London, April 28
Tata Steel’s pension liabilities are putting off buyers for its British steel-making operation, Business Secretary Sajid Javid said today, underlining difficulty government faces in securing a sale that would save thousands of jobs.
India’s Tata group announced plans to quit its entire British steel operation last month, leaving the government battling to save an industry that has been hurt by cheap Chinese imports, soaring costs and weak demand.
The government, keen to avoid reputational damage caused by the loss of 10,000 jobs, has offered millions of pounds in support to potential buyers, including the option of taking a 25 per cent stake in the firm.
But appearing in front of a parliamentary inquiry into decline of industry, both Javid and Tata Steel UK’s CEO Bimlendra Jha said firm’s pension deficit, last estimated at nearly £500 million, was a major stumbling block.
“A number of potential buyers ... have said that we won’t have much interest if we have to take over current pension plan as it is,” Javid told the lawmakers.
Jha said there were big question marks about the viability of the main asset in its British portfolio — a steel plant in the Welsh town of Port Talbot.
“If this pension fund liability is not taken care of, there is no buyer sitting out there to buy this business,” he said. “If we don’t solve that problem we are staring at some very- bad consequences for UK taxpayers.”