Tata Steel could be on the brink of making an agreement with the government to save the plant in Port Talbot, according to media reports. If successful, the deal will save approximately 11,000 jobs and the company will receive a £1 billion loan. The British Steel Pension Scheme would also be restructured if the agreement goes ahead.
Government intervention has become necessary as a suitable buyer doesn’t appear to have been found. The Business Secretary Sajid Javid had previously stated that the government would be willing to provide a 25% equity stake in the business and it would also offer further financial support.
Tata Steel have made no comment on it’s website about the potential deal, but it has welcomed the changes to the British Steel Pension Scheme, which were announced after talks between the company, government, regulators, and pension scheme trustees.
In a statement, Human Resources Director for Tata Steel’s European operations, Tor Farquhar, said:
“This is an important step forward which would enable a better outcome for the vast majority of members of the British Steel Pension Scheme than the benefits provided by the Pension Protection Fund. The consultation is also an important step that supports the prospect of securing a sustainable future for Tata Steel UK’s 11,000 employees.
In a recent statement to the House of Commons, Javid said that Tata was in the process of considering proposals. At a meeting in Mumbai, the Business Secretary yet again reiterated the government support that would be offered to bidders for the plant. In the Commons in May, Javid stated there were seven bidders for Tata’s Port Talbot plant, and they were working to “narrow the field” to concentrate on the most credible ones.
In further positive news for the manufacturing sector, manufacturing activity increased in May, according to the Purchasing Managers Index; the UK Manufacturing PMI moved passed its recent stagnation 50.1. However, the sector’s performance is still sluggish and analysts are concerned that it will continue to hold back the rest of the economy.
Major concerns for the manufacturing industry include the poor performance of exports and the impending Brexit vote. Many businesses surveyed by Markit say they feel that the forthcoming European Union vote was having a negative impact on their businesses due to the on-going uncertainty. A recent report by the Centre for Economics and Business Research indicated that a ‘yes’ vote could result in a loss of 950,000 manufacturing jobs.