Mineworkers’ Pension Scheme

Nick Smith Excerpts

Tuesday 5th December 2017 Westminster Hall

[Nick Smith (Blaenau Gwent) (Lab)]

I beg to move,

That this House has considered the Mineworkers’ Pension Scheme.

It is a pleasure to serve under your chairmanship, Mr Paisley. I applied for the debate for one reason: because miners and their families deserve a fair deal from their pension pots. In the time I have, I will talk a bit about the scheme—what it is, what the issues are and what could be done going forward—but first, I want to talk about why it matters.

I have a very personal stake in this because of where I am from and my family. Like much of south Wales, coalmining is a big part of Blaenau Gwent’s history. We were the crucible of the industrial revolution in Wales. Steel and coal propelled the Welsh economy, shaping our landscape and employing hundreds of thousands of people. There were tragedies as well, such as at Senghenydd and Six Bells in my constituency—I could go on.

Like many people in Blaenau Gwent, mining also played a big part in my family. I was named after three colliers—my three uncles on my mum’s side—Nicholas, Desmond and John. I still remember the 1974 coal strike: I went with my Uncle Dessie to pick coal off the patches high above Tredegar to help keep our homes warm. They were all members of this scheme. Working deep underground, miners like my uncles helped keep our country running for decades. It was dangerous work, but they just got on with it. Oakdale colliery, where a lot of my family worked, shut 28 years ago. The British mining industry is almost gone, but what is left is former mining communities such as Blaenau Gwent and pensioners like my uncles.

In 2006, there were 280,000 total members of the scheme. By 2016, there were just over 177,000 members. The scheme projects that that number will fall by about 50,000 in the next 10 years, which would take total membership down to about 127,000—a drop of 55% over 20 years. Those members who are left deserve a duty of financial care from our Government.

[Stephanie Peacock (Barnsley East) (Lab)]

I have hundreds of constituents who have paid into the scheme and deserve the money, in contrast to the Government, who have not made a contribution since 1994. In discussions, the Government have said that they do not intend to agree to changes that are not in their interests. This is simply not fair. They need to think again.

[Nick Smith]

My hon. Friend makes a really good point that gets to the nub of the question we are considering.

I called for the debate following the productive meeting that Labour colleagues and I had with the scheme trustees recently. At the meeting, we looked at ways of improving outcomes for the scheme’s members, and I am grateful to my hon. Friend the Member for Ashfield (Gloria De Piero) for organising it.

On the scheme itself, in 1994, there was an agreement between British Coal pension trustees and the Government. The Government made a guarantee that any pensions earned up until privatisation were safe and would not fall in cash terms. In return, if the schemes were in surplus and doing well, that surplus would be split 50:50, with half going to scheme members and the other half to the Government. The sharing of the surplus is at the heart of our discussion.

Since 1994, the Government have taken £3.5 billion out of the scheme, without making any payments into it. It could be argued that £830 million of that was British Coal’s original share of the surplus being paid back to the Government—I sort of get that and it is a fair point.

[Chris Evans (Islwyn) (Lab/Co-op)]

I am glad that my hon. Friend mentions British Coal. He will know that British Coal made no employer contributions between 1987 and 1995, when a Conservative Government were in power. Does he agree that that was an error by that Government that clearly proves that, in their time in government, they did not care about ex-mineworkers?

[Nick Smith]

My hon. Friend and neighbour really captures what has happened.

[Wayne David (Caerphilly) (Lab)]

As my hon. Friend has said, the surplus gets to the heart of the issue. Does he accept that the surplus the Government have received is far in excess of their own expectations for what could have happened?

[Nick Smith]

My hon. Friend and neighbour, like my hon. Friend the Member for Islwyn (Chris Evans), gets right to the bone. Nearly £2.7 billion has come from the scheme to the Government as their share of the subsequent surpluses. That means that the Government have taken the same share as the people who earned the pensions in the first place.

Instead of paying in, the Government act as a guarantor in case things go wrong. That is a good thing and has been helpful—the trustees say that. The Government say that they take the money because they will step in and protect the value of pensions if the fund encounters difficulties. The trustees accept that this protection has enabled them to pursue more lucrative investments than might otherwise have been the case. I would like to be clear: we are glad that the Government guarantee is there. It has made a difference and helped to lead to better returns.

[Ben Bradley (Mansfield) (Con)]

I have also met the trustees. Does the hon. Gentleman accept what they have said—that the guarantee is the most important part of the agreement, and that they would not wish to give any movement on that guarantee within the scheme for any price?

[Nick Smith]

The hon. Gentleman is right. When we met the trustees, they told us that the guarantee was important, and I accept that. It has been helpful in terms of pursuing lucrative investments, which have aided scheme improvements and its funding. It has also given miners the peace of mind that the pension they earned will not go down in value, no matter what happens in the markets. It is a good thing. The basic nature of the guarantee is not in dispute. The concern is about how much money is being taken out of the surplus in return for it. That is the question we have to try to tease out.

[Ann Clwyd (Cynon Valley) (Lab)]

I congratulate my hon. Friend on getting this important debate. The miners feel deceived and that they have been led down the garden path. As he and many colleagues know, there is anger in mining communities because they feel they have been duped. Waiting and waiting for some kind of resolution is not good enough. May we have an inquiry by the Treasury Committee into the scheme? Would he agree with that?

[Nick Smith]

I agree. More parliamentary consideration of this important initiative and where it goes next would be valuable.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I congratulate the hon. Gentleman on securing this important debate, the tone of his remarks to date and the manner in which he and colleagues are campaigning. Will he explain why during 13 years of Labour Government the deal with the trustees was not renegotiated at all?

[Nick Smith]

The hon. Gentleman makes a fair point, but this is not about looking backwards but about looking forwards and looking after the hundreds of thousands of people I mentioned in my introduction.

The Government have provided the guarantee, which is an important commitment, but I would like to ask the Minister three things and I would like three answers today, please. How many other pension schemes that the Government guarantee have delivered them a windfall of billions similar to that in this instance? Do the Government still think that the 50:50 share of the surplus is fair? Importantly, will the Government consider taking a reduced share in the future?

It has been estimated that the Government will receive windfalls of £51 million each year between 2016 and 2019—another £200 million. Lots of people feel that that belongs to the retired miners, not the Government, and I agree with them. Today, I call on the Government to revisit the surplus sharing arrangements, and in particular I urge them to meet the trustees of the scheme to chart a way forward. I am sure that I speak for many colleagues in saying that there is support for change in our constituencies, and that we should do the right thing by retired mineworkers and their families. The time has come for a better way to help the trustees support our communities. This is the miners’ money. They earned it through years of hard work at the coalface, and they deserve a better and fairer share of it.