Few of us know about Starmer's worst policy, but it's cost £1.5bn
Labour's management of our money has been a near masterclass in how not to do it. The job-destroying employers' National Insurance hike, the aspiration-wrecking VAT on school fees, or the wealth-destroying scrapping of non-dom status – there are plenty of candidates for the Government's worst economic policy.
But there is one much less-noticed bailout that does neatly sum up what has gone wrong. Energy and climate change secretary, Ed Miliband, is splurging at least £1.5bn of taxpayers' money on righting a wrong that is simply a chimera. It displays Labour's mawkish sentimentality about workers at its worst.
Miliband has an almost religious commitment to decarbonising the economy by 2050 – although there are signs he is wavering in his opposition to new North Sea exploration as the reality of Britain's economic plight dawns.
The opening of Britain's first new coal mine for 30 years at Woodhouse in Cumbria was blocked last autumn on environmental considerations, after having been approved two years previously by Michael Gove under the Tories.
But while Miliband doesn't want there to be a new generation of British miners, like much of the Left, he seems to romanticise the struggles of the miners of the past – especially those fighting Margaret Thatcher in Arthur Scargill's Great Strike of 1984-85. And that is where the £1.5bn comes in.
When the coal mines were taken into state ownership on January 1 1947, this was celebrated by Clement Attlee's Labour government as a glorious step on Britain's irreversible road to socialism.
In 1952, the defined benefit Mineworkers' Pension Scheme (MPS) was established. Until 1975, members paid no more than 20p per week into the fund, and pensions were thus very modest.
But then contributions and benefits were linked to miners' pay – they are still not vast, averaging £84 per week in 2019 – and the fund showed a stellar investment performance in the 1970s and 1980s.
Under nationalisation, British Coal or the National Coal Board as it was until 1987, guaranteed that if the scheme's funds were insufficient to meet its commitments, it would cover them. When John Major's government decided to privatise the coal industry, this guarantee would make that plan impossible.
Even then, there were far more retired miners than men still toiling down the pits, and that is truer still today. In 2023, there were more than 100,000 members in the scheme – and not one working miner. No private enterprise would take on the risk, even though the scheme was in healthy surplus.
The solution, which allowed the industry to be privatised in 1994, was that the scheme would be closed to further contributions, and the Government would take over that guarantee. In return, any surplus in the scheme would be divided between the Government and increased pensions for members.
As a result, miners' pensions are roughly a third higher than they would be if they were simply receiving their accrued benefits.
This arrangement has come under constant attack from the Left on the grounds that the scheme has resolutely remained in surplus, and the guarantee has never been invoked. It has been portrayed as a typical Tory sleight of hand to diddle the workers out of what is rightfully theirs.
But how is this the case? If you have never claimed on your household insurance, you cannot then call your underwriter and ask for the past 20 years of premiums back. You would get very short shrift if you made such a request. Yet that is precisely the demand of the Left.
As the MPS itself acknowledges, members directly benefited: 'The guarantee has enabled the trustees to adopt an investment strategy that targeted high returns… as a result, the typical member's pension today is around 33pc higher in real terms'. So where is the injustice?
Yet last October, Miliband agreed to waive the Government's entitlement to £1.5bn from the scheme's surplus. This may not be the end of the story, as the Treasury has received £4.8bn between 1994 and 2024 from the MPS, and another £3.1bn from the British Coal Staff Superannuation Scheme, a separate pension scheme also for the coal industry, which had a similar arrangement.
By Miliband's logic, should these funds not now be returned?
Why has a Government which endlessly bangs on about the Tory 'black hole' in the nation's finances decided to forfeit such huge sums when the case for doing so is so weak?
It is not because the National Union of Mineworkers is today a powerful organisation. It remains affiliated to Labour, but has only 103 dues-paying members, and contributes around £1,500 annually to party coffers.
It may have something more to do with the much larger contributions made by the big unions, who espouse the miners' cause.
But much more significant is surely a historic attachment to a Left-wing cause. The miners were at the forefront of the 20th century's industrial battles. They brought down Edward Heath's government in 1974, and did their very best to replicate this coup with the union's attempt to remove Mrs Thatcher.
The real injustice is that all of us are now paying over a billion pounds in the service of a Left-wing vision of Britain's post-war history.
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