Tata Steel has "in principle" reached an agreement to end the saga over its £15bn pension scheme and clear a path for a merger with German energy giant ThyssenKrupp, says the Financial Times.

"If the settlement moves to a successful conclusion, it could spell an end to the crisis in the steel industry that blew up last spring when Tata said it intended to quit Britain after years of losses," the paper adds.

Unions voted earlier this year to approve the closure of the old British Steel pension schemes, which have assets of around £15bn and offered a guaranteed payout rate based on salary, to new accrual.

This next step would address the trickier issue of what to do about scheme's existing members. Their accrued benefits added up to a £700m shortfall against projected assets and were costing the company £136m a year to fill.

While the bill was considered too high for ThyssenKrupp to take on, pension scheme law prevented Tata from reducing the rates it would pay to members.

This solution would see the scheme hived off into a separate vehicle into which Tata would invest £550m and 33 per cent of the UK business.

Members will have the choice of transferring into this new fund, where payments would be uprated at a slower inflation rate, or staying with the existing scheme, which would then fall into the pension protection fund (PPF), where most members would see payouts cut ten per cent.

Unions say the majority of members would be better off transferring to the new scheme.

"Tata said the deal was subject to approval by the Pensions Regulator and non-objection on the part of the PPF. The Pensions Regulator said important details remained to be finalised," said the FT.

Tata workers agree to close defined benefit pension scheme

16 February

Tata Steel workers have voted in favour of the company's proposal to close their generous defined salary pension scheme.

"In return for pension changes, Tata Steel has pledged to guarantee production and jobs at Britain's largest steelworks in Port Talbot, Wales, for five years and to invest £1bn in its UK business over the next decade," says Reuters.

A ballot had been open to more than 10,000 workers who are members of the Community and GMB unions for the past two weeks, says Sky News, and around three-quarters agreed to the reform.

Consequently, all new pension contributions will go into a new money purchase pension scheme, which does not guarantee a set payout and is exposed to market risk.

It should, however, help avoid the British Steel Pension Scheme "from having to be taken over by the Pension Protection Fund (PPF) lifeboat scheme", adds Sky. That would have cut payouts to existing pensioners by around ten per cent.

The deal also guarantees 4,000 workers at Port Talbot their jobs for the next five years, even if a proposed merger of Tata with German conglomerate ThyssenKrupp goes ahead.

However, the agreement - and with it the future of the steelworks in the UK - remains dependent on a bigger change to the pension scheme that would affect all 130,000 existing members.

Tata is seeking what Reuters describes as "rare regulatory approval" to cut future payouts by linking to a lower rate of inflation. It also wishes to hive off the scheme into a new company to avoid further contributions to meet a massive funding shortfall.

The company says its UK unit, which is set to post its first profit in five years, "will fail if it has to keep ploughing funds into a scheme with 13 times more pensioners than paying employees", Reuters adds.

Even if the deal does succeed, some remain unconvinced on the longer-term future for jobs at Port Talbot.

"Thyssenkrupp has said its main goal in merging with Tata's European operations is to combat overcapacity in the steel sector, and many expect this makes jobs at Port Talbot… vulnerable in the long term," says Reuters.

Tata Steel agrees £100m sale of 'speciality' business

10 February

Tata Steel has finally secured a formal £100m deal to sell its "speciality steel" arm to turnaround industrials consolidator Liberty House.

The deal brings to an end months of uncertainty for 1,700 staff across a number of Tata sites in South Yorkshire, as well as service centres in Bolton, Greater Manchester, and in China.

Upheaval dates back to March last year following the announcement that Tata was exiting the UK market altogether – and then the news that it had signed a "letter of intent" on a sale of the speciality arm in November.

In between Tata initially claimed it would only sell its UK businesses as a single asset. It later relented and split off its non-core arms, including the "long products" arm based out of Scunthorpe, which was sold last June.

The remainder of the operations, including the steelworks in Port Talbot, Wales, which has a 4,000-strong workforce, are set to be merged with German conglomerate ThyssenKrupp.

In order to facilitate that deal, which incorporates all of Tata's European steel assets, the Indian-owned firm is consulting on reforms to its UK business, including hiving off its pension scheme and limiting future payouts.

The speciality unit produces steel for the automotive, aerospace and oil and gas sectors.

In common with the improvement in the wider steel sector, it generated pre-tax earnings of £74m in the third quarter of its latest financial year, compared to a £90m loss the previous year, says the Daily Telegraph.

The purchase will make Liberty one of the largest steel and engineering employers in the UK with more than 4,000 workers across Britain, including Scottish mills that were also formerly owned by Tata.

Tata Steel still pursuing pension scheme law change

13 January

Tata Steel is still pursuing a radical shake-up of its £15bn UK pension scheme in a move that would require a change in the law, the Financial Times reports.

"Under plans being drawn up… members will be asked to consent to increases in future payouts being pegged to a lower measure of inflation, with the scheme put in a special purpose vehicle holding a guarantee from Tata Steel," the paper says.

The key challenge is the inflation change, which would save billions of pounds in future liabilities but would contravene a provision in the Pension Scheme Act 1995 stating promised benefits cannot be taken away.

Experts worry any alteration will create a precedent that unscrupulous employers could exploit to reduce pension bills. Tata argues it can be considered an exception because its own pension scheme documents from 1990 allow for benefit changes.

The proposals had the backing of former business secretary Sajid Javid, but his successor, Greg Clark, is understood to have refused to countenance the change.

Tata Steel has been stuck with a dilemma: it wants to offload its UK business, but a proposed merger with German rival ThyssenKrupp is unlikely to progress unless the burden of funding the pension scheme is removed.

Its plan to separate the scheme, with members that refuse falling into the Pension Protection Fund, also needs to be approved by the Pensions Regulator. However, officials are unwilling to give a green light because Tata is no longer on the brink of collapse.

Being "close to insolvency… is a pre-requisite for obtaining a regulated apportionment arrangement", says the FT.

Tata Steel was making losses of £1m a day last year, but a rise in steel prices means it is now eking out a modest profit. It is still on the hook for hefty pension payments that are only likely to rise, however.

The company's pension plans also advanced this week with a new offer of "hundreds of millions of pounds" to buy out a guarantee the scheme holds over a plant in the Netherlands.

Tata Steel rescue 'still faces pension hurdles'

9 December

The Pensions Regulator has warned "there are still major hurdles to overcome" to secure Tata Steel's pension scheme, despite this week's rescue deal, says The Guardian.

Tata has agreed to keep open both blast furnaces at the massive Port Talbot steelworks in South Wales, invest £1bn in the wider UK business and seek to avoid redundancies for the next five years.

However, in return it has demanded that workers make concessions on pay and terms, including agreeing to the closure of the final salary pension scheme to new contributions.

But experts say the move will only see a modest 1.5 per cent saving on pension contributions and that this is not sufficient to resolve the outstanding shortfall in the scheme.

John Ralfe, a pension consultant, told the Guardian: "Tata Steel is making annual cash contributions for new defined-benefit pension promises of 11.5 per cent of salary versus ten per cent for the replacement defined-contribution scheme.

"Closing the defined-benefit scheme does nothing to address the existing £15bn of liabilities."

When Tata put its UK business up for sale, its pension scheme had a £700m deficit. It is paying around £136m a year to fund this, an amount that is expected to keep rising.

That burden is a blocker to a proposed merger with German company ThyssenKrupp, which Tata is pursuing to secure its European and UK operations' long-term future. It has said it ideally wants to offload the scheme altogether.

The Pensions Regulator said: "We note the announcement from Tata Steel and look forward to seeing more detail from them regarding any proposal for the British Steel pension scheme.

"There are still significant issues to be resolved and we will consider any proposals carefully in light of their impact upon the 130,000 pension scheme members and PPF levy payers."

Regulators have been sceptical about the plan to set up the scheme up without a sponsoring employer and reluctant to send it into the Pension Protection Fund (PPF) without a much bigger financial contribution from Tata.

Entering the PPF would also be opposed by unions as it would reduce payouts to pensioners.

No easy solution presents itself, but the company is pressing on for now. The Financial Times reports Tata is close to agreeing a payment with pension scheme trustees to buy out the fund's claim on Tata's Dutch steelworks.

Pension experts warned of the risks to the financial health of the scheme if trustees did not extract a high enough price for its guarantee.

Tata Steel's £1bn rescue deal at mercy of pensions ballot

8 December

Tata Steel and trade unions have agreed a deal that will see both the blast furnaces at Port Talbot in South Wales stay open for at least five more years.

The Indian company will also invest £1bn in future steel production and pledge to seek to avoid compulsory redundancies over the next five years.

However, it wants staff concessions in return, including the closure of the £15bn final salary pension plan.

Tata wants to close the "defined benefit" scheme to new contributions and replace it with money purchase "defined contribution" funds, something most companies in the private sector have already done.

To help the deal, it has promised a maximum top-up of ten per cent of salary-to-employee-contributions of six per cent.

It's undoubtedly a less generous set-up, but is more affordable for the company.

While the unions have tentatively backed the plan, Roy Rickhuss of Community said the pension scheme closure was "a serious concern" and that they will ballot members on the proposal in the New Year.

"Tata has put a lot on the table in terms of investment and it is not clear what would happen to those commitments if this pensions deal was voted down," says the BBC.

Koushik Chatterjee, the group executive director of Tata Steel, said: "The proposed changes to future pension provision and other employment terms are necessary to de-risk the company and help achieve long-term sustainability.

"We are also working separately on a necessary structural solution for the British Steel pension scheme fund."

Pension expert John Ralfe told The Guardian the reduction from 11.5 per cent currently to ten per cent "saves virtually nothing".

Instead the long-term sustainability of the company depends on finding a workable solution to funding existing pension liabilities, against which the company has a £700m shortfall requiring it to invest £136m a year.

That is seen as blocking a proposed merger of Tata's UK steel assets with German rival ThyssenKrupp and the company has proposed spinning out the pension scheme into a separate company, or placing it in Pension Protection Fund.

Tata Steel proposes closing £15bn pension scheme

7 December

Tata Steel has suggested closing its massive £15bn final salary pension scheme as part of a plan to secure new investment into its Port Talbot plant in Wales.

The Indian-owned industrial giant was revealed yesterday to have put forward a deal to secure new investment into its remaining UK assets, which employ 9,000 people. The rescue plan would mean keeping up both blast furnaces at the South Wales site.

Tata has so far only committed to keeping both open for three years – and the Financial Times says one was due to close when that guarantee expires, "raising fears of downsizing and job cuts".

A total of 7,000 people are employed by Tata in Wales, 4,000 of whom work at the Port Talbot facility. Of these, half have roles "at the 'hot end' of the site, working on the blast furnaces and other processes that turn coke and iron ore into steel", says the Telegraph.

"An option being examined by local management is a partial relining of its interior that could extend its life by up to 10 years," adds the FT.

In return for this and other ongoing investment the company wants unions to agree to changes to staff terms and conditions.

Reports today reveal that the existing final salary pension scheme would be closed to new contributions and replaced by a "less generous – but today commonplace – defined contribution scheme".

Even if unions accept the proposals this will not be the end of the road for the pension scheme, which is seen as a "millstone" and a blocker to a mooted merger with Tata's German rival ThyssenKrupp.

"Tata Steel UK poured £136m into the defined benefit scheme during its last financial year," says the FT. This is expected to rise to £146m this year under current arrangements.

One option would be to seek agreement to move the scheme into the industry lifeboat, the Pension Protection Fund (PPF), despite the firm not being insolvent. But this would involve cutting future payouts and unions would therefore resist strongly.

The trustees of the scheme have expressed a preference for it to be hived off into a separate company, but the PPF has raised objections on the basis that with no sponsoring employer there is a greater risk of the fund eventually failing.

Tata Steel closes in on Port Talbot rescue deal

6 December

Tata Group is on the brink of a deal that will safeguard 4,500 jobs and both of the blast furnaces at its main plant in Port Talbot, Sky News says.

Unnamed sources claim the Indian-owned company is "edging closer to agreeing a deal with the steel unions which would see continued investment into the plant in return for concessions on staff terms and conditions".

Councillor Tony Taylor, who worked at the Welsh plant for 44 years, told Sky that if the future of two blast furnaces can be guaranteed, it will "secure the plant for 15 to 20 years". Currently, Tata has only guaranteed the furnaces for three years.

The Indian conglomerate announced in March it was planning to sell its UK operations following a sharp drop in steel prices, only to reconsider after the government stepped in to pledge hundreds of millions of pounds of support.

Tata has since sold off two satellite units. In June, it completed the sale of its Scunthorpe-based "long products" business, which produces steel for the rail and construction sectors, to turnaround investor Greybull Capital.

That business is now trading profitably under the revived British Steel brand.

Then last month, it struck a £100m deal to sell its speciality and pipes business in Yorkshire, which supplies the automotive, aerospace and oil and gas sectors, to global consolidator Liberty House.

The remaining rump of the business, with Port Talbot at its core, is now part of a plan to merge the broader European arm of Tata with German conglomerate ThyssenKrupp.

However, last week it was claimed the company could close of one of the blast furnaces at Port Talbot to save money irrespective of merger plans.

Port Talbot is Britain's biggest steelworks and employs more than 11,000 people directly or through its many contractor and service firms.

Tata's continued investment – and the merger with ThyssenKrupp – is said to be contingent on being able to offload or reduce liabilities in relation to the £15bn British Steel pension scheme, says the BBC.

Tata Steel could close Port Talbot furnace

30 November

Tata Steel and the German conglomerate ThyssenKrupp could close one of two blast furnaces at the UK's largest steelworks at Port Talbot following their proposed merger, Reuters reports.

The agency cites two "industry sources", one of whom is "close to ThyssenKrupp's board", as saying the companies expect "the struggling plant to be downsized" if the tie-up goes ahead.

Port Talbot accounts for around 4,000 steel workers. That's almost half of the 9,000 or so that will still be employed by Tata in the UK after the sale of its speciality and pipes unit, which was announced yesterday.

Reuters cited an email sent by two senior officials at the Community steel union that says that Tata has only pledged to keep the two blast furnaces at Port Talbot running for three years.

A union source said: "Three years is nowhere near enough. Our line in the sand has always been keeping two blast furnaces running. We want guarantees and besides, they've given us guarantees before that haven't materialised."

Separately, Wilhelm Segerath, who represents the works council on ThyssenKrupp's supervisory board, said in an interview this week that "workers would resist shutting down capacity in any merger", says CNBC.

Segerath added: "We have capacities that are worth preserving, and we will fight for that. I don't see any strengthening through a merger with Tata."

Commitments to retaining staff at Port Talbot could be part of any government-back rescue deal. Plans to include concessions on energy costs and cheap loans were mooted earlier this year.

Critically, the government is involved in talks to resolve an impasse relating to Tata's £15bn pension scheme, which is said to be £700m in deficit. ThyssenKrupp has said it does not want to take on the pension scheme in its current form.

Richard Farr, managing director at Lincoln Pensions, said: "There has to be some sort of compromise over the [pension] deficit. They [Tata] are doing their bit, now it's the government's turn."

Tata announced on Monday that it would invest £85m in its UK operations, "but the plan did not include any investment in Port Talbot, other than funds for an environmental scheme for its power plants", says Reuters.

Tata to sell Yorkshire steel plants in £100m deal

29 November

Indian conglomerate Tata has finally struck a £100m deal to sell its speciality and pipes business, safeguarding the future of hundreds of its employees. The business currently employs some 1,700 workers across several plants in Yorkshire.

The unit, which produces steel for the automotive, aerospace and oil and gas sectors, was put up for sale in the summer, after being separated from Tata's wider UK steel portfolio, which was at the time being sold as a combined entity.

A transaction was thought to be imminent in September, but nothing was forthcoming.

Now Tata has signed a "letter of intent" to sell the business to Liberty House, a buyer of distressed industrial assets that has already acquired a number of plants in Scotland and Wales from the Indian firm.

The steel union Community says it welcomes news of the negotiations following "months of unnecessary stress and concern".

The BBC adds: "The union said it would be seeking urgent talks with Liberty House… and would be asking what their plans were for investment, protecting jobs and providing decent pensions for members in retirement."

Tata has already split off another of its UK businesses, the long products division that supplies the construction industry. The division, which is based at the firm's plant in Scunthorpe, was sold to the turnaround investor Greybull in April.

Tata's remaining UK assets are the subject of merger talks involving its broader European operations and the German conglomerate ThyssenKrupp.

Crucial to those talks, and to the fate of the major Port Talbot works in South Wales, is the company pension scheme. Earlier this year it was £500m in deficit.

Ministers had hoped to change the law to allow future pension payouts to be capped and for the scheme to be hived off into a standalone company, but those plans were "shelved" earlier this year.

According to the Daily Telegraph, pressures on the UK business have eased because global steel prices have risen, while "moves in the market" mean the size of the pension scheme "funding hole has been reduced considerably".

Tata Steel pension reform plans 'shelved' by ministers

14 September

A controversial plan to reform Tata Steel's pension scheme and cut around £2.5bn from future payouts has been "shelved" by ministers, according to insiders briefed on the ongoing talks.

The revelation adds to questions over a proposed rescue of the bulk of Tata's UK steel operations, which it hopes to merge with its German rival Thyssenkrupp.

Like previous would-be suitors for Tata's assets, it is known that Thyssenkrupp is not willing to combine the businesses if they remain liable for a £15bn scheme that is billions of pounds in deficit, says the Financial Times.

A consultation on proposals to hive off the scheme and cut the rate at which future pension payouts are increased each year to the lowest level of inflation closed in June.

There has since been no formal word from the government. The post-Brexit departure of former business minister Sajid Javid (he is now communities secretary) means the reforms have lost their biggest supporter.

A number of other ministers and opposition MPs are also against the plans, not least because cutting payout rates would involve a change in the law that would be seen as setting a dangerous precedent.

Some sources believe Tata and Thyssenkrupp are already reconciled to losing the argument on the reforms and are "considering alternatives".

One such plan could involve pension scheme members being given the choice of joining a new scheme on the revised terms, or remaining in the existing scheme that would be placed in the Pension Protection Fund (PPF).

As joining the PPF would involve a 10 per cent cut to payouts, this would actually leave many worse off. Many pension scheme members could therefore opt to leave, achieving the intended outcome without requiring a legal change.

But, according to City AM, the trustees of the scheme appear to continue to favour the reform plans that were put to consultation.

Allan Johnston, chairman of the trustee board of the British Steel Pension Scheme, said: "The disapplication of Section 67 continues to be our preferred option and we expect to have further discussions with government before any decision is taken on the consultation outcome."

Tata Steel could agree rescue deal to save 2,000 jobs this week

13 September

Tata Steel could finally agree a sale of its speciality and pipes business this week, in the process saving around 2,000 jobs across sites in Rotherham, Stocksbridge and Hartlepool.

The business was placed up for sale earlier in the summer, having been separated from a plan to sell all of Indian-owned Tata's UK steel assets.

Having initially been adamant that any rescue buyout would have to be for the whole UK operation, the firm later backtracked by splitting its speciality unit from its main business.

Tata subsequently abandoned the sale of its remaining assets, instead including them in ongoing talks with the German conglomerate ThyssenKrupp over a merger of the companies' pan-European businesses.

That process is ongoing and remains dependent on talks with the government over Tata's £15bn British Steel pension scheme. The scheme has a huge funding shortfall that the company is keen to offload.

Tata's executive director Koushik Chatterjee told The Guardian: "We need more time – there is the complication of pensions. All bidders come with a univocal approach – that pensions have to be separated from the business."

As for the speciality unit, the Daily Telegraph says the "frontrunner" to acquire it is global commodities group Liberty House, which had been interested in making a bid for the whole UK operation.

Liberty House is expected to pay a "realistic" price of less than £100m, according to sources.

A sale earlier this year of the long products unit, which employs 4,000 staff and is based at a plant in Scunthorpe, was revealed by Tata yesterday to have swung the whole group to a net loss for the third quarter.

Greybull Capital paid a nominal £1 for the business, crystallising a £370m write-down and triggering a £350m loss for the three months.

On a cheerier note, the remaining UK assets, including the massive plants at Port Talbot in Wales, turned previous losses into a £90m gain for the quarter, with the weak pound helping to boost exports.

Chatterjee added: "Today we see a more depreciated pound, which is where exporting competitiveness has improved. That provides a lever [for the UK business] to sustain itself ... but that’s very fickle."

Pension lifeboat tightens 'dumping' rules ahead of Tata Steel rescue

22 August

A prospective rescue of Tata Steel's UK business, which would save primary steelmaking in the UK and with it, tens of thousands of jobs, still has to get over the significant hurdle of its huge pension deficit.

Now the industry's pension lifeboat has laid down the gauntlet in the form of toughened rules to prevent employers "dumping" their pension schemes to free up costs.

The Pension Protection Fund (PPF), which looks after £23bn in assets, has changed its regulations to put more of the cost of a bailout onto the offloading firms.

Companies will have to pay "all legal, financial and redundancy costs", says the Daily Telegraph. Bank fees charged to facilitate a restructuring will have to be deemed "reasonable".

The PPF mainly rescues pension plans whose sponsoring employer has gone bust. Members of bailed-out schemes face having their payouts cut by ten per cent.

However, on 24 occasions in the past eight years, the fund has agreed to take on plans from employers as part of a restructuring to allow them to stay in business. In these cases, it has also taken stakes in the surviving company of up to 33 per cent to secure a funding stream.

These conditions would form a blueprint for any rescue of the Tata Steel-underwritten £14bn British Steel pension scheme. It has a funding shortfall of around £300m, rising to at least £700m if it has to be bought in the private sector.

The huge burden has been a major obstacle to a sale of Tata Steel's UK unit, which was put up for sale in March.

It remains a potential blocker even to a revised rescue plan from Tata Steel's Indian parent company, which would see the UK arm bundled in with the wider European operations in a merger with German conglomerate ThyssenKrupp.

Pension trustees believe they can keep the scheme out of the PPF if it is hived off into a separate plan, as long as they can reduce obligations by cutting the rate at which payouts increase over time.

That might yet prove too politically sensitive, however, as it requires a change in the law. The PPF has also said that if it goes through, the scheme should be made ineligible for a future rescue.

Hopes rise for Tata Steel rescue deal despite pension doubts

12 August

Hopes have risen that Tata Steel UK and its 11,000 workforce will be rescued despite doubts over a controversial plan to restructure its pension scheme.

Last month, Tata's Indian parent company announced it was no longer seeking a sale of the UK assets it put on the block in March. Instead, the company intends to include the operations in its long-standing plans to merge its wider European business with German steel group ThyssenKrupp.

The Guardian says the revised plan depends on the government's previous pledge to give hundreds of millions of pounds to the company's UK operation in investments and loans.

A source has indicated that the financial package is still on the table and that the "sentiment is the same", adds the paper.

However, the deal also hinges on finding a solution to the £15bn British Steel pension scheme underwritten by Tata, which is thought to be at least £700m in the red.

One plan, backed by the former business secretary, Sajid Javid, is for the fund to be hived off into a new company with future accruals linked to a lower level of inflation. This has proved controversial as experts say it would drive "a coach and horses" through existing legislation.

It is now "understood" that the new Business Secretary, Greg Clark, has not given the proposal his backing and it is therefore no longer an option.

Trustees of the scheme told the Guardian it "would not be realistic" for the Tata/ThyssenKrupp joint venture - or any other bidder, for that matter - to take on the burden. This raises the prospect of pension liabilities bringing down the company.

They are confident, however, that a solution can be found and the scheme can be sustained outside the Pension Protection Fund, ensuring that payouts are better protected.

Clark has visited Tata bosses in India and talks are ongoing with the Pension Regulator. The mood is optimistic, although discussions are expected to drag on into the fourth quarter.

It is unclear how a revised pension scheme restructure would work, but the Guardian hints at Tata "pumping money into it in return for a change in workers' benefits" including potentially "limiting future increases in pension payments to the minimum required by law".

Overall, the pressure appears to have abated thanks to a turnaround in steel prices in March, when Tata's UK arm was losing £1m a day. The Brexit vote has also helped, as the pound's plunge has made steel exports more attractive and Chinese imports more expensive.

Greg Clark seeks to assure Tata Steel on rescue package

21 July

In one of his first engagements since becoming business secretary, Greg Clark has visited the under-threat Port Talbot blast furnace to meet Tata Steel bosses and unions.

Such an early visit sends a signal of the reshaped government's desire to press on with plans to protect primary steelmaking in the UK. The Guardian reports Clark took the opportunity to restate that the crisis remains a "priority" for his new, bigger business department.

Roy Rickhuss, the general secretary of steelworkers union Community, said: "The new secretary of state clearly understands the scale of the challenge still facing the industry, but his words to steelworkers today must be followed by firm actions to help save their jobs."

A spokesman for Tata Steel said: "We look forward to working urgently with the new secretary of state, alongside other stakeholders, to develop the best outcome for our UK business and its employees, as well as others including members of the British Steel pension scheme."

Tata's mention of the pension scheme arguably shows the key, contentious issue facing Clark. The government has already repledged hundreds of millions of pounds in commercial loans to the firm -and vowed to develop an "industrial strategy" that will cover issues such as energy costs.

But one of the major blockers to Tata's revised plan to retain its UK assets through a merger with German group ThyssenKrupp is the £14bn British Steel pension scheme, which is at least £700m in deficit and represents a huge ongoing financial liability.

A consultation on controversial plans to restructure the fund and reduce inflation increases closed in June, but the government changes mean there has as yet been no official response. The proposals are opposed by, among others, the Pension Protection Fund.

Finding some kind of solution could be the make-or-break issue to protect 11,000 direct jobs at Tata and potentially tens of thousands of others across its supply chain and wider industry.

There have already been job losses related to the uncertainty surrounding Tata Steel. Port Talbot's Fairwood Fabrications, an engineering firm with strong links to the steel sector, is to be liquidated with the loss of 250 jobs, reports the South Wales Evening Post.

Chairman Gherold Davies said the financial problems were related to the troubles in the steel industry.

Tata Steel pushes for speedy sale of units

13 July

Tata Steel UK is pressing ahead with plans to spin out its speciality division, which makes products for the aerospace industry, despite abandoning the sale of its broader British business.

The Indian-owned company is pushing for a speedy sale and has invited bids for the unit by this Friday, says Sky News.

The speciality division is the third-largest producer in its corner of the steel sector, with a client list including Airbus, Boeing and Rolls-Royce. It employs 2,000 people across plants in Rotherham and Stocksbridge, as well as service centres in Bolton, Xian in China and Nagpur in India.

According to documents sent to bidders, the arm made a pre-tax loss of £81.4m in the year to March 2016, but is expected to swing into a £33m profit within three years.

It is not the only part of the UK business being split and sold separately, Sky News claims. Tata is also said to be seeking a buyer for its pipeline tube business, which supplies steel products to the oil and gas industry and has a workforce numbering several hundred people.

Tata said in March it would sell its UK arm, which now employs 11,000 people since the sale of its Scunthorpe steelworks earlier this year.

The company initially said it would only consider bids for the whole of the business but as the process became mired in delays, rumours circulated that some standalone units might be sold independently.

The sale of its UK assets was cancelled altogether last week, amid merger talks with German rival ThyssenKrupp. It is believed an increase in global steel prices has returned the UK arm, which was losing about £1m a day, to profit.

Questions remain over pledges made by the government to support the business, specifically its proposals to reform Tata's £14bn British Steel pension scheme by reducing the rate of inflation increases.

Politicians have bemoaned the ongoing uncertainty surrounding Tata, which poses a threat to tens of thousands of jobs across a range of sectors.

This week, Welsh Assembly member Bethan Jenkins said two suppliers to Tata Steel have "gone into administration in recent weeks through being owed money by the steelmaker", reports the South Wales Evening Post.

"Contractors and suppliers are swiftly becoming the silent victims in this time of great uncertainty," she added, citing estimates that "as many as 18,000 people" work in Tata UK's supply chain.

Tata Steel holds out over future of Port Talbot plants

07 July

Tata Steel is no longer selling off its UK assets but refuses to offer guarantees on the future of Port Talbot.

The Indian-owned company confirmed on Friday that it has halted a process to separate its UK arm from its wider European operations. A sale process has been ongoing since March, but has been dogged by delays and accusations of brinkmanship.

Instead, year-long talks with German steel group ThyssenKrupp about a merger with Tata's businesses on the continent have been extended to include the UK arm, the Wall Street Journal reports.

But analysts at Deutsche Bank wrote in a client note that this change in tack makes the tie-up a "much higher risk transaction… in part because of Tata UK's high pension liabilities".

Herein lies the rub, adds The Guardian. Until Tata has thrashed out a deal with the government, it will not make promises about Port Talbot, which represents the last bastion of primary steelmaking in the UK.

"I think it is important to look at it from the prism of a competitive business rather than sitting on any firm guarantees," said executive director Koushik Chatterjee. "Volatility of the market and the risks to performance have to be mitigated by building a structurally competitive business."

He added: "It is about own internal plan being made more robust, it is about the… policy of both the Welsh government and the UK government, and then we have to get to the answer on pensions and look at a satisfactory conclusion to our engagements with the unions."

Chatterjee's focus on the pensions issue is telling. So far, the government has publicly stood by a pledge to offer up to £1bn in commercial loans to turn around Port Talbot.

But it has said nothing more about controversial reforms to the £14bn British Steel pension scheme. A consultation that proposed hiving off the scheme and cutting future inflation increases closed last month and prompted criticism from the likes of the Pension Protection Fund.

With a black hole of at least £700m and requiring hundreds of millions of pounds in top-up payments, the pension scheme remains a millstone around the business and holds back any deal.

Now it will be for new prime minister Theresa May and her team to make a call on the pension plans, which could be key to unlocking a deal to safeguard 11,000 jobs.

Tata Steel full nationalisation still on the table

7 July

A full nationalisation of Tata Steel UK is still an option if its Indian parent company fails to find a buyer and pulls the shutters down on its business, says Anna Soubry, the minister for small businesses.

Giving evidence to a joint parliamentary committee on the steel crisis, Soubry told MPs: "You can be assured we looked at all options and one of those was whether or not - my phrase - to ‘buy it for a quid’."

She added: "When you make political determination that you’re going to keep at least one of the blast furnaces [at Tata’s Port Talbot steelworks] open, you look at all options."

Committee member Stephen Kinnock, whose constituency covers the South Wales plant, asked if the option of temporary full nationalisation was still "on the table" as a last resort, to which Soubry repeated that "all options" were still being considered, reports The Guardian.

According to the BBC, Tata will announce on Friday that it is "pausing" the sales process to allow the company to consider its options after last month's EU referendum.

It is still expected to press on with the sale of its specialty steel-making business, which employs 2,000 employees in Hartlepool, Rotherham and Stocksbridge, in Sheffield.

ITV News adds there is now "only one bidder left with any serious chance" of securing a deal for the remaining assets – Sanjeev Gupta's Liberty House, which wants to radically revamp the Port Talbot works and replace the two blast furnaces with an electric arc furnace to process scrap steel.

Again, however, sources say a buyout is "unlikely any time soon" and that the Tata board is expected to decide tomorrow to "keep running their UK business for the foreseeable future".

The outlook is improving for steel, as global prices rise and a tumbling pound boosts export prospects. It has been estimated that Tata's UK arm, which was making losses of £1m a day, made a profit of £15m in the last quarter.

But the BBC notes that without a clear, final decision, the developments will mean "the future of the rest of the 9,000-strong workforce [remains] unclear."

Tata Steel gets renewed pledge on government aid

05 July

Amid a wave of political turmoil unleashed by the EU referendum last month, ministers are keen to show there is still a firm hand on the wheel.

In the business arena, one area of particular concern is the ongoing sales process for Tata Steel's UK assets, on which rests the fate of 11,000 jobs and the country's primary steelmaking capability.

Government representatives had been meeting "daily" with the Indian-owned company and were thought close to agreeing a deal that would see the firm scrap the sale and stay on as owner. But that is all now up in air in the wake of the EU vote.

Specifically, there are doubts that promises on financial aid would be honoured, that controversial pension scheme changes will be pushed through and over the firm's trading position outside the EU in general.

On the first of these worries, at least, the business department has offered fresh assurances. A statement to the Financial Times confirms a package of financial support continues to be on the table.

This means the government is still pledging to contribute equity and take a 25 per cent stake in any buyout – and to provide loans on a commercial basis to fund turnaround plans. These offers extend to Tata, if it decides to stay on.

Will this be enough to persuade the company to move on with a final decision, after it was reported by the Daily Telegraph this week that it had "pulled back" from the sales process?

A source told the FT Tata is now "recalibrating" its figures, indicating that the outcome will at least be delayed. It will be weighing up whether the question mark on tariffs for EU exports is sufficiently offset by an export-boosting slump in the pound.

Perhaps more importantly, the source added that the company remains concerned that its contacts in power government will now change – and with them, the stance on the steel sector.

It is waiting to see if a new prime minister will push ahead with the controversial changes to the £14bn pension scheme and with relief on energy costs.

A Tata spokesperson said the strategy review of its UK business was continuing and that the company would be "considering implications from the referendum".

New Tata Steel rescue bidder claims Brexit is a boon

30 June

Tata Steel is said to be in talks with a last-ditch bidder for its stricken UK assets.

City financier Ed Truell has "opened talks with Tata Steel, the Pensions Regulator and the Treasury", reports The Times.

And it appears he thinks the business's prospects have been boosted by last week's vote for Brexit.

So far the prevailing view has been that the decision to leave the European Union, where Tata's UK arm sends 40 per cent of its exports, would be a disaster for any hopes of rescuing the 11,000 workers the company still employs.

The vote is said to have led Tata to reconsider a U-turn on staying in the UK, while reports suggest several of the seven white-knight bidders – or the banks backing them – could now withdraw their interest.

However, Truell told City AM: "Brexit has made the business a lot more attractive to potential buyers... that has certainly enhanced my thinking."

By leaving the EU, he added, Britain would be in a position to impose more protective import tariffs on cheap Chinese imports and more directly support its steel sector to compete with heavily-subsided EU competitors.

Truell also cited benefits to producers from the weaker pound, which, since the vote, has twice hit a 30-year low against the dollar before recovering slightly since Tuesday.

The former chairman of the London Pension Fund Authority, who made his name as a private equity investor, plans to take on Tata Steel UK for £1 - and then sell it off piecemeal to "buyers that have been queuing to make an offer… without the pension fund millstone".

In order to resolve the problem of the pension deficit, Truell would keep the £14bn scheme in the remaining shell company and take out "risk insurance and… hedges in the reinsurance market" to cover future liabilities.

This would avoid having to change the law to reduce future payouts, but would require the government and Tata acting as guarantors.

Getting such assurances represent what The Times refers to as "substantial hurdles" for the plan. The proposal does, however, mean that controversial reforms that have been criticised by the Pension Protection Fund are no longer needed.

Tata Steel rescue still all about the pensions

28 June

Tata Steel's rescue might not, in fact, have been derailed by the vote for Brexit, but a huge challenge still remains for the government.

Tata's Indian parent company is still working on a deal with the government to keep its UK business, reports The Guardian, despite the threat to single market membership that could affect steel exports to the continent.

Several potential buyers are said to be considering pulling out of the bidding process over fears that the company's 40 per cent of sales to the EU might be lost.

However, it appears the situation has been helped by the pound's decline, as it makes exports cheaper and could boost overall overseas trade. A strong pound in recent years has been cited as one of the key problems for the industry.

The Guardian adds that sources indicate it is essential for the government to push through proposed reforms relating to the company's £14bn pension scheme, which remains the elephant in the room.

Its funding shortfall is at least £700m and as much as £7.5bn. Meeting future obligations is seen as prohibitively expensive.

A consultation that closed this month looked at the proposal to change the law to allow future pension payouts to be increased annually at a lower rate of inflation.

The problem is the plans are controversial – the industry bailout fund said they set a dangerous precedent – and the government is in flux. There is a real question over whether the Conservative administration has the authority and the wherewithal to conclude the process to Tata's satisfaction.

It has long been thought that a final decision by Tata would come next month, but a new prime minister will now be in place until September. Of course, Business Secretary Sajid Javid could press on regardless in the meantime.

Roy Rickhuss, the general secretary of the steelworkers' union Community, said: "The EU referendum result and the government turmoil that has resulted have placed new question marks over Tata Steel’s sales process and the trade unions need to understand what actions government will take to safeguard the future of UK steelmaking."

Tata Steel: Bidders could abandon talks after Brexit

27 June

Britain's vote to leave the European Union could mean the loss of the 11,000 jobs at Tata Steel's UK plants, Sky News reports.

The broadcaster says Tata is now much less likely to remain in the country, even despite government offers of support, and that "several" of the seven rescue bidders are set to pull out of the race to acquire the UK assets.

Sources close to the Indian-owned company said this "raised the possibility of putting its British business into some form of liquidation".

In particular, a joint bid from UK turnaround investor Endless and US billionaire Wilbur Ross could be abandoned. "Wilbur has been reasonably open that this deal is far less attractive if Brexit happens," a source told Sky.

"A number of other prospective buyers are understood to have similar concerns," the report adds.

The BBC says that even those bidders still keen might face the challenge of funding being pulled, as "banks and investors backing them" also consider the impact of Brexit.

Tata's steel operations are based around key plants in Wales, where its Port Talbot blast furnaces are based. Close to 70 per cent of Welsh steel exports are to the EU.

Voters in all of the towns where Tata Steel has a presence backed the Leave campaign by a clear majority. It had been argued that looser trade rules and fewer restrictions on government support might help the beleaguered industry.

But after the referendum result, Sky News points to concerns regarding "the potential impact of Brexit on global demand for steel, the robustness of new trade deals negotiated by the government, and the ability to sell steel produced in the UK in the European single market".

There are also suggestions that the weaker government in the wake of the prime minister's resignation on Friday could be unable to pass controversial reforms to Tata's £14bn pension scheme.

Without a law change to enable a £2.5bn cut to future liabilities, by linking future payments to a lower level of inflation, it is deemed the scheme, in deficit to the tune of £700m, is unsustainable without huge and prohibitive annual funding from a buyer of the business.

Why Brexit has hit Tata Steel rescue hopes

24 June

A historic vote for Brexit could endanger the hopes of saving 11,000 steel jobs, including 3,000 at the Port Talbot blast furnace, as Tata Steel reconsiders its future.

The Indian-owned firm put its UK assets up for sale in March and has already sold one business unit in Scunthorpe, although it had been rumoured in recent weeks that bosses could be leaning towards accepting government support to stay on.

However, a source speaking to the Financial Times said that was now in doubt following the results of the EU referendum. Leave’s shock win means the fate and cost of steel sales to Europe are in doubt, subject to a complex trade negotiation with the bloc.

Prior to the vote, Tata bosses had written to staff asking them to “consider” the benefits of membership of the EU, which is the firm’s largest trading partner and accounts for a third of exports.

There will now be “recalibration” by the board, the source said, adding: “This could change everything.”

Tata Steel’s shares slumped nine per cent in Mumbai this morning, which in terms of falls was second only to the 11 per cent decline for sister company Tata Motors, which also has a UK manufacturing presence in the form of carmaker Jaguar Land Rover.

The company’s official statement stated simply it is “committed to developing the best prospects possible for our UK operations”.

There has been much talk in recent months about the damage that will be wrought on communities if Tata’s operations are not preserved. In this context, it is worth noting that in all of the local authorities in which the company has sites, a majority of voters backed leaving the EU.

The most Eurosceptic of these was Hartlepool, where nearly 70 per cent backed Leave, while the least was Sheffield, where only a marginal 51 per cent voted Out. In the Neath Port Talbot poll, the Leave majority was 56 per cent.

It could be that those steelworkers agree with some of the arguments made earlier this year that EU state aid rules blocked the government offering more support and that more stringent tariffs on cheap Chinese steel imports could have been imposed.

If those claims - most vocally expressed by Nigel Farage - are correct, then the enthusiasm of either Tata or its buyers will be unruffled by the referendum result. Time will tell.

Tata Steel pensions: Has 'punchy' PPF response hit rescue sale?

22 June

A rescue sale of Tata Steel's remaining UK assets, which collectively employ 11,000 people, has been thrown into fresh doubt by the industry's pension lifeboat scheme.

Giving its official response to a consultation on controversial reforms to the £14bn British Steel pension scheme, which is underwritten by Tata, the Pension Protection Fund (PPF) has warned the proposals set a dangerous precedent, the BBC reports.

They also say it could force the PPF to cover an even bigger financial hit further down the line.

Tata's pension funds are £700m in deficit, or as much as £7.5bn on a worst-case buyout basis. The huge sums needed to fill the shortfall are one of the main reasons the Indian company wants to leave the UK, but they represent a huge barrier to a successful sale.

To counter this, the government has proposed hiving the schemes off into a separate holding company and re-indexing future payouts to a lower level of inflation. This would save £2.5bn in future liabilities and, the trustees say, make the funds sustainable over the longer term.

However, the PPF has said this amounts to reducing promised benefits and requires a change in law, which would set a precedent for other employers in a similar situation.

Consequently, it says there are "significant risks for relatively limited gains".

As for separating off the company, it argues this would mean the PPF "directly underwriting the risk of the scheme's investment strategy failing". If this happened years down the line, the liability could have grown and would impose a much bigger strain on the rescue scheme.

The government should "seriously consider making any such scheme ineligible for PPF protection", it says, reports the Daily Telegraph.

Independent pensions expert John Ralfe said the response meant a sale of Tata’s UK business was now unlikely to take place.

"The PPF is against it - and the language is pretty punchy - and as they are the ones who will have to bail it out if it goes wrong, it is not going to happen," he said. "The government can’t just overrule the people with the most skin in the game."

Even if Tata decides to scrap the sale and stay on in the UK, as has been rumoured, it will want to find a solution to the pension deficit. This could ultimately mean the government having to step in to guarantee payouts to its 130,000 members.

Tata Steel 'courting bidders' for two of its UK divisions

21 June

Tata Steel appears to be abandoning its previous pledge to keep the whole of its UK business as a single operation, fuelling speculation it might hold on to the bulk of its assets.

The Financial Times reported yesterday that the company was now considering bids for parts of the business, something it initially rejected. Tata's Indian parent company was also said to be considering accepting government support and scrapping the sale altogether.

Adding to that, Sky News says today that "documents relating to the sale of Tata's speciality steels division and its pipeline tube operations… will be issued to potential bidders in the coming days".

The sales would involve breaking up Tata's UK operations, which several analysts believe will yield a greater overall value as separate businesses. Speciality steels and pipeline tube operations have been chosen because "they are separable from the main Tata Steel supply chain".

Tata may then decide to hold on to its remaining assets based around the Port Talbot blast furnace, which represents the largest chunk of its UK operations. In return, the government could take an equity stake in the company of up to 25 per cent and hand out hundreds of millions in taxpayer loans.

The speciality unit is "the world's third-largest manufacturer of steel for the aerospace industry", with customers including Rolls-Royce. It employs more than 2,000 people at two sites in Yorkshire.

Tata's pipeline tube business supplies products to the oil and gas industry and has a workforce of several hundred.

Seven bidders have been shortlisted for the entire business and a final decision is expected to be finalised next month. In the meantime, a consultation on the £14bn Tata-sponsored pension scheme closes on Thursday.

The restructuring of the British Steel pension scheme would clear a path to reduce the inflation increases to future payouts and save £2.5bn in liabilities, a critical element of a plan to hive off the fund in order to ease the burden on any prospective owner.

Tata Steel's future still hangs in balance

20 June

Tata Steel remains divided on whether to reverse its decision to leave the UK or go ahead with a sale – and it is also open to selling off its assets piecemeal in order to secure the best price.

Tata's Indian parent company said in March that it was leaving the UK, where its sprawling operations based around the Port Talbot blast furnaces are losing around £1m a day.

In the hopes of saving the thousands of jobs at risk, the government has made a series of offers to would-be buyers, but they also extend to the existing owner.

Among them is a pledge to take a 25 per cent stake in the company and to provide hundreds of millions of pounds in taxpayer loans to finance a turnaround. The government has also promised to find a solution to the £14bn British Steel pension schemes, which are in deficit to the tune of £700m.

A consultation on controversial changes to the pensions fund, which would allow trustees to link eventual payouts to a lower level of inflation, saving £2.5bn in liabilities, closes on Thursday.

The Daily Telegraph cites sources close to the firm as saying the board is now holding "daily" meetings with representatives at the Department for Business, Innovation and Skills "to establish the details of [these] headline pledges".

Tata has delayed a final decision on its future until July, although several industry experts believe it is more likely now to stay than to go. One source says the decision to leave was based on a management turnaround plan for the UK business being rejected and that a "very different plan would have to be put to the board".

If Tata does go sell, the government's preferred bidders are said to be JSW Steel of India and a joint offer from the UK private equity fund Endless and Wilbur Ross, a veteran US turnaround investor.

Both bidders are being backed "because of their financial positions", says the Financial Times, as the company and government seek assurances that the UK business would be kept open for a minimum of three years.

However, in another twist that will "further muddy the waters", another source told the FT Tata might now be considering bids that would split up its UK business to extract the best value.

Such offers would probably involve "facilities that are operationally separate" being hived off individually and the Port Talbot plant being sold as a rump asset, along with its range of related businesses. Several experts fear this could lead to the closure of the Welsh site, where Tata's losses are based.

This would mark a reversal for the company similar to a decision to scrap the sale. Until recently, it had refused to even consider bidders unwilling to take on its assets as a single going concern.

Tata Steel: Trustees back pension payout cuts

17 June

Trustees of the massive £14bn British Steel pension scheme have formally backed government proposals to curb future payouts, which they say amount to a better deal for its 130,000 members.

According to The Times, the trustees' official response to the public consultation about the modified deal warns that 58,000 members under 65 could face a ten per cent cut to their pensions if the scheme were placed in the industry bailout fund.

Under Payment Protection Fund (PPF) rules, members under retirement age are entitled to 90 per cent of their payout, subject to a cap of around £30,000.

Allan Johnston, the chair of the trustee board, says the "very large, well-funded" scheme would be a better option than the government's lifeboat, in spite of the proposed reduction in annual increases.

At the end of May, the government announced a 30-day consultation on a legal change to the scheme as part of its plan to help Tata Steel find a buyer for its UK businesses. The modifications would allow the fund to cut annual increases to the lowest rate of inflation in order to save around £2.5bn in liabilities.

The controversial proposal would breach a provision in pension law that states that schemes with a defined payout are not allowed to have their benefits reduced from what was promised when members' contributions were made.

The Times reports that Tata believes the legal change can be ring-fenced to its fund because its pension scheme documents state that benefits can be cut if they prove unaffordable. These terms were agreed in 1990, but the changes to pension law came later, in 1995.

Tata's pension scheme is currently running a funding deficit of £700m. The figure would rise to £7.5bn on a "worst-case" basis in the case of a buyout by a private provider.

Rescue bidders are unwilling to take on Tata's pension liabilities, making finding a solution an important step in the effort to save 11,000 jobs. It is now becoming a straight choice between the government's union-backed proposals and the PPF, with the added complication of the precedent that might be set for future pension schemes.

Tom McPhail, the head of retirement policy at Hargreaves Lansdown, told The Guardian the changes "may well be the right thing to do", but it "will be hard to ring-fence this decision".

However, he added: "In light of issues being raised in the context of the BHS pension scheme, there is a strong argument for a considered review of the pension scheme funding, of trustee responsibilities and of trade-offs between guarantees and costs in final salary pension schemes."

Tata Steel calls on staff to consider EU benefits

16 June

Tata Steel has written to its remaining 11,000 UK staff calling on them to consider the benefits of European Union membership ahead of next week's referendum.

The intervention comes as Tata's Indian parent company mulls seven bids for the businesses - and is rumoured to be considering abandoning the sale of its UK assets if it can secure the same concessions the government is offering prospective white knights.

It is widely thought that bosses are waiting for the outcome of next week's vote before making a decision. A final announcement is now not expected until July.

In its letter, reported by the Daily Telegraph, Tata pointedly refuses to back either a Remain or Leave vote.

But head of public affairs Tim Morris warns that "access to the EU market is 'fundamental to our business'", remarks that will be interpreted as supportive of a vote to stay.

"The EU is by far our largest export market, with over a third of our UK steel heading there… access to that market is fundamental to our business," he says.

He also appears to critique the Brexit proposal that the UK could leave the EU but, like Switzerland, be in the single market. This would lead to a critical loss of influence, he says.

"It is likely we would still need to adhere to EU rules to enter that market," he writes. "The difference: we would no longer have a say in how they are set up or applied."

Some in the Leave camp have complained that restrictive EU rules are partly to blame for the crisis facing the UK's steel producers, arguing in particular that state aid rules prevent the government from providing direct financial support.

Labour MP Stephen Kinnock, whose Aberavon constituency includes the Port Talbot steelworks, welcomed the letter.

"Tata’s statement makes it clear that a vote to leave the European Union would be a hammer blow for the British Steel Industry," he said.

Tata Steel bosses 'split' on whether to stay or go

15 June

Tata Steel's Indian parent company has further delayed the sale of its remaining UK assets while it considers whether or not to stay on as owner.

Sources at the firm told the Financial Times that a shortlist of two or three bidders from the seven who submitted a formal approach "may not be finalised until the end of this week or later". An announcement "had been expected several weeks' ago".

Moreover, in a move dubbed "unusual" by one person working on the deal, bosses have gone been back to the potential buyers "several times" in the last month to request further information and clarifications.

Coupled with claims from bidders that "requests for more information from the company in order to substantiate their offers have been frustrated", this is all "slowing the process yet further" and a final decision is not expected until next month.

It is also prompting accusations from some quarters that Tata is "playing everyone for fools", as rumours build that the board is "split" and could scrap the sale and run the business itself.

The government has issued promises on matters such as energy costs and procurement contracts, along with - more lucratively – a pledge to back turnaround plans with a loan of "hundreds of millions of pounds".

More controversial is its plan to hive off Tata's £15bn British Steel pension scheme and link future payments to a lower level of inflation. The required law change this would need is already being discussed.

One source said the sale "lacked a clear timetable and was confusing", while another dubbed the process a "charade… to wheedle further financial concessions out of the UK government".

Delaying the process to July also allows the firm to see the result of the UK referendum on membership of the European Union and to assess what affect this will have on trading. It is likely that a vote to leave would result in at least short-term disruption to European exports.

Losses at Tata's Port Talbot plant and related operations have already been stemmed from £1m a day as steel prices edge higher and a weaker pound boosts exports.

Tata Steel pension cuts will hit older workers hardest but could still prove a good deal

06 June 2016

"Hundreds of members of the Tata [Steel] pension scheme could end up worse off than expected" if cuts following changes to the law are pushed through, says The Times.

Reforms to the Pensions Act 1995 would allow the government to "re-index" increases to payouts from the £15bn British Steel pension scheme to a lower level of inflation, slashing £2.5bn from future liabilities. The scheme's trustees believe this would avoid the need for a Pension Protection Fund bailout.

The pensions fund would also be hived off into a new company, clearing a path for a rescue buyout of Tata Steel's UK assets or for a deal that would see the company stay on in the UK, safeguarding 11,000 jobs in the process.

But the Times says workers who accrued pension savings prior to 1997 might get an even worse deal than annual uprating at the lower CPI measure of inflation. The Financial Times adds that older schemes could be either "frozen, or limited to very small rises".

Even "very small rises" would represent a better deal than the alternative offered by the PPF, though. Pensions export Henry Tapper noted in a blog earlier this year that the PPF's rules state that any accruals made prior to April 1997 are completely frozen.

For other workers, the restructuring would certainly be a far better deal than the ten per cent cuts to all deferred pensions under the PPF. That is why unions are supportive of the controversial plans.

The FT notes, however, that the plans could still be subject to a legal challenge from some of the older pensioners who would lose the most.

Specifically, Tata has admitted that some members, who were transferred into the current fund in 1990 from a previous scheme, raised concerns at the time that the new contract put any future benefits at risk of being cut if they became "unaffordable".

The paper says the "matter was apparently settled in 1995, but it is not clear how".

"The trustee is now investigating the terms on which that dispute was settled," a spokesperson for Tata said, "[and] will be taking further legal advice on this question when the outcome of the government’s consultation is known."

Tata Steel could get £900m government loan to scrap sale

03 June

Ministers are putting "massive pressure" on Tata Steel to scrap a sale of its UK assets, as fears grow that disappointing rescue bids could endanger 11,000 jobs – and many thousands more in the wider industrial sector.

The Times reports that Business Secretary Sajid Javid has even offered to lend the company as much as £900m to refinance an intercompany loan provided by its Indian parent. To avoid breaching European Union rules on state aid, the taxpayer loan would need to be provided on "commercial terms".

As previously reported, the government is also consulting on controversial legal changes that would facilitate a radical restructure of the £15bn British Steel pension schemes currently underwritten by Tata. The funds are £700m in deficit and a millstone around the neck of the business – as well as a major barrier to any sale.

Under the plans, the schemes would be hived off and future payments uprated at a lower level of inflation, cutting liabilities by around £2.5bn.

Focus now has shifted to persuading Tata to stay, as insiders indicate the company is "disappointed" by the size of the rescue bids it has received. It has also failed "to secure assurances that a buyer would commit to keep the [Port Talbot] plant open for more than three years".

Industry sources told Sky News it was no secret that "the government is putting massive pressure on Tata in the effort to get them to stay". Some have previously claimed the company could simply be engaging in a game of "brinkmanship" in order to extract concessions and sweeteners.

Tata has maintained it is focused on finding a buyer for its UK assets, which are losing around £1m a day. The Times reports the company is thought to have narrowed down a field of as many as eight bidders down to three, including a Port Talbot management bid under the name Excalibur, global commodities trader Liberty House and turnaround investor Endless.

An announcement is expected on 24 June, the day after the EU referendum.

British Steel returns as Tata completes Scunthorpe sale

01 June

British Steel is back.

After being privatised by Margaret Thatcher in 1988 and then disappearing following a merger to form Corus Group in 1999, the brand will be the new name of the European Long Products business in Scunthorpe which Tata Steel has finally offloaded.

Tata, which acquired Corus in 2007, announced it was exiting the UK in March, after years of mounting losses. The Long Products unit, based around its huge plant in Scunthorpe, has been sold to turnaround investor Greybull Capital for a nominal £1, while a sale process for the remaining assets, employing more than 11,000 people, is ongoing.

British Steel, as now is, produces steel for the rail and construction sectors. In addition to Scunthorpe, it operates smaller sites across northern England, including Teesside and York, as well as a rail mill in northern France, the BBC notes. It employs a total of 4,800 people.

Commercial director Peter Hogg told BBC Radio Four's Today programme that the company has been trading profitably again for the past two months, thanks mostly to workers agreeing to cuts in their pay and pensions to reduce costs. Wages would return to their previous levels after 12 months, he added.

Pension cuts are a controversial feature of a prospective rescue deal for Tata's remaining UK assets, with plans to hive off the £15bn British Steel schemes into a separate company and change the law to allow future payouts to be uprated at a lower level of inflation.

While Greybull only paid a nominal sum for the part of the business it has acquired, it has put together a £400m finance package to fund a turnaround plan. This was sourced entirely from the private sector, meaning a £100m government loan that had been mooted was not utilised.

The company is perhaps best known for a previous investment in Monarch Airlines, which similarly saw staff agree to pay cuts and was subject to a £125m rescue plan that has successfully returned the firm to profit.

A final decision on a preferred bidder for Tata's remaining operations is to be announced later this month, but reports now suggest the Indian-based company itself might stay on.

Tata Steel accused of 'brinkmanship' over UK exit

31 May

Tata Steel's Indian parent company has been accused of "brinkmanship" designed purely to "get concessions out of the government", reports the Daily Mail, as speculation mounts that it could pull a sale of its main UK assets.

Having apparently caught ministers on the hop with March's announcement that it was pulling out of the UK, following years of sales rumours, Tata has been working with the government on a bidding process to secure a rescue deal.

As many as seven offers may have been submitted for the businesses based around the Port Talbot blast furnaces, which collectively account for more than 11,000 jobs.

But in attempting to solve some of the company's "unique" problems by offering cheap loans to fund a turnaround and to tweak the law to reduce the burden of its £15bn pension schemes, there are reports the government might have put together a package that would convince Tata to stay.

This would bring short-term job security and be touted as a victory by Business Secretary Sajid Javid.

Others, however, are not convinced.

"Several potential buyers are now said to have dropped out after it was claimed Tata demanded that any new owner pays off a £900m intra-company loan," The Mail says. This has fuelled claims that the company always wanted to stay on and is engaged in "a game of brinkmanship to get concessions out of the government".

Labour MP Stephen Kinnock, whose Aberavon constituency is home to the Port Talbot plants, told the BBC he would welcome "in principle" a decision by Tata not to sell, but that workers needed to be offered "guarantees" on the company's long-term commitment.

"[Steelworkers] in my constituency, their families and communities around them have been through hell in the last few years and certainly since March, when the sale was announced," he said. "I think they'll be forgiven for treating any news that Tata is staying on board with a degree of scepticism and even anger.

"So I think we need a very clear set of guarantees from Tata that they will be in it for the long run, that there will be investment and they will be doing what's needed so we're not back at square one 12 months from now."

Tata announced losses of £326m for the fourth quarter of the last financial year as it continued to write down the value of its European businesses, which have been hit by falling steel prices and a flood of imports from China. However, this was an improvement on a loss of £576m for the same period last year, notes Bloomberg.

While the future of one part of the UK business hangs in the balance, Tata could complete as soon as tomorrow a sale of the long products division based around its plant in Scunthorpe that employs 3,000 people.

Sources told Sky News a £400m financing package is fully in place, with all of the funds coming from private sources, meaning a mooted £100m loan from the government will not be needed.

Tata pension cuts: A 'dangerous precedent' or a 'blessing'?

27 May

As had been widely expected, the government yesterday announced a consultation that would allow changes to future pension payouts from Tata Steel's pension schemes.

It's a controversial move. Some believe it sets a "dangerous precedent", while others argue it is necessary to save 11,000 jobs and a company that represents the last stronghold of steelmaking in the UK.

What is the problem?

The £15bn British Steel final salary pension funds are a major barrier to securing a rescue deal for Tata's UK assets – or even persuading the Indian conglomerate not to exit the UK at all. More than 11,000 jobs are at risk, as well as tens of thousands more in related industries.

Department for Works and Pensions figures yesterday revealed the situation is financially much worse than had been thought. The funds have a shortfall of £700m to meet ongoing liabilities, much more than the regularly quoted £485m. To get a private insurer to buy the scheme would cost £1.5bn or, on a worst-case basis, as much as £7.5bn.

Tata is believed to be pumping in £35m a year to the schemes, but this would need to rise substantially just to maintain the status quo. No buyer is willing to shoulder the burden.

What is the new plan?

"Under the government's plan, drawn up with trustees, the scheme would be spun off into a new financial vehicle and benchmarked against the consumer price index (CPI) rather than the retail price index (RPI)," says The Guardian.

Put simply, uprating pensions in line with a lower measure of inflation would save as much as £2.5bn in future liabilities. Allan Johnson, the chairman of Tata's pension trustees board, says this will make the schemes affordable over the longer term.

But the proposal also requires a change to the 1995 Pensions Act, which forbids trustees from reducing payouts promised to members. It's this that has some experts worried.

Why are they concerned?

Business Secretary Sajid Javid believes the law will only relate to the Tata schemes and their "unique" situation. However, others aren't so sure.

Pension consultant John Ralfe told the Daily Telegraph: "This is the most extraordinary government document I have ever read. It is telling us that ministers are willing to change the law for one particular company in one particular set of circumstances."

Angela Eagle, the shadow business secretary, said the plans "risk setting a very worrying precedent" for other companies with a defined benefit scheme in deficit, a point supported by former pensions minister Steve Webb.

"Government would try to argue this was a special case, but rushed legislation as this always has a danger of a loophole," he said.

Apart from the government and Tata, is anyone else in favour of this?

Yes, quite a lot of people, actually. Most surprisingly, the plan has the backing of unions in order to save all those jobs – and because if the company fails and the schemes are placed into the Pension Protection Fund, then all ongoing and future pensions for those members below retirement age would be cut by ten per cent.

"It is important that all stakeholders continue to explore all available options that avoid the need for the scheme to go into the PPF, which would be the worst deal for scheme members," Community, Unite and GMB unions said in a joint statement.

What about those wider consequences?

Unions were at pains to point out that the government must be careful how it drafts the law changes. "We need to ensure that there are cast iron safeguards in place so this unique situation does not result in employers dodging their pensions responsibilities," they said.

But there are some who believe a precedent could be positive in cases such as this, where the alternative is dumping members into the PPF and losing out on even more benefits, and might even help to fix some broader issues with pension saving.

While "the potential deal on British Steel could rip a hole in one of the most fundamental principles of pension provision", it could also "be a blessing in disguise", Tom McPhail, the head of retirement policy at financial adviser Hargreaves Lansdown, said.

He added: "Some final salary schemes have become unsustainably expensive. The bulk of employer pension funding is being used to prop up these schemes, at the expense of younger employees in defined contribution pensions. A review of how we treat final salary guarantees could ultimately unlock better long-term pension provision."

When will it all be resolved?

The consultation is open until the 23 June, the same day as the EU referendum, after which Tata is expected to say which bid it has accepted - or whether it has decided to stay on after all.

Steel crisis: Tata might not dump its UK assets after all

27 May

Tata Steel's ongoing sale process for its stricken UK plants has been "thrown into confusion", says The Times, after rumours emerged that it might not dump its assets after all.

The company's Indian parent announced its shock exit from the UK, where it is losing £1m every day, in March. However, since then, the government, under pressure from campaigners, has offered "a deal so attractive" to prospective buyers that Tata might hang on.

In fact, The Guardian reckons that during talks in Mumbai to review up to seven rescue bids, Business Secretary Sajid Javid directly "asked [Tata] to consider keeping the business".

Executive director Koushik Chatterjee refused to rule out hanging on to the assets. Asked by reporters if this was now an option, he said: "Let's focus on the sales process. Let’s see where we get to."

The government has offered to provide funding and take a minority stake of up to 25 per cent in any buyout, as well as provide low-rate commercial loans to fund turnaround plans.

More crucially, it is set to launch a consultation today on changes to pension law that would allow payments on the Tata-underwritten £14bn British Steel pension schemes to be "re-indexed" to a lower level of inflation, saving as much as £2.5bn in future liabilities.

"Tata is unwilling to retain any liabilities in the British Steel pensions scheme and no buyer wants to take them on," says the Times.

Under the rumoured plan, Tata would provide a one-off sum and the schemes would be hived off into a separate company.

An alternative option would see the pensions placed in the industry rescue scheme, the Pension Protection Fund. If this were to happen, cuts to payouts would be more "acute", reports the Financial Times, with immediate drops of ten per cent for members who retired early and a cap on total payouts for everyone.

For this reason – and with 12,000 jobs at threat - unions are said to be supportive of the law change. Roy Rickhuss, the general secretary of Community union, said it would review the proposals to ensure "any change in the law… would not have an adverse impact on other pension schemes".

Public sector pensions were shifted to the lower rate of inflation in 2010. Unions at that time launched a legal challenge against the changes that proved unsuccessful.

Tom McPhail, the head of pensions research at Hargreaves Lansdown, told the Times: "This is the one thing you don't touch with pensions… It really would open up a Pandora's box.

"Yet this might be a blessing in disguise because something has to give," he added. "If there were a way in which pension benefits could be changed [for companies with unsustainable deficits], British industry might be able to move on."

Steel crisis: Tie-up could save Tata's Port Talbot works

24 May

A widely reported tie-up between two of the main bidders for Tata Steel's UK assets could mean the shelving of a frontline proposal to shut down the blast furnaces at Port Talbot.

The fate of the plant, which employs 4,000 people, had become a contentious issue after one of the main white-knight bidders argued the furnaces should be shut down to return the business to profit.

Liberty House, which has been amassing steel industry assets, including two Tata mills in Scotland, proposed converting the plant to use electric arc furnaces to produce finished steel from UK scrap.

Unions and campaigners are fiercely opposed to the idea, which would spell the end of "primary" steel-making in the UK, and argue that the plan would eventually mean significant job losses among Port Talbot's thousands of specially skilled staff.

In recent days, though, it has become apparent that Liberty House is preparing to work in partnership with one of the other bidders for the site, Excalibur, which is led by Port Talbot management and has been adamant that the blast furnaces would stay.

Now it seems Liberty has been convinced.

"It is understood that [Liberty] has come round to the idea of saving much of the 4,000-strong workforce at Port Talbot by keeping the blast furnaces running, optimising them, taking an investment decision on whether to upgrade them and in any case beginning plans to install an electric arc furnace," reports The Times.

Although the two groups are thought to have submitted separate bids, they are said to be keen for their offers to be seen as complementary and a viable alternative to proposals from private equity or overseas investors.

"It is not a joint venture, it is not a joint bid, but they are looking at a proposition," a source said. "It would be important for them to be seen together as the alternative… as the UK industry bid."

In all, seven bidders are thought to have submitted a buyout proposal. The Financial Times reckons these will be whittled down to a shortlist of "two of three" at a meeting of the Tata board in Mumbai this week, which will be attended by Business Secretary Sajid Javid.

The fate of the £15bn pension schemes underwritten by Tata Steel UK remains a key concern, with wrangling over a rumoured plan to split off the schemes into a separate firm and limit future payouts ongoing within government.

Steel crisis: Pensions split hangs over Tata deadline

23 May

The pensions of more than 130,000 members of retirement funds underwritten by Tata Steel UK are in the balance, as the deadline for rescue bids for the business looms.

Seven prospective buyers, which employ around 12,000 people at sites across the UK, are expected to put forward an offer by the end of the day. The BBC even reports that two of them, Liberty House and a management buyout consortium going under the name Excalibur, will state they are prepared to "work in partnership on a takeover".

It is not known how this would affect their respective turnaround plans. Liberty plans a radical conversion of the Port Talbot blast furnace into an electric plant processing scrap steel, while Excalibur has pledged to retain primary steelmaking.

Business Secretary Sajid Javid is flying to Mumbai this week to discuss the offers with the Tata board, says the Daily Telegraph. Beyond the specifics of the rescue plans in each offer, attention is likely to be focused on finding a solution to the near-£500m pension scheme deficit that has the potential to scupper a sale.

Buyers are unwilling to take on the huge £15bn British Steel pension funds, which the Daily Mail has estimated will require additional annual funding of £60m from next year - on top of the existing £485m shortfall and losses of £1m a day running the business.

Javid is thought to be backing a rescue plan that would see the funds hived off into a separate company, underwritten by the government and boosted by a one-off payment from Tata. Future pensions would be re-indexed to a lower inflation measure to "build a 'war chest' of £1.5bn to £2bn… to execute a buyout of the scheme" at some point.

However, this would involve a change to the law, which experts and the Department for Works and Pensions worry will set a dangerous precedent.

Their alternative solution is to place the funds into the industry rescue scheme, the Payment Protection Fund. This would also see future payments cut to the lower inflation measure only without the need for new legislation. It would also mean payments for a number of members who took early retirement being cut by up to ten per cent.

In a joint statement, the Department for Business, Innovation & Skills and the Department for Work and Pensions said: "We are working very closely together to achieve the best result for Tata workers and a future for British steel."

A spokesman for Tata said the company was "in talks with the government and pension scheme trustees to find a solution for the scheme".

Steel crisis: US slaps 522% anti-dumping levy on Chinese imports

18 May

After concluding that Chinese producers were dumping steel at below market prices, regulators have raised import duties to unprecedented levels, setting the tax at an eye-watering 522 per cent.

Much to the chagrin of campaigners in the UK, this has happened not in Europe but in the US. America's Department of Commerce has upped import taxes on Chinese-made cold-rolled flat steel used in car manufacturing, shipping containers and construction by more than five-fold, the BBC reports.

So-called "anti-dumping levies" of 71 per cent have also been slapped on imports from Japan.

US producers reckon that around 12,000 workers have been laid off in the past year as a result of anti-competitive action by rivals in China. Alleged dumping by heavily-subsidised Chinese companies is central to the complaints of industry on this side of the Atlantic too, where around 5,000 jobs have been lost in the past year.

In particular there have been calls for Europe to ramp up the import duties on Chinese steel – and criticism of the UK government for blocking the repeal of the EU 'lesser duty rule' that some say prevents higher charges being applied.

The government has countered that the rule is a protectionist measure that could be applied to any industry if removed – and that the European Commission could apply higher duties simply by assuming a higher cost of production in Europe. At home it has taken action to limit energy expenses and is heavily involved in talks to broker a rescue deal for the stricken UK operations of Tata Steel.

A sales process for the Tata assets is now well advanced, with seven prospective bidders now confirmed. India's CNBC-TV 18 reports that three will be short-listed by the end of this month or early next. It adds that all bidders have received assurances they will not bear liabilities relating to the £15bn British Steel pension schemes, which will be at least partly covered by taxpayers.

There has been controversy over one rumoured plan for the schemes, which would see them hived off into a new company and payouts 're-indexed' to a lower level of inflation in order to reduce liabilities by £2.5bn. One pension expert said the plan was "illegal" under European law and would "drive a coach and horses" through the principles of pension saving in the UK.

A deadline for the sale's completion is expected to be set shortly after the EU referendum on 23 June.

Steel crisis: Tata pension plan 'is illegal', expert claims

13 May

The debate over how to deal with Tata Steel's pension scheme deficit is laying bare just how difficult it will be to secure a rescue takeover.

Earlier this week, it was reported that Sajid Javid, the Business Secretary, was negotiating a plan that could see the £15bn British Steel retirement funds hived off into a separate company and future liabilities reduced by £2.5bn by changing the inflation measure used to uprate new payouts from RPI to CPI.

But yesterday, the man advising the government inquiry into the pension problems unfolding at BHS, John Ralfe, warned such a plan could be "illegal under European law".

According to the Daily Telegraph, Ralfe wrote to the work and pensions select committee to say that a legal challenge would be based on the principle that government intervention would amount to "interfering with a private contract".

He is also more generally concerned at the principle it would represent for thousands of other UK firms with pension deficits amounting to more than £300bn.

"It would drive a coach and horses through the fundamental principle that pension benefits, once earned, cannot then be reduced," he said.

The plans would require the government to change the law. According to the Financial Times, "the 1995 Pensions Act says trustees cannot change pensioners' uplift from RPI to CPI without an actuary certifying 'equivalence' between the old and new terms".

This would evidently not be applicable in this case, which the Daily Mail says would amount to a cut of 15 per cent in future pension payouts.

However, if a sale is to be agreed that will save the 11,000 remaining jobs at Tata, something will need to be done with the pension schemes. The Mail notes that at present, the schemes have a £485m black hole and a buyer would need to "pay off the debt and make regular contributions, which will jump from £35m to £60m next year".

"Such large sums make a rescue of the loss-making business financially impossible," the paper adds.

It is for this reason that unions find themselves in the unusual position of seemingly defending the move to cut their members' future pensions, while warning others against using it as a precedent.

"We would warn rogue employers against using this unique set of circumstances as an opportunity to dodge their pension responsibilities and leave their own employees in the lurch," a spokesman for Unite said.

The FT says one option would be to split the schemes into separate funds for existing benefits and future contributions, meaning terms would not change for the savings so far made. Experts told the paper there was a precedent for this in the privatisation of Royal Mail in 2012.

Tata Steel: Javid eyes law change to solve pension riddle

12 May

Sajid Javid is considering changes to existing pension rules that would cut the future payout to Tata Steel employees by £2.5bn.

The Financial Times reports that the Business Secretary is in talks on a plan that would see the £15bn British Steel pension fund, seen as a key barrier to a sale of the business, hived off from Tata and re-indexed to the lower inflation benchmark the Consumer Price Index (CPI). This would cut future liabilities by around £2.5bn.

It is an essential step in the plan to ringfence the pension and keep it outside of the industry rescue scheme, the Pension Protection Fund.

To avoid this, it must have "enough assets to purchase benefits with an insurance company at PPF compensation levels". This is only possible if future payouts are limited – and in any case, moving into the PPF would see pension accruals shifted to CPI anyway.

Such a move could mean those who have taken early retirement having their ongoing pension income cut by ten per cent.

Under the plans, the schemes could be ultimately backed by the government and would likely be placed into a separate holding company. Tata Steel would make a one-off payment of "hundreds of millions of pounds" to help to fill the deficit.

The changes would require changes to the 1995 Pensions Act, the FT adds: "At present, sections 67 and 68 of that legislation prevents trustees from changing the annual raise in retirement income."

There are, however, concerns in the Department of Works and Pensions that the move could set a worrying precedent for more than 4,800 pension schemes across the country that are in deficit to the collective tune of £309bn.

Javid has previously told a panel of MPs a number of potential rescue bidders for Tata Steel "have said they will not have much interest if they have to take over the current pension plan as it is… It is expensive". He said the government was seeking to find a solution to the pension riddle "in any way we can".

Unions are understood to have been constructively involved in talks. This is in stark difference to the position after the government similarly re-indexed public sector pensions back in 2010, which saw unions launch ultimately unsuccessful court action.

Steel Crisis: Tata puts forward seven rescue bids

10 May

Seven bidders lining up a rescue offer for the whole of Tata Steel's UK operations have been fast-tracked into a second stage of the sale process and given deeper access to company financial information.

Tata's Indian parent company said it had "immediately taken forward" seven prospective bids and rejected a number of others that The Guardian says wanted to "cherrypick" specific parts of the business rather than acquire it wholesale.

The company added that it is "clarifying outstanding points with a number of other parties who have submitted an expression of interest".

Among the approved bidders are a management buyout vehicle going under the name Excalibur and Sanjeev Gupta's Liberty House, which wants to transform Tata's Port Talbot works into an electric arc furnace processing UK scrap steel.

The Financial Times reports that one of Tata's main Indian rivals, JSW, has emerged as a "last-minute bidder" and that a Chinese company is also in the second round – an inclusion that will raise eyebrows, given that China's alleged "dumping" of steel in Europe is seen as one of the key problems facing the UK sector.

US steel producer Nucor, ThyssenKrupp of Germany and investment firm Greybull Capital, which recently bought Tata's long products business, including its Scunthorpe operation, are also understood to be among the interested parties.

Tata said it had reached its decision in consultation with the UK government. After intense lobbying and pressure at home – and criticism of an apparently sluggish initial response to the crisis – the government has said it could take a stake of up to 25 per cent in the company as part of a rescue deal and also offer additional financing on "commercial terms".

It is also expected to give pledges on procurement for infrastructure projects and could yet put forward further assistance in the form of guarantees for suppliers and a bailout of the pension schemes seen as one of the key barriers to any sale.

The FT says Tata has now pushed back the deadline for securing a buyer until after the EU referendum on 23 June.

Tata collapse may cost 'hundreds of thousands of jobs across Britain'

9 May

The collapse of Tata Steel and the loss of British steel production could cost ten times more jobs than feared, it has been claimed.

Nick Reilly, the former president of US car giant General Motors' European operations and now an industry consultant, told The Times there is "a high risk that maybe one of the manufacturers — maybe Vauxhall, maybe Toyota, maybe Nissan — will move out of the country if they cannot source steel locally".

He added: "It is not inconceivable and that has to be recognised. What we are then talking about is not the 30,000 to 40,000 jobs at risk in the steel industry, but hundreds of thousands of jobs across British industry. That has to be very concerning."

The automotive market accounts for £500m of Tata UK's £2bn annual turnover. The company's biggest car customer is Sunderland-based Nissan, which produces around 500,000 vehicles a year, or nearly one-third of total British car production.

Bidding for Tata's UK businesses is now entering its next phase, after the deadline for declarations of interest passed last week. Two frontrunners have emerged in the form of Sanjeev Gupta's Liberty House, which recently acquired two Tata mills in Scotland, and a management buyout team going under the name Excalibur.

One major issue could be the fate of jobs, as Liberty has pledged not to make redundancies despite plans to transform the Port Talbot blast furnace into an electric Arc furnace that would process scrap steel the UK currently exports.

In contrast, the South Wales Argus says Excalibur has vowed to maintain Port Talbot and protect its 4,000 jobs, but has admitted it could cut "up to 1,000" jobs across sister plants at Llanwern, Caerphilly and elsewhere by moving "towards leaner autonomous sub-business units".

The Daily Telegraph believes there are as many as 20 bidders for the businesses. Key concerns that could see a number fail to put forward firm offers include pension liabilities of almost £500m in the £15bn British Steel pension schemes and fears that credit insurers will pull cover for Tata's suppliers.

According to the paper, one insurer has already done this – and if others follow suit, suppliers could stop providing the materials needed to keep the plants running. It could prove prohibitively costly to re-start production if stopped, so there are calls for the government to step in to "act as a guarantor on contracts and outstanding payments".

Steel crisis: Government must do more to secure sale, says Tata

28 April

Tata Steel has said the help it has received from the government as it tries to find a buyer for its threatened plants has not been adequate.

Giving evidence to the business, innovation and skills select committee, UK chief executive Bimlendra Jha told MPs the firm has not set a deadline for disposing of its British works but said Tata "cannot continue to bleed [money]" at the sites.

The businessman said a sale would not happen unless the pension fund deficit was addressed, says the BBC. The Guardian says Tata has been "pumping" more than £100m a year into the scheme to fund its £15bn liabilities.

The scheme could now enter the state-backed Pension Protection Fund,