Mineworkers’ Pension Scheme

Stephanie Peacock Excerpts

Thursday 16th May 2024 Commons Chamber

[Stephanie Peacock (Barnsley East) (Lab)]

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.

--- Later in debate ---

[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.

[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.