The UK government is prepared to offer help with pension liabilities and energy costs to potential buyers of Tata’s threatened steel plants, Sajid Javid, the business secretary, has said.
Javid said the government wanted to find a buyer for the whole of Tata’s UK business, including the Port Talbot steelworks, as he defended his handling of the crisis against accusations ministers are letting the steel industry fail.
After a week of intense criticism, the business secretary said he believed there was still time to find a buyer and the government was prepared to offer sweeteners.
“Tata will issue an offer document very soon. Alongside that, the UK government know – I’ve known for a while – that we’re also going to have to offer support to clinch that buyer and give that steel plant a long-term, viable future,” he said.
He added: “No one is talking about nationalisation of pension schemes but it is something I absolutely recognise is a challenge.”
Javid has previously rejected nationalising Tata’s steel plants but left the door open for the government to offer some sort of temporary bailout.
“I don’t think nationalisation is a solution to this. Having said that, I also think it wouldn’t be prudent to rule anything out at this stage, but I think that nationalisation is rarely an answer in these situations,” he said.
“I do feel, though, for lots of reasons, after talking to Tata and many others involved in this, that there will be enough time to find the right buyer working with the government and being able to take this forward. We will look at everything we can do to allow a sale going ahead and I wouldn’t rule anything out at this stage.”
Javid has been under pressure since Tata confirmed it was withdrawing from Port Talbot and other UK sites, threatening tens of thousands of jobs, while he was on a trade visit to Australia accompanied by his daughter.
Speaking on the BBC’s Andrew Marr Show on Sunday, the business secretary acknowledged he had known for some weeks that Tata was considering pulling out of the UK.
However, Javid said he pressed ahead the trade trip because he had not anticipated Tata executives would make such a strong announcement after their critical board meeting in Mumbai.
The business secretary has also been criticised for fighting to keep the EU’s lesser duty rule that has been blamed for failing to protect UK steel from being undercut by cheap Chinese imports dumped on the market.
But Javid insisted it was “misleading” to suggest the UK had not done enough within the EU, highlighting a separate move to support higher tariffs on some steel products.
John McDonnell, Labour’s shadow chancellor, warned on the same programme that it could cost more than £1bn in welfare benefits if the government allowed the steel industry to collapse.
He said it was a mistake for the government to rule out nationalising the steel plants. “If we can find another buyer it’s got to be not an asset-stripping job, we’ve got to have some guarantees – keeping Port Talbot open for example,” McDonnell said.
“If we haven’t got that leeway in the timescale, well then, as a fallback yes, nationalise in the short-term to stabilise the situation, prepare the sector then before you look back out to another buyer. That would give us the stability that we need in this sector.”
On the BBC’s Pienaar’s Politics, Angela Eagle, the shadow business secretary, also attacked Javid and other ministers for taking a laissez-faire approach that amounted to “sit on your backside and let the whole thing go”.
EU rules prevent the UK from offering state support to its beleaguered steel industry but there could be ways to take on pension liabilities and offer relief for energy costs.
A source close to Tata said “they could find a solution” and potentially rescue the deal with German industrial conglomerate ThyssenKrupp if the UK government provided substantial financial support and the pension scheme, which has 130,000 members, was restructured.
ThyssenKrupp was in talks with Tata three months ago about buying Port Talbot and its other UK sites as part of a deal to buy its European business, including its other major steelworks in the Netherlands.
However, the German company walked away owing to concerns about the losses of the UK business and its pension liabilities of almost £15bn.
This article was written by Rowena Mason and Graham Ruddick, for theguardian.com on Sunday 3rd April 2016 11.14 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010