'Pensions law changes considered' to help save Tata - but opposition warns of 'dangerous path'

Tata
Tata
0
Have your say

Ministers have been warned not to rush into far-reaching changes to pensions law in an attempt to save the Indian conglomerate Tata's UK steel-making assets.

The Government has confirmed it is looking at "all options" in relation to Tata's £15 billion UK pensions liabilities - seen as one of the major obstacles to a successful sale.

Business Secretary Sajid Javid is due to make a Commons statement on the negotiations after returning from talks in Mumbai with senior Tata representatives.

Ministers are thought to be preparing to launch a consultation on possible legal changes which could enable a major restructuring of the Tata pension fund.

It could include cutting its long-term liabilities by benchmarking it to the consumer price index (CPI) rather than the retail price index (RPI), which is generally higher.

The Department for Business, Innovation and Skills said it recognised that the pensions issue was a "challenge".

"We are exploring all options and engaging with Tata and other interested parties in order to see what support Government can provide," it said.

The move was welcomed by Welsh First Minister Carwyn Jones who has been in Mumbai with Mr Javid meeting senior Tata figures.

He said there were ways of dealing with the issue without having to put the fund into the Government's Pensions Protection Fund lifeboat.

"There are ways of looking to change the law on this and we would urge the UK Government to do that," he told Channel 4 News.

"It's right to say - let's not pretend otherwise - that it's unlikely that any buyer will come forward with the pension liability there.

"But there are ways for the UK Government to remove that liability without actually putting the fund in the Pension Protection Fund which would then of course see a cut in benefits for those who are already beneficiaries."

However there were reported to be misgivings about the wider implications of the plan in the Department for Work and Pensions and the Treasury.

Ex-Liberal Democrat pensions minister in the former coalition Steve Webb said the Government was "going down a very dangerous path" in seeking to change the law.

"Everyone has huge sympathy for steel workers and for efforts to protect jobs, but rushed changes to pension rules risk driving a coach and horses through the pension security of hundreds of thousands of workers, well beyond the steel industry," he said.

"The rules to protect pensions have been carefully worked out over many years. Rushed legislation could open the floodgates to employers who may wish to walk away from their pension schemes rather than honour their pension promises. The Government must tread very carefully in this area."

For Labour, shadow work and pensions secretary Owen Smith said it would be "totally inappropriate" for ministers to "rush out" an announcement on the final day before a Commons recess without the chance for proper scrutiny by MPs.

"Steel workers' pensions must be protected, they've earned them with hard graft over many years," he said.

"So if ministers are considering measures which might see those pensions reduced, MPs from all parties, especially those representing steel communities, will want a chance to question the plans, along with the trade unions who are playing such a vital and impressive role standing up for Tata workers."