Deputy Prime Minister John Prescott looks forward to a new future for the coalfields

The Deputy Prime Minister, John Prescott, announced plans on Tuesday to spend £350m on regenerating coalfields in Kent, Yorkshire, the Midlands, the North East and the North West.

The money - which is on top of £3bn of existing spending on former coalfields - includes £45m for a new Coalfields Regeneration Trust, £28m on housing and £15m towards an Enterprise Fund designed to spark new businesses.

Part of the funding is to come from surpluses made by two miners' pension funds - the MPS and the BCSSS - which are together worth £20bn.

Tories first dipped into pension fund

In 1994 the Conservatives pushed through the Coal Act, which allowed the government to transfer money from the pension fund surpluses to the treasury.

Tower Colliery is the last remaining deep pit in Wales

Plaid Cymru, the Party of Wales, says Labour criticised the act at the time but has made no effort to repeal it and has continued the "theft".

Welsh miners donated about 12% of the money in the funds and Plaid Cymru spokesman Bleddyn Hancock, who is also the regional secretary of the pit deputies' union Nacods, says it is a "grave injustice" for the money to be spent on English coalfields.

Wayne Thomas of the National Union of Mineworkers: "Mr Prescott's announcement has not gone down well in Wales"

Mr Hancock said: "The Coal Board took the miners' health, the Tories took their jobs, and now new Labour have stolen their pensions."

He said the MPS fund made a surplus of £1.5bn last year and the BCSSS a profit of £846m.

Mr Hancock said Plaid Cymru asked for it to be used to give miners and their widows an extra £10 a week but instead the government took 50% of it for the treasury's "consolidated fund" and awarded the pensioners only £5 a week.

'Many families rely on pensions'

He said 50,000 families relied on payouts from the pension fund and he said the coalfield communities would be better rejuvenated by putting more money in the pockets of ordinary people rather than spending on grandiose schemes.

He said Wales should get a fair share of the millions which have been "creamed" off the pension funds and that the money should be given to the National Assembly with no strings attached.

The energy spokesman for the Scottish National Party, Alasdair Morgan MP, was equally scathing.

"While this announcement is good news for coal-mining communities in England, it is an absolute disgrace that not one penny of the £350m is being directed to Scottish coalfield communities," he said.

"All that Scottish miners get is one-third of a £10m fund paid for out of the pension funds of miners. Scottish miners will get a paltry £3.3m while communities south of the border will get £350m over the next three years."

Graham Davies, of the Coalfield Communities Campaign's South Wales branch, said the government should have set up a nationwide taskforce to tackle deprivation in the English, Scottish and Welsh coalfields.

'Misinterpretation'

A spokesman for the Department of Trade and Industry - which has made a £10m grant towards the regeneration of the coalfields - said the £350m had come from the DETR's own funds.

He said it was a "misinterpretation" to draw a link with the money taken from the pension fund surplus.

He said the only money coming from the pension fund was a £10m "endowment" which would be split fairly between England, Wales and Scotland.

The spokesman said the reasoning behind the Coal Act was that the treasury was underwriting the pension funds so although it took money out when they did well it was there to top them up should there be a shortfall.