Mineworkers’ Pension Scheme

Part of the debate – in the House of Commons at 7:49 pm on 10th June 2019.

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Photo of Grahame Morris Grahame Morris Labour, Easington 7:49 pm, 10th June 2019

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.

The third point made by the Chief Secretary in her letter was this:

“Any changes to the surplus sharing arrangements could only be considered in the round with changes to the guarantee, but trustees have indicated that their members are happy with the guarantee as it stands”.

As previously stated, the benefit of the guarantee is not being questioned. We all accept that it has benefit and value. It has allowed the scheme to be ambitious in its investment strategy. However, we should not conflate support for the guarantee with support for the surplus-sharing arrangements. Members representing coalfield areas will have received emails from constituents referring to the MPS trustee for Yorkshire and North Lincolnshire, Ken Capstick, in which he says:

“I know of not one Trustee that would agree with the statement made by…Chief Secretary to the Treasury and it is a complete misrepresentation of the position of the Trustees.”