This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/business/2016/apr/21/government-take-stake-tata-steel-british-plants

The article has changed 5 times. There is an RSS feed of changes available.

Version 1 Version 2
Tata Steel: government offers to part-nationalise UK plants Tata Steel: government offers to part-nationalise UK plants
(about 2 hours later)
The government is ready to part-nationalise Tata’s UK steel assets and offer hundreds of millions of pounds in debt relief if a private buyer can be found. The government is ready to part-nationalise Tata’s UK steel assets and offer hundreds of millions of pounds in debt financing if a private buyer can be found.
Ministers unveiled their proposals for a package of support after Sajid Javid, the business secretary, said last week that the government was prepared to “co-invest” in British steel.Ministers unveiled their proposals for a package of support after Sajid Javid, the business secretary, said last week that the government was prepared to “co-invest” in British steel.
The plans could involve the government taking a minority equity stake of up to 25% in the steel plants, including Port Talbot in south Wales, amounting to part-nationalisation of the struggling industry.The plans could involve the government taking a minority equity stake of up to 25% in the steel plants, including Port Talbot in south Wales, amounting to part-nationalisation of the struggling industry.
Related: Government 'willing to take 25% stake in Tata Steel' - Politics liveRelated: Government 'willing to take 25% stake in Tata Steel' - Politics live
The offer has been made jointly by the UK and Welsh governments and will be made available on commercial terms to potential buyers of Tata Steel. The government is offering a sweetener in the hope that a buyer can be found for all of Tata’s remaining steel assets, after the Indian-owned company announced last month that it was pulling out of the UK. The move was welcomed by the industry, Labour MPs and trade unions but any proposals will still have to clear the European commission.
The government is offering a sweetener in the hope that a buyer can be found for all of Tata’s remaining steel assets, after the Indian-owned company announced last month that it was pulling out of the UK. Anne Soubry, a business minister, called for “overly strict” EU state-aid rules to be relaxed, just hours after the government said it could take a 25% stake in the crisis-hit Tata steelworks. Speaking at a steel industry conference in Brussels, Soubry said: “When the UK looked at all of the options – and I do mean all the options – one of the biggest problems we had is making sure that any plans we have are compliant with state-aid rules. We have to look at state-aid rules to make sure that if we have an industry as vital as the steel industry is, in the particular and exceptional circumstances that it finds itself in, whether there should be some flexibility in what many people otherwise regard as overly strict state-aid rules.”
Javid came in for criticism for failing to respond quickly enough to the crisis. He was away on a trade trip to Australia when Tata announced the withdrawal, which puts up to 40,000 jobs at risk. Soubry said that a large number of buyers had expressed an interest in purchasing the entire Tata business but that its blast furnaces would “be the most difficult parts of the set”.
He initially ruled out nationalisation but the government later backtracked and said all possibilities were still on the table. Government sources said that because the new measures being proposed would only be activated if a potential buyer was found, they should be viewed as a commercial intervention rather than state aid. BIS was also keen to stress it should not be regarded as part-nationalisation because the government would not have majority control.
Outlining its package, the Department for Business, Innovation and Skills said its offer would be tailored to the purchaser’s strategy and financing needs. Ricardo Cardoso, a spokesman for the competition commissioner Margrethe Vestager, would only say that “we are in contact with the UK authorities on this issue”.
It is expected that the large majority of the help will be through the provision of debt financing but other options include hybrid convertible debt or a minority equity stake of up to 25%. Javid has come in for criticism for failing to respond quickly enough to the crisis. He was away on a trade trip to Australia when Tata announced the withdrawal, which puts up to 40,000 jobs at risk. He initially ruled out nationalisation but the government later backtracked and said all possibilities were still on the table.
The government is also working to “find a solution” to the burden of pension liabilities, which has been putting off potential buyers. Outlining its package, the Department for Business, Innovation and Skills said its offer would be tailored to the purchaser’s strategy and financing needs. It is expected that the large majority of the help will be through the provision of debt financing but other options include hybrid convertible debt or a minority equity stake of up to 25%.
The details of the package emerged after a second meeting between Javid and Cyrus Mistry, the Tata Global chairman in Mumbai. The offer has been made jointly by the UK and Welsh governments and will be made available on commercial terms to potential buyers of Tata Steel. They are also working to find a solution to the burden of pension liabilities, which has been putting off potential buyers.
Javid said: “This government is committed to supporting the steel industry to secure a long-term viable future and we are working closely with Tata Steel UK on its process to find a credible buyer. The detail of our commercial funding offer is clear evidence of the extent of that commitment. The details of the package emerged after a second meeting between Javid and Cyrus Mistry, the Tata Global chairman in Mumbai. Javid said: “This government is committed to supporting the steel industry to secure a long-term viable future and we are working closely with Tata Steel UK on its process to find a credible buyer. The detail of our commercial funding offer is clear evidence of the extent of that commitment.
“Ministers have visited Tata Steel sites across the country and the pride and dedication of the highly skilled men and women working there is obvious to see. We have already delivered on energy compensation, on tackling unfair trading practices and on procurement of British steel, and we will keep on going further to support this vital industry.”“Ministers have visited Tata Steel sites across the country and the pride and dedication of the highly skilled men and women working there is obvious to see. We have already delivered on energy compensation, on tackling unfair trading practices and on procurement of British steel, and we will keep on going further to support this vital industry.”
Carwyn Jones, the first minister of Wales, said: “We’re committed to supporting any credible bid to secure steel-making in Wales. We have worked with the UK government to put in place this significant package of support and we believe that this will help secure a successful sale of Tata Steel’s operations in Wales and the rest of the UK.”Carwyn Jones, the first minister of Wales, said: “We’re committed to supporting any credible bid to secure steel-making in Wales. We have worked with the UK government to put in place this significant package of support and we believe that this will help secure a successful sale of Tata Steel’s operations in Wales and the rest of the UK.”
The European Investment Bank has also said it may consider possible financing for new investment in the UK steel industry on the basis of specific proposals. Related: Sajid Javid is ill-prepared to save UK steel | Angela Eagle
The industry welcomed the offer, with the EEF manufacturers group saying it was an “extremely positive statement of intent”. Gareth Stace, director of UK Steel, said it was a good first step as the industry had been calling for government to “step up to the mark” and provide this type of financial commitment and backing.
He added: “We are not yet out of the woods, however. Further action is still needed on energy costs and business rates whilst at EU level, we still need to see tougher action on the dumping of cheap imports. This will then provide the level playing field which will give UK companies a fighting chance to compete.”
Frances O’Grady, general secretary of the TUC, also said it was a welcome recognition by ministers but the devil would be in the detail and the business secretary must do more to tackle China’s dumping of steel if the industry is to be viable in the long term.
Her concerns were echoed by Angela Eagle, shadow business secretary, who said it was a long-overdue recognition of the need for government support for the sale process.
“Labour and the steel unions have been calling for action for weeks; this appears to be a step forward,” she said. “But this alone will not be enough to save the steel industry. The government must ensure Tata allow enough time for a suitable buyer to be found and they must reassure the customer base and supply chain. Crucially, they need to address the underlying challenges facing the industry: energy costs, business rates, procurement, and most of all, the illegal dumping of Chinese steel. Labour has developed a four-point plan to save the steel industry.”
Stephen Kinnock, Labour MP for Aberavon, said he welcomed the move but the government must also “step up to proactively reassure customers and secure the order book”. He said: “This announcement has come as the result of the relentless pressure that Labour MPs and the steel unions have been exerting within and outside Westminster, exemplified by the fact that we have raised the issue 208 times in the chamber since the general election.”