Javid heads to India over Tata steel sale

Henry Mance and Michael Pooler
U.K. Home Secretary, Sajid Javid.
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Business secretary Sajid Javid is to head to India on Tuesday to meet Tata chairman Cyrus Mistry in Mumbai over the disposal of its threatened UK steel operations.

And has become personally involved in the battle to save Tata Steel's UK business, after little progress in the week since the Indian company put the plants up for sale

The prime minister will meet the Welsh first minister Carwyn Jones on Tuesday to discuss how to attract potential buyers for sites such as Port Talbot without breaching EU rules on state aid.

On Monday, Mr Jones, a Labour politician, launched a stinging attack on the UK government's response, saying it had been "slow and inadequate".

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He singled out Britain's opposition of higher EU taxes on Chinese steel, saying: "We need the UK to back higher tariffs."

Tata Steel said last week it was conducting a strategic review for its UK operations, which were acquired for £6.2bn in 2007 but which are now lossmaking amid a global steel glut. Port Talbot in south Wales, which employs about 4,000 workers, is the most problematic site.

Mr Jones labelled Tata Steel's decision "deeply disappointing", and said the company should now allow "months, not weeks" for a buyer to come forward.

In an attempt to grasp the situation, Mr Cameron dispatched his policy chief Oliver Letwin to join Mr Javid at a meeting with Tata Steel's finance director Koushik Chatterjee in London.

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A spokesperson for the prime minister said that, under state aid rules, the UK could still "provide financial support" for the steelmaking sites. That could include reducing pensions and energy costs. But asked for details, the prime minister's spokesperson said the focus was currently "on how we get a genuine sales process off the ground".

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The government remains opposed to allowing higher tariffs on Chinese steel. "We don't want to have decisions in one area which have an adverse impact in other areas," Mr Cameron's spokesperson said.

Mr Jones said he had "a simple message for the people of Wales and the UK government: these plants cannot close."

"We are not arguing to prop up a dying industry," he told the Welsh assembly. "We cannot contemplate a future without a domestic steel production capacity."

The Welsh government has put together a package of support worth £60m — made up of a £30m commercial loan to convert one of Tata Steel's lines to a galvanizing line, a further £30m for environmental improvements, and up to £2m for skills and training. "That remains on the table," Mr Jones said.

Trade unions said that further government support was needed to bridge the two to three years it would take for Tata Steel's UK operations to get back to "self-sustainability". One way of circumventing EU rules was to invest in an emissions-reducing power plant at Port Talbot, they said.

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Mr Cameron's spokesperson said he had no plans to meet union officials because no request had been received. Community, the steelworkers' union, said it had sent two emails and one letter asking for a meeting with the prime minister.

Mr Javid has been heavily criticized after going on a business trip to Australia, despite being aware that Tata Steel was close to making a decision on its UK business.

Allies of the business secretary insisted he remained "in the hot seat" and "in control" of the government's response. On Tuesday he will meet Sanjeev Gupta, founder of the commodities firm Liberty House, who has expressed interest in some of Tata Steel's UK sites. "Sajid is certainly interested in listening to Sanjeev Gupta," said a person close to the business secretary.

On Sunday Mr Javid said there was no question of nationalizing the £15bn pension fund for Tata Steel's UK workers, which has a £475m deficit.

"Define nationalization," Mr Jones, Wales' first minister, responded. If Tata Steel's operations were to go into administration, the Pension Protection Fund, which is part-financed by levies on eligible pension schemes, would guarantee an 85 per cent payout to beneficiaries.

Mr Jones said that EU rules prevented the Welsh government from offering Tata tailored discounts on business rates. He underlined the desire for a comprehensive solution for Tata Steel's UK operations, saying that the different sites were "quite interdependent".