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Sajid Javid faces MPs over steel crisis - business live Steel crisis: No buyer for Tata UK unless pension liability solved - live
(35 minutes later)
10.34am BST
10:34
Reminder, you can watch today’s hearing here.
10.32am BST
10:32
We should hear from the business secretary in a moment....
Sajid Javid up next at @CommonsBIS let's hope he's asked by @IainWrightMP et al whether his decision to fly to Australia was a mistake...
10.30am BST
10:30
What we learned from Tata boss
That’s the end of the session with Bimlendra Jha, so what did MPs learn from the Tata UK boss?
1) The pension issue is absolutely crucial.
No potential buyer is going to buy Port Talbot, and Tata’s other steel plants, without some solution
Tata’s pension fund has £15bn of liabilities, and an estimated deficit of under £500m.
The collapse of high street chain BHS showed that pension black holes get bigger when a firm goes under, as potential losses are “crystallised”.
Jha insisted that there are ways of fixing this problem, without using public money; hopefully Sajid Javid can give more details shortly.
2) Tata insists it kept the government in the loop.
The “writing was on the wall all the time”, Jha insists, when quizzed about exactly when it warned the government that the situation was unsustainable. That raises fresh questions about Javid’s decision to fly to Australia as the crisis escalated.
3) Can Port Talbot be saved, in current climate?
Jha says there are “serious question marks” over the South Wales plant. And he pinned the blame firmly on high costs, such as energy and business rates, that are making it unprofitable.
We would not be selling up if we could make money, he insists.
4) This crisis could still end very badly.
As he urged the government to address the pension issue, Jha warned that the stakes are terribly high.
It’s not just the four thousand or so workers at Port Talbot, but the “economic and social consequences of that kind of disaster” if steel fails.
10.07am BST
10:07
Q: What can be done to remove uncertainty and help solve this crisis?
This uncertainty is exactly why we need an accelerated timescale for this sale, says Bimlendra Jha.
He may still be bristling from that criticism that Tata want ‘non-binding’ letters of intent from potential buyers next week).
We must remove uncertainty among customers, suppliers and staff.
The government have given us letters, which we can use to reassure suppliers, he adds.
10.01am BST10.01am BST
10:0110:01
Q: What happens to Tata UK’s pension liabilities if Port Talbot closes? Q: What happens to Tata UK’s pension liabilities if Port Talbot closes or is sold?
The number of contributors goes down by 4,700, Jha replies, so the burden increases and the scheme becomes weaker.The number of contributors goes down by 4,700, Jha replies, so the burden increases and the scheme becomes weaker.
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10.00am BST10.00am BST
10:0010:00
Bimlendra Jha then gives MPs a lesson in running a manufacturing giant in the 21st century.Bimlendra Jha then gives MPs a lesson in running a manufacturing giant in the 21st century.
UK manufacturing is in decline, and when we hurt ourselves with high energy costs or business rates you hurt the whole industry. And when a firm can easily move over the Channel and buy energy cheaper, the situation quickly worsens.UK manufacturing is in decline, and when we hurt ourselves with high energy costs or business rates you hurt the whole industry. And when a firm can easily move over the Channel and buy energy cheaper, the situation quickly worsens.
We cannot be the ones who shut the door on the industrial revolution which began in this country, Jha declares, jabbing at his desk.We cannot be the ones who shut the door on the industrial revolution which began in this country, Jha declares, jabbing at his desk.
And this chart, from retail commentator Paul Mitchell, shows how rates have gone up and up:And this chart, from retail commentator Paul Mitchell, shows how rates have gone up and up:
@graemewearden Javid and his Government's part they played with the ever increasing business rates burden for Tata. pic.twitter.com/irXDmKr09m@graemewearden Javid and his Government's part they played with the ever increasing business rates burden for Tata. pic.twitter.com/irXDmKr09m
9.55am BST9.55am BST
09:5509:55
Tata: No buyer unless pension liabilities are fixedTata: No buyer unless pension liabilities are fixed
Q: We’ve heard a lot about pensions liabilities at BHS this week, but those liabilities would be dwarfed by Tata Steel’s liabilities. What consideration have you taken about potential liabilities to the UK taxpayer?Q: We’ve heard a lot about pensions liabilities at BHS this week, but those liabilities would be dwarfed by Tata Steel’s liabilities. What consideration have you taken about potential liabilities to the UK taxpayer?
We need to be aware that if this pension fund liability is not taken care of, there is no buyer sitting out there to buy this business, CEO Jha replies.We need to be aware that if this pension fund liability is not taken care of, there is no buyer sitting out there to buy this business, CEO Jha replies.
[Tata UK has a pension liability of around £15bn] [Tata UK has a pension scheme of around £15bn, and a deficit of around £485m]
If we don’t solve this problem, we are staring at some very bad consequences for the UK taxpayers, Jha continues. It’s not just the Tata Steel workers, it’s the entire supply chain and the entire communities that demand on it.If we don’t solve this problem, we are staring at some very bad consequences for the UK taxpayers, Jha continues. It’s not just the Tata Steel workers, it’s the entire supply chain and the entire communities that demand on it.
Jha says:Jha says:
I don’t know what arithmetic has been done on the economic and social consequences of that kind of disaster....I don’t know what arithmetic has been done on the economic and social consequences of that kind of disaster....
Key point: Tata says no buyer for its steel works unless pension fund liability is addressedKey point: Tata says no buyer for its steel works unless pension fund liability is addressed
Q: What about your arithmetic? You bought this business, and you knew about the liabilities at the time...Q: What about your arithmetic? You bought this business, and you knew about the liabilities at the time...
We have kept it funded, Jha interjectsWe have kept it funded, Jha interjects
Q: But is there a wider issue about businesses walking away from their liabilities?Q: But is there a wider issue about businesses walking away from their liabilities?
Tata have constantly put money into the pension fund. We have had constant dialogue with our trade union partners.Tata have constantly put money into the pension fund. We have had constant dialogue with our trade union partners.
Jha then says Tata has been speaking to the government about finding solutions that would not involve public money or hurt the company.Jha then says Tata has been speaking to the government about finding solutions that would not involve public money or hurt the company.
He suggests that a move to a defined contribution scheme, rather than a final salary scheme, would help.He suggests that a move to a defined contribution scheme, rather than a final salary scheme, would help.
Updated
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9.40am BST9.40am BST
09:4009:40
"Serious question marks" about Port Talbot's viability"Serious question marks" about Port Talbot's viability
Q: Do all communications between Tata and the UK government go through you, Mr Jha?Q: Do all communications between Tata and the UK government go through you, Mr Jha?
No, replies Jha (who took over as CEO earlier this month)No, replies Jha (who took over as CEO earlier this month)
So you can’t be sure that Tata didn’t privately tell the government months ago that it was considering closure (as Sajid Javid told MPs this month).So you can’t be sure that Tata didn’t privately tell the government months ago that it was considering closure (as Sajid Javid told MPs this month).
Jha confirms that this is true, but then warns:Jha confirms that this is true, but then warns:
There are serious question marks about the viability of Port Talbot.There are serious question marks about the viability of Port Talbot.
TATA STEEL UK CEO JHA SAYS SERIOUS QUESTION MARKS OVER VIABILITY OF PORT TALBOT STEEL PLANTTATA STEEL UK CEO JHA SAYS SERIOUS QUESTION MARKS OVER VIABILITY OF PORT TALBOT STEEL PLANT
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at 9.41am BSTat 9.41am BST
9.37am BST9.37am BST
09:3709:37
Q: Does Tata believe the UK government is open to buying British steel for infrastructure projects?Q: Does Tata believe the UK government is open to buying British steel for infrastructure projects?
Marc Meyohas of Greybull Capital says the government is open to dialogue on this issue, and it’s crucial that this dialogue delivers results.Marc Meyohas of Greybull Capital says the government is open to dialogue on this issue, and it’s crucial that this dialogue delivers results.
The government have made it clear they are behind the industry, he says.The government have made it clear they are behind the industry, he says.
Q: Anything in writing?Q: Anything in writing?
Not to us, Meyohas replies.Not to us, Meyohas replies.
9.35am BST9.35am BST
09:3509:35
Tata boss: The writing was on the wall all the timeTata boss: The writing was on the wall all the time
Q: How long have you been talking intensively with the UK government?Q: How long have you been talking intensively with the UK government?
We have been talking to the government on a daily basis for months, Bimlendra Jha says. There is now also a team from Tata’s inWe have been talking to the government on a daily basis for months, Bimlendra Jha says. There is now also a team from Tata’s in
Q: When did you tell the government that the situation was so serious?Q: When did you tell the government that the situation was so serious?
Jha can’t say exactly when it happened, during the ongoing dialogue over issues such as business rates.Jha can’t say exactly when it happened, during the ongoing dialogue over issues such as business rates.
Q: When did you decide to pull out of the UK?Q: When did you decide to pull out of the UK?
At the board meeting of 29 March, when the board released that the losses were unsustainable.At the board meeting of 29 March, when the board released that the losses were unsustainable.
Q: But the government would have known how serious things were?Q: But the government would have known how serious things were?
The writing was on the wall all the time, Jha says. It’s hard to say when the penny drops in someone’s mind, though.The writing was on the wall all the time, Jha says. It’s hard to say when the penny drops in someone’s mind, though.
9.30am BST9.30am BST
09:3009:30
The commitee turn to Marc Meyohas of Greybull Capital, which is funding a management buyout of Tata’s site in Scunthorpe.The commitee turn to Marc Meyohas of Greybull Capital, which is funding a management buyout of Tata’s site in Scunthorpe.
We are confident that the management plan to turn Scunthorpe around will work, says Meyohas.We are confident that the management plan to turn Scunthorpe around will work, says Meyohas.
Q: Will it work better than your involvement with Comet (the UK retailer which collapsed in 2012)?Q: Will it work better than your involvement with Comet (the UK retailer which collapsed in 2012)?
We only had a small involvement in Comet, Meyohas insists.We only had a small involvement in Comet, Meyohas insists.
9.27am BST9.27am BST
09:2709:27
There is great sadness that we are leaving the UK, Jha concludes, but we must be responsible to our shareholders too.There is great sadness that we are leaving the UK, Jha concludes, but we must be responsible to our shareholders too.
9.26am BST9.26am BST
09:2609:26
Q: Is the government doing enough?Q: Is the government doing enough?
Tata UK CEO Bimlendra Jha says there is a growing awareness that more needs to be done, such as on energy costs.Tata UK CEO Bimlendra Jha says there is a growing awareness that more needs to be done, such as on energy costs.
But there are serious structural weaknesses - Tata UK would not be loss-making if we had Germany’s energy costs.But there are serious structural weaknesses - Tata UK would not be loss-making if we had Germany’s energy costs.
Q: Would you be selling the business if there wasn’t an uneven playing field?Q: Would you be selling the business if there wasn’t an uneven playing field?
We wouldn’t not be selling the business if it wasn’t loss-making, Jha insists.We wouldn’t not be selling the business if it wasn’t loss-making, Jha insists.
Tata has put in £1.5bn in capital expenditure, and written off £2bn, and hasn’t taken a divident from the UK operations in the last nine years.Tata has put in £1.5bn in capital expenditure, and written off £2bn, and hasn’t taken a divident from the UK operations in the last nine years.
We have taken all the hit, all the time.We have taken all the hit, all the time.
UpdatedUpdated
at 9.26am BSTat 9.26am BST
9.21am BST
09:21
Tata: We can't keep sites running indefinitely
Q: What is the timescale for a sale?
There is no deaddrop time, but given the losses, urgency is important as we can’t continue to bleed money.
Q: Can you guarantee that you will keep the UK operations running until a buyer is found to save jobs?
We cannot give any such commitment
Q: So do you have an internal deadline?
Jha insists that Tata is a responsible seller, however...
What if no buyer emerges? We cannot continue to bleed.
Updated
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9.18am BST
09:18
Iain Wright asks why Tata has asked potential buyers to submit offers by next week. Why is the timescale so short?
Our world reknown advisors believe this is a liberal timescale compared to what administrators would do, says Bimlendra Jha.
9.17am BST
09:17
Iain Wright, committee chairman, begins by asking Bimlendra Jha when Tata first began considering closing its UK steel operations rather than selling it.
We haven’t said we are planning to close it, Jha replies.
But the secretary of state told Parliament he was told privately several weeks ago that Tata was considering immediate closure, Wright says.
Our board meeting only decided to exit the UK, Jha says.
Wright asks if Tata intimated to the government that you might simply close the sites?
No. Jha insists. There is a very difficult business case to continue with Port Talbot.
Therefore, we must find a buyer who can make the whole UK strip system work - both Port Talbot, and the downstream operations.
9.12am BST
09:12
Steel hearing begins
The hearing on the Steel Industry is starting now, the Grimond Room of the House of Commons.
The first witnesses are Bimlendra Jha, CEO of Tata Steel UK, and Marc Meyohas, partner of Greybull Capital.
You can watch it live here.
9.03am BST
09:03
A month ago, the crisis in Britain’s steel industry appeared to be career-defining for Sajid Javid. Not in a good way, either.
Famously, the business secretary jetted off to a trip to Australia just as Tata’s board took the momentous decision to sell all its UK operations.
He was then dragged back to Britain (with a non-too-impressed teenage daughter in tow), and only reached Port Talbot on April 1 three days after the story broke.
Over the last month, Javid should have had his head down helping to find a buyer for Tata’s UK steelworkers and save around 40,000 jobs.
Last week, he announced that the government would provide hundreds of millions of pounds in state support, such as loans and grants, and possibly even an equity stake.
8.41am BST
08:41
Today’s steel hearing comes two days after prime minister David Cameron visited Tata’s main blast furnace on the south coast of Wales:
The Press Association explains:
Prime Minister David Cameron visited the Tata Steel works in Port Talbot, South Wales, on Tuesday to assure workers, unions and bosses of the Government’s commitment to support the future of steel-making at the under-threat plant.
Unions welcomed the recent offer of state support for potential buyers, but stressed that any action must cover plants across the whole country and not just in Wales.
Mr Rickhuss said the Prime Minister had “looked proud steelworkers in the eye and promised to do all he could to protect their jobs”, and said his union would “hold him at his word”.
8.30am BST
08:30
European stock markets have been dragged down by disappointment that the Bank of Japan didn’t unleash more stimulus today.
In London, the FTSE 100 has shed 40 points or 0.6%, and there are similar losses in Paris and Frankfurt.
Tony Cross, market analyst at Trustnet Direct, says:
London equities have been rattled in early trade with the shock news that the Bank of Japan offered no further stimulus being seen as a key factor in driving sentiment.
8.14am BST
08:14
Shareholder revolts today?
Britain’s investors have a great chance to protest against excessive boardroom pay today.
No fewer than 26 companies are holding annual general meetings today, and there could be revolts against remuneration policies at several major companies including drugs firm Shire Pharmaceuticals, and engineering group Weir.
My colleague Jill Treanor explains:
The votes on pay at Shire Pharmaceuticals, CRH (a building materials business) and Weir are expected to be tight, especially at Shire – where chief executive Flemming Ørnskov is receiving a 25% rise in his salary to $1.7m (£1.2m).
Related: FTSE companies prepare for executive pay showdowns
Updated
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8.04am BST
08:04
Japanese stock market takes a tumble
Investors in Japan are nursing heavy losses today after the country’s central bank defied expectations of yet more stimulus measures.
The main Japanese stock index, the Nikkei, has slumped by 3.6% and the yen has soared against the US dollar.
USD/JPY plunges >3 big figures on BOJ's no move, the biggest fall since Aug and third biggest since 2008-09 crisis pic.twitter.com/t8nboTGoel
All because the Bank of Japan left its (already sizeable) stimulus programme unchanged at today’s policy meeting.
Economists had been expecting another big move - further rate cuts and yet more electronic money-printing, to try and get Japan’s growth and inflation rate up.
So, bad news for plucky investors. But perhaps a victory for those who argue monetary policy shouldn’t be the only tool fighting the economic malaise.
Central banks re QE, alternating: "It's not working. We must do more of it!" "It's not working. We must do less of it!"
7.46am BST
07:46
The agenda: Steel hearing, and US growth figures
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The future of Britain’s steel industry is under scrutiny today, as MPs investigate efforts to save tens of thousands of jobs at Tata’s operations across the UK.
Business secretary Sajid Javid will be quizzed about the government’s plans this morning, at 10.30am.
Before that, the BIS select committee will also hear from Bimlendra Jha, chief executive of Tata and Marc Meyohas of Greybull Capital, which is buying Tata’s plant at Scunthorpe.
MPs are presumably going to ask how the UK steel industry reached this plight, the issue of Chinese steel dumping, and the government’s offer to partly nationalise the sites.
They should also probe reports that Tata might actually keep the sites, a month after shocking Britain by putting them up for sale.
Related: Sajid Javid to face MPs over crisis in UK steel industry
Here’s the key timings:
At 9.10am
At 9.50am
At 10.30am
Also coming up today....
At 1.30pm, we find out how the US economy fared in the last quarter. Economists expect a sharp slowdown, to a quarterly rate of just 0.15%.
That would make Britain’s slowdown, to 0.4%, look quite decent - and would also fuel concerns that the global economy is weakening.
In the City, Lloyds bank is reporting financial results.
And the Greek bailout crisis is also rumbling on.
Prime Minister Alexis Tsipras is due to speak to European Council President Donald Tusk today, after Tusk rejected his call on Wednesday for a leaders’ summit to discuss Greece’s bailout talks.
Related: Tusk rejects Tsipras request for EU summit on Greece bailout
I’ll be tracking all the main events through the day....
Updated
at 9.02am BST