Mineworkers’ Pension Scheme

Luke Graham Excerpts

Monday 10th June 2019 Commons Chamber

[Luke Graham (Ochil and South Perthshire) (Con)]

My hon. Friend makes a good point about some of the dangers that coalminers faced at the coalface. In Clackmannanshire, which I represent, we still see not only the dangers that they faced back at the time, but the legacy and the long-term health impacts. Does he agree that it is time to review the fund and its distribution and that we should set regular reviews with actuarial advice to ensure that the distribution is fair and equitable in both good times and bad?

[Bill Grant]

My hon. Friend makes a valid point. Those who were colliers or miners can become victims of silicosis and pneumoconiosis—common names in my household and my father’s—which affect the respiratory system. This group of people deserve a review that favours them. Many miners unfortunately go on to develop ill health later in life, which can often be attributed to the conditions in which they worked underground.

The men who wroughed hard, as we say in Scotland, in the bowels of the earth to put the “Great” in Great Britain fuelled the industrial revolution and kept the home fires burning through two world wars. It is worthy of note that the Labour party agreed to consider their concerns, but it found itself unable to do so as far back as 2003, due to a fall in world stock markets, so the original 50-50 share of the surplus prevailed. Even with the passage of time, it is clear that that unpredictability remains, given the immense dependency on the behaviour of money markets and the return from stock exchanges. It is essential to take a risk-based approach to ensuring that any Government, as the guarantor, are robust in securing and maintaining funding for the future.

The contingent pension liability for British Coal’s two pension schemes was valued at the modest sum of approximately £16 million. Some argue that recent surpluses need to be balanced against previous deficits, but I am unsure whether I would support such an approach. It was reported that there was a large surplus in the guarantee fund in 2017, with half being destined to provide bonuses to pensioners. The trustees announced new bonuses representing an increase equivalent to 4.2% of guaranteed pensions in the six years to 2023. In addition, there were to be improved benefits, and quite rightly so, for members under 60 who were not yet retired but who were experiencing serious ill health from spending decades underground. Such modest moves are to be welcomed, as is the coalfield communities fund that assists some of those communities.

In 2018, the Minister for Energy and Clean Growth instructed her officials to liaise with the pension fund’s trustees with a view to considering revising the scheme for the benefit of all parties. Earlier this year, she advised that that was ongoing, so this evening I ask the Minister to endeavour to expedite the review, given the increasing age and ill health of many mineworkers, to achieve any necessary adjustments to meet the earlier stated principle of a fair and equitable sharing of risk and, more importantly, reward in the interests of both scheme members and the Government. Finally, I hope that the review will look kindly on the remaining miners and their widows and afford them the financial dignity that they so richly deserve.

[Gloria De Piero (Ashfield) (Lab)]

It is a pleasure to follow the hon. Member for Ayr, Carrick and Cumnock (Bill Grant) and to see cross-party consensus around the need for change. I also congratulate the Backbench Business Committee on selecting this extremely important subject for debate.

I have been campaigning on the mineworkers’ pension scheme for some years alongside my hon. Friends from other coalfield communities and with both the National Union of Mineworkers and, crucially, the trustees of the pension scheme. We are all united in and committed to our goal of achieving a fairer pension for the thousands of former mineworkers and their widows who have stood by in dismay as the Government’s coffers swelled with billions of pounds made on their pension investments.

In answer to parliamentary questions, the Department for Business, Energy and Industrial Strategy has admitted, in its role as guarantor of the mineworkers’ pension scheme, that the Government have received nearly £4.5 billion since 1994. They have never had to pay a penny into the scheme. Even now, they expect to receive around £142 million a year from the scheme surpluses—a truly eye-watering figure. No wonder there is a huge amount of anger and resentment in mining communities because of it. The phrase I hear from many ex-miners in Ashfield is, “The Government is taking our money.”

Some people think ex-miners have a fantastic pension that is the envy of those on pensions from other traditional industries, but the truth, as my hon. Friends have said, is that the MPS pension is worth not much more than £80 a week. The truth is that many ex-miners and their widows are on a very limited income and struggle to make ends meet. That is some thanks for the back-breaking work these men did literally to keep the country’s lights on.

The conditions in which miners worked were uncomfortable at best and downright dangerous at worst. Keith Stanley, whom I know well, worked at the coalface in Nottinghamshire for 35 years, and he describes what it was like for miners down the pit: digging in narrow tunnels, just four feet tall at most; coal raining in on them regularly; travelling for an hour underground just to reach the coal seam before doing a shift; and grafting in hot and dirty conditions that most of us could not imagine.

Men were transferred to neighbouring collieries when the pits began to close, but when places ran out as more and more mines shut down, too many of them were tossed aside, left to find work in local factories or as manual labourers if they were lucky. Now approaching old age, many of them do not have the pension they hoped for and watch in dismay while money made from their pension investments is pocketed by the Treasury.

Keith told me that this injustice has always grated on him and that the oft-repeated Government line that ex-miners have a good deal leaves him seething. On the contrary, it is the Government who seem to have the good deal. When the guarantee arrangements were first negotiated, it was never forecast that the Government would make so much money from the scheme. They have banked billions more than expected, which is why we are now debating the right thing to do.

[Luke Graham]

I do not want to break the consensus that is building in the Chamber tonight, but the hon. Lady calls this an injustice and blames the Government. Why, then, did Ministers in the Labour Administration stand at the Dispatch Box in 2001, 2002 and 2003 and refuse to have that review? Why is it okay for Labour Members to call for it now? At least be honest about it.

[Gloria De Piero]

I accept that and, actually, the negotiations began at the end of the last Labour Government’s term—representatives of the National Union of Mineworkers have told me about the meetings they had in No. 10—but we left office. Will the hon. Gentleman acknowledge the millions that we spent on compensation for industrial injuries and industrial white finger?

--- Later in debate ---

[Stephanie Peacock (Barnsley East) (Lab)]

I am pleased to follow my hon. Friend the Member for Ashfield (Gloria De Piero), who has been a long-standing campaigner on this issue. I wish to congratulate my hon. Friend the Member for Easington (Grahame Morris) on his passionate speech in opening this debate, and I thank him for it. It is a pleasure to have the opportunity to be here fighting for an issue that matters so much to the lives of many of my constituents in Barnsley East. This debate on the MPS follows my Adjournment debate on the same subject in February, where we discussed the contribution made to this country by miners who toiled for decades, and the money the Government have unfairly taken from their pension scheme. Although I am pleased that this debate has been granted—I thank the Backbench Business Committee for selecting it—what we need now is action, not more words.

Since the scheme was established, following the privatisation of British Coal in 1994, the Treasury has pocketed more than £4.4 billion, with nearly half a billion more over the next three years planned. Yet since 1987 the Government have not paid in a single penny, and instead claim their undertaking as guarantor makes this a fair price worth paying. In return, the average retired miner must get by on about £84 a week, while some are forced to settle for much less.

[Luke Graham]

The hon. Lady is talking about returns. Does she recognise that a 40% return on an investment fund is extraordinary? One does not have to be a City hedge fund manager to understand that. A lot of that is down to the fact that the Government are a guarantor. Does she agree therefore that regular reviews should take place and that the percentage should be variable, based on the performance of the fund, as 50% or 90% of nothing will be nothing for the miners?

[Stephanie Peacock]

I will come on to talk about what split I think there should be, but I just ask the hon. Gentleman whether he could live on £84 a week. That is what a lot of retired miners in my constituency—

[Luke Graham]

rose—

[Stephanie Peacock]

I have taken an intervention and I am going to make some progress.

As I was saying, these staggering sums are born out of the 50-50 surplus-sharing arrangement. Let us not forget that, as has already been pointed out in this debate, this agreement was made without any actuarial advice—it is simply staggering. This agreement simply must be reviewed and amended to give miners a greater share of what I believe is fundamentally their money. It is patently unfair that these miners, who powered our nation, are left to fight for crumbs off the table.

Leaving aside questions of fairness, the sharing surplus arrangement no longer makes financial sense either. The Government claim the risk they undertake in underpinning the pensions in their role as guarantor justifies this huge price paid and they suggest that without their backing the current value of the pensions would be considerably less. That is certainly up for debate, but what is not is that the landscape has changed drastically since this original agreement was made. For instance, the risk they assumed in 1994 in acting as guarantor has decreased substantially since then. The membership of the scheme alone has fallen considerably, for example. In 2006, there were 280,000 members, whereas there are now fewer than 160,000—by 2026, there will be just 125,000. So the financial risk for the Government has decreased and will continue to do so, yet miners in the scheme are still essentially charged the same price for the guarantee as they were 25 years ago. From a financial perspective, the scheme is no longer proportionate or providing value for money, yet the Government are willing to ignore this in order to continue boosting the coffers of the Exchequer.

On that note, in my previous Adjournment debate the Minister further attempted to justify this income by stating the Government have spent about £1 billion in coalfield communities over the past two decades—but that still leaves billions taken from the miners unaccounted for. Surely, the Government should at least tell us where that money has been spent?

Rather than in the Treasury, money should be in the pockets of retired miners. Along with the scheme trustees, the Government have the authority to make that so, by amending the surplus sharing arrangement, providing genuine value for money and righting this injustice—so will they? Will they, like the Labour party, commit to an immediate review of the current scheme as it stands? As part of that review, will they consider the NUM-commissioned report that suggested a 90-10 split in favour of the miners? Will they meet me, other coalfield MPs and the NUM to discuss that recommendation further? Will they acknowledge that the benefits brought to miners’ pensions by the Government’s guarantee simply no longer provide value for money? These are good, hard-working people who toiled for decades for the good of our country. The Government should put right this wrong and give miners what is rightfully theirs: a decent pension that they have earned and paid for.