UK business secretary postpones Tata Steelworks decision to next PM

British Business Secretary Kwasi Kwarteng has indicated that the next British Prime Minister will have to decide on the Tata Group’s request for £1.5 billion in government grants to safeguard the future of its Port Talbot steelworks.

Kwarteng allies say the minister wants to help steelmakers, including Tata, owner of the UK’s largest steelworks, decarbonise the sector, but say future grant decisions must be made by a new Tory leader and Prime Minister.

After two years of talks, Tata has failed to reach an agreement with the British government, which has been embroiled in a series of crises and is now distracted by the race to replace outgoing Prime Minister Boris Johnson.

Tata Group chairman Natarajan Chandrasekaran told the Financial Times this week that without a decision within the next 12 months on funding to help it cut carbon emissions, it could be forced to shut down operations.

A colleague of the Business Secretary said: ‘Kwasi believes steel is a strategic industry and wants – and has supported – the industry’s transition to low carbon production – but not at any cost . This is a problem for the new administration.

Kwarteng’s position is significant as he is tipped as future Chancellor if Foreign Secretary Liz Truss becomes Prime Minister when a new Conservative leader is appointed on September 5.

Kwarteng is a strong supporter of Truss in his battle with former Chancellor Rishi Sunak for the Tory leadership, but neither candidate is seen as a knee-jerk supporter of big industrial grants.

Truss campaigned on the need to shrink the size of government and cut taxes, while Sunak promised tax cuts when inflation is brought under control.

Both claimed they were ‘Thatcherites’: Margaret Thatcher is associated with the 1980s when her government refused to bail out struggling heavy industry, including coal mining and steel production.

Truss and Sunak have pledged to meet Britain’s net zero carbon targets and have sat in a cabinet that has made significant investments in the transition to green energy.

If Tata received the grants it is seeking, it would build two new electric arc furnaces and close its two blast furnaces in Port Talbot, halting primary steel production, people familiar with the details said. Arc furnaces recycle scrap metal and are less carbon intensive than blast furnaces.

The Department for Business said Tata was “a valued steel producer and significant employer in the UK”. The company operates the Port Talbot plant and employs nearly 8,000 people across its operations.

The government said: “Our continued support for the sector’s low carbon transition includes the £289m Industrial Energy Transformation Fund and over £1bn to help with energy efficiency, decarbonisation, low-carbon infrastructure and research and development.”

Tata’s request for £1.5 billion was not referred by Kwarteng to the Treasury, but the commercial department expected such a request.

Stephen Kinnock, the Labor MP whose constituency includes Port Talbot, urged the government to act but said ‘the cavalry is coming’ and a future Labor government would invest in the site.

“There is not a single steel industry in the world that is capable of decarbonizing without substantial government support, so why the hell have Rishi Sunak, Liz Truss and the rest of the cabinet been dragging their feet on this for so long? long time?” he said.

“The Labor Party has set out plans for a £3billion Steel Renewal Fund, which would benefit the UK steel industry by teaming up with Tata Steel and other UK-based steelmakers to forge a strong, resilient and carbon-free steel industry.”

Peter Hughes, regional secretary of the trade union group Unite, said: “Steel is a strategic industry and must be at the heart of the UK’s economic strategy. The UK government urgently needs to refocus its attention on who its next leader will be and focus on supporting workers and maintaining highly skilled, well-paid steel jobs here in Wales.

A Welsh Government spokesperson said: “Our aim continues to be to explore all avenues to secure a successful, low-carbon future for Welsh steel. This goal is entirely possible, but it requires action and ownership by the UK government. »

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