Tata steel shut down would leave £4.6BILLION blackhole in UK economy warn experts
More than 40,000 jobs are at risk if no buyer can be found for Tata Steel
The closure of the Tata steel plants would leave a £4.6billion blackhole in the British economy, experts warned.
The study says the Treasury stands to lose £2.2million a day through additional benefit payments and lost tax revenue if the plants go under.
More than 40,000 jobs are at risk if no buyer can be found for Tata’s UK operations, including the Port Talbot works.
An analyis by the IPPR think tank says the cost to the Government of lost tax revenue, welfare and housing costs would be £800million a year or £4.6billion over the next ten years.
In addition, the reduction in household spending would add up to £3billion over the next decade and steel towns face losing millions of pounds in revenue for vital services.
Business Secretary Sajid Javid
The findings will pile pressure on Business Secretary Sajid Javid , who was in Mumbai for a meeting with Tata executives, to stop the closure of Tata’s plants.
Speaking after talks with talks with Tata boss Cyrus Mistry in Mumbai, Mr Javid announced the sale process will be launched formally on Monday.
He said: “We had a constructive and positive meeting, and it’s fair to say Tata demonstrated again that they are a responsible company.
“They said that they intend to launch formally the sales process by Monday at the latest.
“I have also made it clear that the UK government will do everything it can to support any serious buyer in any way we can to secure the long-term future of this industry.”
The Government is changing low government finance so councils will no longer get funds from central government and will have to rely on the money raised from business rates and council tax.
Port Talbot is facing uncertain future
Under the new system the threatened closure of the Tata steelworks in Rotherham will cost the local council £3.2million in business rates.
Labour MP John Healey says steel towns face a “triple blow” of losing jobs, a shortfall in revenue and having to put council tax bills up to cover the cost.
In a letter to Business Secretary Sajid Javid, he said: “There is even more at stake than the direct blow to local jobs and business if Tata’s Rotherham steel plants close.
“This huge hit to our business rates base will be a secondary economic shockwave which other steel areas will take as well.
The letter continued: “The new system for funding local government through business rates is totally inadequate for losses on this scale.”
Alfie Stirling, IPPR Research Fellow, said: “The effects of plant closures on the UK could be very serious indeed.
“Our new analysis shows that there is significant fiscal and economic cost to inaction, which the government must take account of when considering its options for Tata Steel.”
A senior churchman warned that communities across the UK would be “crushed” if British steel plants close.
Speaking to the governing body of the Church in Wales in Llandudno, Archbishop of Wales Dr Barry Morgan said: “If the banking industry, which still does not fully appreciate the extent of its rescue, judging by the behaviour of some of its members, was deemed worth saving, surely it is worth securing a sustainable future for the steel industry in Wales and the UK.”
He feared cheap Chinese imports would kill off rival producers – leaving the way clear for the Chinese to hike prices when they had seen off competition.
“Other countries have imposed tariffs on imports and massively subsidised steel production.
“The danger is that if all steel-making plants are closed, once they are gone, the price of steel will increase and that will have far reaching repercussions on our economy and industry.
“It will be too late by then and people in places like Port Talbot, whose lives and communities have been shaped by the steel industry, will have been crushed.”
Extra foodbanks and a debt advice centre have been opened to cope with a feared surge in demand in the plant folds, Dr Morgan revealed.
A Department for Business spokesman said: “We are working very closely with Tata on the sale process and securing sustainable steel making in the UK.
“We think sites such as Rotherham have a positive future and hopefully the issue of business rates will not arise.”