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Tata Steel: Pension fund deficit deters buyers, says Javid | |
(about 2 hours later) | |
Potential buyers of Tata Steel UK have said they would not be willing to take on the company's pensions liabilities, Business Secretary Sajid Javid has told MPs. | |
The pension fund has more than 130,000 members and a deficit of £485m. | |
He told the Business select committee: "It's not unreasonable ... to say 'look we're interested in the assets but this would be an issue'." | |
Pension fund trustees were in talks with the regulator, Mr Javid said. | |
Bimlendra Jha, chief executive of Tata Steel UK, told MPs that a sale would not happen unless the pension fund deficit was addressed. | |
"If we don't solve it we are staring at some very bad consequences for the taxpayer ... We are staring at a huge economic and social disaster," he said. | |
Mr Javid reiterated that the Government would not take a stake of more than 25% in Tata Steel's UK assets and that he wanted a sale of Tata's steel assets completed as soon as possible. | |
The business secretary denied he had been on the back foot throughout the crisis. | |
He said with hindsight he should have attended a Tata board meeting in Mumbai in March when Tata decided to sell its UK business. At the time he was on an official visit to Australia. | |
More help | |
Mr Javid insisted he had been working with Tata since February to find a buyer for its steel business after he discovered it was planning to close Port Talbot. | |
Tata's Mr Jha told MPs that the government needed to do more to help the company find a buyer. | |
Although there was no set deadline for a sale, he said that Tata could not continue to "bleed" indefinitely. | |
Mr Jha said Tata was not prepared to split up its UK steel assets to secure a sale: "We would not deal with ... somebody saying leave alone Port Talbot and give us the rest - that is not a solution that's acceptable." | |
He blamed the sale on "structural weaknesses" in the UK, such as high energy costs and business rates. | He blamed the sale on "structural weaknesses" in the UK, such as high energy costs and business rates. |
"If we were at the same electricity costs as Germany , then [Tata Steel UK] would be £40m better off - we would not be having negative numbers," Mr Jha told MPs. "We would not be selling the business if we were not losing money" | |
David Cameron visited the Port Talbot steelworks in South Wales on Tuesday in a bid to assure workers of the Government's commitment to support the plant's future. | David Cameron visited the Port Talbot steelworks in South Wales on Tuesday in a bid to assure workers of the Government's commitment to support the plant's future. |
The UK government has said it would consider taking a stake in Tata Steel UK. | The UK government has said it would consider taking a stake in Tata Steel UK. |
Stuart Wilkie, Tata Steel UK's director at Port Talbot and Llanwern, is working on plans for a management buyout. | Stuart Wilkie, Tata Steel UK's director at Port Talbot and Llanwern, is working on plans for a management buyout. |
Downing Street said the government was doing all it could to secure a "sustainable future" for the plant. | Downing Street said the government was doing all it could to secure a "sustainable future" for the plant. |
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