Fears over miners' pay and pensions as UK Coal in talks over future

Workers at Daw Mill colliery The fire at Daw Mill was the largest at a UK coal mine in more than 30 years

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A union fears hundreds of miners could lose out on redundancy pay if UK Coal applies for voluntary liquidation.

UK Coal said its business remained viable, despite claims a fire at its Daw Mill colliery in Warwickshire has left it with cash-flow problems.

Most of Daw Mill's 650 staff will be made redundant at the end of May but could lose benefits if UK Coal begins insolvency proceedings.

UK Coal said all options were being considered as part of restructuring.

In a statement, Kevin McCullough, chief executive of UK Coal Mine Holdings, said: "Daw Mill represented a significant part of the business and discussions have been under way since the fire to find a way forward for the rest of the business.

"The remaining deep mines in Kellingley in North Yorkshire, Thoresby in Nottinghamshire and six surface mines, remain viable and discussions continue with a wide range of interested parties."

Redundancy fears

Jeff Wood, national president of the UDM, said if UK Coal went into voluntary liquidation, Daw Mill staff could receive state payouts instead of enhanced benefits if they were not transferred over to a new company, one option he believes the company is considering.

"Our members are very concerned [about the plans]," Mr Wood said.

"The Daw Mill men are sat at home wondering if they are going to get to the end of May and get their redundancy.

"Our pensioners are very concerned because if the company did go down the insolvency route, the pension scheme would fall into the UK Pension Protection Fund which only protects 90% of the benefits they would have previously enjoyed."

UK Coal's surface mines

  • Butterwell, near Morpeth in Northumberland
  • Huntington Lane, near Telford in Shropshire
  • Park Wall North, near Crook in County Durham
  • Potland Burn, near Ashington in Northumberland
  • Lodge House, near Ilkeston in Derbyshire
  • Minorca, near Measham in Leicestershire
'Difficult decisions'

Mr McCullough said: "Our main focus has been on preserving 2,000 jobs and securing the future of UK coal mining.

"Our remaining mines have been performing well since the fire at Daw Mill and we continue to work closely with our employees, government, pension funds, the Pensions Regulator, suppliers and customers.

"There will undoubtedly be some difficult decisions as we have had to look at all possible options, but there is a good business here with 2,000 families depending on our workforce and I am confident we will be able to announce more news in the coming days."

Over the past year, the company has announced restructuring programmes at Daw Mill and in August it said it was "unlikely" the mine would remain open after 2014.

At the time, UK Coal said it had made overall losses of £20.6m in the six months to 30 June, with Daw Mill contributing to a 20% fall in production.

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