Britain faces an “economic and social disaster” if the pension issues facing TataSteel UK cannot be solved and a buyer is not found, the boss of the steel company has warned.
Bimlendra Jha, chief executive of Tata Steel UK, told MPs there would be “very bad consequences for the taxpayer” if the pension liabilities of almost £15bn facing the business are not dealt with.
Jha was addressing the Business, Innovation and Skills committee as they investigate the demise of the UK steel industry. Around 40,000 jobs are at risk after Tata Steel announced last month that it plans to pull out of the UK, including the Port Talbot steelworks.
The Tata Steel UK boss insisted the company has set no fixed deadline to find a buyer, amid concerns that there may not be enough time to find a saviour.
However, Jha warned that Tata “cannot continue to bleed” and that there remain “serious questions marks about the viability of Port Talbot”.
He said that solving the pension problem was key to finding a buyer. Tata Steel has been pumping more than £100m a year into the pension scheme to fund its liabilities. The scheme could now enter the state-backed Pension Protection Fund.
Jha added: “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.”
However, he also opened the door to Tata Steel keeping the business if it could turnaround losses at the UK arm, which have been put at around £1m a day.
“We would not be selling the business if we were not losing money,” said Jha, adding that the UK had structural weaknesses around energy prices and business rates.
Source: The Guardian