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Brexit fallout: Fears grow for Tata Steel sale in wake of EU referendum

The Indian owners of Tata Steel fear that the political and economic uncertainty surrounding the UK’s Brexit vote may hamper efforts to find a buyer for its doomed UK steel assets.

Concern for the deal, which includes the massive Port Talbot works, centers around the need to restructure the business’ bloated pension scheme which counts 130,000 current and former steelworkers, along with their children and spouses.

With a deficit of around £485m, the scheme has proven the biggest sticking point in any deal, with the Department of Work and Pensions closing a consultation period on any potential restructuring on 23 June to which they must be a parliamentary response within four weeks.

In particular, uncertainty surrounding the Conservative Party leadership contest, which is expected to kick-off today and rumble on until early September, are fuelling concerns that the leadership contest will take precedence over sorting out the Tata pensions pot.

Speaking to the BBC, a source at the Indian multinational said: “It’s clearly an incredibly busy time in UK politics. Nevertheless, the company still hopes that the hundreds of thousands of people in Britain who are dependent on a steel pension will not be left worse off by the current political leadership uncertainties.”

Efforts to save the UK steel industry have been led by business secretary Sajid Javid, but he is now widely tipped to back the candidacy of the Work and Pensions Secretary Stephen Crabb in the hope of sealing the role of chancellor were Crabb to be successful.

Clearly both men are closely linked to the Tata pensions deal and a protracted and keenly fought campaign could seriously hamper any progress on the issue.

Options on the table for the beleaguered pension scheme include a plan to link annual increases on Consumer Price Inflation, which is linked to household goods, instead of the Retail Prices Index, which is linked to retail goods and services, which would lower payouts and save billions of pounds.

However, such proposals have been criticised by the Pensions Protection Fund, who argue that they would set a dangerous precedent which could see employers manipulating employee pensions for their own benefit.

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