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| Tata Steel crisis leaves government ministers in ‘disarray’ | Tata Steel crisis leaves government ministers in ‘disarray’ |
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| David Cameron has flown back to Britain for emergency talks with ministers over the financial crisis engulfing Tata Steel’s British operation – amid warnings that the firm has just weeks to secure a rescue deal on which up to 40,000 jobs could depend. | David Cameron has flown back to Britain for emergency talks with ministers over the financial crisis engulfing Tata Steel’s British operation – amid warnings that the firm has just weeks to secure a rescue deal on which up to 40,000 jobs could depend. |
| The Indian-owned company said it was losing £1m a day, with a source claiming that the government’s failure to back calls in Europe for higher tariffs against cheap Chinese imports was the “last straw”, prompting the decision to sell the business that was once British Steel and more recently Corus. | |
| Labour accused the government of being in “disarray” as Cameron and his business secretary, Sajid Javid, scrambled back to the UK after Tata announced it would be selling off British plants including the Port Talbot steelworks in south Wales as well as sites at Rotherham in South Yorkshire, Corby in Northamptonshire and Shotton in Deeside. | |
| Jeremy Corbyn has urged Cameron to treat the unfolding situation as a national crisis by recalling parliament and considering bringing Britain’s ailing steel industry back into public ownership. | Jeremy Corbyn has urged Cameron to treat the unfolding situation as a national crisis by recalling parliament and considering bringing Britain’s ailing steel industry back into public ownership. |
| However, Javid rejected the idea of nationalisation, which government officials believe will carry a pricetag of £1.5bn a year. “I don’t think that nationalisation is going to be the solution,” said Javid. “I think everyone would want a long-term viable solution and, if you look around Europe and elsewhere, I think nationalisation is rarely the answer, particularly if you take into account the big challenges the industry faces.” | |
| But the government is thought to be considering other forms of aid, including stepping in with temporary financial support during the search for a buyer. | But the government is thought to be considering other forms of aid, including stepping in with temporary financial support during the search for a buyer. |
| The prime minister will travel to Washington DC on Thursday where dozens of world leaders are gathering for the Nuclear Security Summit, hosted by the US president, Barack Obama. Cameron is expected to raise the issue of Tata Steel with the Indian prime minister, Narendra Modi. | The prime minister will travel to Washington DC on Thursday where dozens of world leaders are gathering for the Nuclear Security Summit, hosted by the US president, Barack Obama. Cameron is expected to raise the issue of Tata Steel with the Indian prime minister, Narendra Modi. |
| Related: The Guardian view on Tata Steel’s pull-out: a national summons to get serious | Editorial | Related: The Guardian view on Tata Steel’s pull-out: a national summons to get serious | Editorial |
| The financial problems facing Tata are so significant that the value of its British steel operations are now “almost zero”. The company source said Tata was now prepared to “give it away for nothing”. They warned that Tata had tried and failed to find a buyer over the last 18 months because of the amount of money needed to get the company back on track. | The financial problems facing Tata are so significant that the value of its British steel operations are now “almost zero”. The company source said Tata was now prepared to “give it away for nothing”. They warned that Tata had tried and failed to find a buyer over the last 18 months because of the amount of money needed to get the company back on track. |
| “They have spent nearly £4bn in the last eight years. It would need another £4bn.” The company’s pension costs are a “huge problem”, they added, with Tata warning last year that it faced a £2bn pension deficit in the UK. | “They have spent nearly £4bn in the last eight years. It would need another £4bn.” The company’s pension costs are a “huge problem”, they added, with Tata warning last year that it faced a £2bn pension deficit in the UK. |
| The decision to sell the operation could cost 15,000 jobs inside the company but the thinktank IPPR said that up to 40,000 could be affected more widely across the supply chain. | The decision to sell the operation could cost 15,000 jobs inside the company but the thinktank IPPR said that up to 40,000 could be affected more widely across the supply chain. |
| Tata’s decision came after Javid opposed calls last month to scrap a regulation known as the “lesser duty rule”, which would have allowed the EU to increase tariffs on Chinese steel beyond the current 9%. The government said this would lead to higher costs for users of steel and was not a proportionate response. | Tata’s decision came after Javid opposed calls last month to scrap a regulation known as the “lesser duty rule”, which would have allowed the EU to increase tariffs on Chinese steel beyond the current 9%. The government said this would lead to higher costs for users of steel and was not a proportionate response. |
| Labour was able to dominate the debate about the future of Britain’s steelworks because key government figures were out of the country when the decision was taken by Tata’s board late on Tuesday. Cameron was on holiday in Lanzarote, while Javid was in Australia, despite knowing that the decision was likely to be made this week. Photographs of the business secretary at a black tie dinner in Sydney on Wednesday also proved embarrassing for the government. | Labour was able to dominate the debate about the future of Britain’s steelworks because key government figures were out of the country when the decision was taken by Tata’s board late on Tuesday. Cameron was on holiday in Lanzarote, while Javid was in Australia, despite knowing that the decision was likely to be made this week. Photographs of the business secretary at a black tie dinner in Sydney on Wednesday also proved embarrassing for the government. |
| George Osborne is in Paris for G20 talks, where he will raise the issue of Tata Steel with European counterparts. | George Osborne is in Paris for G20 talks, where he will raise the issue of Tata Steel with European counterparts. |
| Corbyn cut short a holiday in the UK to head to the Port Talbot plant. He wrote to the prime minister to warn that the move had put “thousands of jobs” and “a strategic UK-wide industry” at risk. “Steelworkers and their families will be desperately worried about the uncertainty. The government is in disarray over what action to take. Ministers must act now to protect the steel industry, which is at the heart of manufacturing in Britain and vital to its future,” he added. | Corbyn cut short a holiday in the UK to head to the Port Talbot plant. He wrote to the prime minister to warn that the move had put “thousands of jobs” and “a strategic UK-wide industry” at risk. “Steelworkers and their families will be desperately worried about the uncertainty. The government is in disarray over what action to take. Ministers must act now to protect the steel industry, which is at the heart of manufacturing in Britain and vital to its future,” he added. |
| He accused the government of flip-flopping because of a suggestion early yesterday, from the minister Anna Soubry, that part-nationalisation would be considered as part of a rescue. Corbyn said he was “shocked” to hear Javid pull the option off the table. | He accused the government of flip-flopping because of a suggestion early yesterday, from the minister Anna Soubry, that part-nationalisation would be considered as part of a rescue. Corbyn said he was “shocked” to hear Javid pull the option off the table. |
| Roy Rickhuss of the Community trade union said: “Seeing confusion and mixed messages from ministers will only increase the worry of steelworkers across the UK. | Roy Rickhuss of the Community trade union said: “Seeing confusion and mixed messages from ministers will only increase the worry of steelworkers across the UK. |
| “The fact that one minute they are saying they are looking at all the options and the next they’re saying some form of nationalisation is not a solution shows a government divided and without the political will to take the tough action necessary to save our industry.” | “The fact that one minute they are saying they are looking at all the options and the next they’re saying some form of nationalisation is not a solution shows a government divided and without the political will to take the tough action necessary to save our industry.” |
| Stephen Kinnock, the Labour MP for Aberavon, where the Port Talbot plant is located, travelled with Rickhuss to Mumbai for last-minute talks with Tata, in which they tried to persuade the company to consider keeping hold of the operations. | Stephen Kinnock, the Labour MP for Aberavon, where the Port Talbot plant is located, travelled with Rickhuss to Mumbai for last-minute talks with Tata, in which they tried to persuade the company to consider keeping hold of the operations. |
| He said the government had not offered support to the delegation and accused ministers of failing to take action to protect British steel, which has been in decline as a result of Chinese dumping. | He said the government had not offered support to the delegation and accused ministers of failing to take action to protect British steel, which has been in decline as a result of Chinese dumping. |
| “We are rolling out the red carpet for Beijing,” he added, arguing that Britain – and particularly Osborne – was pushing for China to get market economy status at the World Trade Organisation despite the fact that the vast majority of its steel industry was state-owned. He also described Britain as a “ringleader” in blocking European commission attempts to improve anti-dumping policies. | “We are rolling out the red carpet for Beijing,” he added, arguing that Britain – and particularly Osborne – was pushing for China to get market economy status at the World Trade Organisation despite the fact that the vast majority of its steel industry was state-owned. He also described Britain as a “ringleader” in blocking European commission attempts to improve anti-dumping policies. |
| “They are in hock to China. Our commercial policy, our approach to trade and manufacturing, and our overall industrial strategy, is being dictated by Beijing.” | “They are in hock to China. Our commercial policy, our approach to trade and manufacturing, and our overall industrial strategy, is being dictated by Beijing.” |
| Related: We bailed out the bankers. Welsh steelworkers deserve no less | Michael Sheen | Related: We bailed out the bankers. Welsh steelworkers deserve no less | Michael Sheen |
| Javid spoke on the phone with the Tata Steel chairman, Cyrus Mistry, in what sources called a “constructive” conversation. | Javid spoke on the phone with the Tata Steel chairman, Cyrus Mistry, in what sources called a “constructive” conversation. |
| The prime minister spoke to the Welsh first minister, Carwyn Jones, to discuss the “urgent” situation. | The prime minister spoke to the Welsh first minister, Carwyn Jones, to discuss the “urgent” situation. |
| A Downing Street spokesperson said: “Both the PM and first minister agreed it was an extremely worrying time for the workers and wider community in Port Talbot, and south Wales more broadly. They also agreed that the UK and Welsh governments would continue to work together closely to do everything possible to secure the future of steelmaking at Port Talbot and elsewhere in the UK. | A Downing Street spokesperson said: “Both the PM and first minister agreed it was an extremely worrying time for the workers and wider community in Port Talbot, and south Wales more broadly. They also agreed that the UK and Welsh governments would continue to work together closely to do everything possible to secure the future of steelmaking at Port Talbot and elsewhere in the UK. |
| “The PM and first minister pledged to work to support a sales process that delivers a sustainable long-term future for the plant. They also agreed to remain in close contact in the days ahead at both official and ministerial level.” | “The PM and first minister pledged to work to support a sales process that delivers a sustainable long-term future for the plant. They also agreed to remain in close contact in the days ahead at both official and ministerial level.” |
| Port Talbot, and other Tata sites with blast furnaces that actually make steel, are understood be particularly at risk because the financial losses are so large. The management at Port Talbot is thought to be willing to launch a management buyout, but this is likely to need the unions to agree to cuts to the pension scheme and financial support from the government. | Port Talbot, and other Tata sites with blast furnaces that actually make steel, are understood be particularly at risk because the financial losses are so large. The management at Port Talbot is thought to be willing to launch a management buyout, but this is likely to need the unions to agree to cuts to the pension scheme and financial support from the government. |
| Tata has written off £2bn from the value of its UK assets, meaning they are effectively worthless. Koushik Chatterjee, the finance director of Tata Steel, said the UK business had become “quite a burden for the company” and that the board had decided “we can’t sustain this kind of exposure”. | Tata has written off £2bn from the value of its UK assets, meaning they are effectively worthless. Koushik Chatterjee, the finance director of Tata Steel, said the UK business had become “quite a burden for the company” and that the board had decided “we can’t sustain this kind of exposure”. |
| Liberty House, which has agreed to buy Tata sites in Scotland, said its interest in the business would depend on support from Tata and the government. | Liberty House, which has agreed to buy Tata sites in Scotland, said its interest in the business would depend on support from Tata and the government. |
| It said: “Like others in the industry we will have to take time to reflect on Tata’s announcement and its implications. The scale and timing of yesterday’s decision was much more dramatic than anyone was expecting. While the downstream operations will be of interest, we’re clear that taking on the iron and steelmaking facilities present a huge challenge.” | It said: “Like others in the industry we will have to take time to reflect on Tata’s announcement and its implications. The scale and timing of yesterday’s decision was much more dramatic than anyone was expecting. While the downstream operations will be of interest, we’re clear that taking on the iron and steelmaking facilities present a huge challenge.” |
| Greybull Capital, an investment firm, is in the process of buying Tata’s Scunthorpe plant and is thought to be keen to focus on that deal at this stage, rather than buying more from the Indian company. | Greybull Capital, an investment firm, is in the process of buying Tata’s Scunthorpe plant and is thought to be keen to focus on that deal at this stage, rather than buying more from the Indian company. |
| Terry Scuoler, the chief executive of the manufacturers’ organisation EEF, urged the company to keep the plants open while a buyer was sought. “I’m delighted that the government is standing firmly behind the principle of steel manufacture in south Wales. I think there is an onus and a duty on Tata in the interim, to continue to invest and to give the plant a fighting chance to find a buyer. This is not a week, this is three to six months to support the business for a reasonable length of time.” | Terry Scuoler, the chief executive of the manufacturers’ organisation EEF, urged the company to keep the plants open while a buyer was sought. “I’m delighted that the government is standing firmly behind the principle of steel manufacture in south Wales. I think there is an onus and a duty on Tata in the interim, to continue to invest and to give the plant a fighting chance to find a buyer. This is not a week, this is three to six months to support the business for a reasonable length of time.” |