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Steel crisis: No buyer for Tata UK unless pension liability solved - live Steel crisis: business secretary admits he should have flown to Mumbai - live
(35 minutes later)
11.08am BST
11:08
Q: Anna Soubry says she heard about Tata’s plans via Twitter. You were on the other side of the world - how can you claim you were in control?
Javid reiterates that commercial sensitivity stopped the government from saying more.
MPs on BIS committee say Sajid Javid has given impression during steel crisis that he is not in control of situation, he is denying this
11.06am BST
11:06
Q: The government has given some very mixed messages - first saying that nationalisation was off the table, but now offering to do whatever it takes.
Do you accept you have been on the back foot throughout this crisis?
Javid denies this, claiming the government’s message has been consistent despite the pressure not to release commercially sensitive decisions.
He points out that minister Anna Soubry didn’t rule out nationalisation, but then adds:
Rarely is nationalisation a solution - the best companies are in private hands.
Q: You’re doing it again - ‘rarely’ is not a decisive word. It doesn’t suggest a clear-cut plan to what’s been unfolding.
Javid repeats that he is under control. It has taken time for Tata to release info about its own plans, and the government has been reacting and adding its own detail.
11.02am BST
11:02
Javid’s decision to fly to Australia last month, not Mumbai, is particularly sensitive as he also took his teenage daughter along.
Javid says ministers 'have to be ready to turn back' when they are on trade missions (even to Australia with daughter in tow)
10.58am BST
10:58
Javid is asked about his dislike of "industrial strategy". He replies that manufacturing declined from 18% to 10% of GDP under Labour.
10.58am BST
10:58
Q: Businesses complain about the lack of a level playing field, so what can be done to help firms compete with German firms?
Javid says that more needs to be done on energy costs -- an issue which Tata UK raised earlier in this session.
10.55am BST
10:55
Some early reaction to Javid’s testimony:
Sajid Javid seems to be getting into a tangle. Admits he knew Tata was considering closing Port Talbot, but not clear why not in Mumbai
Javid admits that "with benefit of hindsight" he would have gone to Mumbai for Tata board meeting last month
10.54am BST
10:54
Javid: With hindsight, I should have gone to Mumbai
Q: If you could turn the clock back a month, would you have attended that meeting in Mumbai rather than going to Australia?
Of course, says Sajid Jabid. With the benefit of hindsight, knowing what they would say and how it would have been reported.
But the reality is that he must travel for his business.
10.52am BST
10:52
Javid: I wasn't blindsided by Tata
Q: Isn’t the truth that you were blindsided by Tata, which is why you set off to Australia leaving no-one in London who could deal with this crisis?
No, Javid insists. Tata is a large global business, so people in every management layer don’t always have all the information about what’s happening.
He denies that a better early warning system would have helped.
Q: It looked like you were on the back foot after the Mumbai meeting, in panic mode and scrambling around to get the initiative.
Javid denied that he should have flown to Mumbai for the board meeting - that would have been far too late. It might have made a great photo opportunity, but it wouldn’t have helped.
Instead, our work in the weeks before the meeting were crucial. And the government couldn’t have shared some information because it was legally sensitive - announcing it could have made the situation worse.
10.46am BST
10:46
Q: So when the Tata board met in Mumbai in late March, were you convinced that they had dropped the idea of complete closure and were looking for a buyer?
Yes, says Javid.
Q: So did Tata mislead you?
No, says Javid. But he was surprised by the speed at which Tata was looking to sell up.
Q: Frankly, secretary of state, I don’t understand why you weren’t in Mumbai, says Iain Wright.
Javid repeats that he had been shocked to learn in February that Port Talbot could close, but he had then begun looking for a buyer. So he was startled by newspaper reports that the board decided to settle the issue ‘within weeks’
That is not what we agreed with Tata, and that’s not what they are not planning to do.
Javid says he went on his (infamous) trade mission to Australia knowing that he could return if needed - as he did.
10.42am BST
10:42
Javid: We learned in February
Sajid Javid has arrived, flanked by two senior officials.
Iain Wright, BIS committee chair, goes first:
Q: You told the House on 11 April that Tata were seriously considering closing Port Talbot.
The CEO of Tata UK has questioned that this morning [earlier] - so who actually told you, and when?
Javid says that Tata India (so not the UK branch) told him in mid-February that they were considering shutting Port Talbot and focusing on the rest of their UK operations.
We then worked intensively to try to persuade Tata to keep funding their operations, and embark on a turnaround plan.
But it became clear that the board might not accept that, so we began considering whether an alternative owner could be found instead - and considering what we could do to assist
Q: What did you do between mid-February and the Mumbai board meeting at the end of March when the decision to sell up was taken?
Javid says he asked the company if there was anything we could do that would prevent them from closing Port Talbot. And the short answer was no.
There were things they wanted us to do for the rest of the business - but I kept my focus on saving Port Talbot. So we began considering whether another buyer could be found.
Tata is a global producer, not just a UK one, so there may be another company who could take their operations on.
10.34am BST10.34am BST
10:3410:34
Reminder, you can watch today’s hearing here.Reminder, you can watch today’s hearing here.
10.32am BST10.32am BST
10:3210:32
We should hear from the business secretary in a moment....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...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 BST10.30am BST
10:3010:30
What we learned from Tata bossWhat 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?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.1) The pension issue is absolutely crucial.
No potential buyer is going to buy Port Talbot, and Tata’s other steel plants, without some solutionNo 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.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”.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.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.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.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?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.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.We would not be selling up if we could make money, he insists.
4) This crisis could still end very badly.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.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.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 BST
10:01
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.
Updated
at 10.14am BST
10.00am BST
10:00
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.
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:
@graemewearden Javid and his Government's part they played with the ever increasing business rates burden for Tata. pic.twitter.com/irXDmKr09m
9.55am BST
09:55
Tata: 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?
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 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.
Jha says:
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 addressed
Q: What about your arithmetic? You bought this business, and you knew about the liabilities at the time...
We have kept it funded, Jha interjects
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.
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.
Updated
at 10.20am BST
9.40am BST
09:40
"Serious question marks" about Port Talbot's viability
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)
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:
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 PLANT
Updated
at 9.41am BST
9.37am BST
09:37
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.
The government have made it clear they are behind the industry, he says.
Q: Anything in writing?
Not to us, Meyohas replies.
9.35am BST
09:35
Tata boss: The writing was on the wall all the time
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 in
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.
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.
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.
9.30am BST
09:30
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.
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.
9.27am BST
09:27
There is great sadness that we are leaving the UK, Jha concludes, but we must be responsible to our shareholders too.
9.26am BST
09:26
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.
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?
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.
We have taken all the hit, all the time.
Updated
at 9.26am BST