
The other 50% was payable to the guarantor. The Government of the day agreed to leave their share of surpluses in the scheme as the investment reserve. This acts as a buffer against a future deficit.
The arrangements for sharing scheme surpluses were agreed between the trustees and the Government in their role as guarantor to the Mineworkers’ Pension Scheme in 1994. At that time, all parties believed the equal sharing of surplus to be a fair agreement. That predates all of us. The guarantee ensures that: a member’s guaranteed pension, including inflation increases, will always be paid; and a member’s total pension, including bonus pension, will not fall in cash terms.
The scheme has been a success and it is to the credit of the scheme’s trustees that they have invested in such a way as to enable those returns, and we know as politicians that decisions on pensions and pension reserves are not always as successful as this. But it is the guarantee that makes higher returns possible. Without the guarantee, the trustees would have to invest far more cautiously so as to avoid losing money and risk being unable to meet scheme obligations. In a former role in the DWP, I have also been responding to debates where pension schemes have failed, and we cannot lose sight of that.
We have seen this scenario with many other pension schemes. Few equivalent schemes have been able to generate surpluses and fewer still are able to use those surpluses to improve member benefits. The presence of the guarantee allows the trustees to invest in a way that targets high returns and generates bonuses for members. The trustees acknowledge the importance of the guarantee and the ability to generate the bonuses that it creates.
The scheme website states that a typical member’s pension today is around 33% higher in real terms than it would have been had they received only their actual earned pension up to privatisation. I welcome this success and believe that it would be unwise to tamper with such a fruitful arrangement.
I acknowledge the 2021 Select Committee report and its recommendations. However, like my predecessors, I cannot agree to implement them. This is a question of balance, and I recognise that there are strongly held different viewpoints, but like the trustees, the Government recognise the importance of the guarantee and are committed to it. All scheme members will continue to receive their full pension entitlement. That commitment is unwavering. Implementing the report’s recommendations would shift the balance of risk to the taxpayer in a way that the Government consider would be disproportionate.
The Minister at the time of the report met the trustees, following publication of the report, to hear their views. She set out that any changes to the surplus sharing arrangements would need the trustees’ agreement to give up the guarantee, which the trustees declined. The Minister then invited the trustees to put forward any further proposals to changes to surplus sharing, emphasising that the guarantee would need to form part of any discussions. To date, none has been received. The Government have agreed some scheme changes, though, including additional protections for bonus pensions, and changes to mitigate potential unfair impacts of recent inflation changes. I stress that we are also open to further suggestions.
The other 50% was payable to the guarantor. The Government of the day agreed to leave their share of surpluses in the scheme as the investment reserve. This acts as a buffer against a future deficit.
The arrangements for sharing scheme surpluses were agreed between the trustees and the Government in their role as guarantor to the Mineworkers’ Pension Scheme in 1994. At that time, all parties believed the equal sharing of surplus to be a fair agreement. That predates all of us. The guarantee ensures that: a member’s guaranteed pension, including inflation increases, will always be paid; and a member’s total pension, including bonus pension, will not fall in cash terms.
The scheme has been a success and it is to the credit of the scheme’s trustees that they have invested in such a way as to enable those returns, and we know as politicians that decisions on pensions and pension reserves are not always as successful as this. But it is the guarantee that makes higher returns possible. Without the guarantee, the trustees would have to invest far more cautiously so as to avoid losing money and risk being unable to meet scheme obligations. In a former role in the DWP, I have also been responding to debates where pension schemes have failed, and we cannot lose sight of that.
We have seen this scenario with many other pension schemes. Few equivalent schemes have been able to generate surpluses and fewer still are able to use those surpluses to improve member benefits. The presence of the guarantee allows the trustees to invest in a way that targets high returns and generates bonuses for members. The trustees acknowledge the importance of the guarantee and the ability to generate the bonuses that it creates.
The scheme website states that a typical member’s pension today is around 33% higher in real terms than it would have been had they received only their actual earned pension up to privatisation. I welcome this success and believe that it would be unwise to tamper with such a fruitful arrangement.
I acknowledge the 2021 Select Committee report and its recommendations. However, like my predecessors, I cannot agree to implement them. This is a question of balance, and I recognise that there are strongly held different viewpoints, but like the trustees, the Government recognise the importance of the guarantee and are committed to it. All scheme members will continue to receive their full pension entitlement. That commitment is unwavering. Implementing the report’s recommendations would shift the balance of risk to the taxpayer in a way that the Government consider would be disproportionate.
The Minister at the time of the report met the trustees, following publication of the report, to hear their views. She set out that any changes to the surplus sharing arrangements would need the trustees’ agreement to give up the guarantee, which the trustees declined. The Minister then invited the trustees to put forward any further proposals to changes to surplus sharing, emphasising that the guarantee would need to form part of any discussions. To date, none has been received. The Government have agreed some scheme changes, though, including additional protections for bonus pensions, and changes to mitigate potential unfair impacts of recent inflation changes. I stress that we are also open to further suggestions.
Stephanie Peacock
I was pleased to have worked with the trustees and the then Minister on the issue of bonuses. I appreciate the arguments that today’s Minister is making, and no one underestimates how important the guarantee is, but does he acknowledge that members of the mineworkers’ pension scheme have to date paid £4.8 billion for that guarantee?
Justin Tomlinson
Absolutely, but nobody knew how this would go when the deal was struck. At the time the deal was struck, it was deemed to be fair, but like many other pension schemes it could easily have gone the other way. If it had, we would not now be having a debate to say, “Well, we need to excuse the taxpayer.” It was a fair deal at the time, and we seek to ensure that it continues to overdeliver.
Lee Anderson
The Minister said that it was a fair deal at the time. I was working down the pit at the time. I assure him that nobody I worked with thought that it was a fair deal; we thought that it was forced upon the trustees. It was, “Take it or leave it.” It has proved not to have been a fair deal. As I said, when the last miner dies, billions of pounds will go to the Treasury. We have received a 50% surplus in return. Does the Minister think that is fair—yes or no?
Justin Tomlinson
That presumes the investments will continue to return at the rates they have; they could just as easily go the other way, which I suspect is why the trustees were reluctant to release the guarantee. However, to be clear, I remain open to exploring options for improvements to the scheme, and would welcome any suggestions that the trustees wish to make. The door is firmly open.
Future outcomes are not known. Any market volatility could impact future scheme valuations, and the guarantee will provide even greater value should market conditions make it harder to generate returns. If there is a deficit in the future, members will still see their guaranteed pensions increase by RPI, and will continue to receive bonus pensions to ensure that their total pension does not fall in cash terms. If the investment reserve that the Government leave in the scheme to act as a buffer is exhausted, funds from the Government will be found to ensure that payments continue to be made to scheme members. To be absolutely clear, that commitment from the Government is unwavering.
Question put and agreed to.
Future outcomes are not known. Any market volatility could impact future scheme valuations, and the guarantee will provide even greater value should market conditions make it harder to generate returns. If there is a deficit in the future, members will still see their guaranteed pensions increase by RPI, and will continue to receive bonus pensions to ensure that their total pension does not fall in cash terms. If the investment reserve that the Government leave in the scheme to act as a buffer is exhausted, funds from the Government will be found to ensure that payments continue to be made to scheme members. To be absolutely clear, that commitment from the Government is unwavering.
Question put and agreed to.
House adjourned.
Contains Parliamentary information licensed under the Open Parliament Licence v3.0.