Mineworkers’ Pension Scheme

I beg to move,

That this House calls on the Government to carry out a review of the existing arrangements for the sharing of the surplus generated by the Mineworkers’ Pension Scheme.

I thank the Backbench Business Committee, under the excellent stewardship of my good and hon. Friend the Member for Gateshead (Ian Mearns), for permitting this important debate. I also take this opportunity to apologise to those retired miners who made the long journey from the coalfield areas in anticipation that the debate would take place last week. Unfortunately, that was impossible owing to Government business.

In March I was honoured to accompany a group of retired mineworkers and MPs from coalfield areas to deliver a petition with more than 100,000 signatures to No. 10 Downing Street calling for a review of the surplus sharing arrangements for the mineworkers’ pension scheme. The petition is the basis on which this debate was called. I thank all those who have campaigned for pension justice for miners and their dependants.

I must declare an interest. Like many miners, my father and grandfather died prematurely in their 50s, their lives cut short by the industrial diseases prevalent in coalfield communities. While my father never collected his pension, my mother has been left with a reduced widow’s pension from the British Coal staff superannuation scheme. Every year, thousands of miners face premature death because of the dangerous conditions they toiled in underground many years ago.

My hon. Friend speaks movingly about his family, but he also points to another issue, which is that the Government need to act urgently, otherwise miners and their families, who are obviously getting older, will not benefit from any measures taken.

That is an incredibly important point. When I had to apologise to some of the miners from Wales and Yorkshire who travelled down last week, the point was made to me that even in the space of one week—the period by which this debate was delayed—thousands would die.

I congratulate my hon. Friend on securing the debate and pay particular tribute to my hon. Friends the Members for Barnsley East (Stephanie Peacock), for Ashfield (Gloria De Piero) and for Blaenau Gwent (Nick Smith) for their work. Does my hon. Friend agree that a key issue is that the widow’s pension is even smaller than many of the miners’ pensions, so we are asking for an uplift from very small figures? If the Government could show some compassion and bring forward these changes, many widows and miners’ children would benefit hugely.

Absolutely; that is a key point. I hope those on the Treasury Bench will listen intently to the points made in this debate.

My hon. Friend the Member for Torfaen (Nick Thomas-Symonds) made a point about the number of miners and their dependants who were dying. The mineworkers’ pension scheme annual report shows a dramatic fall in the number of pensions in payment. It has fallen from 175,000 in 2011 to just over 135,000 today. As this indicates, because of the age of the retired miners and their widows—many are now in their 80s or older—they are passing away and the number of beneficiaries is falling dramatically.

I am proud to represent the mining communities of east Durham. We owe a debt of gratitude to our miners. Easington’s pits produced the nation’s wealth and powered the industrial revolution, and the mining industry transformed our landscape. Without coal, many of the colliery villages in Durham would simply not exist. Where a pit was sunk, workers from all parts of the UK— from Wales, Cornwall, Ireland—would come to work in those collieries. Indeed, at the height of its production, the Durham coalfield alone employed 170,000 miners in the 1920s.

Coalmining remained our primary source of employment until the closure of our last pit in Durham in 1994. The colliery in my village, Murton, ceased production in November 1991. It was a proud industry until relatively recent times. In my opinion, the men who toiled in our pits are heroes—they worked in darkness so that we could live in light—and, in their retirement, they and their widows deserve respect and security.

There are points of agreement that I believe are accepted across the House, including, I hope, on the Treasury Bench and among Government Back Benchers. I think we can all agree that there is value and importance in the guarantee given to the mineworkers’ pension schemes. What is in dispute is the cost of the guarantee. There is no denying that the guarantee has given to those who administer the funds the freedom to make bold investment decisions, which has allowed them to target higher returns on investment. It follows that the guarantor—the Government—should be compensated for the guarantee fairly and proportionately.

We should recognise that when the increase in the miners’ pension scheme was higher than that in the state benefit scheme, many people in my constituency, because they got more money, did not take the means-tested benefits they were entitled to, so it is not just about surpluses; it is about how much money the scheme saved the state.

That is an absolutely relevant point. Other colleagues have referred to the relative pension levels. Ministers often quote the percentage increases, but the average pension payable is £84 a week. That is a paltry sum. I also respectfully point out to the Minister that the Government have never been called upon to make a single payment into the scheme.

I refer to my declaration in the Register of Members’ Financial Interests: I am a deferred member of the mineworkers’ pension scheme. My hon. Friend mentions the fact that British Coal—the National Coal Board—never put a single penny in the scheme. Many people have called this the crime of the century. At the time of the discussions, the projections were that the agreement would raise £2 billion. The Government have taken £4 billion from the miners of this country without putting a single ha’penny back in. Is this not an absolute disgrace?

Absolutely. I could not put it any better myself. It is now time to review the surplus sharing arrangements and the level set in 1994 and consider whether the decisions taken then were taken with the best financial advice and in the best interests of miners.

To be fair, the Government have been consistent in their arguments against making changes to the scheme. These arguments are set out in various responses to parliamentary questions and were restated by the Chief Secretary to the Treasury in her response on 14 May to a cross-party letter co-ordinated by my hon. Friend the Member for Blaenau Gwent. I want to summarise the Government’s response because it is important to consider their arguments. The first is that the sharing arrangements work well for beneficiaries; the second that the sharing arrangements provide fair compensation for the Government; and the third that there can be no unilateral action and that changes can be made only with the agreement of the trustees. I want to take each point in turn.

First, does the surplus-sharing scheme work for beneficiaries? The Government’s position is that the scheme has worked well. In her letter of 14 May to my hon. Friend the Member for Blaenau Gwent, the Chief Secretary said:

“The sharing arrangements has meant beneficiaries enjoy bonus payments worth more than 33% of their index-linked benefits”.

As highlighted in a previous debate by my good and hon. Friend the Member for Barnsley East (Stephanie Peacock), the average payment from the scheme is just £84 a week, and it is a great deal less for widows, many of whom have outlived their husbands by many decades. Our industrial legacy means that many miners, like my father, never reach retirement age. Those who do are often in ill health, and will draw their pensions for fewer years than those who retire from other industries and sectors.

We often talk about deferred wages. When miners made those contributions, week after week and year after year, the expectation was that they and their families would have security in their retirement. After we delivered the Downing Street petition, w Sullivan, a campaigner and former miner, spoke of some widows receiving pensions of

The hon. Gentleman is making a powerful speech. He has given some alarming figures. Does he agree that this is not just about security in retirement, but about dignity, and that the Government are not giving dignity to pensioners in the mining industry and their widows?

Absolutely. We owe a debt to the miners, and the Government have an obligation to them— a moral obligation. They obviously have the financial resources to discharge that debt, and to give retired miners and their widows and dependants some dignity.

May I take up my hon. Friend’s point about the moral obligation? Does he remember that when the Prime Minister first stood on the steps of No. 10 Downing Street, she talked about dealing with injustices in our society? Would it not be appropriate if, during her last few weeks in office, she asked officials and Ministers to think again and look at the independent analysis conducted by the National Union of Mineworkers, which suggests that a 90-10 split would be much fairer?

Absolutely. I thank my hon. Friend for his intervention, which has pre-empted my further remarks.

I am trying to deal systematically with the Government’s objections to changing the split. The second point made by the Chief Secretary in her letter concerned the question of whether the surplus sharing arrangements represent fair recompense for the Government guarantee. In her letter to my hon. Friend the Member for Blaenau Gwent, she wrote:

“Thank you for also raising your views on the surplus sharing arrangements. I believe that these represent reasonable recompense to the taxpayer, both for the past investment in the Mineworkers Pension Scheme during the industry’s period of public ownership and for the risks they continue to bear through the government guarantee”.

There is no evidence that the current sharing arrangements can be considered fair or reasonable. Incredibly, the scheme was established, and the surplus sharing arrangements agreed, without any actuarial advice, as confirmed in written answers given to my hon. Friend the Member for Barnsley East.

We know a lot more about the mineworkers’ pension scheme and the associated risks that it faces than we did in 1994. If the 50-50 split represented the risk in 1994, 25 years later the risk to the Government is marginal. After a quarter of a century, they have never made a single contribution to the fund.

In the context of efforts to set a fair sharing arrangement, the Minister will be aware of two reports commissioned by the National Union of Mineworkers. I thank the NUM, and Chris Kitchen and his executive, for that. The two reports were produced by First Actuarial, and dealt with the Government guarantee and the surplus sharing arrangement.

One of the reports suggested that a 90-10 split of future surpluses would be a fair return to the Government for the relatively low level of risk taken in providing the guarantee. The schemes have been tested, and I point out that they weathered the 2008 world financial crash without any need to fall back on the guarantee. I implore the Government to use that report as a basis for negotiation—or rather renegotiation—which can deliver for all interested parties.

That is what we expect from Tory Ministers.

Absolutely.

The MPS winter newsletter states:

“Whilst the Trustees are and always have been supportive of any initiative that had the underlying aim of improving members outcomes, the Trustees do not have the power to make these changes without recourse to the Guarantor”

—in other words, the Government.

“We will of course continue to work in your interests across all aspects of running the scheme”.

Let me say this, earnestly, to the Minister. The trustees will be listening. They want to renegotiate the current sharing arrangements. If approached by the trustees, will the Government, as guarantor, negotiate those arrangements? If the Minister wishes to intervene now, I will take his intervention; otherwise I hope he will address that question when he sums up the debate.

May I say to the hon. Gentleman that there are those on this side of the House who not only have a great deal of sympathy with what is being said, but have a great deal of support for it and want to give a great deal of encouragement? Having come from Sheffield and worked with miners on the cricket field as well as the rugger field, I know the position exactly. I have seen all the pits and been down a lot of them. Let me simply say, I hope that you get what you want.

God bless you. I am grateful for that intervention,

What I am trying to do—with all due respect, and without denigrating anyone’s contribution—is set out the factual position. I think that the arguments that the existing arrangements are unfair are overwhelming.

There is one point that my hon. Friend has not mentioned at all. I worked in the pit for 20-odd years before I came to Parliament, and I must say at the outset that this is an easier job than working down a coalmine. I know a lot of people do not like me saying that, but it is a fact. There is no doubt whatsoever about that.

One of the things that I learnt about the pension scheme was this. I must tell my hon. Friend, who has not referred to this yet although he may do so later, that when I went down the pit just after the second world war there was a pension scheme in the coalmining industry for managers and people who ran the mine. There was also a scheme that paid deputies, who were like little sergeants in the pit. They were people with authority and their membership entailed that they could be paid as well. I think it was in the early 1960s, when I was still in the pit, when at last somebody decided that miners themselves, and there were 700,000 of them working in the coalmines in Britain at the time—