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Sale of Tata Steel's UK plants to start next week

Published 06/04/2016

Sajid Javid, who will meet Cyrus Mistry, chairman of the Indian conglomerate
Sajid Javid, who will meet Cyrus Mistry, chairman of the Indian conglomerate

The process for selling Tata Steel's UK plants will start by Monday but there is no set timeframe for it to be completed.

Business Secretary Sajid Javid revealed the details after a two-hour meeting with Tata officials in Mumbai, just over a week after the Indian conglomerate took the shock decision to sell its loss-making UK assets.

Mr Javid said Tata will allow a "reasonable amount of time" for the process to be completed.

The minister stressed that the Government wanted to work with any prospective buyer, saying "a number" of people had already started coming forward.

"I would like to see many more come forward when the formal process begins," he said.

Mr Javid met Cyrus Mistry, chairman of the Indian conglomerate, and other company officials to discuss the planned sale.

He said afterwards that he understood there would be some "issues" to deal with, such as power, which the Government "might be able to help further with".

The minister had been urged by unions to stress the need for Tata to act responsibly as a search for a buyer continues, and to allow enough time for the process to be completed.

Sanjeev Gupta, the head of the Liberty Group, held talks with Mr Javid on Tuesday and has raised hopes that jobs could be saved, especially at the huge plant in Port Talbot, South Wales.

Mr Gupta said: "UK Government appears highly supportive and is proactively engaged in finding a long-term solution. We have also actively engaged with Welsh Government and again we are encouraged by their approach.

"The next step is for Tata to define the formal sales process and request indications of interest from potential buyers. We await further details on this and then will assess our own next step.

"Liberty has already proven its ability to build value from UK steel assets with our acquisition of our Newport Steel plant, Midlands engineering operations and most recently in Scotland where we acquired mills from Tata. Everyone is very motivated to find a solution."

Meanwhile, workers are voting on temporary changes to terms and conditions as part of an impending sale of Tata's giant steel plant in Scunthorpe.

Union members are being balloted on a 3% cut in pay and a reduction in pensions, part of a "transformation plan" ahead of the expected sale to investment firm Greybull Capital.

Negotiations over the sale of the plant, which employs around 4,000 workers, have been taking place for several months, well before Tata's announcement last week.

Steve McCool, national officer of the Community union, said terms and conditions at Scunthorpe would be restored after a year.

"We are hopeful that the deal between Tata Steel and Greybull can be completed soon. Our own independent experts, Syndex, have found the transformation plan to be robust with a high probability of success. Our experts have also advised us that Greybull has the necessary capabilities to deliver the plan and secure a sustainable future for the business.

"Having given all the proposals and the context full consideration, myself and the national officers from the other unions are recommending that our members vote for the temporary changes to terms and conditions on the basis that this will give the transformation plan with Greybull a greater chance of success," he said.

Members of Unite and the GMB are also being balloted, with the result due on April 19.

Community said negotiations with managers at Tata's Long Products division over the transformation plan had been difficult.

Labour said its MPs have raised the issues facing the steel industry 203 times in Parliament since the general election and secured eight debates.

Shadow business secretary Angela Eagle said: "The perfect storm threatening the future of the steel industry in the UK didn't appear out of nowhere, it's been brewing for many months.

"Labour has raised the serious issues facing the steel industry time and again, yet the Tory Government have failed to take the necessary action to avert the crisis.

"As the crisis escalated, trade union representatives and the local Labour member of Parliament were in Mumbai fighting for the future of the industry, but the Government was missing in action. The Prime Minister was on holiday, the Chancellor was keeping his head down after his disastrous budget, and the Business Secretary was at a black tie dinner in Australia extolling the virtues of the free market.

"The steel industry is hanging by the thinnest of threads, the time for action from the Government to save our steel is now."

Mr Gupta said buying Tata's UK steel business was a "daunting" prospect, especially as the sale announcement was so unexpected.

He told the Press Association he expected other companies to show an interest now that the sale process was about to formally start.

"We have had very good interaction with the government and unions but we now need a proper analysis, and work out many details."

Mr Gupta said any buyer would have to "turn around" Tata's loss-making business and would not want to take on the huge pension liabilities.

Tata would probably want to make progress on any sale within weeks, but Mr Gupta said he believed the process would take months.

"We are interested and we now need to work out a business plan."

Mr Gupta said Tata workers would have to be retrained and he still believed jobs could be saved, although he added it was time to "take a breather" to consider details of the sale.

Speaking after a conversation this evening with Sajid Javid, Roy Rickhuss, general secretary of the Community union said: " I welcome the fact that the secretary of state informed me of the constructive conversation he had with Tata. I am pleased that he raised those issues I had raised with him before he flew to India.

"I am encouraged to learn that Tata have committed to be a responsible seller and to allow the time we need to secure a new commercial operator.

"This is a credit to the campaign our members have run over the past week. Now is the time to get to work. Community has already begun working with independent experts to map out a plan for our steel industry. We look forward to continuing to work with government to build a sustainable future for steelmaking in the UK."

Harish Patel, Unite national officer for manufacturing, said: "This is an agonising time for these workers and their communities so we look forward to a fuller debrief on the next stages from the minister on his return. Our members are sure to have questions on the details and the next steps.

"Tata has made it clear that they want to make this process as swift as possible, and while we welcome their commitment to be a responsible seller, we now need to focus on how this industry is safeguarded for the future.

"We are extremely concerned that this uncertainty will have wider ramifications. We also want to discuss the supply chain implications, where Unite has thousands of members who also face an uncertain future, so we will be seeking further urgent discussions with the minister on his return."

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