Damning report reveals government pocketed £4bn from miners’ pensions so far

A damning report has revealed that the Government has received £4.4bn from miner’s pensions so far – and is in line to pocket at least £1.9bn more.

A miner walks to the showers after his last shift as UK deep coal mining comes to an end in 2015 at Kellingley Colliery. Image: Bruce Rollinson.

The Mineworkers Pension Scheme and its controversial ‘surplus-sharing arrangement’, meaning surplus is shared 50:50 between the government and members, was subject to a parliamentary enquiry by the Business, Energy and Industrial Strategy Committee.

The government guaranteed that pensioners would always receive the benefits they had earned up until to the privatisation of British Coal in 1994, and that these benefits would increase in line with inflation.

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However, in return for this guarantee, the government is entitled to receive 50 per cent of any surplus in the scheme’s value at subsequent valuations.

Wentworth and Dearne MP John Healey says that the government “simply cannot justify getting billions from a scheme they’ve never put anything in that was built on the backs of miners.”

The committee’s report, published today (April 29), says the government “failed to conduct due diligence during the 1994 negotiations, and was negligent by not taking actuarial advice.”

It says the 50:50 split is “arbitrary” and the government’s share “is not proportionate to the degree of financial risk it actually faces.”

In December Mr Healey and other coalfield MPs called for the inquiry to scrutinise how the surplus-sharing arrangements were agreed, the government’s role as guarantor of the scheme, and the “continued appropriateness of the 50:50 split”.

The inquiry found that the government has so far received £4.4bn – more than double what was expected – and is set to pocket at least £1.9bn more. The Government is a guarantor but has paid nothing in and is not expected to have to.

The average miner gets £84 a week. Half get less than £65 a week, a quarter less than £35 a week, and one in 10 gets less than £18 a week.

The Select Committee recommends a revised agreement where the government only receives a share of surpluses if the scheme falls into deficit and they have to make up the shortfall, and for miners to get an immediate cash boost from transferral of a £1.2bn fund.

“I’ve been fighting on this for years but all I get from Ministers is that they won’t even consider a review. It’s shameful,” added Mr Healey.

“Thousands of ex-miners are dying every year, and those still with us are suffering with poor health and struggling to get by every day. They need help now and an immediate increase to their pensions.”

The BEIS report says: “Given … the vast sums which have been paid to the Government, it is unconscionable that many of the scheme’s beneficiaries are struggling to make ends meet.

“It is patently clear today that the arrangements have unduly benefited the Government, and it is untenable for the Government to continue to argue that the arrangements remain fair.

“Government should not be in the business of profiting from mineworkers’ pensions.”

Last year Mr Healey revealed that South Yorkshire has the highest number of members of the MPS (Mineworkers’ Pension Scheme)in the UK.

One in five members – more than 27,000 – live in and around South Yorkshire, and 6,710 in and around the Wentworth and Dearne constituency alone – more than in the whole of the North West region or in the four southernmost English regions combined.

A Government spokesman said: “Mineworkers’ Pension Scheme members are receiving payments 33% higher than they would have been thanks to the Government’s guarantee.

“On most occasions, the scheme has been in surplus and scheme members have received bonuses in addition to their guaranteed pension.

“We remain resolutely committed to protecting the pensions of mineworkers, are carefully reviewing the findings of this report, and will consider all recommendations made.”