More reports on: Steel

Javid slammed over claims he tried to save Tata Steel

29 April 2016

Claims by UK Business Secretary Sajid Javid that he persuaded Tata not to shut its UK steel business immediately and instead try to find a buyer have been called into question by MPs, as he received a mauling over his response to the steel crisis.

UK Business Secretary Sajid JavidMPs on the Business, Innovation and Skills select committee, taking evidence on the meltdown in the UK steel industry, also heard from the chief of Tata Steel UK that the 485 million deficit in the company's giant pension scheme is deterring potential buyers.

Tata boss Bimlendra Jha warned that if the 14.5-bn retirement scheme's ''liability is not taken care of, [and] there is no buyer, there will be very, very bad consequences for the taxpayer".

"If this is not solved, we are staring at a huge economic and social disaster," he said.

MPs on the committee raised doubts about Javid's statement to the House of Commons that his intervention had prevented an immediate shutdown of the loss-making operations, based at the giant Port Talbot plant in Wales.

The business secretary told an emergency debate on 12 April that he became aware that Tata's Indian parent company was considering an immediate closure of Port Talbot several weeks before the board made a decision on 29 March not to back a turnaround plan. The decision to sell the UK operations put the jobs of 11,000 Tata staff and 20,000 people in the supply chain in jeopardy.

In the Commons debate the minister said the government had stepped in to ''secure a reprieve'', but giving evidence to the committee on Thursday, Jha flatly denied that Tata had intimated it was considering an immediate closure. Jha said the board meeting ''made only one decision, to exit the UK''. However, he added he was not privy to all the communications between Javid and Tata's board.

Jha added that Tata had started ''dialogue'' with the government about problems at its UK steel business more than three years ago, but as the ''greater gravity'' of the crisis became clear over the past few months, this contact became ''almost daily''.

Asked by MP Peter Kyle when it first became clear to Tata that the business was ''unsustainable, unviable'', Jha said, ''The writing was on the wall all the time. It's hard to say the exact moment when the penny dropped.''

Javid defended his handling of the steel crisis, which has been caused by a ''perfect storm'' of global oversupply, China dumping subsidised steel on global markets, and high costs in the UK. He said his department had been working behind the scenes for months to try to ease the problems, but commercial confidentiality prevented him from revealing his actions.

''We asked the company if there was anything we could do to stop the closure - the answer was no,'' the business secretary told the committee. ''We said to them, 'Can we agree if you can't make Port Talbot work, can we see if there are other buyers out there [who] can make it work?'''

Javid came under fire for being on what he described as a ''trade mission'' to Australia when Tata announced it was disposing of the UK business, and he had to rush back to deal with the crisis. His decision to have his teenage daughter accompany him was also criticised.

Explaining this to the committee, the minister said Tata had indicated that a decision on selling would not come so soon.

The pension deficit remains a major hurdle to finding a buyer for the business Javid told MPs, but said he did not see it as a major threat to public finances. ''A number of the potential buyers... have said that we won't have much interest if we have to take over the current pension plan as it is,'' he added.

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