Agenda item

In accordance with Rule No. 13.1, Councillor P Peacock will move and

Councillor D Lloyd, will second a motion to the following effect:

Mineworkers Pension Scheme

‘On the 29^th of April 2021 the Business, Energy and Industrial Strategy Committee published their investigation into the surplus sharing arrangements between the UK Government and the Mineworkers Pension Scheme.

Since privatisation of the Mineworkers’ Pension Scheme in 1994, successive Governments have received 50% of surpluses in the Scheme’s value, in return for providing a guarantee that the value of pensions will not decrease. At the time it was expected that the Government would receive approximately £4bn from the arrangement in today’s money. However, to date, the Government has received £4.4bn, and is also due to receive at least another £1.9bn, on top of 50% off any future surpluses. The Government has not paid any funds into the Scheme in return.

Whether or not the Government knew in 1994 that it would disproportionately benefit from the arrangement, and whether all parties thought it was fair at the time, is irrelevant. It is patently clear today that the arrangements have unduly benefited the Government, and it is untenable for the Government to continue to argue that the arrangements remain fair.

Tens of thousands of former mineworkers and their families reside within our district. Newark and Sherwood District Council support their calls for the Government to take seriously and act on the following findings of the Business, Energy and Industrial Strategy Committee:

·         “The Government hands the £1.2bn it is due to receive from the Investment Reserve back to miners, and sets out its proposals for how and when this will be administered in response to this report”.

·          “Governments should not be in the business of profiting from mineworkers’ pensions. We are therefore disappointed by the Government’s argument that the 1994 agreement is a success because the public purse has had strong returns from it. The Government is not a corporate entity driven by profit-motives and should not view the miners’ pensions as an opportunity to derive income”.

·         “The Government’s guarantee is important, has contributed to the success of the Scheme, and has benefitted Scheme members. However, we are not convinced by the Government’s argument that its entitlement to 50% of surpluses is proportionate to the relatively low degree of risk it actually faces in practice. The number of Scheme members and the relative size of the fund has fallen significantly since 1994. Yet, the Government’s ‘price’ for the guarantee has not been adjusted to reflect that fact. With no formal period review mechanism built into the agreement, pension members remain tied to an expensive arrangement”.

·         “With the benefit of hindsight, it is clear that the Government has already profited greatly from the Scheme. The Government must acknowledge that continuation of the arrangements in their current form deserves a review and a better outcome for pensions should be found. The current arrangements should be replaced with a revised agreement in which the Government is only entitled to a share of surpluses if the Scheme falls into deficit, and the Government has to provide funds. In that event, the Government should be entitled to 50% of future surpluses up to the total value of the funds it has provided to make up any shortfall. Such an arrangement takes account of the vast funds the Government has received thus far and the significant reduction in the risk it faces, and would ensure that neither party will be out of pocket in future”.

·         “Given that the Scheme has continued to produce strong returns despite the 2008 Financial Crisis and the COVID-19 pandemic, there is little reason to believe the Government will be required to pay into the Scheme before it is wound-up. Even if, in extremis, the Government is required to financially contribute at some point in the future, realistically its contribution will not come close to the (at least) £6.3bn it is currently due to receive in total”.

In supporting these findings Newark and Sherwood District Council will write to the Chancellor of the Exchequer asking him to act immediately to the findings of the Business, Energy and Industrial Strategy Committee and implement/respond to their recommendations’.

Link to BEIS Investigation:

https://publications.parliament.uk/pa/cm5801/cmselect/cmbeis/1346/134602.htm

In accordance with Council Procedure Rule No. 13.1, Councillor P. Peacock moved and Councillor D. Lloyd seconded a motion to the following effect:

“On the 29^th of April 2021 the Business, Energy and Industrial Strategy Committee published their investigation into the surplus sharing arrangements between the UK Government and the Mineworkers Pension Scheme.

Since privatisation of the Mineworkers’ Pension Scheme in 1994, successive Governments have received 50% of surpluses in the Scheme’s value, in return for providing a guarantee that the value of pensions will not decrease. At the time it was expected that the Government would receive approximately £4bn from the arrangement in today’s money. However, to date, the Government has received £4.4bn, and is also due to receive at least another £1.9bn, on top of 50% off any future surpluses. The Government has not paid any funds into the Scheme in return.

Whether or not the Government knew in 1994 that it would disproportionately benefit from the arrangement, and whether all parties thought it was fair at the time, is irrelevant. It is patently clear today that the arrangements have unduly benefited the Government, and it is untenable for the Government to continue to argue that the arrangements remain fair.

Tens of thousands of former mineworkers and their families reside within our district. Newark and Sherwood District Council support their calls for the Government to take seriously and act on the following findings of the Business, Energy and Industrial Strategy Committee:

• “The Government hands the £1.2bn it is due to receive from the Investment Reserve back to miners, and sets out its proposals for how and when this will be administered in response to this report”.

•  “Governments should not be in the business of profiting from mineworkers’ pensions. We are therefore disappointed by the Government’s argument that the 1994 agreement is a success because the public purse has had strong returns from it. The Government is not a corporate entity driven by profit-motives and should not view the miners’ pensions as an opportunity to derive income”.
• “The Government’s guarantee is important, has contributed to the success of the Scheme, and has benefitted Scheme members. However, we are not convinced by the Government’s argument that its entitlement to 50% of surpluses is proportionate to the relatively low degree of risk it actually faces in practice. The number of Scheme members and the relative size of the fund has fallen significantly since 1994. Yet, the Government’s ‘price’ for the guarantee has not been adjusted to reflect that fact. With no formal period review mechanism built into the agreement, pension members remain tied to an expensive arrangement”.
• “With the benefit of hindsight, it is clear that the Government has already profited greatly from the Scheme. The Government must acknowledge that continuation of the arrangements in their current form deserves a review and a better outcome for pensions should be found. The current arrangements should be replaced with a revised agreement in which the Government is only entitled to a share of surpluses if the Scheme falls into deficit, and the Government has to provide funds. In that event, the Government should be entitled to 50% of future surpluses up to the total value of the funds it has provided to make up any shortfall. Such an arrangement takes account of the vast funds the Government has received thus far and the significant reduction in the risk it faces, and would ensure that neither party will be out of pocket in future”.
• “Given that the Scheme has continued to produce strong returns despite the 2008 Financial Crisis and the COVID-19 pandemic, there is little reason to believe the Government will be required to pay into the Scheme before it is wound-up. Even if, in extremis, the Government is required to financially contribute at some point in the future, realistically its contribution will not come close to the (at least) £6.3bn it is currently due to receive in total”.

In supporting these findings Newark and Sherwood District Council will write to the Chancellor of the Exchequer asking him to act immediately to the findings of the Business, Energy and Industrial Strategy Committee and implement/respond to their recommendations.”

The motion, on being put to the meeting was declared carried unanimously.