Tata Steel to cut 1,500 UK jobs

Tata's England-based long products business produces bars, rods and rails, mostly for the construction sector.

Tata (formerly known as Corus) is one of the biggest steel makers in the world, with operations in 26 countries.

The firm said demand for structural steel in the UK was only two-thirds of the level seen in 2007 and "is not expected to fully recover within the next five years".

Businessman Ratan Naval Tata said British managers did not compare favourably with their Indian counterparts, blasting staff he had met at Corus and Jaguar Land Rover, two companies Tata bought in recent years.

There was also uncertainty over further carbon cost increases from the UK government, which risked undermining competitiveness.

"As a consequence, the business has proposed a plan to further reduce costs, focus on products that create value and improve its ability to respond quickly to demand fluctuations. 

The sites were acquired by Tata in 2007 as part of its $13.7-billion purchase of Anglo-Dutch steelmaker Corus.

The carbon tax means electricity costs will increase dramatically, adding an extra £16.2 million in 2013/2014 and a whopping extra £32.3 million in 2015/16 to the steel industry.

Emissions

The floor price, which has been set at £16 per tonne of carbon dioxide in 2013 rising to £30 per tonne in 2020, puts a minimum tax on carbon-intensive power generation, which indirectly rewards producers of greener energy and will be applied to operators in the EU's emissions trading scheme.

According to sources the floor price will provide a large revenue stream to the exchequer, which could earn up to £740 million in the first year, and will be used to subsidise all forms of renewable energy, including nuclear power.

But Tata has warned that the introduction of the tax represents a potentially severe blow to the sustainability of UK steelmaking.