Leading Article: Asset-stripping the elderly

ROBERT MAXWELL must be roaring with laughter beside his personal furnace. Another big business is planning to raid pension funds to stave off financial ruin. This time it is the Government, which just cannot resist the temptation of so much money lying around in trust for retired coal and rail workers. Why leave it there, when it could be reducing the budget deficit?

That deficit is not being helped by the pounds 500m subsidy of coal prices that Michael Heseltine had to pull out of the hat to keep the MP Winston Churchill sweet. It was the least he could offer to avoid defeat in the Commons. Wouldn't it be a hoot, after all the trouble the miners have caused the Tories, if by sleight of hand the Government raised most of the money from British Coal's staff pension fund?

These shenanigans have heavy overtones of the Maxwell scandals. Ministers set up an inquiry into how he defrauded company pensioners. He can rightly claim to have taught them everything they know about asset-stripping the aged. But the trustees of the pounds 7bn British Coal staff pension fund are rightly nervous and will fight the Government's scheme in court.

It works as follows: British Coal owes redundant staff about pounds 480m, but thinks it can draw most of the cash from its share of surplus pension funds. That way it does not have to ask Michael Heseltine for the money. This frees Mr Heseltine to 'give' out pounds 500m in coal subsidies and appease Tory rebels.

Is this a dirty trick or just an imaginative solution? It is hard to tell. Some say that there is a surplus in the pension fund and the trustees should, according to common practice, let British Coal have it. But the trustees are prudent folk, respected for steering a steady course. Surpluses can easily disappear if investment portfolios tumble. A shrinking workforce combined with large numbers of ageing beneficiaries might easily produce a different picture in a decade. It may be the wiser decision to leave those funds where they are.

If the crime is questionable, the existence of a motive is not. The Government desperately needs to cut the Public Sector Borrowing Requirement. Absorbing the financial assets of industries set to be privatised would be very helpful. The suspect already has form, having tried, so far unsuccessfully, to do just that with the British Rail pension fund.

Aside from these questions is the matter of whether ministers have behaved openly. Parliament should be told how coal subsidies are being funded, rather than be hood-winked by secret fundraising techniques. Most of all, pensioners and workers, already threatened with redundancy, are entitled to know what the Government has up its sleeve.

No doubt ministers would like to raise cash by taking over other state pension funds: the Post Office is a tempting prize. Although pocketing the money might take a little pressure off the budget deficit, such action would not demonstrate fiscal rectitude. It would leave future governments to pay benefits to the next century's retirees from other sources. Pensioners are justified in preferring their means of support to be managed by dedicated trustees rather than by Treasury officials.