Hartlepool MP quizzes business secretary over steel pension fund changes
Hartlepool MP Iain Wright has quizzed business secretary Sajid Javid over possible changes to the British Steel pension fund.
Proposed changes to the fund risk setting a “very worrying precedent” for other company schemes, Labour has said.
Shadow business secretary Angela Eagle voiced concerns over the suggestion of cutting the fund’s long-term liabilities by benchmarking it to the consumer price index (CPI) rather than the higher retail price index (RPI).
The move is thought to potentially save £2.5billion.
Speaking in the Commons, Ms Eagle told MPs: “The suggested move from RPI to CPI for the British Steel pension scheme risks setting a very worrying precedent for other occupational schemes.
“As the House will know, this change is currently illegal.”
Ms Eagle made her remarks after a statement to MPs from Mr Javid.
The Cabinet minister arrived in the Commons hours after returning from a visit to Mumbai to discuss Tata’s sale of its UK assets with officials from the Indian conglomerate.
Mr Javid said the consultation on the British Steel pension scheme is designed to provide “clarity and security” for members.
He told MPs: “Tata understandably wants the sales process to be as swift and as straightforward as possible. However, they assured me they remain absolutely committed to being a responsible seller.
“There are a number of credible bids on the table, all of which we discussed.”
Hartlepool MP Mr Wright, who is also the chairman of the Commons business, innovation and skills select committee, sought assurances from Mr Javid that any changes would only apply to the British Steel pension fund.
He said he was concerned that “steps taken could set a dangerous precedent whereby companies abdicate their responsibilities to the members of their pension schemes”.
Mr Javid stressed that any changes would only apply to the specified fund.
“There is no deal and there is no preferred option - this is a very open consultation,” he said.
“You will see there are a number of options that the Government is looking at.
“But no decision has been made and as I mentioned earlier we are very wary of setting a precedent and I can assure you that this is very much about this scheme and this scheme only in these very unique circumstances.”
Mr Javid said Tata is studying the proposals ahead of the next stage of the sales process, adding: “This remains, quite rightly, an independent commercial process.
“It is not the Government’s job to pick a winner or to back a specific bid.
“What we can do is listen to Tata, listen to the bidders and work with everyone involved to remove potential barriers to a sale.”
Labour frontbencher Ms Eagle said there are “no easy options” for the pension scheme, adding: “Any resolution must protect the pensions of the scheme’s 130,000 beneficiaries.
“But it must also ensure that it avoids setting a potentially dangerous precedent for the millions of other occupational pensioners who currently enjoy RPI indexation rights.”
Ms Eagle added to Mr Javid: “What assurance can you give me that this proposed change will not be extended to other occupational schemes?
“Can this change be sensibly and safely ring-fenced because if not it’s very, very difficult.”
Mr Javid said the scheme is in deficit, suggesting some changes have to be made to prevent it entering the Pension Protection Fund.
He added: “I think it’s very important to emphasise that if this proposal happened it wouldn’t be the Government making any changes, it’d be something the scheme would want to do because it believes that it will mean in almost every case that their members would either be better off or no worse off.
“That is their belief and, of course, it will be tested by the Pensions Regulator.”