Call Tata Steel’s bluff over Port Talbot

For a company that boasts of being a “world leader in sustainable steel”, Tata is doing a terrible job of ensuring the long-term survival of its plant in Port Talbot.

Once again, the Indian industrial giant is sounding the alarm about the site’s future, this time threatening to shut down operations unless it receives £1.5bn of state aid to put the plant on a more environmentally friendly footing. Tata envisages a “transition to a greener steel plant”, which is all very commendable but the grand decarbonisation plan is “only possible with financial help from the Government,” Natarajan Chandrasekaran, the chairman of Tata Group, told the Financial Times.

It is an outrageous demand, a form of eco-blackmail that the Government should refuse to bow to under any circumstances. One suspects its owners aren’t really serious about walking away anyway. Ministers should call their bluff, just as Rishi Sunak did when Sir Richard Branson was passing the begging bowl round Westminster during the pandemic, in the hope of securing a taxpayer-funded bailout for Virgin Atlantic despite the deep pockets of its largest shareholder. In the end, after his cries for help were batted away, the billionaire managed to pull together a £1.2bn rescue deal that included a £200m cash injection from his Virgin Group. Less than a year later, the airline had raised a further £160m to keep it flying, with another £100m reportedly coming from its parent. The Treasury should adopt the same hardline approach again.

Tata has been making the same threats, more or less, about walking away from Port Talbot for years now in a desperate effort to scare ministers into propping it up with taxpayer money. As far back as 2016, the plant’s owner has been casting doubts on its future. A proposed turnaround plan that hinged upon a £100m cash injection was “unaffordable”, and the likelihood of delivery “highly uncertain”, it decided. Yet despite pressure from trade union bosses, local MPS and Jeremy Corbyn, the Government refused to step in, and remarkably Port Talbot limped on.

Then, just as the pandemic kicked off, Tata bosses were at it again, jostling for a £500m emergency loan under Sunak’s Project Birch, a scheme set up to provide bespoke bailouts to companies whose failure would “disproportionately harm the economy” but, crucially, had exhausted all other escape routes.

The rescue package never emerged and Port Talbot lived to fight another day. If Mumbai-based Tata was serious about throwing in the towel, it would have done so by now.

But the company has significant skin in the game when it comes to the UK business landscape, in the form of Jaguar Land Rover. It can’t afford to simply turn its back on Port Talbot, particularly given the site’s importance to one of the country’s poorest regions. Tata’s reputation would be trashed and its suitability as a long-term owner of JLR thrown into question.

Indeed, it is surely no coincidence that on the same day that the Indian conglomerate was attempting to hold Her Majesty’s Government to ransom, JLR could be found running a soft, self-serving “interview” with Ratan Tata, chairman emeritus of Tata Sons and humble “architect of Jaguar Land Rover’s remarkable renaissance” on its corporate website, in which the world was reminded of such heroics as a doubling of sales, 20,000 more employees, and $16bn (£13.3bn) of investment since Tata took over in 2008. If the suggestion is that this brilliant feat should somehow extricate one of the world’s largest multinationals from its obligations elsewhere then it should think again. Thousands of steelworkers are once again being shamefully treated as a bargaining chip in a corporate buck-passing exercise.

The timing of the plea is curious . With the Government in chaos is it hoping to find a more sympathetic audience? The release of accounts the day before showing that the steelworks had moved £82m into the black – its first pre-tax profit in 13 years – on the back of record steel prices and a recovery in demand will hardly help its cause. It’s not that there isn’t a strong case for saving Port Talbot. Steel has a vital role to play in defence, offshore wind, car manufacturing and big infrastructure projects. But it’s not for taxpayers to prop up the sector.

If Tata believes in the plant’s future then a conglomerate whose 29 listed entities had a combined stockmarket value of more than $300bn at the end of March, must provide the necessary capital. If not, then it should step aside and allow the Government to take control while investors are sought, just as ministers did with British Steel three years ago. Absentee owners cannot expect to have it both ways.

‘Thousands of steelworkers are being treated as a bargaining chip’