MPs demand reassurances from Sajid Javid over British Steel pensions - as it happened
Full coverage as parliament discusses whether to cut the benefits due to Britain's steel workers, to help Tata find a buyer
- Snap summary: MPs fear a dangerous precedent
- Sajid Javid's statement - highlights start here
- Angela Eagle demands more details
Earlier:
6.02pm BST
Time to wrap up. A quick recap:
"a very dangerous precedent that undermines workplace pensions and incentives to save to secure dignity in retirement".
Related: Tata Steel pension chief backs controversial cuts
Related: Scuffles and smoke bombs as protesters step up fight against French labour bill
5.14pm BST
Shifting the British Steel pension scheme from the Retail Prices Index to the Consumer Prices index, as the Trustees have proposed, would wipe 2.5bn of its liabilities.
"In 2011 the Government changed statutory pension increases from RPI to CPI. If CPI is used, pension entitlements increase by around 1% less per annum than under CPI. Over a 15-20 year period, that's a 15-20% reduction on the size of an individual's pension.
"Whether or not a scheme has the flexibility to adopt CPI comes down to how the lawyer wrote scheme rules before 2011. Some schemes, such as British Airways, allow the flexibility to adopt CPI. Others, such as British Steel, clearly don't. There's a 'scheme rules lottery' in respect of RPI and CPI.
"For a British Steel pensioner with a 5,000 per annum pension, a move to CPI will see them 50 worse in year one, 100 in year two and so in. Over a typical pensioners' lifetime this is a loss of 15,000 of lifetime savings. On the plus side, this only one third of the average loss on falling in to the Pension Protection Fund.
4.25pm BST
The government's proposed changes to the British Steel pension scheme could prompt a row with the European Union, according to the Financial Times.
It says:
If the government legislates to amend the rules governing one pension fund - for a struggling industry - it could raise alarm bells in Brussels: it is likely to be seen as state aid by EU officials.
In the 40-page consultation document it emerged that not all members of the scheme would be better off under the proposals. Some 5,800 would be worse off, 70,000 would be in the same situation and 40,000 would be in a better situation.
4.11pm BST
Parliament's Business, Innovation and Skills committee has just moved a step closer to getting Mike Ashley, boss of Sports Direct, to testify before them.
The committee has written to Askley, declining his invitation to visit his Shirebrook warehouse. Instead, they expected to see the retail titan in their committee room on June 7 to face questions about working conditions at Sports Direct.
3.17pm BST
Britain's steel union have welcomed the government's decision to open a consultation on making changes to the British Steel pension scheme.
They confirm that the deficit - now 700m, it appears - is a serious hurdle to finding a buyer for Tata's operations in the UK.
The steel trade unions - Community, Unite and GMB - have been in dialogue with the UK Government and Tata Steel for a number of weeks to secure a sustainable future for our industry. A number of bidders have made it clear that the British Steel Pension Scheme (BSPS) presents a major challenge to any sale. We also fully understand the great importance of this pension scheme to both current and former steelworkers and steel communities across the UK.
There has been a lot of speculation that any sale of Tata's assets would involve the BSPS going into the Pension Protection Fund (PPF). The trade unions believe that such a move would be an unmitigated disaster. The PPF is a financial safety net but it would see every member of the scheme take an unnecessary cut in pension benefits. The financial health of the BSPS is such that going into the PPF can certainly be avoided.
BREAKING: Joint statement on British Steel Pension Scheme from the steel trade unions https://t.co/SCuYDL9lIA #SaveOurSteel
3.01pm BST
The proposed pension changes are controversial for another reason.
The prospect of workers' pension rights being cut has prompted Tata to reconsider selling its UK assets at all!
The sale of Tata Steel's UK assets has been thrown into confusion after speculation that the business secretary has offered Tata a deal so attractive that it may yet keep Port Talbot and a dozen other facilities around the country.
One of those sweeteners is said to include an accommodation to downgrade the retirement benefits of members in the British Steel Pensions Scheme to try to keep a lid on the 15 billion fund's 485 million deficit.
TIMES BUSINESS: Tata sale in chaos over 'sweetener to stay put' #tomorrowspaperstoday pic.twitter.com/A9jOzSFnV6
2.33pm BST
My colleague Graham Ruddick sums up the key exchange from the steel session (which starts back at noon BST)
Sajid Javid, the business secretary, said the trustees had asked the government to make the scheme exempt from legislation in the 1995 Pensions Act.
"The scheme's trustees have come forward and asked us to look at current legislation," Javid told MPs. "The scheme trustees have put forward this proposal and it is only right that we consider it."
Related: Tata Steel pension chief backs controversial cuts
2.05pm BST
In Yes Minister, Jim Hacker defined a dangerous precedent thus:
"If we do the right thing this time, we might have to do the right thing again next time."
1.24pm BST
And finally, Labour MP Madeleine Moon of Bridgend says that other companies are already poaching skilled steel workers.
Q: Shouldn't the government give an assurance that public sector contracts will always demand a high percentage of British steel, to underpin confidence?
1.21pm BST
Geriant Davies, Labour Co-operative MP for Swansea West, tells the house that he warned the government that minimum carbon pricing would hurt the steel industry.
Javid agrees that energy costs are important, but not the only factor facing steel plants.
1.18pm BST
Q: Does the government still want to grant China 'market economy status' (which the European Parliament voted against this month)
Javid says the European Commission is considering the issue, but it wouldn't prevent tariffs being imposed on Chinese steel.
1.15pm BST
Clive Betts MP asks the government to act on energy costs, which mean steel works pay 85% more than German rivals.
Javid repeats that the government has already acted on this issue, and is prepared to do more.
1.14pm BST
Sue Hayman MP asks the business secretary to reassure steel workers that they will get their full pensions.
Sajid Javid agrees that steel workers have worked hard for their pensions, so the government must do everything possible to find the best outcome.
1.13pm BST
The SNP's Margaret Ferrier asks about proposals to change the 'lesser duty rule', which allows Chinese steel firms to sell their products in the UK without a hefty tariff.
Javid says there are ways to improve the lesser duty rule, but doesn't believe it should be scrapped.
1.12pm BST
Labour's Paul Flynn says he'll soon qualify for a pension after 30 years in the steel industry, but it will be dwarfed by House of Commons pension. Isn't it repugnant that workers in such a dangerous, skilled, industry are being asked to pay to cover their pension deficit?
Javid says the government will leave no stone unturned to find a buyer for Tata's UK assets.
1.09pm BST
Richard Fuller, Conservative MP, makes an important point -- could any future surplus be transferred out of the pension fund?
Javid agrees that pension benefits should always go to those who have paid in.
1.08pm BST
Labour's David Anderson raises the issue of miners' pensions, saying retired workers are suffering from government decisions in the past.
Javid says that the proposals on the table today are different to what happened in the 1990s.
Related: Retired miners lose out as ministers dig in
1.05pm BST
Kevin Foster, Conservative MP, urges the government to ringfence any pension changes
Javid repeats that this is a one-off situation.
1.04pm BST
Javid then warns that unless changes are made, it's very likely that the British Steel pension scheme would have to be rescued by the Pension Protection Fund (which would also result in a cut to benefits).
1.03pm BST
Q: Will any changes to the British Steel pension scheme be put to a ballot of members?
Javid says that the Trustees already have the right to change the indexing, but they are prevented by legislation.
1.01pm BST
Asked again about steel-dumping, Sajid Javid says that British steel is the best in the world - and some companies have come to regret buying inferior foreign alternatives.
1.00pm BST
Labour's Jessica Morden asks what the government is doing to reassure companies who buy British steel, such as Nissan (who have a plant in her constituency, Newport East).
Sajid Javid says the government has been speaking to customers and telling them that British steel has a long-term future.
12.59pm BST
Conservative MP Steve Double asks what impact the climate change levy introduced by Gordon Brown has had on the steel industry.
Sajid Javid says the government is providing support and exemptions to help companies with energy costs.
12.57pm BST
Kevan Jones MP raises the importance of Britain's steel industry to the defence sector.
Javid says 95,000 tonnes of British steel will be used in the new Queen Elizabeth aircraft carrier.
12.56pm BST
Q: Could potential bidders work in partnership to help the steel industry?
Javid says that the field of seven bidders will be narrowed, and he's confident that Tata would be amenable if bidders wanted to work together.
12.55pm BST
Asked about timings, Savid Javid says there is no deadline to find a buyer - but Tata want to move quickly.
12.54pm BST
Redcar MP Anna Turley, says the government has acted disgracefully over the steel crisis and urges Javid not to inflict more pain on workers.
(a steel plant in Redcar closed last autumn with the loss of 1,700 jobs).
12.52pm BST
Conservative MP Mark Spencer wants reassurances that any deal will work, and that MPs won't be back discussing this issue in two years.
Javid repeates that there is no deal yet, and any deal depends on the approval of the Pension Regulator.
12.51pm BST
Dennis Skinner MP raises the issue of the miners' pension scheme, saying the "lousy rotten Tory government" refused to provide any help.
Javid says this doesn't have anything to do today's issue.
12.49pm BST
Conservative MP Julian Knight says the government must retain the crucial principles that members always have the final say, and that pension promises are delivered.
Javid agrees that the integrity of the pension system must be retained.
12.47pm BST
Seema Kennedy, Conservative MP for South Ribble, asks what support is being given to steel workers and their communities.
Javid says that the best support is the confidence that there is a long-term future for the UK steel industry.
12.44pm BST
Labour's Jo Stevens asks what discussions have taken place with the pensions regulator about this "potentially risky and precedent-setting proposal".
Javid says discussions have taken place, and confirmed that they would need to have the regulator's full support.
12.41pm BST
Labour's Tom Blenkinsop says his father in law is a British steel pensioner.
Q: What would happen if the scheme were taken into the Pension Protection Fund?
12.39pm BST
Conservative MP Peter Bone says the government needs to get to the "root of the problem", the dumping of Chinese steel.
Q: Why can't the government impose higher tariffs, as the US just did?
12.38pm BST
Labour's Stephen Kinnock, who represents Port Talbot, raises media reports that Tata could actually retain its UK assets.
Javid declines to comment on these rumours, saying the government wants to work constructively with all potential bidders.
12.37pm BST
Conservative David Mowat asks whether changing the benchmarking from RPI to CPI inflation will bring the British Steel pension scheme into surplus.
Q: If not, could workers face a "double-whammy" if the scheme later moves into the Pension Protection Fund?
12.35pm BST
Frank Field, who chairs the work and pension committee, points out that many other pension schemes are in deficit. It will be hard to 'gate' these plans just to the steel industry.
He asks for a discussion after the recess, to consider the full impact of the proposed changes.
12.32pm BST
Tom Pursglove MP asks if the government knows whether more investment could come to steel works in his constituency, Corby.
Javid says commercial details are sensitive, but there are seven serious bids on the table.
12.31pm BST
Iain Wright MP, who chairs the business, innovation and skills committee,is also worried about the precedent issue.
Q: Is this deal purely for steel, or is it being extended to other strategically important industries? And is the government's preferred option the 2012 deal for Royal Mail, which distinguished between past and future contributions?
12.27pm BST
Conservative MP David Davies, of Monmouth, commends Sajid Javid for his efforts to save the UK steel industry.
But he urges the business secretary to proceed carefully
12.25pm BST
SNP MP Neil Gray is disappointed by the lack of detail in the government's plans.
Q: How would it affect current workers, and could it be a dangerous precedent?
12.24pm BST
Onto questions.
Pauline Latham, Conservative MP, asks about another crisis - the future of BHS.
12.21pm BST
Sajid Javid defends the short length of the consultation - time is of the essence in the search for a buyer.
He says the trustees of the British Steel pension fund approached the government, asking for changes to be made.
12.17pm BST
Labour's shadow business secretary, Angela Eagle, responds.
She reminds the house that steel workers protested outside parliament yesterday.
12.13pm BST
12.12pm BST
The steel crisis is ultimately about the workers who make Britain's steel industry the best in the world, Javid continues.
We will continue to fight for British steel for a long as it takes, he adds.
12.11pm BST
Sajid Javid begins by telling MPs that he just returned from Mumbai a few hours ago.
During his trip, he stressed the importance of Tata running a "responsible" sales process for its UK steel operations.
12.08pm BST
Business secretary Sajid Javid is on his feet, updating the House of Commons on the British Steel pensions consulation.
12.00pm BST
One of the City of London's top experts on pensions is worried about the government's plan.
Tom McPhail, head of retirement policy at financial service group Hargreaves Lansdown, says:
In this case, a change of escalation rates could be the least worse solution. But the potential deal on British Steel could rip a hole in one of the most fundamental principles of pension provision. It is well-established that pension benefits, once granted cannot be taken away.
The government should be very cautious about sacrificing such a principle in pursuit of short term interests, even if there are tens of thousands of jobs at stake.
11.53am BST
The situation in the British steel pension fund is worse than first thought....
Government statement reveals that British Steel pension fund deficit is now 700m (as of December 2015). Had been estimated at 485m.
11.52am BST
Opposition MPs have already criticised the government for suddenly launching this consultation, just before the House of Commons breaks for a recess.
Labour will stand with our Trade Union colleagues to ensure steel pensions as well as steel jobs are protected: pic.twitter.com/1fmBoIZY5b
11.48am BST
This one-month consultation is due to end on the same day as the EU referendum....
British Steel pension consultation ends on....June 23. Familiar date? pic.twitter.com/wAjPsFYFMl
11.36am BST
The trustee of the British Steel pension fund is backing the government over its plans to potentially cut pension payments to workers.
Allan Johnston believes this would be a better outcome for members than entering the Pension Protection Fund (when there is an automatic 10% reduction to benefits)
The government believes if it can significantly restructure the pension scheme then Tata Steel can be persuaded to keep the business.
Sajid Javid, the business secretary, has said the government is willing to offer hundreds of millions of pounds to a buyer and is looking at ways to restructure the pension scheme by reducing its liabilities by billions of pounds.
Related: Tata steel pension chief backs controversial cuts
11.19am BST
There are important developments in the crisis gripping Britain's steel industry, which could hit pensioners in the pocket.
The government has announced a new consultation into overhauling the British Steel Pension Scheme.
"The consultation includes a full range of options that consider whether and how the scheme could be separated from the existing sponsoring employer and whether it will be necessary to reduce the benefits within the scheme."
"Everyone has huge sympathy for steel workers and for efforts to protect jobs, but rushed changes to pension rules risk driving a coach and horses through the pension security of hundreds of thousands of workers, well beyond the steel industry."
11.11am BST
We should remember that Britain's service sector has been becoming increasingly dominant for decades, partly due to the sweeping changes during the Thatcher government:
Just a reminder that the whole lack of rebalancing is not just a post-crisis issue. pic.twitter.com/pUVtMaALdD
10.44am BST
Martin Beck, senior economic advisor to the EY ITEM Club, fears that the UK economy has continued to slow in the current quarter.
"Looking ahead to Q2, the latest Services Index release showed services output falling in March providing a weak starting point for expansion.
While early days, a run of weak activity surveys in April also casts a gloomy note, suggesting that the economy will see a further deceleration in growth. A cloudy international outlook and the prospect of rising inflation at home will present ongoing headwinds."
10.19am BST
John Hawksworth, chief economist at PwC, says the 0.5% fall in business investment last quarter is a clear sign that Brexit fears are hurting the Britain's economy.
He warns:
"Global concerns have eased more recently, but uncertainty related to the EU referendum could lead to a further moderation in growth in the second quarter as some businesses continue to defer investment and hiring decisions. But the economy should rebound in the second half of the year in the event of a vote to Remain.
The downward revision of GDP to 2% suggests that perhaps the recovery we have been looking for after 18 months of slowing growth just isn't there. Perhaps the most telling figure today was the Q1 business investment reading, which contracted for the second consecutive quarter.
This is a clear indication of the fear that firms are experiencing regarding the effects of a Brexit and makes you wonder what this number would look like in the event the UK left the EU.
The weaker annual growth rate (2%) is further confirmation of the Brexit related negativity already embedded in the wider economy and aside from recent retail sales, continues a poor run of UK economic indicators.
10.08am BST
Anyone remember George Osbornes' "March of the Makers"? It seems to have taken a wrong-turning.
Britain's feted economic rebalancing pic.twitter.com/Xog4ehzEwv
10.02am BST
Ms Lee Hopley, Chief Economist at EEF, says Britain's economy is suffering from problems overseas, and the EU referendum:
"The data confirms a softer start to the year as households continue in the driving seat with their foot on the gas
Business investment, however, slipped further and net trade again failed to support GDP growth. It's far from a surprising picture given the wobbly world economy at the start of the year is providing little impetus to export growth or, confidence amongst business to press ahead with big expansion plans.
9.59am BST
Today's growth figures also confirm that Britain's service sector is outperforming everything else.
Services output jumped by 0.6% during the last quarter, but construction shrank by 1.0% and manufacturing declined by 0.4%.
As @samueltombs points out, UK now entirely reliant on the consumer sector for growth. Rest of economy stagnating pic.twitter.com/H6ZtwW2oaD
9.53am BST
The pound has fallen by half a cent against the US dollar, following the news that business investment fell by 0.5% in the last quarter.
9.38am BST
Breaking: UK growth slowed to 0.4% in the first quarter of 2016, down from 0.6%, the Office for National Statistics reports.
That's in line with the first estimate, released last month.
The trade balance deficit widened from 16.4bn in Quarter 4 2015 to 18.0 billion in Quarter 1 2016 .
Following a 0.1% increase in Quarter 4 2015, exports decreased by 0.3% in the latest quarter, while imports increased by 0.8% in Quarter 1 2016 following a 0.9% increase in Quarter 4 2015.
9.28am BST
Nearly time for those UK growth figures....
Upcoming event in 5 min [08:30 GMT] - UK Second Estimate GDP (Quarter on Quarter, cons:0.4%, prev:0.4%) #forex #fx #finance
9.22am BST
Tomas Casasi-Klett, Professor at the University of St Gallen, says the world leaders gatherer in Tokyo have a lot to worry about.
He argues that Shinzo Abe was right to warn of a potential Lehman Brothers moment today:
The G7 will be about keeping all black swans at bay, starting with the Brexit one, we are at a point where the world is evermore fearful of a black swan, a Minsky moment*. A number of events could mirror the Lehmann trigger we saw in 2008, these include a Trump victory in November or unexpected economic volatility in China's markets.
However, a Brexit is now the most immediate and plausible candidate for such a trigger - it would activate other triggers across the globe, a chain-reaction of sorts originating with British voters.
9.15am BST
Britain's EU referendum is just four weeks away, and City traders are getting nervous.
The cost of hedging against wild swings in the value of the pound over the next month has jumped this morning. It hit its highest level since March 2009, in the aftermath of the financial crisis.
9.00am BST
Shares in miners and oil producers are rallying this morning, following the jump in the oil price.
The sight of Brent crude nudging over $50 per barrel is boosting confidence in the City, while a weakening US dollar is pushing up other commodity prices too.
Energy and Mining stocks are topping the FTSE this morning with gains of 2-3% after Brent Crude broke back above the symbolic $50/barrel 6-month highs overnight and an easing in US Dollar strength benefits the greenback-denominated raw materials space as a whole.
Sceptics will point to the breakout by oil - inspired by a drop in US oil stockpiles on top of falling US output and global supply problems - as likely attracting shale/frackers back to idle rigs.
8.28am BST
Japan's PM, Shinzo Abe, has apparently warned G7 world leaders that we could suffer a crisis on the scale of Lehman Brothers in 2008.
That's according to the Nikkei news agency
Japan's Abe Warns Of Lehman-Magnitude Crisis - Nikkei
JAPAN PM ABE WARNS OF LEHMAN-MAGNITUDE CRISIS - NIKKEI - oh goody!
'Lehman style' is one of Abe's favored rhetorical devices. Previously used as condition not to do sales tax https://t.co/7HwubCNvn5
Related: G7 summit: Juncker aide says Boris Johnson as leader is 'horror scenario' - live
8.26am BST
Here's an example of the supply disruptions that has pushed the oil price up, from Reuters:
A Nigerian youth group leader confirmed on Thursday that militants had attacked a Chevron oil facility in the Niger Delta.
"The attack truly happened," Eric Omare, spokesman for the Ijaw Youth Council, said.
7.53am BST
Oil prices have hit their highest level of the year, after figures showed that the long-running glut in crude prices could finally be eroding.
Brent crude, sourced from the North Sea, has jumped over the $50 per barrel mark.
$50 oil is back https://t.co/1FlvxKisbt pic.twitter.com/Bj7F5yttQD
"US oil inventories have largely topped out and should decline through the summer."
7.39am BST
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
We get a proper insight into the state of Britain's economy this morning, when the second estimate of GDP for the first quarter of 2016 is released, at 9.30am.
Private consumption growth is once again expected to make the main contribution to total growth with net trade likely being a drag. Expectations for business investment will also be muted given that the approaching EU referendum became a more high profile source of uncertainty during the period.
PM Abe welcomed #G7 leaders to Ise Jingu at start of the Ise-Shima Summit https://t.co/nsFjIsOiib pic.twitter.com/Mck6t92p7f
Oops pic.twitter.com/1ie3Zmka45
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