Elderly men suffering from chest diseases and a crippling hand condition were advised to allow the National Union of Mineworkers to fund their legal claims in return for paying part of their eventual compensation to the union.

But what the miners were never told was that in reality, the Government — and not the union — was paying the legal bills for successful claims.

The Government has repeatedly emphasised that “100 per cent of the compensation that we pay must go to the claimants without anyone else taking a slice of it”.

The solicitors concerned, Yorkshire-based Raleys, have been paid £53 million of public money for their work on the cases settled so far.

The NUM has banked an estimated £10 million from the compensation scheme but has not paid legal costs in any of the 28,000 cases that Raleys has so far handled.

Some of the money, it can be revealed, has been pledged towards a £10 million legal action that the NUM is mounting — with the help of Raleys — in an attempt to win compensation for an osteoarthritic condition known as “miner’s knee”.

If the group action succeeds, the Government — which took on on the former British Coal’s liabilities — will face a further multimillion-pound payout to Raleys. A court date has been set for January next year.

Raleys’ clients, who include the widows and children of dead miners, were rarely if ever told that they could take their claim to a solicitor who would not deduct a penny from their settlement.

Leaders of the NUM, whose national headquarters are in Barnsley, South Yorkshire, have refused to discuss where its cut of the compensation money has gone and for what purpose it is being used.

But Kevin Barron, the MP for Rother Valley and a former senior NUM official, described the union’s arrangement with Raleys as “a scam from day one” and accused Mr Scargill of “abusing the loyalty of the mining communities”. “The NUM has not put a penny into fighting these cases and they have raked in millions of pounds for doing very, very little,” he said.

John Mann, MP for Bassetlaw, another coalfield constituency, who has waged a long campaign against abuse of the scheme, said last night that there could be no justification for Raley’s actions and demanded that all the NUM money “be paid back immediately”.

The NUM’s money-making enterprise is the latest scandal to hit the Coal Health Scheme, which has spun so badly out of control that the final bill — which was initially estimated at £1 billion — is likely to reach £8 billion.

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