Sajid Javid to launch proposals that could slash billions of pounds from British Steel pension fund liabilities
In a bid to make Tata Steel more attractive to buyers, the government is set to reveal proposals this week that would potentially cut billions of pounds from the liabilities of British Steel's £15bn pension scheme.
Sajid Javid, UK business secretary, is reportedly launching a consultation on Thursday that will discuss proposals including altering the annual uplift in pensions provided to scheme members from the RPI inflation index to the CPI index. Sky News reports this would save an estimated £2.5bn and would help in converting the £15bn scheme into a separate entity.
If adopted, these proposals would lead to a reduction in benefits that thousands of steelworkers will receive in the future.
Read more: Tata pensions "quick fix" a risky precedent says former minister
The consultation is expected to last only a few weeks in order to safeguard the future of Tata Steel that employs 11,000 workers.
Bidders for the iconic steel business include management buyout vehicle Excalibur Steel, that is headed by Tata's UK strip steel unit boss Stuart Wilkie, and Liberty House, which owns two of Tata's smaller mills.
A government spokesperson told City PM: “We are working very closely together to achieve the best results for Tata workers and a sustainable future for British steel.”
Business Secretary Sajid Javid and Welsh First Minister Carwyn Jones travelled to Mumbai to meet Tata executives this week.