Will UK Coal be nationalised?


UK Coal

In a strange twist of fate, parts of UK Coal could end up being re-nationalised, as the company struggles financially, and ministers enter into discussions over the steps they need to take in order to protect at least some of the firm's pensions.

So what has gone wrong, and what's at stake?


UK Coal runs three mines in the UK. In February a fire started in its largest deep-pit colliery in Warwickshire, and it is still burning today. As a result 650 miners have lost their jobs, and the company has lost £160 million of coal and £100 million of equipment.

According to The Guardian, the government is in daily contact, trying to resolve issues for the firm. It is said to have rejected a request for a loan, and faced the threat of voluntary liquidation.

UK Coal said: "Discussions are ongoing with a wide range of interested parties, including our employees, Government, pension funds, the pensions regulator, our insurers, suppliers and customers, to find a way forward for the remaining viable mines."

One option might be for the Coal Authority - owned by the government - to take over this pit, and save the rest of UK Coal. The Journal reported that a DECC spokesman had admitted that: "The Government is looking at a number of options about UK Coal's future."

In the Sunday Times, Michael Fallon, the energy minister, said "We are looking at whether the ownership of Daw Mill can be transferred back to the Coal Authority."

Why is this such a concern?

The company employs 6,000 people, so clearly their livelihoods are at stake. In addition, the coal itself is a useful part of the country's energy generation. However, another major issue here is the pension scheme.

The company is part of a bigger organisation. It was restructured last year, and the pensions liabilities were all given to UK Coal. It has serious deficits - of over £500 million - and has to make regular large payments make up the shortfall.

The risk here is that if the company was to go under, the pension scheme would fail, leaving pensioners in the hands of the Pension Protection Fund.

This would not only leave thousands of pensioners far worse off, but create a real burden for the government. It's something they all want to avoid.

The question is whether things will get bad enough for the government to take matters into its own hands and re-nationalise the business. We will have to wait and see.

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