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Steelworkers to vote on Port Talbot rescue plan www.theguardian.com
Thousands of steelworkers will vote on rescue proposals for the Port Talbot steelworks this week in a definitive moment for the crisis in the industry.
Tata Steel has tabled a proposal to save 8,000 job in its UK business, including the Port Talbot steelworks in south Wales, by investing £1bn into modernising its operations over the next 10 years.
However, this investment depends on spinning off the pension fund behind Tata Steel UK into a separate entity and replacing the final salary pension scheme with a less generous defined contribution scheme.
The existing scheme – the British Steel pension scheme (BSPS) – could enter the Pension Protection Fund (PPF) as part of the arrangement, which would result in a 10% cut to members’ benefits. However, for this to occur Tata Steel must convince the Pensions Regulator that its UK business is on the brink of insolvency and is likely to have to pump hundreds of millions of cash into the scheme.
The BSPS has 130,000 members and £15bn of liabilities. It would be by far the biggest pension scheme to be taken on by the PPF.
The trade unions Unite, GMB and Community have recommended that workers vote in favour of the proposals, but they could still be rejected given the changes to the pension scheme.
If the rescue package is approved then Tata Steel will look to complete a merger of its European operations with ThyssenKrupp, the German industrial conglomerate.
Tata Steel declined to comment. The trade unions said they had not made the recommendation lightly, telling workers: “Nobody is saying that the proposal on the table is without issues. But as we have said before, what you are voting on is the best outcome that could be achieved through negotiation. It is our collective view, supported by our independent experts, that this is the only credible and viable way to secure the future.”
However, John Ralfe, a pension consultant, warned: “ThyssenKrupp won’t touch Tata UK or Tata Holland unless the British Steel pension scheme is hived off. The risks of it coming back to bite them are too high.
“It is not clear what the pension trustees have in mind with the plan to hive off the pension scheme without Tata Steel UK going into insolvency. The legal tests for a regulated apportionment arrangement [the process whereby a pension scheme enters the PPF] are deliberately set very high.
“The BSPS will certainly close to new pensions, but the £15bn of historic liabilities are likely to remain the responsibility of Tata Steel UK, which will continue to soldier on, and ThyssenKrupp would then be almost certain to walk away.”
The steel jobs have been at risk since last March when Tata Steel announced it was putting its UK business up for sale amid losses of more than £1m a day. The decision sparked a political crisis as the government scrambled to secure the future of the plant. Port Talbot is one of only two sites in Britain that makes steel in blast furnaces.
Published Date:2017-01-30
