Mineworkers’ Pension Scheme

Alan Brown Excerpts

Monday 10th June 2019 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to follow the hon. Member for Caerphilly (Wayne David) and there have been some excellent contributions tonight. I thank the Backbench Business Committee for bringing forward this important issue and I commend the hon. Member for Easington (Grahame Morris) for leading the debate. He gave an excellent speech, which illustrated the key issues at the outset, detailing his family mining history and giving the personal example that, sadly, his dad died before reaching pension age. He was correct to highlight the dramatic death rate: an average of 10,000 miners in receipt of their pension are dying a year. The death rate is rising, which means that the longer that this Government do not take any action, the more of a windfall that generates for the Treasury. That is why action is needed soon. He also highlighted the generally low pension rates that miners in the miners’ pension scheme receive. As we heard, these are not huge sums of money. That money is still difficult to live on, and the example of somebody getting just £8.50 a week was really illustrative. Overall, his contribution was measured and well delivered.

We had 12 other contributions from Back Benchers, with cross-party agreement, which is really good. I pay testament to the work by and contribution from the hon. Member for Barnsley East (Stephanie Peacock), who unearthed the lack of actuarial advice back in 1994 and the unfairness in the fact that £1 billion spent in coalfield communities is well dwarfed by the £4.5 billion that the Government have taken out of the fund. As others have said, the hon. Member for Blaenau Gwent (Nick Smith) made an emotional contribution about the effect on his family. I have signed early-day motion 235 in support of changes to the 50-50 split and of the cross-party letter organised by the hon. Gentleman. Frankly, the Government response was really poor and it is good that that has been widely rebutted tonight. I come from a wider coalfield and coalmining area and I was proud as an MP to witness the unveiling of a new memorial to all the miners that were killed in Muirkirk and the surrounding villages. It is right that that goes down in lasting memory.

It has been a real disappointment that Governments of all colours have benefited from the 50:50 arrangement and that, to date, sadly, none have been willing to make any changes. In fact, if we look at the ministerial responses over the years, we see that they are actually all the same. It does not matter if it is a new Minister, a Tory Minister or a Labour Minister; they have all trotted out the same arguments, which appear to be the fact that the guarantee was welcomed at the time, that it reduces the risk on the miners’ pension scheme, that it provides an RPI uplift on pensions and that it generates higher investment return. Those are moot points. Of course, the guarantee’s existence is a good thing. However, given that the UK Government received a surplus of nearly £4.5 billion by 2018, the argument that a 50:50 split is still a fair risk and reward for the Government providing that guarantee has less and less credibility. That is further highlighted by the fact that the long-term success of the fund has not changed, despite recessions and stock market crashes along the way. As others have said, 25 years on, the risk has diminished greatly. It really does take a special type of blinkers from this Government to ignore any moral arguments on change. It is a fact that mining communities have suffered badly with the loss of coalmines, with guys left unemployed or seeking employment in poorer paid jobs. Others who have worked hard all their lives are now in poor health and widows are struggling to get by. No wonder it rankles that the UK Government are effectively still making money at their expense.

What Governments have also overlooked are the contributions holidays that were undertaken in the 1980s—money that otherwise could have been allocated for the benefit of mineworkers. Moreover, the reduced risk to the MPS resulting from the guarantee is welcome, but it is often overlooked that in 1994, during privatisation, adopting that model not only reduced the risk in the private sector but allowed the Government to get a higher return from the privatisation. Those are further things that need to be considered in the bigger picture.

Labour and Tory Ministers have long argued that the guarantee has allowed higher-risk, higher-value investments to be made and thereby resulted in returns higher than they would otherwise have been. This is correct, but the Government bandying around figures about a 33% increase is not helpful because they are based on assumptions that suit them. In addition, it is not just the fund that has grown; the UK Government’s investment reserve also benefits from the success of the performance of the MPS. That has increased in value from £1.1 billion in 2014 to £1.5 billion in 2017, which has allowed the release of £475 million to the Government in the last financial year. These are huge sums of money the Government are benefitting from. Clearly, even if we change the 50-50 split, they will still make large sums of money.

Another Government line that has been attempted over the years is that MPS trustees are happy with the current arrangements, but that is patently untrue, as the hon. Member for Easington highlighted. The trustees have written to Governments in the past, but they say that they still will not engage and make the changes, so that is another dead duck from the Government.

We need clarity about what the UK Government hope to achieve. The Minister for Energy and Clean Growth has asked her officials to explore the trustees’ options for revising the scheme, so what are the Government’s aims and ideas? What progress has been made in the year since she asked that this happen? Critically, what does she mean by her comment that the revisions have to be to the “benefit of all parties”? It is clearly impossible to do the right thing by changing the share percentages without there being a financial detriment to the Treasury. That sting in the tail looks like an in-built wrecking mechanism. We need to know what she means.

I pay tribute to the Coalfield Communities Campaign for lobbing the Government and for calling this the miners’ money. In 1999, it highlighted that the average pension was then just £38 per week; today, it is about £65 per week, although some figures say it is £85. This is critical considering the benefits that would accrue if we altered the split percentages. It also shows that, although the pensions have grown with the higher investment return, the miners are not exactly living in the lap of luxury, so that is another false start in talking about percentage increases.

In 2002-03, the campaign by the Coalfield Communities Campaign led to a proposal that the split change to an 85:15 split, but the then Minister, Brian Wilson, dismissed this as

“off the radar screen in current circumstances”—[Official Report, 10 June 2003; Vol. 406, c. 186WH.]

When will someone in government be brave enough to suggest what could be considered and what they would consider fair?

As I have said, the Government have benefited to the tune of £4.5 billion to date. They have not been slow to reduce tax thresholds for those earning the most money or to introduce corporation tax reductions for the largest multinational companies. These measures, along with those on inheritance tax and other things, are projected to cost the Treasury £80 billion, according to figures from the Library based on previous Red Book projections by the UK Government. Surely, then, now is the time to do the right thing for the benefit of the remaining 158,000 members of the MPS, carry out the review and get a fair and equitable split, rather than this 50-50 split.

--- Later in debate ---

[Andrew Stephenson]

I am setting out my Department’s position. Whether a review is undertaken is a matter for the Treasury, and the Treasury’s position was set out in a letter from the Chief Secretary to the Treasury to MPs on 14 May. That position has not changed. I am sure that the Chief Secretary to the Treasury and other colleagues in that Department will want to reflect on any motion passed by this House, but I am trying to update the House in response to the Opposition Front-Bench spokesman, who asked what the Government were doing about the proposals that had previously been under discussion—the proposals that have been brought forward by the scheme’s trustees.

The proposals have been considered for several months. They are balanced, and I support them. With the support of my Department, I have formally written to the Treasury to say that we support the proposals, because the trustees have identified that protecting already accrued bonuses is more important than the 50-50 split.

[Alan Brown]

The Minister seems to be saying that the proposals being considered are from the trustees and they have not proposed any changes to the 50-50 split. Is it not the case that the trustees have said today that the Government are not willing to discuss a change to the 50-50 split? Is he saying that he thinks it is fair to maintain that 50-50 ratio?

[Andrew Stephenson]

The trustees have made it clear that protecting bonuses already accrued is their priority, rather than renegotiating a greater share of future surpluses. I have not met the trustees, and I have already given the House the date when I will be meeting them. I have seen the six proposals from the trustees, which have been considered by my predecessor and his predecessor, and I acted swiftly in my first two months in office to ensure that my Department supports those proposals and will write to the Treasury encouraging their adoption.