Government in advanced talks over £500m Tata Steel aid package

Published

1 year ago

September 2, 2023

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The government is in advanced talks with Britain’s biggest steel producer to hand over a £500m aid package aimed at securing the long-term future of steelmaking in south Wales.

Sky News can exclusively reveal that Whitehall officials and Tata Steel are close to agreeing a deal that would commit more than £1bn to the future of its Port Talbot steelworks, but which could ultimately result in thousands of job losses.

Sources said this weekend that the terms of an agreement were subject to change, but that there were hopes of finalising it as early as this month.

One insider suggested that Tata Steel had been trying to persuade the government to increase the proposed funding package in recent weeks.

Under the plans currently envisaged, the government would commit approximately £500m of public funding to the company, while Tata Steel’s Indian parent would sign off £700m of capital expenditure over a multi-year period.

Port Talbot employs about 4,000 people – roughly half of Tata Steel’s overall UK workforce of approximately 8,000.

Industry sources close to the discussions said the company had indicated that over the long term, as many as 3,000 of its British-based staff were likely to lose their jobs.

Electric arc furnaces, which Tata Steel would commit to building as part of the agreement with government, utilise different, less labour-intensive, processes to produce steel than traditional blast furnaces.

The government is said to have accepted during the discussions that some job losses would be inevitable as part of the transition to reducing carbon emissions, although an insider said on Saturday that a number of those could be through workers taking early retirement.

The final scope and timing of any redundancies would be negotiated between the company and trade union officials, and sources close to the process insisted that no decisions had been taken.

If a deal can be reached, it would mark the second time this year that the government has bankrolled investment in a manufacturing business owned by Tata Group.

In July, it agreed to commit several hundred million pounds to the company to construct a £4bn battery factory in the UK for its Jaguar Land Rover subsidiary.

Rishi Sunak, the prime minister, described the investment as “a massive vote of confidence” in British industry.

Ministers and Britain’s two biggest steelmakers have been in talks for months about handing over hundreds of millions of pounds of taxpayers’ money to fund the companies’ transition to greener production.

Initially, both Tata Steel and British Steel, its smaller rival, were offered £300m each in government support, but formal agreements have remained elusive.

British Steel’s Chinese owner, Jingye Group, announced hundreds of job losses earlier this year – a move which angered ministers because they coincided with discussions about state funding – but has also yet to reach a deal to secure its plants’ future.

The government originally sought to tie the issue of public funding to a moratorium on redundancies, but it was unclear whether any formal guarantees aimed at limiting job losses would be part of the Tata Steel funding package.

Sources said the offer to Tata Steel had been increased from £300m to about £500m during the course of the summer.

If completed, an agreement with the government would draw a line under years of uncertainty about the medium-term future of Port Talbot, although it was unclear whether the company would make specific commitments about the long-term as part of a deal.

As recently as May this year, Tata Steel warned of a “material uncertainty” over the future of its British business, citing a lack of clarity about potential government support among the factors raising doubts over its prospects.

In an interview with the Financial Times in July last year, Natarajan Chandrasekaran, the Tata Group chairman, said: “A transition to a greener steel plant is the intention that we have . . . But this is only possible with financial help from the government.

“We have been in discussions over the last two years and we should come to an agreement within 12 months.

“Without this, we will have to look at closures of sites.”

In 2020, the Treasury hired bankers and management consultants to draw up a blueprint for the future of the steel industry and advise on talks with Tata Steel about the future of Port Talbot.

During the pandemic, the company floated a plan that would have entailed the government injecting £900m into it in return for an equity stake of up to 50%.

There is not thought to be any equity-linked element to the current aid proposal.

Nevertheless, the proposed scale of the taxpayer support for Tata Steel’s UK operations illustrates the acute political sensitivity that continues to accompany the subject of British steelmaking.

With a general election less than 18 months away, and the Conservatives facing a battle to convince voters that it has a plan to restore the economy to sustainable long-term growth, the closure of one of the country’s most important manufacturing sites would be devastating.

In a letter to Jeremy Hunt, the chancellor, in December, Grant Shapps, the then business secretary, and Michael Gove, the levelling-up secretary, argued that retaining sovereignty over steel production was critical to the UK economy.

“Every other G20 nation has maintained domestic steel production and, while we do not think that this should come at any cost, we do believe it is in HMG’s interest to offer well-designed and targeted funding which unlocks private investment, achieves a good outcome for taxpayers, and enables transformed , decarbonised and viable domestic steel production to continue in the UK in the long-term,” Mr Shapps and Mr Gove wrote.

“We do not want to become reliant on steel sources elsewhere in the same way that energy security has become self-evidently important.

Figures from UK Steel, the industry body, revealed earlier this year that crude steel production in 2022 had fallen to 6m tonnes, its lowest level of output since the Great Depression of the 1930s.

A Tata Steel spokesman said in a statement issued to Sky News: “Tata Steel is continuing to discuss with the UK government a framework for continuity and decarbonisation of steelmaking in the UK amidst very challenging underlying business conditions, given that several of its heavy-end assets are approaching the end of life.”

“Given the financially constrained position of our UK business, such significant change is only possible with government investment and support, as also seen in other steelmaking countries in Europe where governments are actively supporting companies in de-carbonisation initiatives

The Treasury referred an enquiry from Sky News to the Department for Business and Trade, which has been contacted for comment.

UK

Ellis Cox: Mother appeals to catch son’s killer on birthday anniversary

Published

4 hours ago

January 18, 2025

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Ellis Cox: Mother appeals to catch son's killer on birthday anniversary

Fresh appeals have been made for information on what would have been the 20th birthday of Ellis Cox, who was shot dead in Liverpool last June.

A number of people have been arrested in connection with the murder at Liver Industrial Estate, but no one has been charged yet.

The 19-year-old’s family and police have paid tribute to him and called for those with information to come forward.

He was shot in the back after a confrontation between his friends and another group of up to three males on Sunday 23 June.

His mother Carolyn paid tribute in an appeal to coincide with what would have been his 20th birthday.

“He was so kind… so laid back, so calm, so mature for his age. And he was just funny. Very funny.

“He was my baby… no mum should have to bury a child. He was my life. And I don’t know what to do without him.”

Meanwhile, his aunt Julie O’Toole said he was “the sort of person I think you’d be hard pressed to find anyone to say anything negative about. He was loyal, fiercely loyal… everything was about his family”.

To pay tribute to Ellis, Liverpool City Council will be lighting up the Cunard Building and Liverpool Town Hall in orange on Saturday.

Detective Chief Inspector Steve McGrath, the senior investigating officer, spoke about the information gathered so far, six months on from Mr Cox’s murder.

“I’m satisfied that the group that he was with was probably the target… and I would say that’s got something in relation to do with localised drug dealing in that area. But Ellis had no involvement in that whatsoever,” he said.

He added that police are looking for “really significant pieces of evidence now”, including “trying to recover the firearm that was used in relation to this, looking to recover the bikes that were used by the offenders”.

Mrs Cox also appealed for people to come forward with information.

“If you know anything, don’t let us get to [his] next birthday and still know nothing.

“We need to get justice for Ellis. And we need to get the people who took him from us off the streets.”

UK

Manchester United legend Denis Law dies aged 84

Published

15 hours ago

January 17, 2025

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Manchester United legend Denis Law dies aged 84

Former Manchester United and Scotland footballer Denis Law has died, at the age of 84.

In a statement, his family said: “It is with a heavy heart that we tell you our father Denis Law has sadly passed away. He fought a tough battle, but finally, he is now at peace.

“We would like to thank everyone who contributed to his wellbeing and care, past and much more recently.

“We know how much people supported and loved him and that love was always appreciated and made the difference.”

The Aberdeen-born footballer previously announced in August 2021 that he had been diagnosed with dementia.

A prolific striker, Law scored 237 goals in 404 appearances for Manchester United, for whom he signed for a then-British record transfer fee in 1962.

He is the only man to have two statues dedicated to him at Old Trafford – one on the Stretford End concourse, the other as part of the United Trinity statue overlooking the stadium’s forecourt beside fellow great George Best and Sir Bobby Charlton.

The only Scottish player to have won the Ballon d’Or award, in 1964, he was also part of United’s triumphant campaign in the 1968 European Cup – in which they became the first English club to ever win the competition.

In a statement, the club said: “Everyone at Manchester United is mourning the loss of Denis Law, the King of the Stretford End, who has passed away, aged 84.

“He will always be celebrated as one of the club’s greatest and most beloved players.

“The ultimate goalscorer, his flair, spirit and love for the game made him the hero of a generation. Our deepest condolences go out to Denis’s family and many friends. His memory will live on forever more.”

Wayne Rooney, former United captain and the club’s all-time record goalscorer, described Law as a “legend”.

“Thoughts with all Denis’s family and friends,” he said in an online post.

Another former United captain, Gary Neville, said: “A great footballer and a great man. It’s a privilege and an honour to have spent time in your company. The King of the Stretford End.”

A tribute from the Scotland national team said Law was “a true great”.

“We will not see his likes again,” it said.

Law also played for Huddersfield Town, Manchester City, and Italian club Torino during his club career, and made 55 appearances for Scotland, scoring 30 goals for his country.

Manchester City said in a post on X: “The whole of Manchester, including everyone at City, is mourning with you. Rest in peace, Denis.”

UK

FTSE 100 closes at record high

Published

16 hours ago

January 17, 2025

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The UK’s benchmark stock index has reached another record high.

The FTSE 100 index of most valuable companies on the London Stock Exchange closed at 8,505.69, breaking the record set last May.

It had already broken its intraday high at 8532.58 on Friday afternoon, meaning it reached a high not seen before during trading hours.

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The weakened pound has boosted many of the 100 companies forming the top-flight index.

Why is this happening?

Most are not based in the UK, so a less valuable pound means their sterling-priced shares are cheaper to buy for people using other currencies, typically US dollars.

This makes the shares better value, prompting more to be bought. This greater demand has brought up the prices and the FTSE 100.

The pound has been hovering below $1.22 for much of Friday. It’s steadily fallen from being worth $1.34 in late September.

Also spurring the new record are market expectations for more interest rate cuts in 2025, something which would make borrowing cheaper and likely kickstart spending.

What is the FTSE 100?

The index is made up of many mining and international oil and gas companies, as well as household name UK banks and supermarkets.

Familiar to a UK audience are lenders such as Barclays, Natwest, HSBC and Lloyds and supermarket chains Tesco, Marks & Spencer and Sainsbury’s.

Other well-known names include Rolls-Royce, Unilever, easyJet, BT Group and Next.

FTSE stands for Financial Times Stock Exchange.

If a company’s share price drops significantly it can slip outside of the FTSE 100 and into the larger and more UK-based FTSE 250 index.

The inverse works for the FTSE 250 companies, the 101st to 250th most valuable firms on the London Stock Exchange. If their share price rises significantly they could move into the FTSE 100.

A good close for markets

It’s a good end of the week for markets, entirely reversing the rise in borrowing costs that plagued Chancellor Rachel Reeves for the past ten days.

Fears of long-lasting high borrowing costs drove speculation she would have to cut spending to meet self-imposed fiscal rules to balance the budget and bring down debt by 2030.

Long-term government borrowing had reached a high not seen since 1998 while the benchmark 10-year cost of government borrowing, as measured by 10-year gilt yields, was at levels last seen around the 2008 financial crisis.

The gilt yield is effectively the interest rate investors demand to lend money to the UK government.

Only the pound has yet to recover the losses incurred during the market turbulence. Without that dropped price, however, the FTSE 100 record may not have happened.

Also acting to reduce sterling value is the chance of more interest rates. Currencies tend to weaken when interest rates are cut.