Tata Steel: Ministers warned they are taking ‘dangerous path’ over pension law

A plan to cut pension benefits to help save Tata Steel's UK operations could take ministers down a “dangerous path”.

Steel workers wave banners as they take part in protest march through central London (Getty Images)

A former pension minister has issued warnings over the Government’s plans to cut pensions benefits to save Tata Steel’s UK operations.

Steve Webb said the proposed changes could take ministers down a “dangerous path” and create an adverse effect for other pensioners.

The pension security of “hundreds of thousands of workers, well beyond the steel industry could be affected,” he said.

His warning comes as the Government has confirmed it is looking at solutions in relation to Tata’s £15bn UK pensions liabilities, which are seen as a major obstacle to a successful sale.

A new consultation on the changes which could enable a restructuring of the Tata pension fund is expected to be launched on Thursday.

Labour urged the Government to tread carefully and ensure workers’ pensions are protected.

“Steel workers’ pensions must be protected, they've earned them with hard graft over many years,” said Owen Smith, the shadow Work and Pensions Secretary.

“So if ministers are considering measures which might see those pensions reduced, MPs from all parties, especially those representing steel communities, will want a chance to question the plans, along with the trade unions who are playing such a vital and impressive role standing up for Tata workers,” he added.

The British Steel pension scheme has 130,000 members and it is yet unclear how many of those would be affected by the changes.

Britain's steel industry has been hit by cheap Chinese imports, high energy costs and a global supply glut and, in March, Tata said it wanted to sell its remaining plants in the country, putting 15,000 jobs at risk.

Hundreds of steelworkers marched through London on Wednesday to put pressure on Tata and the Government to save the crisis-hit industry.

Tata announced on 9 May that it was considering seven expressions of interest in its UK business and bidders were required to submit their proposals by Monday.

A shortlist of bidders had been expected following a Tata board meeting on Wednesday. But finance director Koushik Chatterjee said bids were still under “active consideration”.