Labour is reportedly preparing to hand £2.3billion to retired coal miners by the end of the year, in a move that could see up to 40,000 former miners and supervisors receive payouts averaging £55,000.

The cash sits in the British Coal Staff Superannuation Scheme’s (BCSSS) investment reserve fund — a pot of government‑owned money originally designed to shield taxpayers from covering deficits in the scheme. If approved by the Treasury, the transfer would mean Labour would have released a combined £3.8billion to coal pensioners since the election, including £1.5billion already given to members of the Mineworkers’ Pension Scheme, the Telegraph reports.

Campaigners argue the reserves were built up by scheme members and should be returned to them.

Critics counter that the money belongs to taxpayers, noting it stems from an agreement made when the Government guaranteed pensions would always be paid – even if the fund ran dry.

That deal was struck after British Coal’s privatisation in 1994, when the British Coal Staff Superannuation Scheme was granted a Government guarantee covering all pension payments, including inflationary increases. In return, the Government was entitled to 50% of any investment surpluses, with the other half going to members.

So far, successive Governments have withdrawn £3.2 billion. The remainder of the Government’s share sits in the scheme’s investment reserve fund, which acts as a buffer if pension payments fall short.

After the scheme entered a series of deficits, the surplus-sharing arrangement was scrapped in 2015. Since then, all profits have gone into the reserve, which the Government can fully draw down from 2033.

Sources say Energy Minister Sarah Jones has written to the Treasury in favour of the move, with officials preparing for a decision around Chancellor Rachel Reeves‘s Autumn Budget.

Critics, including pensions consultant John Ralfe, argue the decision would strip away billions owed back to taxpayers in 2033 and risk leaving the public on the hook if the scheme falls into deficit.

The scheme’s chair, Cheryl Agius, told members this week she believed a “complete and lasting resolution” was close.

A Department for Energy Security and Net Zero (DESNZ) spokesman said: “Minister Jones recently met with Trustees of the BCSSS and is talking to the Treasury about their proposals. We will provide an update in due course.”