Ian Lavery
Main Page: Ian Lavery (Labour - Wansbeck)(10 years, 6 months ago)
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Ian Lavery (Wansbeck) (Lab)
As ever, it is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Mansfield (Sir Alan Meale) on securing this important debate.
I want to place on the record my thanks to the National Union of Mineworkers, which has done a tremendous job in highlighting the very difficult situation, and to people in the communities who have been constantly on the phone, concerned that, having spent a lifetime in the industry, they do not now have what was promised on the day they joined it.
We need to look at several things, but we must understand that the concessionary fuel arrangement is not, as many people suggest, a benefit; it is a hard-earned entitlement. It is not a free gift—it is not free coal or free fuel—but part of working underground. When people started work at the pit, they immediately got concessionary fuel, if they had a house and no one else in the house had the entitlement. They got fuel immediately, but we are talking about a lifetime entitlement. It had to be earned through years of service, so that when they finished work—many miners finished young, in their 40s and 50s, not too long ago—they had at the back of their mind their entitlement to fuel because they had worked the required amount of years listed in the national concessionary fuel agreement. This is from years ago, so I might be wrong and the situation might have changed, but I think that the required number was 15 years in the industry, with five of the last 10 years being continuous.
The right was hard earned, and yet we hear some people say, “Free coal bemuses me, by the way”. It was not optional or something that people had to go and ask the bosses for; it is deferred wages, as part of their employment package or their contract of employment. That has been disputed, but there is no doubt that the law clearly states that something not in people’s normal contract is an implied contractual obligation. “Law at Work” simply states:
“If terms have not been expressly agreed, they can be ‘implied’ through conduct or custom and practice.”
We cannot get much more “custom and practice” than people starting employment and getting fuel every week or month, or whatever the cycle was, to the time they finished work. It is not even in dispute: if it is not in people’s contracts but is an arrangement, it is an implied contractual obligation.
Mr Spencer
The hon. Gentleman is making an impassioned speech. Morally, he is absolutely correct, but the difficulty is that the employer, UK Coal, has gone into liquidation and so has side-stepped that obligation. The question is whether the Government should step in to fill that moral gap if there is no legal necessity to do so.
Ian Lavery
I understand exactly what the hon. Gentleman is saying, but I think that there is a moral obligation. I will come to why I think there is more than a moral obligation.
Some 1,600 to 2,000 people will be affected, including widows—women whose husbands died underground—and, as my hon. Friend the Member for Mansfield explained, those who left the industry under ill-health retirement. For some of the people who had accidents and retired, the judge agreed that they would have compensation, but that was sometimes reduced to the amount of concessionary fuel they would receive well into the future. All those things need to be looked at.
Nigel Adams (Selby and Ainsty) (Con)
A few seconds ago, the hon. Gentleman hit the nail on the head. We are talking about 1,600 to 2,000 people in this country, so the scale is not enormous. The amount of money could be found, and I am hopeful that it will be found. I passionately believe that the Government have a moral obligation to step in and right this wrong.
Ian Lavery
I sincerely hope that the hon. Gentleman is right, because, as the Member who represents the former Selby coalfield, I have in my constituency more men, women and, potentially, widows, than any other area in the national coalfield.
We must consider the moral obligation. No Government of any political persuasion or colour should have any problem with giving hard-working people what was agreed when they started employment. That is the issue. Some people suggest that there is an obligation to the taxpayer—there is, but that can easily be overcome.
Sir Alan Meale
My hon. Friend is touching on the responsibility of the Government. If we go back to the 1947 legislation relating to the nationalisation of the coal industry, we can see that some private mining companies had concessionary coal agreements with their work force, and those obligations were taken on by the nationalised industry. The Government therefore have a legal and moral responsibility to try to keep the arrangement going.
Ian Lavery
I sincerely agree with my hon. Friend’s comments, and I want to turn to how the Government could approach this important issue. I intended to read out section 19 of the Coal Industry Act 1994, but my hon. Friend has already done so. It clearly begins:
“The Secretary of State may, out of money provided by Parliament, make such payments to such persons as he may think fit for the purpose of securing any of the following, that is to say—”
I will not ramble on, as the provision has already been placed on the record, but it is from the Coal Industry Act, and we have to ask why it is there. It is there for a reason—to tackle the problem we face today. It is not there for any other reason. It is not there because it was thought that things would not happen, but because of the debate that was had at all stages of the privatisation of the coal industry in 1993-94. I urge the Minister to look at the situation and take advantage of what the Secretary of State is allowed to do in accordance with the 1994 Act. The matter was discussed at great length, and it is very interesting to read. People should take the opportunity to read Hansard at all stages to see how much of the debate was taken up by this issue, which is very important for many miners.
If the industry had not been privatised, such a situation would not have arisen. The only people who are suffering are those who have worked hard in the industry. It is not the Government who will suffer and it is not UK Coal, which has moved on to pastures new, that will suffer— it is the 2,000 people in the mining communities. As politicians, we have a responsibility to try to help those people.
We have already discussed the vulnerable people in the community—the widows and the elderly people—who have served a lifetime in the industry. They do not have any ability to earn in the future. As the hon. Member for South Derbyshire (Heather Wheeler) mentioned, many of those people live in remote communities. They have only coal-fired power; they do not have gas. How will they afford to renew their heating systems and, on top of that, pay the horrendous hikes in prices for gas and oil, which we are discussing later today in the main Chamber? It is just impossible for them. We should not be putting such a burden on to people who have given their lives not just for the coal industry but for the people in this country.
People face a dilemma: do they get gas, oil or electricity? The price is all that they can look at—and whether they can afford it. We have problems with miners who, having started at the pit on the same day and worked side by side, have finished work under different circumstances. They have all put in exactly the same amount of time, and, under the national concessionary fuel scheme, had a lifetime entitlement to coal. Now, because of UK Coal’s failure, some people have that allowance and some people do not. It is discriminatory to say the least. How can UK Coal get away with creating such social destruction? It abandoned the coal industry one day and moved on to pastures new, leaving carnage behind. It left people in the mining community to pick up the pieces from big business, and they will fail. As politicians, have we not got the common decency to put that right?
A number of firms in the north-east are owed huge amounts of money by UK Coal, which moved on the next day to secure Thoresby, Kellingley and up to six open-cast mines. That was welcomed, but we should not look at that and say it was brilliant and leave the other people behind to pick up the pieces. That is just not acceptable.
UK Coal owes lots of money to companies in my area. It owes M J Hickey, a plant hire firm, £30,000; that could put the company out of business. It owes Northumberland county council £620,000, which will put huge strains on the local community. This is not good enough. I agree with what the hon. Member for Sherwood (Mr Spencer) said; of course we wanted to secure up to 2,000 jobs. I compliment the Minister on his assistance in that regard, because it is just so, so important. However, we must look at what is left behind.
Nigel Adams
I could not agree more with the hon. Gentleman. Lots of companies have been left with huge debts following the restructuring of UK Coal. Perhaps we need time to look at the pre-pack administration and the way in which large companies restructure following failure. A cleaning contractor in my constituency is thinking of getting out of the business because UK Coal at Kellingley has left unpaid a debt of several thousands of pounds, which will cost many, many jobs. The time has come for the Government to look at how companies can be operating one day and then be collapsing the business, going into pre-pack and reforming the following day.
Ian Lavery
Absolutely. That is the point I was making, so thanks for that. With regard to UK Coal, our fear is that there will be pennies left for people left behind. At the same time, as the hon. Gentleman has said, UK Coal is forging ahead under a new name, with the directors making fortunes and the company earning profits. It just cannot be right.
With regard to the obligation to the taxpayer, I have a letter from the Minister who wrote to my hon. Friend the Member for Barnsley Central (Dan Jarvis) about the concessionary fuel. He said:
“I do not believe it would be fair to expect the tax payer to meet these additional liabilities on an ex gratia basis.”
That is terrible and it is not acceptable. The Treasury has creamed off—some people say stolen—up to £4 billion from the pensioners in the mineworkers’ pension scheme and other pensions from the surpluses that have been generated since privatisation. Is that not good value for the taxpayer?
I am talking about £4 billion, and it is rising as we speak. If we think that it is good enough for the taxpayer to continue to get a feedback in financial incentives from the mineworkers’ pension scheme, surely consideration should be given to paying 2,000 members concessionary fuel, which was part of their arrangements when they started work. I had said that the Government should get £2 billion from the pension schemes. That figure is now £4.4 billion.
As I am sure the Minister is aware, UK Coal was fined £200,000 only two weeks ago for an underground accident that killed an individual. It was also fined £50,000 for failing to prevent an underground explosion. Those moneys will be paid by the administrator, but what it means, if this goes to the nth degree, is that the people on the list—the 2,000 beneficiaries who hope to get something from the administrator—will be put into the same pot as the £200,000 fine for killing somebody and for an underground explosion.
What people need to realise is that the widow of that miner who was killed—the reason why UK Coal was fined £200,000—could suffer as a consequence. She could get reduced finances from her benefits to cover those fines, which were imposed for killing her husband. That cannot be right, can it? I hope that people understand exactly what I am saying. If not, I will try to explain it in more detail later. Basically, the situation is so perverse it is unreal.
The Government have an option. They have a responsibility under the Coal Industry Act 1994 to take care of those who are set to lose out and to correct an unjust situation that could cause financial problems for more than 2,000 people. I take solace from the reply that the hon. Member for Selby and Ainsty received from the Chancellor yesterday. The Chancellor said that he understood the situation—I cannot quote him exactly—and that he hoped that there would be good news soon. I hope the Minister can tell us what that good news is or at least what we can expect.
In summary, we have been talking about not free coal but an entitlement. It is an implied contractual obligation and an arrangement agreed and forged over generations of coal miners. I ask the Minister to urge the Government to treat those individuals fairly and in the spirit intended in the Coal Industry Act.
Mr Kevin Barron (Rother Valley) (Lab)
It is a pleasure to be here under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Mansfield (Sir Alan Meale) for obtaining this Adjournment debate at such an opportune time. You are right, Mr Hollobone: I am an ex-miner. I received an e-mail from an ex-miner in my constituency in July this year. His name is George Fowler, and he lives in the village of Maltby. He said:
“could you please advise me on the situation with UK Coal? I was retired on ill health in 1998. The UK Coal administrator I spoke to informed me I had lost my fuel. The previous letter left me with doubts for my pension. At this time my health condition has deteriorated and left me again unemployed.”
He goes on to say that “it’s hard times” living on the benefit that he is on. I know George quite well. Like me, he was an underground electrician at Maltby colliery, and he was my apprentice for a number of years. He is clearly not happy with the current situation.
I was around when this House discussed privatisation, which my hon. Friend spoke about. I looked through the archives in my constituency office a couple of weeks ago and found a Department of Trade and Industry publication called “British Coal: The Government’s proposals for concessionary fuel entitlements after privatisation”. I assume the Minister is familiar with that document, but I will tell him what the then Tory Government were saying. The introduction and summary says:
“The Government announced in the White Paper ‘The Prospects for Coal’ its intention to privatise British Coal as soon as possible to free the coal industry from the constraints of public sector ownership.”
Ironically, the last coal mine in my area closed earlier this year, which certainly freed the coal miners of Rother Valley. I have lost six mines since first being elected to this House.
The introduction and summary continues:
“The Government intends to bring forward the necessary legislation as rapidly as possible… The Government recognises the importance to past and present employees of British Coal, and their dependants, of their present concessionary fuel entitlements. The Government is committed to safeguarding their entitlements.”
Paragraph 18 of the document, which was published in October 1993, addresses arrangements for continuing employees:
“The Government will ensure that the responsibility for supplying concessionary fuel to continuing employees will pass to successor companies by whom they are employed. This will be achieved by means of transfer schemes under the privatisation legislation. There will be a contractual obligation on successor companies to honour the continuing concessionary fuel entitlements of those persons who transfer to their employment.”
I think the Government are obliged to honour that, too.
When I worked in the coal industry for many years, concessionary fuel was effectively negotiated as part of our annual income, as my hon. Friend the Member for Wansbeck (Ian Lavery) said. Concessionary fuel was taken into account, as were pensions, in the increase, or lack of increase, in our wages. Previous Governments clearly said to people such as George Fowler that they would be protected following privatisation.
I have a copy of an article from The Guardian, dated 12 May 2013, on the situation at Daw Mill. The article reports that the Minister told The Sunday Times:
“We are looking at whether the ownership of Daw Mill can be transferred back to the Coal Authority.”
If the transfer had taken place, there would be clear implications for the public purse, because the Coal Authority, as I understand it, is funded by central Government, although it also receives fees for planning and so on. The Guardian article continues:
“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… 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.’”
A number of people have said today that they do not want to go into the restructuring of UK Coal, but I do. I have a copy of the directors’ remuneration report from the annual general meeting of the restructured UK Coal. The report was drawn up last year, and I understand that it has been accepted. It was given to me a few months ago; I am happy to give the Minister a copy if he wants one.
Page 2 of the report, which dates from the run-up to the restructuring, states:
“Executive Director remuneration (excluding the Chairman) comprises a base salary, an annual performance bonus, participation in a long term incentive plan or arrangement, a car or car allowance plus fuel card, pension contributions to a defined contribution pension scheme or a pension allowance, life assurance and health insurance. Bonus payments and benefits in kind are not pensionable. An appropriate balance is maintained between fixed remuneration and performance-related remuneration.”
The report then addresses four individuals. I have a few minutes left, so I will read it out:
“Following a review of executive salary levels, Messrs Brocksom, Williams and Michaelson’s base salaries were increased to £242,889, £240,350 and £236,900 respectively with effect from 1 January 2012.”
The report then addresses the annual bonus for executive directors:
“However in light of the planned restructuring the Committee agreed one-off bonus arrangements for 2012, which replaced the normal potential awards…in respect of Messrs Williams, Michaelson and Brocksom.
Messrs Williams and Michaelson had the opportunity to receive an enhanced bonus of up to 150% of base salary in the event of the restructuring plan announced on 14 March 2012 being successfully implemented. The first half of this bonus (of up to 75% of salary) would be payable at the end of 2012 for achievement of specific targets to improve the operational and financial performance of the business together with achieving key personal targets.”
Mr Barron
I do not have much time, and I want to get this on record. I will give way if I get the opportunity.
The report continues:
“The second half of the bonus (of up to 75% of salary) was to be paid on successful implementation of the restructure plan…but will be deferred until the end of 2013 and was conditional upon the continued employment of Messrs Williams and Michaelson.
As part of the restructuring…Messrs Williams and Michaelson transferred respectively to Mine Holdings and Harworth Estates. However, it was agreed and announced at the time of the completion of the restructuring that Mr Williams would leave the Mine Holdings business in early 2013. The Committee has determined that although Mr Williams broadly achieved the safety performance required, the operational and financial performance of the mines put the mines in such difficulties that they will not recommend to the directors of Mine Holdings that the bonus is payable (2011). Mr Williams also benefitted in 2011 from an award of 500,000 shares which will vest during 2013…The Committee reviewed Mr Michaelson’s performance in the year and will recommend to Harworth Estates that a bonus of £152,500 (2011: £114,900) is payable in respect of the operational and financial performance in the year.”
The company has serious problems, yet the report continues:
“In anticipation that Mr Brocksom would leave the business on completion of the restructuring, his enhanced bonus for 2012 was agreed at a lower level of 100% of salary, with no deferred bonus, following the successful implementation of the restructuring plan. He will receive this enhanced bonus of 100% of his base salary £242,888”.
I realise that I will have to sit down in two minutes, but the report states that
“Mr Cox, Chairman, was recruited on a base salary of £350,000 per annum on the basis he provided three days per week. In the light of the time Mr Cox was required to provide in 2012 in relation to the restructuring and on-going business, the Committee agreed to supplement Mr Cox’s base salary by £120,000 for 2012”.
That is for a three-day week, although I assume he may have worked a bit of overtime:
“However, this was not paid until the sufficient short term recovery of the mining business and the proposals for December 2012 restructuring were fully developed”.
I will sit down very shortly, but the report goes on to say that
“Mr Cox was granted the following awards pursuant to the authority contained in Listing Rule 9.4.2R(2):
A Long Term Award to acquire up to 2,800,000 ordinary 1 pence shares which will normally vest on 15 November 2013 (being the third anniversary of Mr Cox’s appointment)…An Award over 1,520,000 shares which was to normally vest on an annual basis in three equal tranches subject to Mr Cox’s continued employment”.
I also understand that UK Coal paid lawyers millions of pounds from the restructuring, yet George Fowler, and 2,300 others, have had their concessionary coal removed by the company. I do not know whether that is illegal, but it is obscene at a time when George Fowler and thousands of others have to suffer having the entitlements they worked for in the coal industry taken from them because of the scheme’s so-called liquidation. I hope the Minister will address some of those issues in the not-too-distant future.