Sajid Javid
Main Page: Sajid Javid (Conservative - Bromsgrove)
The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)
With permission, Mr Speaker, I would like to make a statement on Britain’s steel industry.
Yesterday, Tata’s board met in Mumbai and reviewed progress on the sale of its UK steelmaking assets. Ahead of that meeting, I travelled to India for discussions with Tata’s leadership. I arrived back in London just a few hours ago. I use this opportunity to stress the importance of Tata continuing a responsible and effective sales process, which I commend it for doing so far. I raised various challenges and issues that had been flagged up by potential buyers, and I reiterated the Government’s willingness to support bidders who can deliver a sustainable and successful future for British steelmaking.
Understandably, Tata wants the sales process to be as swift and as straightforward as possible. However, it assured me that it remains absolutely committed to being a responsible seller. There are a number of credible bids on the table, all of which we discussed. Tata is now studying the proposals closely before making a decision on which to take through to the next stage of the sales process. We will be continuing our dialogue with the bidders and with Tata while that happens.
This remains, quite rightly, an independent commercial process. It is not the Government’s job to pick a winner or to back a specific bid. What we can do is listen to Tata, listen to the bidder and work with everyone involved to remove potential barriers to a sale. For example, we are today launching a consultation on options to deliver clarity and security for British Steel pension scheme members. This follows representations from the trustees of the scheme itself and from Tata.
Let me take this opportunity to thank my right hon. Friend the Secretary of State for Work and Pensions and his team for all their hard work in making this consultation happen. The House will appreciate that commercial confidentiality stops me offering a running commentary on the sales process itself. Indeed, all the bidders have signed a non-disclosure agreement. However, I will continue to update the House on progress whenever it is appropriate to do so, and to work around the clock to support British steelmaking and British steel workers.
That support has already seen tens of millions of pounds of compensation paid to energy-intensive industries, which will exempt them from new renewable policy costs. It has seen us become the first Government to implement new guidelines, making it easier for the public sector to buy British steel, and it has seen us consistently standing up for British steel in Europe, including calling for tariffs on a range of Chinese imports where there is evidence of unfair trade.
As yesterday’s demonstration by steelworkers reminded us, this is ultimately about people—about the hard-working men and women who make British steel the best in the world. We owe it to them, their families and their communities to do everything we can to secure the future of their industry. That is why my colleague, the Minister for Small Business, Industry and Enterprise, and I have been fighting for British steel since long before the current crisis hit the headlines, and it is why we will continue to fight for British steel for as long as it takes. We are very pleased to have been supported in this fight by the First Minister of Wales. We are also receiving constructive support from trade unions, particularly Community. By putting aside political point scoring and focusing on what really matters, we are together forging a secure and sustainable future for British steelmaking. I commend this statement to the House.
Ms Angela Eagle (Wallasey) (Lab)
I thank the right hon. Gentleman for his statement and for advance sight of it. I am surprised that he failed to mention any of the details of the consultation paper on pensions that his Government published today.
I agree with the Secretary of State’s assessment of the importance of our steel industry to the UK economy. No one who saw the steelworkers march through London yesterday can fail to be moved by the sight of a dedicated and skilled workforce fighting for their industry. I welcome the right hon. Gentleman’s trip to Mumbai, along with the First Minister of Wales, to meet the Tata board yesterday—his direct engagement with the board is better late than never. I also welcome his confirmation that Tata is acting as a responsible seller. That is vital for the future of the industry here and I, too, commend Tata for it.
The British Steel pension scheme, especially the liabilities it now brings with it, is clearly an issue that requires resolution. Any resolution must protect the pensions of the scheme’s 130,000 beneficiaries, but it must also ensure that it avoids setting a potentially dangerous precedent for the millions of other occupational pensioners who currently enjoy retail prices index indexation rights. I recognise that there are no easy options. I welcome the consultation which has been published today by the Department for Work and Pensions, although the timeframe for responses is very short and the document has been published on the last day before a recess.
The suggested move from the RPI to the consumer prices index for the British Steel pension scheme risks setting a very worrying precedent for other occupational schemes. As the House will know, this change is currently illegal. Why has the Secretary of State said nothing about the details of the pension consultation he has published today? Can he now say a little more? Is there agreement across Government on the principle of the changes to sections 67 and 68 of the Pensions Act 1995, which would reduce indexation from RPI to CPI for this scheme?
What assurance can the Secretary of State give me that this proposed change will not be extended to other occupational schemes? Can this change be sensibly and safely ring-fenced? If not, the position is very difficult. What guarantees can the Secretary of State give the House on the future management of the British Steel pension scheme if such concessions limiting future benefits to pensioners are conceded now, especially on the administrative costs and the charges of the scheme going forward? Are there any other options that were considered by the Secretary of State but not included in the consultation, such as safeguarding the scheme on the public books, as was done with the postal scheme and the mineworkers?
Finally, has the Secretary of State considered the effect on the incentive to save for the wider workforce if accrued pension rights can be arbitrarily reduced in this way, as the consultation paper suggests?
Sajid Javid
I thank the hon. Lady for her comments and questions. She mentioned the demonstration yesterday. She is right that it reminds us that ultimately this is all about people. I was pleased to note that my right hon. Friend the Minister for Small Business, Industry and Enterprise attended that demonstration, alongside the Leader of the Opposition—two unlikely bedfellows but united in this cause to find a long-term sustainable future for our steel industry.
The hon. Lady, understandably, focused her questions on the pension scheme. I will answer as many of her questions as I can and provide more detail. I note that she is a former Pensions Minister herself and I take very seriously what she says. She has a great deal of experience in this area. While the consultation continues, I would be more than pleased to sit down with her and her colleagues and discuss matters in more detail, as I know will my right hon. Friend the Work and Pensions Secretary.
The hon. Lady raised the issue of time. It is a four-week consultation, as I think she knows, but time is of the essence. The steel industry is in a very difficult state. As I mentioned in my statement, Tata is looking to secure a sale as soon as possible. It has been responsible with the timeframe so far, but I hope the hon. Lady understands and agrees that timing is very important. With the timeframe that has been set for the consultation, I hope we have plenty of time to consider all the stakeholders that have responded.
On the consultation itself, one of the first important points to make is that it is the scheme’s trustees who have asked us to look at current legislation, because they believe that changes would lead to better outcomes for their members. So this is a product of the scheme trustees approaching us directly. Under the scheme’s current rules, they have the ability to make all the changes that they have proposed, but they are prevented, rightly, by legislation—the Pensions Act 1995. They have asked us whether we would consider removing that portion of the Act in the case of their scheme, and their scheme only.
It is clear from the consultation document—it was clear already—that the scheme is in deficit, so it is very unlikely that any situation can come about where, unless some of those changes are made, the scheme can be prevented from entering the Pension Protection Fund. That is not to say that there is any issue with the PPF; it is one of the strongest backbones of our pensions system. It is envied around the world and it provides an excellent safety net for so many people, but the scheme trustees have put forward this proposal and it is only right that we consider it.
I will not go into detail about how the proposal, if it were taken forward, would affect certain groups of members, but it is very important to emphasise that if the proposal were implemented it would not be the Government making any changes; those would be something that the scheme wanted to do because it believed that it would mean that in almost every case its members would be either better off or no worse off. That is the belief of the scheme trustees and it will be tested by the Pensions Regulator.
It is worth highlighting the fact that the Government have not made any decision. We are considering the pension trustees’ proposal. It is right to consider this and to consult widely, and for the Government to determine later whether it is the right thing to do.
Pauline Latham (Mid Derbyshire) (Con)
I welcome the Secretary of State’s statement about the possibility of Tata Steel being bought and carrying on as a business. That is very similar to Courtaulds, which closed down in my constituency yesterday. There are people looking to buy the business, keep it running and keep 320 people employed. May I have an urgent meeting with the Secretary of State to discuss that?
Neil Gray (Airdrie and Shotts) (SNP)
I thank the Secretary of State for advance sight of his statement. This is an incredibly sensitive issue, which must be handled with extreme care. That is why I am disappointed that there was not more detail in the statement today. It raises more questions than it answers. We wish to see the Government act where they can, and as quickly as they can, to support and save the UK steel industry. As I have said on so many occasions in this House, we on the SNP Benches are keen to support steel communities represented across this House.
As the shadow Secretary of State said, we are concerned that the proposal could set a dangerous precedent that undermines workplace pensions and incentives to save in order to secure dignity in retirement. Roy Rickhuss, general secretary of Community, said this morning that the union was not “taking anything off the table”, but that it was important “that any change in the law to save steelworkers’ pensions would not have an adverse impact on other pension schemes.” Mark Turner of Unite made similar comments this morning. That is why the SNP believes that it would be highly inappropriate for the UK Government to push the proposal through without further careful consideration.
In that vein, what discussions has the Minister had with the unions and others in the industry? How will the scheme work? How will pensioners currently in the scheme be affected? Will there be a disadvantage for future scheme members? Will he commit to set aside more time in this House so that all the issues can be teased out and discussed in a timeous fashion to support the industry and to ensure there are no wider unintended consequences?
Sajid Javid
I thank the hon. Gentleman for his comments. He quoted Roy Rickhuss, the leader of the Community union. Roy is right—we need to tread carefully. This is a very important issue and it is right, as the hon. Gentleman said, that we do not set any precedents that the House may later come to regret. At the same time, it is also right that we listen to the trustees, and indeed the unions and Tata itself, on this proposal and consider it very carefully. I am sure the House will have more time to look at it in more detail, and there is a lot more information in the consultation that has just been published. I understand that the hon. Gentleman may not have had enough time to look at that just yet, but the consultation period will give us the time we need to look at the issue very carefully.
David T. C. Davies (Monmouth) (Con)
I commend the Secretary of State for what he is doing to try to save this valuable industry, but I would just add—I say this as a pension fund member myself, albeit a small one—that I am slightly concerned by these proposals, so I hope we will proceed with great caution and with thought for all those who are likely to be seriously affected by them.
Sajid Javid
Many members of the pension scheme may well be concerned, and that is why it is absolutely right that they have full information from the Government in the consultation. I understand that the chairman of the trustees has today welcomed the Government’s move, but, at the same time, he has said that the trustees themselves will write to all the members. I welcome my hon. Friend’s recognition that this is all about not only getting the best outcome for the members but sustaining the long-term future of our great steel industry.
Mr Iain Wright (Hartlepool) (Lab)
I welcome the Work and Pensions Secretary’s rhetoric in today’s written statement, when he says:
“Britain’s steel industry is an important part of our economy and this Government is working to help the industry secure a long-term viable future.”
However, may I push the Business Secretary on the risk that steps that are taken could set a dangerous precedent, whereby companies abdicate their responsibilities to the members of their pension schemes? So is this deal purely for steel, or are the Government extending it to other strategically important sectors of the economy or to companies that are identified as crucial to the UK? Is the Government’s preferred option the precedent of the Royal Mail scheme in 2012 in distinguishing between past and future service contributions to members’ pensions in the steel industry?
Sajid Javid
I welcome the hon. Gentleman’s comments. First, there is no deal, and there is no preferred option; this is a very open consultation. As he will see, there are a number of options the Government are looking at, but no decision has been made. As I mentioned earlier, we are very wary of setting a precedent. I can assure him that this is very much about this scheme, and this scheme only, in these very unique circumstances.
Tom Pursglove (Corby) (Con)
As Ministers know, those of us who recently visited the Tata site in Corby with the Business Minister had a very good discussion about what the future holds for it. We heard about the time and investment that are needed to see the plan through. As part of his discussions not only with potential buyers but in Mumbai, has the Secretary of State had any indication that the investment we so desperately need in Corby will be forthcoming?
Sajid Javid
My hon. Friend asks a good question. Of course, he is rightly concerned about Corby and about the operations Tata Steel UK has in his constituency. There is a lot in this process that is commercially sensitive, and it would not be appropriate for me to discuss it in public. However, seven bidders have already come forward. A number have put forward much more detailed, serious bids, and Tata is seriously considering them. Many of them include a future for all the operations that Tata Steel UK currently has.
Frank Field (Birkenhead) (Lab)
Although the House is naturally concentrating on steel jobs and steel pensions, the Secretary of State must be aware that there are thousands of other schemes, covering millions and millions of members, that are equally difficultly placed at the current time, and I am sure he will find it difficult to gate this to just one scheme. Therefore, may I make a plea that, when we return from our short break, we have an opportunity to discuss the longer-term repercussions of the announcement he has made today so that there can be a feeling in the House as to what the next moves might be to defend what has been one of the great successes of the welfare state—occupational pensions?
Sajid Javid
I always listen carefully to what the Chairman of the Work and Pensions Committee has to say, particularly on this type of issue, and I would be happy to meet him to discuss this further. He makes a very important point: this should not be seen as a general look at pensions rules. We are lucky, as a country, to have a very robust pension system; when things do go wrong, there is a lifeboat that works. However, as I said earlier, this is very much about this scheme, although I would be happy to discuss this further with him.
David Mowat (Warrington South) (Con)
The Secretary of State’s consultation represents an important potential point-of-principle change. Will he tell the House whether the change to indexation alone will put the fund into surplus? If the fund is still in deficit after this change, is there not a possibility that a future PPF referral will mean a double whammy for the workforce?
Sajid Javid
The pension trustees believe that their proposal will move the scheme into surplus and make it stable. However, it is worth emphasising that the Pensions Regulator will be very much involved. If this actually did go ahead, the Pensions Regulator would rightly have to be satisfied with it, and there would also have to be a number of other safeguards.
Stephen Kinnock (Aberavon) (Lab)
There has been speculation in the media that Tata Steel may in fact decide to retain the business. Will the Secretary of State explain what role Tata Steel would play in dealing with the pension scheme if that were to happen?
Sajid Javid
There is all sorts of speculation on this issue in the press, but what I can tell the hon. Gentleman, who has been very committed to this process—we have discussed it in person a number of times—is that Tata remains committed and very focused on the sales process. As I mentioned earlier, there are seven potential bidders. The next step is to narrow the field—that is important—so that we can all focus, along with Tata, on the most credible bids. The Government stand ready to work with those bidders.
Mr Peter Bone (Wellingborough) (Con)
There is concern on both sides of the House about what would happen if the pension scheme was changed for Tata Steel. However, would not the sale be more attractive if we went to the root of the problem—the dumping of Chinese steel? Why can we not follow the example of the President of the United States, who has just put tariffs of 588% on Chinese steel?
Sajid Javid
Tariffs do have a role to play where there is evidence of unfair trade. The good news is that, where that evidence has come up, we have worked with our colleagues in the EU—and my hon. Friend’s colleagues in the EU—and been able to take action. In almost every case where a tariff has been introduced, it has resulted in a fall in Chinese imports of almost 90%. That shows us that the process is effective.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
My father-in-law is a British Steel pensioner. What does the Secretary of State believe will happen regarding the recent deals with Liberty and Greybull if the British Steel pension has to be absorbed into the Pension Protection Fund? Will he also remind the House how much money the Treasury has already made as a result of the state taking over the miners pension fund and receiving half the surpluses every year?
Sajid Javid
If this pension fund ended up in the PPF, the outcome would be different depending on the particular circumstances of this group of members. Where those members are existing pensioners—so they are receiving their pension already—they would typically continue to get 100% of their pension, but the indexation would change to the statutory minima, which is typically CPI.
Martin Vickers (Cleethorpes) (Con)
I know from my discussions with Ministers about the future of the Scunthorpe works that the Government have been grappling with the issue of business rate support for the industry. Is the Minister able to advise and update us on any progress that has been made on additional relief?
Sajid Javid
Business rates are an important component of costs for many industries. The Government have already taken action. In the last Budget, we announced that business rates would be indexed to CPI rather than RPI; by 2020, that will save business £370 million. Regarding steel, there are specific proposals. While we do keep these things under review, we are also very much focused on many other ways in which we can help the industry.
Jo Stevens (Cardiff Central) (Lab)
Has the Secretary of State or the scheme trustees had any preliminary discussions with the Pensions Regulator about this potentially very risky and precedent-setting proposal?
Sajid Javid
Yes I have, as have the Secretary of State for Work and other Ministers. That underlines the fact that if any of the proposals in this consultation went ahead, it would require the full support of the Pensions Regulator.
Seema Kennedy (South Ribble) (Con)
My right hon. Friend referred to the fact that this is all about people. Will he update the House on what support is given to steelworkers and the wider community?
Sajid Javid
Some of the best support that we can provide is the confidence that we have given to the sales process to secure a long-term future for Tata’s assets in the UK. My hon. Friend will know that, for example, we have talked about helping with financing on commercial terms, with potentially hundreds of millions of pounds of financing, including a potential equity investment, on commercial terms, of up to 25%.
Marion Fellows (Motherwell and Wishaw) (SNP)
In Scotland, the Tata plant in my constituency, Dalzell works, has already been sold on, but current and former steelworkers in Motherwell and Wishaw will rightly be concerned about their pensions, now frozen in the Tata scheme. Will the Secretary of State provide assurances as quickly as possible to my constituents that their future pensions are secure?
Sajid Javid
It is important that the hon. Lady knows that no pensions are frozen. The scheme is working as it should. The reason this consultation has come about is that, as I have said, the scheme trustees believe that this may lead to a better outcome for all members, including her constituents.
Julian Knight (Solihull) (Con)
I welcome the Secretary of State’s statement. What assurances can he give the House that in his able work to aid the steel crisis, the crucial principles that members should always have the final say, and that employer pension promises, once made, should always be delivered, are protected?
Sajid Javid
My hon. Friend is absolutely right to highlight that. Of course, we must do everything we can to maintain integrity in our overall pension system. In this particular case, it is important to examine carefully the trustee’s belief that exploring some of the alternatives laid out in the consultation would be a better outcome for their members than the alternative.
Mr Dennis Skinner (Bolsover) (Lab)
Is the Secretary of State aware that the last Tory Government to deal with a major occupational fund was the Major Government way back in 1994, when they privatised all the pits and then did a deal with the detested Union of Democratic Mineworkers in order to get the thing on the pension fund settled? The result was chaos, and the net result was even worse after that, because it meant that the Government were able to get their hands on billions of pounds from the miners pension fund, and then at the end, when me and my hon. Friend the Member for Wansbeck (Ian Lavery) were calling for a little bit of state aid to save the last remaining pits, that lousy, rotten Government would not find a penny.
Mark Spencer (Sherwood) (Con)
I know that the Secretary of State and the Business Minister will do all they can to secure as many jobs as possible and to make sure that the pension scheme pays out to as many as possible, but will he assure us that whatever deal is done, it will be sustainable and we will not be back here in two years’ time facing the same challenges in the steel industry?
Sajid Javid
I can assure my hon. Friend that no deal has been done. This consultation is about exploring options that have been brought to us by the trustees, and its right that we look at that. As a further assurance, I can tell him that the regulator would have to be involved, as well as a number of other safeguards, if we went ahead.
Anna Turley (Redcar) (Lab/Co-op)
I appreciate that the timescale in this consultation has to be short, but will the Government commit to publishing a full impact assessment on what this means for people? My constituents have suffered so much in the past six months, and if they get another kicking like this, it will be absolutely disgraceful. The Government have acted shamefully on the British steel industry—please, please look at what the impact of this will be.
Sajid Javid
I have listened carefully to the hon. Lady. Rightly, many people, including her constituents, will want to know what impact this could have. I think they would equally want to compare it with the alternative as well, and judge for themselves whether they would better off with the proposal from the trustees. There is a lot more information in the consultation document, but I am sure that over the next few weeks more will be available.
Wendy Morton (Aldridge-Brownhills) (Con)
I welcome the statement by my right hon. Friend. As these important discussions about the pensions continue, will he assure me that all the rest of the work to support the steel industry continues? With that in mind, may I congratulate him on his announcement on rolling out the guidance on procurement practice to the whole public sector, and ask what he is doing to ensure that UK steel companies are aware of bidding opportunities and are best placed to win contracts?
Sajid Javid
I thank my hon. Friend for her comments. I can absolutely assure her that we continue with the rest of the work, which began a long time ago, including on energy costs, emissions regulations and unfair trading, but of course on procurement as well. One of the streams on procurement, as she suggested, is ensuring our procurement pipeline. Over the next five years we have the biggest infrastructure pipeline of any Government, and that is well known to all steel suppliers and producers.
Angela Smith (Penistone and Stocksbridge) (Lab)
I acknowledge that the Secretary of State and the Business Minister have both visited Stocksbridge, and they will now fully understand that the plant makes some of the very best steel in the world. On that basis, it is really important that we have a responsible buyer for the business. Will the Secretary of State give further details of the timetable, which would be an indicator that Tata is committed to finding a responsible buyer, and tell us how the pensions consultation timetable fits into the overall timetable for the sale of the Tata UK holdings?
Sajid Javid
I enjoyed my visit last week to Stocksbridge in the hon. Lady’s constituency, where I could see for myself just what a strong and valuable business it is. I agree with her comments about the business. In terms of the timetable, I mentioned earlier that Tata itself wants a swift process, but it has not set out a specific timetable. That is good, because there is some flexibility in that. The pensions consultation is a four-week consultation. If the Government were to take any of the proposals forward—again, I stress that it is an “if”—it will be based on the evidence that is returned in the consultation. Then we would want to make sure that it is done as quickly as possible in order to help the sales process.
David Rutley (Macclesfield) (Con)
I understand that there are a number of credible bidders in the sale process. Are there options for those bidders to work in partnership to help to seek solutions for the pension scheme and for the UK steel industry more widely?
Sajid Javid
Seven bidders have expressed interest so far, and that field will now be narrowed down—I cannot tell my hon. Friend exactly to how many, because I do not know at this stage. Where there are bidders that may want to work together, I am confident that Tata will take that seriously.
Mr Kevan Jones (North Durham) (Lab)
What ongoing discussions has the Secretary of State had with his colleagues in the Ministry of Defence about protecting the steelmakers and processes involved in the Successor programmes, such as Sheffield Forgemasters in Sheffield? These are important not just for the UK economy but for the ability of this country to provide an independent nuclear deterrent.
Sajid Javid
There have been regular meetings with our colleagues in the Ministry of Defence and with the companies, including Sheffield Forgemasters, that specialise in some of the steel that is required for our defence purposes. The hon. Gentleman will be pleased to know that, for example, the new Queen Elizabeth aircraft carriers will use some 95,000 tonnes of British steel.
Steve Double (St Austell and Newquay) (Con)
While words of support from Labour Members are always welcome, has the Secretary of State made an assessment of the impact that the climate change levy introduced by Gordon Brown has had on the steel industry? What steps are the Government taking to support other energy-intensive industries such as the china clay industry that is so important to my constituency?
Sajid Javid
That is an important point: energy costs are important for all energy-intensives, including steel, ceramics and many other industries. We have already introduced compensation for the green policy costs to industry, and that already saves the steel industry, including Tata Steel, £80 million, and we are now moving further towards an exemption, which could save another £400 million by the end of this Parliament.
Jessica Morden (Newport East) (Lab)
As well as yesterday’s march, Nissan held an event in Parliament celebrating the excellence of the supply chain, which includes the Zodiac line in Llanwern, and highlighting the skill and dedication of the workforce. In these difficult times, will the Secretary of State be specific about what Ministers are doing to ensure that customer confidence is being maintained?
Sajid Javid
Unfortunately I missed that exhibition because I was not here, but my right hon. Friend the small business Minister attended it and I agree with the hon. Lady about the Zodiac line’s importance to our excellent automotive industry. We have been in touch with Nissan and, indeed, all our other major auto producers, as well as many other companies that rely on British steel, particularly from Tata’s operations. We have been making sure that they have confidence in the sales process so that they can be secure that the supply will be there for the long term.
Jeremy Lefroy (Stafford) (Con)
I thank the Secretary of State and the small business Minister for all the work they continue to do on this matter. I want to raise the question I raised last year about problems with the quality of imported steel, particularly in the construction industry. What work is the Department continuing to do on that?
Sajid Javid
My hon. Friend is right to raise that issue. British steel is known for its quality worldwide, not just at home. There have been cases where companies have come to regret some of the steel they have imported. It is important that the Government continue to play a role, alongside the industry, to highlight that.
Sarah Champion (Rotherham) (Lab)
The Secretary of State speaks of urgency when it comes to the pension consultation, but does he agree that if he had acted with urgency years ago, when we raised the underlying problems, we would not be in the desperate situation we are in now?
Sajid Javid
The hon. Lady is right to mention urgency, and that is why this Government are acting as quickly as they can. To be fair, she should speak to her party leadership and ask why, in the last Parliament, the then Leader of the Opposition, shadow Chancellor and shadow Business Secretary did not use the word “steel” once in the House of Commons.
Kevin Hollinrake (Thirsk and Malton) (Con)
I welcome the Secretary of State’s efforts to save as many steel jobs as possible, and he obviously also has to look at the pension funds. Would any prospective change to pensions legislation include a ballot of scheme members so that they could give their approval?
Sajid Javid
My hon. Friend asks a good question. Under the current scheme rules, the trustees have the right to make the changes they have proposed, but what is preventing them from doing so is legislation. When the trustees discuss the issue and communicate with their members, it is important that they provide full information.
Hywel Williams (Arfon) (PC)
The Secretary of State mentioned the support of the First Minister and the trade unions. Likewise, Plaid Cymru is resolute in its support of the steel industry; in fact, we proposed some practical and detailed measures that would have supported it many weeks ago. However, does he accept that our support is contingent on the pensions of current steelworkers and steel pensioners not being affected?
Sajid Javid
If the consultation proposals do not go ahead—it is important to note that the Government have not made a decision—it is very likely that the scheme will end up in the Pension Protection Fund, because of the size of its deficit. Of course, we and officials are happy to discuss the issue in more detail with the hon. Gentleman, but when he makes his determination I urge him to keep in mind what the alternative might be.
Kevin Foster (Torbay) (Con)
I welcome the Secretary of State’s statement and the actions that have been taken so far. He will be aware, however, that this is not the only industry or business where the company is in distress and pensions are affected. The BHS situation, for instance, affects employees in my constituency. Will he, therefore, confirm that this proposal is being considered only because of the desperate need to save jobs in the steel industry, and that any changes would apply purely to the company in question?
Sajid Javid
My hon. Friend makes an important point. We have excellent protection for pensions when things go wrong in this country. We can all be proud of that. I think that we all agree that this is a unique situation. The Government said that we would look at all options and it is right that we have this consultation.
Mr David Anderson (Blaydon) (Lab)
The Secretary of State said in response to my hon. Friend the Member for Bolsover (Mr Skinner) that this issue was not related to the mineworkers pension scheme, but there are lessons to be learned from it. Members need to understand that in 1994 it was estimated that the Treasury would get £2 billion out of the scheme over 25 years, but it looks like it will get £8 billion over 25 years, when retired miners and miners’ widows are struggling to survive. That is the lesson. What is the Treasury going to take out of the proposal if it is involved? Let us not let what happened in 1994 happen again.
Sajid Javid
I reassure the hon. Gentleman that the options that may have been used in the past are not being considered. The consultation document is clear and relates specifically to the British Steel pension scheme.
Mike Wood (Dudley South) (Con)
Thousands of members of the pension scheme at the old Round Oak steelworks in my constituency may need a buyer to ensure that we have a stable steel industry, but one of the obstacles to securing such a buyer has been the withdrawal of trade credit insurance over recent weeks. Will the Secretary of State do everything he can to ensure that appropriate guarantees are available?
Sajid Javid
My hon. Friend is right to raise that issue. The provision of trade credit is a commercial matter for Tata, but I am confident from what I have seen that the company can identify solutions. We are monitoring the situation very closely.
Nic Dakin (Scunthorpe) (Lab)
I welcome the Secretary of State’s reassurance that Tata remains committed to being a responsible seller. Will he confirm that Tata has responsibilities in relation to the pension scheme and that we will make sure that it delivers on them, in partnership with other stakeholders, in order to deliver the Secretary of State’s stated aspiration that no pensioner will be worse off after the process is completed?
Sajid Javid
The hon. Gentleman is right to say that the scheme sponsor, Tata Steel UK, has responsibilities to the pension scheme. The reality is that the scheme is in a deficit of, depending on how we measure it, anywhere between £700 million and £1.5 billion, and perhaps even higher on a buy-out basis. It is well understood that the company is not able to cover that deficit because of its financial troubles. That is why the scheme trustees have made their proposal, and I hope that the hon. Gentleman agrees that, while we should not rush to any decision, it is right to consider it.
Richard Fuller (Bedford) (Con)
Will the Secretary of State confirm that paragraphs 141, 142 and 143 of the consultation are clear that, should the Government decide to regulate for change on indexation, revaluation or transfer, and the scheme were then to make a surplus, that surplus would be used in the best interests of members and not transferred out?
Sajid Javid
I can confirm that, should the changes proposed by the trustees take place, whatever surplus or change to the value of the scheme they bring about will be for the benefit of the members and no one else.
Paul Flynn (Newport West) (Lab)
I declare a financial interest for the 30 years I worked in the steel industry and the pension I receive, although it is meagre compared with the amount I will be entitled to next year for 30 years in this House. Should we not recall that steelworkers have served the nation well in an industry that is usually dirty, usually dangerous and always skilled? It is right that we look at the situation—I respect the difficulties of this—and say that the nation cannot have a manufacturing base unless it is built on foundations of steel. Is there not something repugnant about expecting pensioners, who have given so much, to pay for this rather than expecting the nation, which owes so much to the steel industry, to do so?
Sajid Javid
I agree with the hon. Gentleman that the steel industry is absolutely vital. It is important for our economic security and our national security, and that is why the Government will do everything we can and leave no stone unturned in our attempts to find a long-term, sustainable solution for Tata’s assets in the UK.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
The steel industry has been crying out for the lesser duty rule to be scrapped, but the Government have shown utter reluctance to do that. UK Steel recently brought forward a possible pragmatic solution to the lesser duty issue to change how tariffs are calculated without necessarily scrapping the rule outright. What is the Secretary of State’s response to that proposal?
Sajid Javid
There was a meeting of the EU trade council last week, which the Minister for Trade and Investment attended. We think that improvements could be made to the trade defence mechanisms, particularly around speeding up investigations and reviewing how duties are calculated. We do not think that there is evidence to support changing the lesser duty rule, but further improvements can be made.
Sue Hayman (Workington) (Lab)
The Tata Steel products plant in my constituency is part of the sale deal with Greybull. I thank the Minister for Small Business, Industry and Enterprise for the meetings she has had and the discussions we have had to secure that site. The workers at the plant are very concerned about their pensions. Some of them have been there for more than 40 years, and they are distressed and worried. They have been loyal employees, and they have given their working life to the plant. Will the Minister assure me that he understands how worried they are, and will he give them an assurance that they will get their full pensions?
Sajid Javid
The hon. Lady rightly refers to the hard work of the steelworkers—those in the industry now and those who have worked for it in the past—in this pension scheme. It is absolutely right that we listen to the trustees and see whether there is anything that the Government can do to bring about a better outcome. That is why we have announced the consultation. I am sure that when the hon. Lady has had time to go through it in detail, we will be able to speak further about the best way to take that forward.
Ms Margaret Ritchie (South Down) (SDLP)
What consideration have the Government given to the impact that steel industry problems will have on the manufacturing industry and the economy across these islands and particularly in Northern Ireland, where rolled steel and other products are imported through Warrenpoint harbour and docks in my constituency?
Sajid Javid
The hon. Lady highlights the importance of the steel industry to manufacturing in the UK, whether it is our auto industry or our aerospace industry, and to the infrastructure needs of this country. That is one reason why we are doing everything we can to help.
Mr Clive Betts (Sheffield South East) (Lab)
May I thank the Minister for Small Business, Industry and Enterprise for coming to visit Outokumpu and representatives of Forgemasters in my constituency, and for enabling my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) and me to join in the conversation? That was really helpful. For the future not merely of Tata but of firms such as Forgemasters and Outokumpu, when are the Government going to act to take away from them the unfair burden of having to pay 85% more for their energy than do their competitors in Germany?
Sajid Javid
Again, the issue of energy comes up in the House, and hon. Members are right to raise it. That is why we have taken action with the compensation scheme, which is now effective and which is helping all steelmaking companies, including Outokumpu, and that is why we are going further with the exemption. We keep the matter continually under review.
Nick Thomas-Symonds (Torfaen) (Lab)
There are 133,000 members of this pension scheme, and I should say that they include many of my constituents, and my father. Given the enormous amount of work that so many people have put into their pensions, does the Secretary of State agree that even though time is extremely short in this four-week consultation, in order to be fair to all those people it must be as wide as possible and consider both the short-term and the long-term effects?
Sajid Javid
I absolutely agree with the hon. Gentleman. I have explained the sense of urgency in finding a credible buyer for Tata’s steel business in the UK. He is absolutely right to stress that the consultation should be wide-reaching and that we should make sure that it brings out the fullest information possible so that when a decision is made, it is made with all that information in mind.
Jim Shannon (Strangford) (DUP)
Recently, Conservative MEPs were split over granting the Chinese Government market economy status. Can the Minister confirm for the House whether the Government’s position is still to grant market economy status?
Sajid Javid
The EU Commission is doing a detailed assessment of the question of market economy status for China. We await the outcome of that, and then we will respond. It is worth reminding the hon. Gentleman that even if China was granted market economy status, it would not prevent us from taking action on tariffs.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
We ought to remind ourselves what pensions are: deferred income. I have some concerns when I hear the Business Secretary talking about a scheme that could go from a deficit of £750 million to one of £1.5 million and end up, as a consequence of the proposed changes, in surplus. We should recall that that is cash that should go to pensioners. Before the House votes on the matter, as it will have to do, we need the full actuarial assumptions so that we can understand the implications. We need to have a proper and thorough debate on the matter and consider the consequences for other occupational pension schemes. These issues are very serious and must be debated fully.
Sajid Javid
I agree with the hon. Gentleman. Much more information needs to be available on any proposal that is brought to the House. As I say, the Government have not made a decision on this, but I think it is entirely responsible of the Government to listen to what the trustees have to say at this point—after all, they are legally responsible and have fiduciary responsibility for all their members—and to put these proposals in the consultation. Before action, if any, is taken, there needs to be a lot more information.
Alex Cunningham (Stockton North) (Lab)
The steel industry would not be in the state it is in were it not for dumped Chinese steel. Does the Minister personally back market economy status for China, which could make the problem much worse?
Sajid Javid
It is fair for the hon. Gentleman to raise the issue of Chinese steel, because we have all seen the massive increase in Chinese output of steel over the last decade, but it would be wrong for Members to assume that that is the only issue facing the industry. Regarding market economy status, as I mentioned, a review is being conducted by the Commission. Once it has reported, we will consider it.
Mr Deputy Speaker (Mr Lindsay Hoyle)
The penultimate choice: Geraint Davies.
Sajid Javid
The hon. Gentleman is right to raise the issue of energy costs. He should bear it in mind that although it is an important component of steelmaking, the total cost is often in the low single digits. Of course, that does not make it unimportant, and that is why we have taken action. We have introduced compensation and we are moving towards exemption, which will help.
Mrs Madeleine Moon (Bridgend) (Lab)
Talking to steelworkers yesterday, I heard over and over again how highly skilled members of the workforce were being poached by other industries. Does the Secretary of State appreciate the importance of maintaining the confidence of the skilled workforce in the steel industry? Perhaps one way he could do that would be to give an assurance today that public sector contracts will always specify a high percentage of British-made steel.
Sajid Javid
I hope the hon. Lady will agree that the Government have done a great deal to bring confidence to the sales process through changes in procurement, where for the first time we have allowed for economic and social factors to be taken into account when making those decisions. In addition, I think that what the Government have said about helping with finance on commercial terms has helped to provide confidence to the industry.