Britain’s largest steelmaker, Tata Steel, is awaiting a government decision on a possible rescue deal that would save 8,000 jobs in a struggling sector whose problems have been compounded by the coronavirus lockdown. Tata Steel’s UK business is seeking about £500m in government support to help it survive. The company is the owner of the UK’s largest steelworks, at Port Talbot in south Wales, as well as other locations in Wales.
The business is a contender for a loan under the Treasury’s so-called Project Birch, a scheme considering bailouts as a last resort for strategically important companies. A state loan could be issued to the group in the new few days, the Financial Times reported.
Officials at the steelmaker have been repeatedly told that a decision is imminent over the course of a few weeks, according to a person with knowledge of the talks. However, a government source cautioned that discussions were still ongoing, and a final decision may not be made for days or even weeks. Project Birch involves Treasury officials examining options for the government to step in and support companies and is aimed at preventing a flurry of job losses in the sectors of the economy hardest hit by the Covid-19 crisis.
Taxpayer support would be offered as a last resort for companies that are not able to borrow more money after they have exhausted other options such as the government’s coronavirus emergency loan schemes. A spokesman for Tata Steel confirmed the company has sought and continues to seek government support, but declined to comment on the details of the talks.
Tata Steel’s UK business first requested support in April, as the coronavirus lockdown shut down industry across the country. Stephen Kinnock, the MP for Aberavon, whose constituency includes the huge Port Talbot site, said the government’s coronavirus large business interruption loan scheme (CLBILS) was capped at a lower amount than what Tata Steel believed it needed. The Port Talbot steelworks employs more than 4,000 workers.
The UK chancellor, Rishi Sunak, is understood to be reticent about taking stakes in companies under Project Birch. The government has previously refused to comment on whether it would partly renationalize the companies it bails out by demanding equity stakes in return for support.
The Indian conglomerate Tata planned to sell its UK business three years ago but eventually decided to keep its British plants and to invest £1bn in upgrading them.