Pit chiefs condemn pension funds proposal as 'immoral': Government accused over plan to withdraw pounds 481m of miners' cash

THE Government was accused yesterday of advising British Coal to take pounds 481m from the staff pension fund to help finance redundancy payments, in a way that was 'probably illegal and certainly immoral'.

The attack came from officials of the British Association of Colliery Management, representing members of the pension scheme, giving evidence to the Commons Social Security Select Committee.

The committee is investigating British Coal's proposal to use its half share of the estimated pounds 1bn staff pension fund surplus to pay the pounds 481m the company owes in payments for enhanced pensions in a previously agreed redundancy package. The company and the trustees of the staff superannuation scheme have agreed to ask a court to decide whether the proposal is legal.

Trustees said they had legal advice that what British Coal proposed to do - at the suggestion of the Government - was illegal and in breach of the rules of the scheme.

Sir Norman Siddall, a trustee and a former chairman of British Coal, said the trustees had a legal obligation to fight the proposal in order to protect the fund's assets. If they accepted the proposals without a fight, the trustees would be liable to legal action from pensioners for breach of trust, he said.

The colliery managers argued that since the Government now paid 90 per cent of the cost of the earlier redundancy package, most of the pounds 481m saving to British Coal would, in fact, accrue to the Treasury andE in effect could be used to finance the Government's promised subsidy to the coal industry, which helped win approval for its piTHER write errort closure programme.

In written evidence to the committee, John Meads, general secretary of the association, said: 'British Coal's attempt to take pounds 481m out of its staff pension scheme . . . is to get the pension scheme, rather than British Coal or the Government, to pay for redundancy costs . . . The ultimate financial beneficiary of British Coal's manoeuvres will be the Treasury. Members of the scheme regard British Coal's action as probably illegal and certainly immoral.

'In effect we are being asked to pay for our own execution bullets.'

However, David Shaw, a Conservative member of the committee, suggested that since the Government had injected more than pounds 20bn into the coal industry, of which about pounds 2bn went into the staff pension fund, it was only fair that the taxpayer should benefit from the large surplus.

He asked: 'Are you not in danger of doing a reverse Maxwell, whereby the pensioners continue to reap the benefits and continue to be a drain on British Coal and the taxpayer?'