Key Takeaways
- • The Treasury reversed a planned release of the Mineworkers' Pension Scheme guarantor's fund just hours before the Budget, leaving more than 100,000 retired miners with no timetable for a pension boost of up to 20%.
- • The MPS guarantor's fund release was estimated by MPs at more than £1bn and was to be funded without cost to taxpayers, after the government had renounced its claim to the surplus.
- • Treasury officials cited government accounting rules when informing trustees, according to openDemocracy; the Treasury did not directly comment on the allegations.
- • Senior Labour sources told openDemocracy that Prime Minister Andy Burnham was "furious" and "blindsided" by the decision, which he and Chancellor John Healey reportedly clashed over.
- • Healey's Budget ended the 50:50 surplus split and abolished the standstill rule, but neither measure adds money to pensioners before year-end, and the NUM expects the remaining funds can only be released at a fiscal event, likely well into next year.
Summary
More than 100,000 retired miners who expected their pensions to rise by up to 20% next month have been left with no timetable for payment after a last-minute Treasury U-turn, according to openDemocracy. Senior Labour sources told the outlet that the prime minister was "furious" at the decision, and openDemocracy understands the government may be unable to transfer the promised funds until next year.
The dispute traces back to the 1994 privatisation of British Coal, when the government agreed to guarantee the two primary miners' pensions in exchange for 50% of any investment surplus. The funds performed well enough that the government never paid into them but still accessed the reserves. The National Union of Mineworkers (NUM) estimates miners have lost out on more than £4.4bn as a result. Earlier this year, the British Coal Staff Superannuation Scheme received its release of funds under then-chancellor Rachel Reeves, and campaigners and coalfield MPs expected the Mineworkers' Pension Scheme (MPS) to receive the same treatment this week, freeing more than £1bn according to MPs' estimates.
Trustees had lined up a bonus to be added to members' December pension payments, based on months of negotiations with ministers, coalfield MPs and the NUM. However, at a Tuesday meeting, Treasury officials told trustees the money would not be released, citing government accounting rules. The Treasury did not respond to questions on what prompted the reversal, pointing instead to the prime minister's remark that "Nothing's gone wrong. The commitment is in no way diminished." Gary Saunders, chair of the MPS trustees, said they were "very disappointed" that the decision was made "just hours before the Budget announcement".
In the Budget, Healey ended the 50:50 surplus split and abolished the "standstill" rule, but neither measure places extra money in former miners' pockets before year-end. Healey said he would ensure the full transfer of the guarantors' fund. The MPS estimates more than 5,000 members die each year, so delays may mean many never receive the promised increase. Labour whips have promised a meeting with coalfield MPs "in the coming weeks" but set no date for release. Trustees have also questioned why accounting constraints were not identified earlier, noting the £2.3bn transferred to the British Coal Staff Superannuation Scheme last year.
The dispute traces back to the 1994 privatisation of British Coal, when the government agreed to guarantee the two primary miners' pensions in exchange for 50% of any investment surplus. The funds performed well enough that the government never paid into them but still accessed the reserves. The National Union of Mineworkers (NUM) estimates miners have lost out on more than £4.4bn as a result. Earlier this year, the British Coal Staff Superannuation Scheme received its release of funds under then-chancellor Rachel Reeves, and campaigners and coalfield MPs expected the Mineworkers' Pension Scheme (MPS) to receive the same treatment this week, freeing more than £1bn according to MPs' estimates.
Trustees had lined up a bonus to be added to members' December pension payments, based on months of negotiations with ministers, coalfield MPs and the NUM. However, at a Tuesday meeting, Treasury officials told trustees the money would not be released, citing government accounting rules. The Treasury did not respond to questions on what prompted the reversal, pointing instead to the prime minister's remark that "Nothing's gone wrong. The commitment is in no way diminished." Gary Saunders, chair of the MPS trustees, said they were "very disappointed" that the decision was made "just hours before the Budget announcement".
In the Budget, Healey ended the 50:50 surplus split and abolished the "standstill" rule, but neither measure places extra money in former miners' pockets before year-end. Healey said he would ensure the full transfer of the guarantors' fund. The MPS estimates more than 5,000 members die each year, so delays may mean many never receive the promised increase. Labour whips have promised a meeting with coalfield MPs "in the coming weeks" but set no date for release. Trustees have also questioned why accounting constraints were not identified earlier, noting the £2.3bn transferred to the British Coal Staff Superannuation Scheme last year.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.