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Sir Alan Meale (Mansfield) (Lab)
It is a pleasure to serve under your chairmanship, Mr Hollobone. We have known each other for a long time, and I am grateful to you for being here today. I am also grateful for the opportunity to hold this debate on a matter that causes acute concern in my constituency and many other mining constituencies across the length and breadth of Britain. Many Members either have a direct interest in the people and the pits concerned, or represent people who have moved to their constituencies from mining towns.
Before I begin, I want to make a complaint. Yesterday morning, I was contacted by the BBC about the debate. I was told that the BBC wanted to cover the whole issue on television and radio, and that someone would contact me later in the day, which they did. The problem was that they rang up late last night and changed the whole basis of the programme, and I was told that it would now cover energy prices, MPs’ expenses and concessionary coal, which are entirely different matters. It is appalling that the BBC has not treated the matter as seriously as it should have done, and I want to put that on record.
Let me set out the background to this debate. Since the collapse of UK Coal—the company that the Government chose to run the coal industry—after a fire in Daw Mill pit a few months ago, most of the mining jobs have been lost and the liabilities are at risk, which are both very serious. That occurred because during the nationalisation of the coal industry, liabilities were transferred from the public sector to the private sector under TUPE arrangements. As I recall, my hon. Friend the Member for Bolsover (Mr Skinner), and my hon. Friend the Member for Wansbeck (Ian Lavery), who is sitting next to me, warned some months ago of the collapse of the company and the subsequent fallout. They predicted that unless immediate action was taken, the scenario that we have seen would come about. I am grateful to them for that prediction, but it is sad that they have been proved correct.
I remind the Minister that when the Government privatised coal mining in Britain—against the wishes of those who worked in the industry, retired from it, or lived or ran businesses in communities around it, and against the wishes of the vast majority who expressed an opinion on the matter—they promised to honour all obligations and to guarantee them after the transfer, so that the obligations were at no risk whatever. It is clear from debates at the time that they were regarded by the Government as obligations governed by collective agreements established since nationalisation in 1947, but particularly negotiated in the ’60s, ’70s and ’80s. Indeed, it can be argued that some of the agreements date back to the beginning of the last century, and I will provide some examples of that later.
Many people say that the obligation to provide concessionary coal represents a benefit in kind, but it is no such thing. It is a negotiated arrangement by which a portion of the coal dug was pooled for concessionary coal deliveries, both at the time and in the future, to anybody who had worked in the industry for more than a specified number of years. People sometimes speak of the concessionary coal purely as a benefit when it has, in fact, already been earned.
I realise that the Minister is likely to argue that his Department has no legal obligations to UK Coal or the individuals concerned, but I fervently dispute that. I believe that the Department has a moral and financial responsibility to those who were promised concessionary fuel as part of their employment package, and who now find themselves at sea. The national concessionary fuel scheme for employers was never designed to be put at risk. No agreement on privatisation would have been reached in this place if Members had thought that the arrangements might ever be put at risk. That is why the Government made it perfectly clear in Bill Committee and on the Floor of the House that they regarded that obligation as an essential part of the privatisation arrangements. I do not think that anybody who was involved in that would assert anything to the contrary.
Members on both sides of the Chamber want to participate in the debate, so I will be fairly brief, but I want to look at the facts. More than 2,000 ex-mine workers and their widows have lost their historical entitlement to concessionary fuel, or cash in lieu of fuel.
Heather Wheeler (South Derbyshire) (Con)
I congratulate the hon. Gentleman on securing this important debate. Constituents from Swadlincote, Woodville and Netherseal have contacted me about this issue. We have had meetings with the Minister, and letters have gone backwards and forwards. The hon. Gentleman makes a really important point about the fact that the resources have been set aside for future payments. The workers did not take that as pay at the time; it was set aside, and the coal would be there, or they would receive cash in hand, later on. Some of my constituents live in properties with coal-fired central heating. They do not have gas, and there is no other way of heating their property, so what are they supposed to do? The situation is costing my constituents £1,300 a year, which is an awful lot of money.
Sir Alan Meale
The hon. Lady is perfectly correct. We are talking about entitlements, and the amount of money that is being taken away from those people is absolutely outrageous. In any other industry, there would be uproar throughout the community. I am grateful to her for expressing her view.
About 400 of the 2,000 mineworkers retired on the grounds of ill health, either because of injuries that they sustained while working in the coal industry or as a result of pneumoconiosis, emphysema, silicosis, asbestosis, chronic bronchitis or a range of other serious illnesses. If hon. Members have ever seen anybody who is chronically disabled by those diseases, they will understand why concessionary fuel and other arrangements—particularly those concerning pensions—are so important.
I will not make too much of this, but I know about such illnesses because my grandfather died of pneumoconiosis when I was six years old. He had to be taken away from his home because he was in such pain, and he lived for about six weeks in hospital care before he died. He drowned in his own blood; his lungs collapsed. We are talking about not one miner, but hundreds. We can see the seriousness of the issue from the fact that among the 2,000 mineworkers that we are discussing, there are an awful lot of widows. The proportion of widows is much higher than it would be if we were talking about any other industry. Mineworkers die on the job; their lives are shortened by the work that they do, and we should be proud of them and support them in their old age. We should not think of trying to remove any entitlement that they have gained through their work.
The Minister can and must try to resolve the matter. It is not acceptable for him to do nothing to change the situation. He can change it, and he knows that. He can use section 19 of the Coal Industry Act 1994, which states:
“The Secretary of State may, out of money provided by Parliament, make such payments to such persons as he may think fit for the purpose of securing…supplies of concessionary coal…made on and after the restructuring date to persons who would have received such supplies from the Corporation under relevant arrangements if those arrangements had not been affected by steps taken in connection with the restructuring of the coal industry”.
The reality is that he can do it.
What are the costs of the scheme? The Government are getting away with this cheaply. In 1994-95, they received £800 million from the private sector in the privatisation of the coal industry. There are surpluses in the miners’ pension scheme and the British Coal staff superannuation scheme. I was a Minister in the Department of the Environment, Transport and the Regions, and every year we talked about how much the surplus was worth. We formed and built the Coalfield Communities Campaign out of some of the reserves. There are hundreds of millions of pounds of surplus every year. The Government have taken that, both before and after privatisation, and that is a scandal, because that money should be paid to the miners who earned it, although that is another matter. The Government should make arrangements to settle the matter from that money. The estimated cost of picking up the concessionary fuel liability in its entirety is £34 million. If we are talking about hundreds of millions of pounds every year and the Treasury gaining £800 million from the denationalisation of coal, a mere £34 million is not very much. The Minister knows that the administrative structure is already in place, so no additional cost is attached to sorting this matter out.
I know that this does not directly come under the subject that we are discussing, but workers have also lost 10% of their pension because of the demise of UK Coal. Now their concessionary fuel will be lost. Either loss is too much. Many of them had previous service in the nationalised industry. Some worked loyally for the Conservative Government during the strikes of 1984-85. I did not agree with that, but they did not stand idly by; instead, they supported the Government in keeping the pits open. Many of the people involved in this matter are the same people who were involved then. A lot of them are thankfully in a different organisation now, but they showed loyalty to the Government, and the Government should begin to think about how they can reward that.
I will help the Minister: it is not just the 1994 Act that he can use. The European Council made a decision on 10 December 2010 on state aid to facilitate the closure of uncompetitive coal mines. That allowed the Government to make provision to ensure that key liabilities were transferred from past employers to any new entity, and were funded, so that UK Coal’s former contractual obligations were met, including those on pensions and concessionary fuel. It is therefore not true that nothing can be done. The EU decision allows the Government to make the payments outside the statutory system. The question is whether they will. It is possible, legal, just and fair. Let’s do it.
Mr Philip Hollobone (in the Chair)
Order. It is my firm intention to ensure that everyone who wants to speak in this debate gets to do so. At 10.40 am, I will call the Front Benchers, although we might get to them before that. The running order that I propose is Mr Mark Spencer, Ian Lavery, Mr Marcus Jones, John Mann and then Mr Kevin Barron. Sporting an early entry for Movember, we start with Mr Mark Spencer.
Mr Mark Spencer (Sherwood) (Con)
I am grateful for your compliment, Mr Hollobone. It is a pleasure to serve under your chairmanship. I pay tribute to the hon. Member for Mansfield (Sir Alan Meale) for calling this most important debate. While I am doing my thank yous, I should also thank the Union of Democratic Mineworkers, which has been active in pursuing this issue and is based in the hon. Gentleman’s constituency.
Before we get to concessionary coal, it is worth reflecting on where we are and how we got here. We could be debating the tragic loss of 2,000 jobs, not only in my constituency but also at Kellingley colliery in Yorkshire, and that would be an entirely different debate. That loss has caused enormous financial distress in my constituency and in other parts of Nottinghamshire and Yorkshire.
It is worth giving credit to the Minister for his work and support when the Daw Mill colliery caught fire and the pit got into difficulty. It is also worth paying tribute to the work of the Minister without Portfolio, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), who was the Minister’s predecessor and who played an active role. It was a tragic position with enormous financial pressure on UK Coal. There was a moment when I worried that we were about to lose all those jobs, and the implications of that would have been enormous. Thankfully, with the support of the ministerial team and the work of UK Coal and a number of others, we were able to secure those jobs.
We should reflect on the implications for those who find they are losing the benefits they have built up. I hesitate to use the word “benefits”, because the hon. Gentleman said we should not call them that, but the scheme was part of the terms and conditions of working down a colliery. It was not only a perk, but part of the employment contract. While working in a pit, the person could see that their family was secured for life for energy provision.
The Government often say that we should support hard-working people who do the right thing, and no career is harder than working in a coal mine. Anyone who has had the opportunity to go down a mine will understand how difficult and hard the work is. These people worked hard and they did the right thing. We have a moral obligation to assist those who worked in the mines, as well as their spouses who might be widowed and find themselves under enormous pressure. As my hon. Friend the Member for South Derbyshire (Heather Wheeler) pointed out, many of these people have coal-fired central heating systems, and the financial cost of moving to another energy source and installing a gas boiler is way beyond their means.
I had the opportunity to go round to some of my constituents with Newark and Sherwood Homes, which is a local authority housing provider. Some of its tenants use the free coal to heat their homes. Newark and Sherwood Homes said that it had given some of its tenants the opportunity to change to gas-fired central heating at the cost of the housing provider, but one of the tenants said to me that he did not want to do that, because his whole lifestyle revolved around getting out of bed in the morning, lighting the fire and heating his water. His reason for getting out of bed in the morning was to light that fire. To understand how these things operate, people have to live in a coalfield community.
Heather Wheeler
I put on the record again that some of my villages do not have gas, so they do not have another way to heat their properties. If we could change them to gas, I am sure that we would have done. I thank my hon. Friend for stressing that it is a lifestyle choice for some people, but for others there is no choice.
Mr Spencer
I am grateful for that intervention. We are fortunate in north Nottinghamshire to have gas to most properties, but some of my constituents will be in the same position, and it is worth making that valid point.
While I have the floor, I will abuse your good will, Mr Hollobone, to a certain degree. I draw attention to the future and how we will move forward in this fantastic industry. I am conscious that Thoresby colliery, in my constituency, has a lifespan that will end sometime between 2016 and 2018. We need to think about how we will accommodate those employees and continue to provide our great nation with home-produced coal.
Just over the border in the constituency of my neighbour, the hon. Member for Bassetlaw (John Mann), is Harworth colliery, which is currently mothballed. I hope that the Government are considering how to reopen it at some point, if it becomes economically viable, and I will continue to discuss that with the Minister.
I implore the Minister to continue to talk to the Treasury about how to accommodate people in this very difficult position. I know that he has given the matter great thought. I hope we can soon accommodate those hard-working people who have done the right thing and should be supported by the Government.
Mr Philip Hollobone (in the Chair)
I understand that Ian Lavery is the chairman of the miners group of MPs, so he is the next speaker.
Ian Lavery (Wansbeck) (Lab)
As ever, it is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Mansfield (Sir Alan Meale) on securing this important debate.
I want to place on the record my thanks to the National Union of Mineworkers, which has done a tremendous job in highlighting the very difficult situation, and to people in the communities who have been constantly on the phone, concerned that, having spent a lifetime in the industry, they do not now have what was promised on the day they joined it.
We need to look at several things, but we must understand that the concessionary fuel arrangement is not, as many people suggest, a benefit; it is a hard-earned entitlement. It is not a free gift—it is not free coal or free fuel—but part of working underground. When people started work at the pit, they immediately got concessionary fuel, if they had a house and no one else in the house had the entitlement. They got fuel immediately, but we are talking about a lifetime entitlement. It had to be earned through years of service, so that when they finished work—many miners finished young, in their 40s and 50s, not too long ago—they had at the back of their mind their entitlement to fuel because they had worked the required amount of years listed in the national concessionary fuel agreement. This is from years ago, so I might be wrong and the situation might have changed, but I think that the required number was 15 years in the industry, with five of the last 10 years being continuous.
The right was hard earned, and yet we hear some people say, “Free coal bemuses me, by the way”. It was not optional or something that people had to go and ask the bosses for; it is deferred wages, as part of their employment package or their contract of employment. That has been disputed, but there is no doubt that the law clearly states that something not in people’s normal contract is an implied contractual obligation. “Law at Work” simply states:
“If terms have not been expressly agreed, they can be ‘implied’ through conduct or custom and practice.”
We cannot get much more “custom and practice” than people starting employment and getting fuel every week or month, or whatever the cycle was, to the time they finished work. It is not even in dispute: if it is not in people’s contracts but is an arrangement, it is an implied contractual obligation.
Mr Spencer
The hon. Gentleman is making an impassioned speech. Morally, he is absolutely correct, but the difficulty is that the employer, UK Coal, has gone into liquidation and so has side-stepped that obligation. The question is whether the Government should step in to fill that moral gap if there is no legal necessity to do so.
Ian Lavery
I understand exactly what the hon. Gentleman is saying, but I think that there is a moral obligation. I will come to why I think there is more than a moral obligation.
Some 1,600 to 2,000 people will be affected, including widows—women whose husbands died underground—and, as my hon. Friend the Member for Mansfield explained, those who left the industry under ill-health retirement. For some of the people who had accidents and retired, the judge agreed that they would have compensation, but that was sometimes reduced to the amount of concessionary fuel they would receive well into the future. All those things need to be looked at.
Nigel Adams (Selby and Ainsty) (Con)
A few seconds ago, the hon. Gentleman hit the nail on the head. We are talking about 1,600 to 2,000 people in this country, so the scale is not enormous. The amount of money could be found, and I am hopeful that it will be found. I passionately believe that the Government have a moral obligation to step in and right this wrong.
Ian Lavery
I sincerely hope that the hon. Gentleman is right, because, as the Member who represents the former Selby coalfield, I have in my constituency more men, women and, potentially, widows, than any other area in the national coalfield.
We must consider the moral obligation. No Government of any political persuasion or colour should have any problem with giving hard-working people what was agreed when they started employment. That is the issue. Some people suggest that there is an obligation to the taxpayer—there is, but that can easily be overcome.
Sir Alan Meale
My hon. Friend is touching on the responsibility of the Government. If we go back to the 1947 legislation relating to the nationalisation of the coal industry, we can see that some private mining companies had concessionary coal agreements with their work force, and those obligations were taken on by the nationalised industry. The Government therefore have a legal and moral responsibility to try to keep the arrangement going.
Ian Lavery
I sincerely agree with my hon. Friend’s comments, and I want to turn to how the Government could approach this important issue. I intended to read out section 19 of the Coal Industry Act 1994, but my hon. Friend has already done so. It clearly begins:
“The Secretary of State may, out of money provided by Parliament, make such payments to such persons as he may think fit for the purpose of securing any of the following, that is to say—”
I will not ramble on, as the provision has already been placed on the record, but it is from the Coal Industry Act, and we have to ask why it is there. It is there for a reason—to tackle the problem we face today. It is not there for any other reason. It is not there because it was thought that things would not happen, but because of the debate that was had at all stages of the privatisation of the coal industry in 1993-94. I urge the Minister to look at the situation and take advantage of what the Secretary of State is allowed to do in accordance with the 1994 Act. The matter was discussed at great length, and it is very interesting to read. People should take the opportunity to read Hansard at all stages to see how much of the debate was taken up by this issue, which is very important for many miners.
If the industry had not been privatised, such a situation would not have arisen. The only people who are suffering are those who have worked hard in the industry. It is not the Government who will suffer and it is not UK Coal, which has moved on to pastures new, that will suffer— it is the 2,000 people in the mining communities. As politicians, we have a responsibility to try to help those people.
We have already discussed the vulnerable people in the community—the widows and the elderly people—who have served a lifetime in the industry. They do not have any ability to earn in the future. As the hon. Member for South Derbyshire (Heather Wheeler) mentioned, many of those people live in remote communities. They have only coal-fired power; they do not have gas. How will they afford to renew their heating systems and, on top of that, pay the horrendous hikes in prices for gas and oil, which we are discussing later today in the main Chamber? It is just impossible for them. We should not be putting such a burden on to people who have given their lives not just for the coal industry but for the people in this country.
People face a dilemma: do they get gas, oil or electricity? The price is all that they can look at—and whether they can afford it. We have problems with miners who, having started at the pit on the same day and worked side by side, have finished work under different circumstances. They have all put in exactly the same amount of time, and, under the national concessionary fuel scheme, had a lifetime entitlement to coal. Now, because of UK Coal’s failure, some people have that allowance and some people do not. It is discriminatory to say the least. How can UK Coal get away with creating such social destruction? It abandoned the coal industry one day and moved on to pastures new, leaving carnage behind. It left people in the mining community to pick up the pieces from big business, and they will fail. As politicians, have we not got the common decency to put that right?
A number of firms in the north-east are owed huge amounts of money by UK Coal, which moved on the next day to secure Thoresby, Kellingley and up to six open-cast mines. That was welcomed, but we should not look at that and say it was brilliant and leave the other people behind to pick up the pieces. That is just not acceptable.
UK Coal owes lots of money to companies in my area. It owes M J Hickey, a plant hire firm, £30,000; that could put the company out of business. It owes Northumberland county council £620,000, which will put huge strains on the local community. This is not good enough. I agree with what the hon. Member for Sherwood (Mr Spencer) said; of course we wanted to secure up to 2,000 jobs. I compliment the Minister on his assistance in that regard, because it is just so, so important. However, we must look at what is left behind.
Nigel Adams
I could not agree more with the hon. Gentleman. Lots of companies have been left with huge debts following the restructuring of UK Coal. Perhaps we need time to look at the pre-pack administration and the way in which large companies restructure following failure. A cleaning contractor in my constituency is thinking of getting out of the business because UK Coal at Kellingley has left unpaid a debt of several thousands of pounds, which will cost many, many jobs. The time has come for the Government to look at how companies can be operating one day and then be collapsing the business, going into pre-pack and reforming the following day.
Ian Lavery
Absolutely. That is the point I was making, so thanks for that. With regard to UK Coal, our fear is that there will be pennies left for people left behind. At the same time, as the hon. Gentleman has said, UK Coal is forging ahead under a new name, with the directors making fortunes and the company earning profits. It just cannot be right.
With regard to the obligation to the taxpayer, I have a letter from the Minister who wrote to my hon. Friend the Member for Barnsley Central (Dan Jarvis) about the concessionary fuel. He said:
“I do not believe it would be fair to expect the tax payer to meet these additional liabilities on an ex gratia basis.”
That is terrible and it is not acceptable. The Treasury has creamed off—some people say stolen—up to £4 billion from the pensioners in the mineworkers’ pension scheme and other pensions from the surpluses that have been generated since privatisation. Is that not good value for the taxpayer?
I am talking about £4 billion, and it is rising as we speak. If we think that it is good enough for the taxpayer to continue to get a feedback in financial incentives from the mineworkers’ pension scheme, surely consideration should be given to paying 2,000 members concessionary fuel, which was part of their arrangements when they started work. I had said that the Government should get £2 billion from the pension schemes. That figure is now £4.4 billion.
As I am sure the Minister is aware, UK Coal was fined £200,000 only two weeks ago for an underground accident that killed an individual. It was also fined £50,000 for failing to prevent an underground explosion. Those moneys will be paid by the administrator, but what it means, if this goes to the nth degree, is that the people on the list—the 2,000 beneficiaries who hope to get something from the administrator—will be put into the same pot as the £200,000 fine for killing somebody and for an underground explosion.
What people need to realise is that the widow of that miner who was killed—the reason why UK Coal was fined £200,000—could suffer as a consequence. She could get reduced finances from her benefits to cover those fines, which were imposed for killing her husband. That cannot be right, can it? I hope that people understand exactly what I am saying. If not, I will try to explain it in more detail later. Basically, the situation is so perverse it is unreal.
The Government have an option. They have a responsibility under the Coal Industry Act 1994 to take care of those who are set to lose out and to correct an unjust situation that could cause financial problems for more than 2,000 people. I take solace from the reply that the hon. Member for Selby and Ainsty received from the Chancellor yesterday. The Chancellor said that he understood the situation—I cannot quote him exactly—and that he hoped that there would be good news soon. I hope the Minister can tell us what that good news is or at least what we can expect.
In summary, we have been talking about not free coal but an entitlement. It is an implied contractual obligation and an arrangement agreed and forged over generations of coal miners. I ask the Minister to urge the Government to treat those individuals fairly and in the spirit intended in the Coal Industry Act.
Mr Marcus Jones (Nuneaton) (Con)
I congratulate the hon. Member for Mansfield (Sir Alan Meale) on securing this important debate. It is extremely important to many of my constituents, who worked at Daw Mill colliery, which is right on the boundary of my constituency and the constituency of North Warwickshire. We have talked about the number of people who are suffering because of the loss of the concessionary coal allowance. We are probably talking about the best part of 2,000 people, and I suspect that about 20% of them live in my constituency, so people can see from that how important this issue is for many of my constituents.
My hon. Friend the Member for North Warwickshire (Dan Byles), who unfortunately cannot be here today, and I have spent a great deal of time addressing the issue of Daw Mill in recent months and, indeed, throughout the past year or so. I do not want to recite the issues about the fire at Daw Mill, the restructuring of UK Coal and so on, but during the past year, my hon. Friend and I have met many miners from Daw Mill, as well as many of their wives, girlfriends or partners, and we know from those meetings how devastating this situation has been for many of our constituents.
There is probably a list of issues that have emerged from the Daw Mill closure and the redundancies that have subsequently been made. The concessionary coal allowance only forms part of the challenges that many of my constituents face, but it is a very important part—not only for those who have just been made redundant, but for those constituents of mine who retired from Daw Mill since privatisation took place in the 1990s.
The crux of the issue is fairness. I represent many ex-miners, some who retired before privatisation happened in 1994, some who retired after 1994 and some who have just been made redundant. From my experience of discussing these issues with them, I know that most of them have spent all their lives since school working in the mining industry. In fact, many of those who have just been made redundant started working in the industry well before 1994, and many of my constituents who have been affected were members of the Union of Democratic Mineworkers. They were the miners who, in 1984, ignored the calls from Arthur Scargill to try to hold the country to ransom; they supported other people across the country by crossing picket lines; and they went into work and got coal out of the ground in Warwickshire.
Those people who left the industry before 1994 have statutory protection; they are still receiving their coal allowance or, if they decided to trade in that coal allowance, their fuel allowance. However, all the people whom I represent who either retired from the mining industry after 1994 or who have recently been made redundant have now stopped receiving their concessionary coal allowance or concessionary fuel payments. We need to bear in mind that many of them are pensioners on fixed incomes who rely heavily on the allowance to heat their homes. As hon. Members have already alluded to, many of them still have coal-fired heating systems and, indeed, many of them live in ex-pit houses, many of which are not the best insulated properties and it therefore probably costs more to heat them than many modern properties.
There is an issue of fairness: the inequity between the people who left the industry before it was nationalised and the people who subsequently left it. Despite some of the arguments that have been made by Labour Members, there is clearly no legal obligation, but there is clearly a moral obligation on the Government to do something to help my constituents who are now struggling to pay their energy bills, through no fault of their own and despite the fact that they worked for many years in a very hard industry, with the expectation that they would receive the coal allowance.
Having spoken to my right hon. Friend the Minister, I know the work that he did in relation to Daw Mill, and I commend him for it. Unfortunately, from my constituents’ point of view, many of them have been the losers in all this, but many of them understand why jobs needed to be secured elsewhere. However, I implore my right hon. Friend to listen to this debate carefully and to speak to our right hon. Friend the Chancellor. My right hon. Friend the Minister knows that I and several other Conservative MPs have already spoken at length with our right hon. Friend the Chancellor about this issue. Seemingly, he is sympathetic, but it might be a good thing if my right hon. Friend the Minister could raise the issue on behalf of my constituents who are affected, and I sincerely hope that when our right hon. Friend the Chancellor is able to make his next mini-Budget—the autumn statement—later in the year, we can see some light at the end of the tunnel for these people, who have suffered badly following the demise of Daw Mill and UK Coal.
John Mann (Bassetlaw) (Lab)
I congratulate and thank my near-neighbour, my hon. Friend the Member for Mansfield (Sir Alan Meale), for calling for and securing this timely debate. I hope that the Minister, who is listening hard to his party’s MPs, is already mulling over how the Government’s commitment to abolish green taxes will only mean anything in reality when Harworth colliery is reopened and re-mined. The coal there—there is enough for at least 30 years, and the possibility of more, if more shafts are sunk in the mine, which is on my constituency’s Lincolnshire border—would provide him with the perfect opportunity to demonstrate that the Government are serious about that commitment.
I hope that we will not have to take legal action for one sub-group of those affected by the issue that we are discussing—the former miners who have had accidents, and the widows of those who died in accidents. There are up to 2,000 of them; my hon. Friend the Member for Wansbeck (Ian Lavery) has already spoken about them. Some legal settlements relating to accidents incorporated the issue of concessionary coal, and therefore the obligation for that sub-group or subset will almost certainly fall legally on the Government. That is because those people who had accidents—by definition, through no fault of their own—including some of my constituents, settled for an amount from the National Coal Board based on concessionary coal being part of their compensation. For that subset of people, the Minister has no choice. I hope that common sense will be used, and that they do not have to waste our time and his, or pay legal costs to pursue compensation through the courts.
I will leave some time for my right hon. Friend the Member for Rother Valley (Mr Barron) to speak. However, I must mention the issue of gas. In Bassetlaw, which is in north Nottinghamshire, 6,000 properties are without access to gas, so using gas is not an option for their owners. Indeed, some of those properties, which include terraced properties, could not safely have oil either. With fuel poverty, sometimes a calculated choice is made, but often there is no choice at all. Indeed, I and others have battled to get gas to particular streets, in order to provide that choice for those who want it, but the costs involved are prohibitive, because installing a gas main is not the cheapest thing in the world, and villages may be many miles away from other places. For many, when it comes to fuel poverty, there is no choice. The most vulnerable, and the most vulnerable to fuel poverty, are among my constituents.
Further clarification is needed, because the term “concessionary coal” suggests a give-away or perk, but the coal is part of the employment conditions and part of the pension. A good comparator would be Ministers and Members of Parliament who require remuneration for a second home. They need a second home to do the job and rightly are not taxed—indeed, they get the money back—on something that is legitimately used to do the job. It is right and proper that that is not a taxable benefit. There are many other areas of life where there are similar comparators. Exactly the same applies to concessionary coal. It is not a perk; it is part of the retirement pension.
I have only two more things to say, but one will take a little time. First, though, I want to refer to the letter recently received by my constituent, Mr Philip Hall of Manton, who is one of those affected. Mr Hall has received what has twice been described by the administrator as a “generous offer”. He is being offered two sacks of coal—not a week, a month or a year, but two sacks of coal for the rest of his life. He wants me to make the point that he does not feel that that is reasonable or generous. He feels that it is an insult.
Nigel Adams
The hon. Gentleman makes a very good point. I, too, have been made aware by one of my local retired miners that they have been contacted, I understand, via UK Coal and offered coal at a price that is higher than they would pay if they went down the local coal merchant’s to buy it. It seems a rum do, if the hon. Gentleman does not mind my saying so.
John Mann
No wonder the administrators are calling Mr Hall’s offer generous. By comparison it is, but a country in which people living in fuel poverty are given two sacks of coal for life, for their pension, is not the kind of country that we aspire to have, or that the Minister aspires to have. I am sure that he would not want that to be part of his legacy as a Minister.
The second and final issue of substance that I want to raise is a matter that I have referred this week— the Minister has been copied in to the letter; it will be arriving—to the Serious Fraud Office. I hope that the Minister, not now but in the next few days and weeks, will investigate this fully. I do not believe that the splitting up of UK Coal has been done properly. I am not referring to the old logo being used in adverts at the moment, because that is peripheral. The company was split in two on 10 December. The land assets were put into a separate company called Harworth Estates Property Group Ltd, and that is where the value is—the huge value of those land assets—because this Government and Her Majesty’s Opposition are keen on house building, and they want the houses built in places such as Harworth. These are former coal sites, brownfield sites. There would be consensus, if the relevant Ministers were here, on building housing in these places. They would be saying, “Yes, this is exactly the kind of land on which we want to see lots of houses.” It is a huge asset—a fortune—that this company is sitting on.
I am not an expert on the legalities of splitting up companies, which is why I have referred the matter to the Serious Fraud Office and to the Minister, but I am pretty sure that people have to be honest about the values of companies. On 10 December, the company was split. I have with me a planning application dated 14 December. The planning application is from UK Coal Mining Ltd—a company that does not appear to exist any more or, if it does, is the one that we are talking about today, which owes the miners the money and the coal. The application is dated 14 December—four days later. This was over a weekend, so it was even fewer working days later. It is a planning application to Bassetlaw district council for 996 houses and other employment opportunities that was put in by this company. The profit on just this one piece of land is worth more than the money required for these miners and widows for the rest of their lives, and the application was put in a few days later.
The reason why I have referred the matter to the SFO is that things have to be done in the open when company changes are taking place, as far as I am aware, and I see on the application that the box has been ticked, and the officers have been named, for pre-planning application discussions. A little fee has been paid to Bassetlaw council, and there have been discussions with three named officers. Documents that I have seen demonstrate that the applicants are told that they will get approval. They know that the council, which is required by Government to have housing, wants housing built in that place. These people put the application in, having split up the company.
Which half of the company will see the profits from this when the application is in the name of UK Coal Mining Ltd? This seems to me very straightforward, and this is where we will need Government intervention. It will need to be the bit that owns the liability, because it seems to me that that is the name in which the application has gone in. It is the basis on which these people split the company up, and the basis on which they approached people, including me, to argue the case for developing the land assets in order to allow the mining operations to continue.
I went to my council of many years and persuaded it that what we want is not just a coal mine in Harworth. We want the land used for industry and for housing. We want a deal doing to allow the industry to survive, and to ensure that it is meeting its proper obligations to the retired. That is exactly what I did, in exactly those terms.
The company restructured just before it put in the application. I have a redacted copy of the application, but I see that it was put in by the applicant just days after the split-up. If that is not fraud, I do not know what is. These people have split a company up, knowing that there is a hidden value there—because they have had the discussions with the council—that needs to be built into the calculations. That value should be with the part of the company with the liability. They should not be allowed to get away with this. I am looking forward to hearing how the Minister will tackle his obligations and give the guarantees, in the language and detail that the Chancellor of the Exchequer used yesterday, and also how he will hold to account these people, who have stolen this asset from the taxpayer, miners and former miners, and ensure that they do not get away with it.
Mr Philip Hollobone (in the Chair)
We will now hear from an ex-miner, Kevin Barron.
Mr Kevin Barron (Rother Valley) (Lab)
It is a pleasure to be here under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Mansfield (Sir Alan Meale) for obtaining this Adjournment debate at such an opportune time. You are right, Mr Hollobone: I am an ex-miner. I received an e-mail from an ex-miner in my constituency in July this year. His name is George Fowler, and he lives in the village of Maltby. He said:
“could you please advise me on the situation with UK Coal? I was retired on ill health in 1998. The UK Coal administrator I spoke to informed me I had lost my fuel. The previous letter left me with doubts for my pension. At this time my health condition has deteriorated and left me again unemployed.”
He goes on to say that “it’s hard times” living on the benefit that he is on. I know George quite well. Like me, he was an underground electrician at Maltby colliery, and he was my apprentice for a number of years. He is clearly not happy with the current situation.
I was around when this House discussed privatisation, which my hon. Friend spoke about. I looked through the archives in my constituency office a couple of weeks ago and found a Department of Trade and Industry publication called “British Coal: The Government’s proposals for concessionary fuel entitlements after privatisation”. I assume the Minister is familiar with that document, but I will tell him what the then Tory Government were saying. The introduction and summary says:
“The Government announced in the White Paper ‘The Prospects for Coal’ its intention to privatise British Coal as soon as possible to free the coal industry from the constraints of public sector ownership.”
Ironically, the last coal mine in my area closed earlier this year, which certainly freed the coal miners of Rother Valley. I have lost six mines since first being elected to this House.
The introduction and summary continues:
“The Government intends to bring forward the necessary legislation as rapidly as possible… The Government recognises the importance to past and present employees of British Coal, and their dependants, of their present concessionary fuel entitlements. The Government is committed to safeguarding their entitlements.”
Paragraph 18 of the document, which was published in October 1993, addresses arrangements for continuing employees:
“The Government will ensure that the responsibility for supplying concessionary fuel to continuing employees will pass to successor companies by whom they are employed. This will be achieved by means of transfer schemes under the privatisation legislation. There will be a contractual obligation on successor companies to honour the continuing concessionary fuel entitlements of those persons who transfer to their employment.”
I think the Government are obliged to honour that, too.
When I worked in the coal industry for many years, concessionary fuel was effectively negotiated as part of our annual income, as my hon. Friend the Member for Wansbeck (Ian Lavery) said. Concessionary fuel was taken into account, as were pensions, in the increase, or lack of increase, in our wages. Previous Governments clearly said to people such as George Fowler that they would be protected following privatisation.
I have a copy of an article from The Guardian, dated 12 May 2013, on the situation at Daw Mill. The article reports that the Minister told The Sunday Times:
“We are looking at whether the ownership of Daw Mill can be transferred back to the Coal Authority.”
If the transfer had taken place, there would be clear implications for the public purse, because the Coal Authority, as I understand it, is funded by central Government, although it also receives fees for planning and so on. The Guardian article continues:
“UK Coal is largely debt-free following a complex restructuring of its parent group Coalfield Resources last year. However, as part of the deal, large pension liabilities from across the group were ringfenced solely within the UK Coal unit, which is committed to a demanding schedule of pension deficit repayments… Earlier this month, UK Coal was forced to deny claims that it was seeking voluntary liquidation after HM Revenue & Customs turned down a request for a delayed tax payment. Fallon said: ‘The cross-government response, coordinated by my officials, has ensured that we have been able to respond to the company’s needs, and help facilitate its financial position.’”
A number of people have said today that they do not want to go into the restructuring of UK Coal, but I do. I have a copy of the directors’ remuneration report from the annual general meeting of the restructured UK Coal. The report was drawn up last year, and I understand that it has been accepted. It was given to me a few months ago; I am happy to give the Minister a copy if he wants one.
Page 2 of the report, which dates from the run-up to the restructuring, states:
“Executive Director remuneration (excluding the Chairman) comprises a base salary, an annual performance bonus, participation in a long term incentive plan or arrangement, a car or car allowance plus fuel card, pension contributions to a defined contribution pension scheme or a pension allowance, life assurance and health insurance. Bonus payments and benefits in kind are not pensionable. An appropriate balance is maintained between fixed remuneration and performance-related remuneration.”
The report then addresses four individuals. I have a few minutes left, so I will read it out:
“Following a review of executive salary levels, Messrs Brocksom, Williams and Michaelson’s base salaries were increased to £242,889, £240,350 and £236,900 respectively with effect from 1 January 2012.”
The report then addresses the annual bonus for executive directors:
“However in light of the planned restructuring the Committee agreed one-off bonus arrangements for 2012, which replaced the normal potential awards…in respect of Messrs Williams, Michaelson and Brocksom.
Messrs Williams and Michaelson had the opportunity to receive an enhanced bonus of up to 150% of base salary in the event of the restructuring plan announced on 14 March 2012 being successfully implemented. The first half of this bonus (of up to 75% of salary) would be payable at the end of 2012 for achievement of specific targets to improve the operational and financial performance of the business together with achieving key personal targets.”
Mr Barron
I do not have much time, and I want to get this on record. I will give way if I get the opportunity.
The report continues:
“The second half of the bonus (of up to 75% of salary) was to be paid on successful implementation of the restructure plan…but will be deferred until the end of 2013 and was conditional upon the continued employment of Messrs Williams and Michaelson.
As part of the restructuring…Messrs Williams and Michaelson transferred respectively to Mine Holdings and Harworth Estates. However, it was agreed and announced at the time of the completion of the restructuring that Mr Williams would leave the Mine Holdings business in early 2013. The Committee has determined that although Mr Williams broadly achieved the safety performance required, the operational and financial performance of the mines put the mines in such difficulties that they will not recommend to the directors of Mine Holdings that the bonus is payable (2011). Mr Williams also benefitted in 2011 from an award of 500,000 shares which will vest during 2013…The Committee reviewed Mr Michaelson’s performance in the year and will recommend to Harworth Estates that a bonus of £152,500 (2011: £114,900) is payable in respect of the operational and financial performance in the year.”
The company has serious problems, yet the report continues:
“In anticipation that Mr Brocksom would leave the business on completion of the restructuring, his enhanced bonus for 2012 was agreed at a lower level of 100% of salary, with no deferred bonus, following the successful implementation of the restructuring plan. He will receive this enhanced bonus of 100% of his base salary £242,888”.
I realise that I will have to sit down in two minutes, but the report states that
“Mr Cox, Chairman, was recruited on a base salary of £350,000 per annum on the basis he provided three days per week. In the light of the time Mr Cox was required to provide in 2012 in relation to the restructuring and on-going business, the Committee agreed to supplement Mr Cox’s base salary by £120,000 for 2012”.
That is for a three-day week, although I assume he may have worked a bit of overtime:
“However, this was not paid until the sufficient short term recovery of the mining business and the proposals for December 2012 restructuring were fully developed”.
I will sit down very shortly, but the report goes on to say that
“Mr Cox was granted the following awards pursuant to the authority contained in Listing Rule 9.4.2R(2):
A Long Term Award to acquire up to 2,800,000 ordinary 1 pence shares which will normally vest on 15 November 2013 (being the third anniversary of Mr Cox’s appointment)…An Award over 1,520,000 shares which was to normally vest on an annual basis in three equal tranches subject to Mr Cox’s continued employment”.
I also understand that UK Coal paid lawyers millions of pounds from the restructuring, yet George Fowler, and 2,300 others, have had their concessionary coal removed by the company. I do not know whether that is illegal, but it is obscene at a time when George Fowler and thousands of others have to suffer having the entitlements they worked for in the coal industry taken from them because of the scheme’s so-called liquidation. I hope the Minister will address some of those issues in the not-too-distant future.
Mr Philip Hollobone (in the Chair)
I call another Member who has made an impressive start to Movember: Tom Greatrex.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
Thank you, Mr Hollobone. I was going to say that it was a pleasure to serve under your chairmanship.
I congratulate my hon. Friend the Member for Mansfield (Sir Alan Meale) on securing the debate. I should declare an interest, in that my grandfather was briefly a miner in a pit in my hon. Friend’s constituency, although I should reassure him that, as I have explained to my constituency neighbour, my hon. Friend the Member for Lanark and Hamilton East (Mr Hood), that was on my mother’s, not my father’s, side of the family, so it is just a coincidence that my surname is Greatrex.
The Minister has rightly been asked a lot of questions by Members on both sides, who represent constituents directly affected by the changes at UK Coal and who have a long and proud record of standing up for their constituencies and mining communities, so I will endeavour to speak for less than 10 minutes to give him the maximum opportunity to reply.
My hon. Friend the Member for Mansfield and others have set out the background, so there is no need for me to go over it. However, I would make the point that this issue garnered a lot of attention from the Minister’s predecessor, the right hon. Member for South Holland and The Deepings (Mr Hayes), following the fire at Daw Mill and the break-up and liquidation of UK Coal. During that time, the Minister’s predecessor, Members from across the House, representatives of the unions and others were involved in a number of discussions, which primarily focused on securing the jobs. As the hon. Member for Sherwood (Mr Spencer) said, we welcomed that, but issues were also raised about the liabilities and the potential effects on the people we are talking about.
It is worth reflecting on the point that this issue has been raised on both sides of the Chamber this morning, by people who do not necessarily normally agree with each other on a number of issues. However, given today’s comments, the Minister will be aware that there is a unanimous view that the situation we are discussing is unjustified and unfair for the people concerned.
I was looking at a written answer from the Minister from June, which demonstrated that the number of households in receipt of concessionary fuel under obligations on the Department of Energy and Climate Change fell from 132,158 in 2003 to 70,419 in 2013, for obvious reasons. However, between 2012 and 2013, it fell from 75,061 to 70,419, so the number of people we are talking about is approximately half the fall in the number of households in receipt of concessionary fuel under the current DECC scheme. It is worth making that point about the scale of what we are talking about, because the number of people entitled to concessionary fuel under the scheme as part of DECC’s obligations fluctuates and falls. DECC may well make projections of those numbers, but it may not be absolutely sure what they are, so if we are talking about 2,000 people, that should borne in mind in relation to DECC’s larger liabilities.
I have a couple of questions for the Minister. The first relates to a point made almost in passing by the hon. Member for Selby and Ainsty (Nigel Adams), and, in a different context, by my hon. Friend the Member for Bassetlaw (John Mann) and my right hon. Friend the Member for Rother Valley (Mr Barron), about some of the other liabilities and unpaid debts of the remaining parts of UK Coal, particularly to small and local businesses. That is an important point, although it does not relate directly to the concessionary scheme. Ministers would normally say that this is a matter for the Department for Business, Innovation and Skills, but given that the Minister is also a Minister in BIS, he can perhaps give us an answer.
Secondly, what assessment has DECC made of the impact of the loss of the national concessionary fuel scheme on ex-employees and on fuel poverty, because the Department has responsibility for those issues? As we have heard, a significant number of people are off the gas grid and have no alternative to the scheme. Their situation in relation to fuel poverty will be significantly affected by the liquidation of UK Coal and the ongoing issue we are dealing with.
I note that a written answer the Minister gave my hon. Friend the Member for Clwyd South (Susan Elan Jones) on 16 October suggested the Government had a pretty closed mind on this issue. I hope the response I heard the Chancellor give the hon. Member for Selby and Ainsty in the main Chamber yesterday, which my hon. Friend the Member for Wansbeck (Ian Lavery)referred to, is a sign that, although there are, as my hon. Friends have shown, potentially legal powers available to the Minister, as well as duties and responsibilities he can use, the Government recognise that there is a moral responsibility that goes beyond those issues. Ministers have to be careful when people start making arguments about moral responsibilities on the Government, but I underline that we are talking about a relatively small number of people.
Sir Alan Meale
My hon. Friend is talking about moral issues. The hon. Member for Nuneaton (Mr Jones) said he did not think there was a legal responsibility. Of the 2,000 people concerned, the majority are injured, ill or widowed. For those who are ill with silicosis, pneumoconiosis, emphysema and other such illnesses, the effects build up over a number of years. They would have contracted their illness in the period when the National Coal Board existed, so there is a legal responsibility, which could be challenged.
Tom Greatrex
I thank my hon. Friend for his intervention. I was about to say that a number of people have, as my hon. Friend the Member for Bassetlaw said, been forced, through no fault of their own, to leave work early, and the scheme’s provisions were part of their settlement. Therefore, there is—at least in some of those cases—almost certainly a legal duty, as well as a moral obligation.
To conclude, the Minister will have heard the strength of feeling. He will have heard about the legal opportunities open to him. He will also have heard the moral case. I hope he will take those points away, reflect on them and, in the further discussions he may have with the Treasury in the next couple of weeks, make it clear to the Chancellor and others that the message from both sides of Parliament—from every person who has spoken in this debate—is that there is a strong case for saying that he not only can, but should, act to ensure that people are not disadvantaged through no fault of their own.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
I thank all those who have contributed to the debate, which has been passionate at times, but none the worse for that. I certainly recognise that the consequences of the fire at the Daw Mill colliery have been deeply felt in the communities involved.
Before I turn to the specific issues around concessionary fuel entitlements, I want to report more broadly on our response to the events that followed the fire. The fire began on 22 February, but the colliery had been at risk of closure since March 2012, and its operators, UK Coal Operations Ltd, had previously stated that they anticipated production would cease, possibly on a temporary basis, in early 2014. Unfortunately, the severity of the fire accelerated that timetable, and, as colleagues know, on 7 March, the company felt forced to announce the colliery’s closure.
It was clear from the outset that UK Coal’s management wanted to identify a way forward to secure the ongoing viability of the remaining business within the parameters of the law and propriety. There was a role for my Department in proactively supporting—yes, supporting—the directors of the company and their advisers to find a solution and to safeguard as many jobs as possible.
Over nearly five months in which UK Coal required support, officials from my Department co-ordinated a cross-Government response, with nine Departments and agencies involved, including Her Majesty’s Revenue and Customs, the Department for Business, Innovation and Skills, the Shareholder Executive, the Department for Communities and Local Government, the Health and Safety Executive, the Coal Authority, the Insolvency Service and Jobcentre Plus. HMRC also worked with the company to help to manage its tax obligations.
We wanted to ensure that there was a fully joined-up approach at national and regional level, which would include ensuring that statutory redundancy entitlements were considered and, where appropriate, processed and paid as quickly as possible through the redundancy payments service; agreeing that the Coal Authority would put in place flexible arrangements on certain payments that the company was due to pay relating to its subsidence security obligations; and enabling the company to secure a rebate on its business rates from North Warwickshire borough council, following a revaluation of Daw Mill.
At local level, BIS West Midlands and Jobcentre Plus met local authorities and other local partners to bring about a response to manage the impact of the closure on employees, local businesses and the communities that were directly involved. As right hon. and hon. Members will know, that involved several tailored, employee-focused events, attended by large numbers of the Daw Mill work force. Jobcentre Plus also provided the work force and local businesses with advice on entitlements and alternative employment, including links to local and national information sources and resources. I firmly believe that, taken overall, the collective effort, nationally and locally, demonstrated cross-Government working at its best, to support the company and its employees while the directors worked with their advisers to identify a way forward to secure the future of the business.
Despite the fact that UK Coal underwent a major restructuring in 2012, it soon became apparent, following the Daw Mill closure, that a viable future for the remainder of the company and its employees would be achieved only through further substantial restructuring of the business. So while it was, on the face of it, disappointing when on 9 July the company announced that it had entered administration, it was clear to me that that was the only way the business could secure a viable way forward.
Subsequently, as part of the administrative process, the Daw Mill mine was disclaimed, which resulted in its transfer to the Coal Authority and to the Crown, under law. That approach is consistent with insolvency procedures and the terms of the licence. The Coal Authority, as it would with any colliery where the licence had been disclaimed, has assumed responsibility for securing the site and ensuring that there are no public safety implications. I reassure right hon. and hon. Members, with respect to the new fire that broke out last week at the colliery, that additional controls and safety measures have been put in place to contain it and disperse the smoke.
In addition, the authority is responsible for settling any future subsidence claims by way of security bonds previously lodged with it by the mining companies. As a result, about 2,000 jobs were secured at UK Coal’s two remaining deep mines at Kellingley and Thoresby and at six surface mining operations; an innovative plan was developed by the directors of the company with the Pension Protection Fund, which also provided PPF protection on accrued benefits for employees. That led to the remaining mining operations being successfully restructured and their assets held in individual companies owned by a new business, which now operates as UK Coal Production Ltd.
As part of the process of securing a viable way forward for the rest of the business and the majority of the work force, the directors and administrators had to take hard and, in many cases, unenviable decisions. It is obviously regrettable that job losses ensued and that many people continue to suffer as a consequence of those decisions, and I would not want to belittle that. However, I suggest that what happened was the “least worst” course of action to secure the future of the remaining collieries.
The hon. Member for Mansfield (Sir Alan Meale) asked me about closure aid. That can be paid only for mines that were pre-notified to the European Commission prior to the expiry of the coal state aid decision in 2010. Neither Daw Mill nor any other UK mines fell into that category. Several hon. Members mentioned pensions, and I am happy to debate the coal pension schemes. The taxpayer, of course, has benefited from surpluses in the past. However, scheme members have also benefited from above-inflation increases of more than 20% since privatisation. They continue to have a cast iron assurance that the cash values of those pensions will never fall.
The hon. Member for Bassetlaw (John Mann) wrote to me, but I have not yet seen his letter and I cannot pre-judge what the Serious Fraud Office might say about the issues he raises. However, I understand that the further restructuring this year involves much of the value of the group property being channelled precisely to support the pensions for employees and former employees.
As to concessionary fuel, it is important to understand the distinction between the national concessionary fuel scheme operated in my Department for the benefit of former employees of the British Coal Corporation, and private concessionary schemes operated by private sector coal companies, including UK Coal. Although they have a common administrator, they are governed by different arrangements. My Department’s obligations are governed by the national concessionary fuel agreements, which take the form of collective arrangements made between British Coal and the mining unions in the 1980s.
When British Coal was sold in 1994, the clear aim was to encourage a competitive industry to flourish free of the constraining influences of public ownership. It was therefore necessary to consider what, if any, of the corporation’s past legacy it would be reasonable and fair to expect private sector purchasers to bear. Among the things considered was the liability for the provision of concessionary fuel to former employees of British Coal and their widows or widowers who met the necessary criteria. It was decided that responsibility for those obligations should remain in the public sector, and they were therefore transferred to my predecessor Department in early 1995.
We currently service more than 69,000 beneficiaries, of whom approximately 57,000 are now in receipt of quarterly cash-in-lieu payments, while the remainder receive fuel. That has cost the Government some £1 billion of Exchequer funds. On the assumption that that will continue until 2050, we anticipate additional costs of some £450 million at today’s prices.
There is no obligation on the Government to fund private schemes that were the responsibility of private companies, and I do not accept that section 19 applies in the present instance. Our firm view is that, the liabilities having already been transferred to successor companies by the restructuring scheme, they cannot be transferred again through the same mechanism. I also have to consider not only the purposes and aims of privatisation but the wider context in which employees in other sectors regrettably lose entitlements to benefits on the failure of their former employer.
I fully appreciate, however, that the loss of concessionary fuel would have been a major blow to those originally supplied under the UK Coal arrangements, particularly when there is universal concern about energy prices. I understand, of course, that many of those affected are in poorly insulated houses or off-grid properties, as my hon. Friend the Member for South Derbyshire (Heather Wheeler) said.
It is correct that the Government should consider requests to support those who have suffered as a consequence of events. Right hon. and hon. Members will have heard the Chancellor’s response yesterday to my hon. Friends the Members for Selby and Ainsty (Nigel Adams), for Sherwood (Mr Spencer) and for Nuneaton (Mr Jones), who have been pressing the campaign, along with my hon. Friend the Member for North Warwickshire (Dan Byles). We are now carefully considering what we can do to help those who have lost their concessionary fuel allowances. I can, in the exceptional and extraordinary circumstances of the Daw Mill fire, confirm that we are considering the request for additional assistance. I hope to make an announcement shortly.
The Government support the coal industry and those who have, regrettably and through no fault of their own, lost their employment and some of the benefits that came with it. We are determined to consider the matter further.