UK Coal 'to be taken over by state pension fund'

The state looks set to take over the bulk of Britain's coal mining industry through a deal by the Government's Pension Protection Fund (PPF).

UK Coal, the struggling rump of the once-nationalised British Coal, is expected to enter administration in the next few days, at which point the PPF is likely to take on the assets along with an estimated £550m pension liability.

The deal would save 2,000 jobs and ensure the mines keep running, but is thought likely to see the pensions of 7,000 current and former workers cut by about a quarter.

A spokesman for the PPF confirmed that it was "one of a number of parties involved in discussions about future operations at UK Coal".

"Our role is to protect the interests of the pension scheme members and minimise any resulting costs to our levy payers," he added.

UK Coal has been suffering financial problems for months and was restructured last year following a fire at the Daw Mill pit in Warwickshire. The company, owned by the miners' pension scheme, operates two deep mines and six surface mines under the banner of UK Coal Operations.

The PPF was set up by the Government 10 years ago, funded through a levy on pension funds. It is responsible for bailing out struggling pension schemes, but it is rare for it to take control of the companies behind them.The deal is thought to be the biggest rescue the PPF has taken on. Nortel, a telecoms company, had a £1bn scheme, but taking into account its assets the potential liability in the PPF's books was £333m.

The blaze at Daw Mill cost the company £100m worth of equipment and £160m of coal, and left it with £35m of other costs.

The deep mines are at Kellingley in Yorkshire and Thoresby in Nottinghamshire.

The problems at UK Coal continue the long-term decline of Britain's coal industry, with production falling steadily since it peaked at 292 million tonnes of coal a year in 1913. By the time it was nationalised in 1947, the industry's output had already declined to 200 million tonnes – from 1,038 mines – and the beginning of production of North Sea gas in the 1960s provided power producers with an alternative source of energy.

By 1983, just before a further raft of pit closures prompted the miners' strikes, production was down to 120.8 million tonnes at 308 mines.

In 2011 the industry, re-privatised in 1994, produced 17.8 million tonnes at 52 pits with just 6,419miners – a monumental decline from the 470,000 employed in 1947.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Buttoned up: Ryan Reynolds with Helen Mirren in ‘Woman in Gold’
filmFor every box-office smash in his Hollywood career, there's always been a misconceived let-down. Now he says it's time for a reboot
News
people
News
Actress Julianne Moore wins the Best Actress in a Leading Role Award for 'Still Alice' during the 87th Annual Academy Awards in Hollywood, California
people
Sport
Ross Barkley
footballPaul Scholes says it's time for the Everton playmaker to step up and seize the England No 10 shirt
News
'We will fix it': mice in the 1970s children’s programme Bagpuss
science
Life and Style
2 Karl Lagerfeld and Choupette
fashion
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SThree: Graduate Recruitment Resourcer

£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...

Recruitment Genius: Telesales Executive - OTE £32,000+

£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...

Ashdown Group: Marketing Manager - B2B, Corporate - City, London

£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...

Neil Pavier: Commercial Analyst

£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...

Day In a Page

War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Why Michael Carrick is still proving an enigma for England

Why Carrick is still proving an enigma for England

Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?