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Tata Steel could make government agreement

Tata Steel could be on the brink of making an agreement with the government to save the plant in Port Talbot, according to media reports. If successful, the deal will save approximately 11,000 jobs and the company will receive a £1 billion loan. The British Steel Pension Scheme would also be restructured if the agreement goes ahead.

Government intervention has become necessary as a suitable buyer doesn’t appear to have been found. The Business Secretary Sajid Javid had previously stated that the government would be willing to provide a 25% equity stake in the business and it would also offer further financial support.

Tata Steel have made no comment on it’s website about the potential deal, but it has welcomed the changes to the British Steel Pension Scheme, which were announced after talks between the company, government, regulators, and pension scheme trustees.

In a statement, Human Resources Director for Tata Steel’s European operations, Tor Farquhar, said:

“This is an important step forward which would enable a better outcome for the vast majority of members of the British Steel Pension Scheme than the benefits provided by the Pension Protection Fund. The consultation is also an important step that supports the prospect of securing a sustainable future for Tata Steel UK’s 11,000 employees.

Commons Statement

In a recent statement to the House of Commons, Javid said that Tata was in the process of considering proposals. At a meeting in Mumbai, the Business Secretary yet again reiterated the government support that would be offered to bidders for the plant. In the Commons in May, Javid stated there were seven bidders for Tata’s Port Talbot plant, and they were working to “narrow the field” to concentrate on the most credible ones.

Manufacturing News

In further positive news for the manufacturing sector, manufacturing activity increased in May, according to the Purchasing Managers Index; the UK Manufacturing PMI moved passed its recent stagnation 50.1. However, the sector’s performance is still sluggish and analysts are concerned that it will continue to hold back the rest of the economy.

Major concerns for the manufacturing industry include the poor performance of exports and the impending Brexit vote. Many businesses surveyed by Markit say they feel that the forthcoming European Union vote was having a negative impact on their businesses due to the on-going uncertainty. A recent report by the Centre for Economics and Business Research indicated that a ‘yes’ vote could result in a loss of 950,000 manufacturing jobs.

Questions being asked over Hinkley C

The proposed Hinkley C power plant has always been the subject of controversy, but further questions are now being raised over its costs and who will foot the bill for the radioactive waste that will be produced.

As detailed in the Guardian, the Department of Energy and Climate Change has declined a Freedom of Information request, which would have disclosed its state aid arrangements with the French energy firm EDF.

The government has previously stated that when a company builds a nuclear plant in the United Kingdom, it would be responsible for the management and cost of the waste disposal, but there are worries that these expenses could be passed on to the bill payer. In addition, environmental group Greenpeace has expressed concerns over the possible bad value that the proposed plant might offer to the tax payer.

David Lowry, who filed the Freedom of Information request, is to appeal the decision and he argues that British citizens are entitled to make up their own minds on whether the government has made the right decision over the plant.

Hinkley C - the costs

In an article on its website, Greenpeace has raised concerns over the potential costs of Hinkley C. A recent spreadsheet issued by the Treasury seemed to suggest that the new power plant could end up costing £26 billion, but the government has since issued a statement saying this was a mistake and the final cost will be £16 billion.

However, Greenpeace says this isn’t consistent with the costs announced by EDF, who say that the development will cost £18 billion, however, this price could still rise should be development be subject to delays.

A new nuclear generation

A move toward nuclear energy is considered necessary due to the closure of the majority of the United Kingdom’s older generation power stations and the need for cleaner fuels.

The Hinkley Point C power plant is being hailed as the first step towards a new revolution for the nuclear power industry, and it will be the first nuclear plant in the UK for a quarter of a century.

Licensing for the station was confirmed in 2012, and Hinkley C will be the first nuclear power plant to be backed by a Funding Decommissioning Programme. Under this arrangement, the company responsible for building the plant must cover all of the costs of decommissioning, and their share of the total cost for waste disposal.

Government announces energy security measures

The government has announced a series of steps intended to reform the Capacity Market and secure energy supply. The reforms follow an earlier consultation, which was held in March.

The changes announced by the Department of Energy and Climate Change are being taken to better cater for the demands of energy during peak times, to help keep costs down for both businesses and domestic households alike, and to help secure the future of energy supply in the United Kingdom.

The core reforms

The reforms have resulted in a number of core changes. The first major transformation announced is that more energy is to be purchased, and the date for buying it is to be brought forward. There will also be increased sanctions for companies that do not comply with their Capacity Market agreements.

As a result of the reforms, the next energy auction is due to be held in January 2017 to help secure energy supplies for the coming year. The government is yet to set a target of how much energy is to be purchased, but it is likely to increase significantly in order to enhance capacity. However, a final decision will not be made until June, when the final details will be made public.

The Energy Bill

In a further effort to secure energy supply, the government has formerly introduced the Energy Bill. The bill includes a number of measures in order to help the government reach its commitments to affordable, greener forms of energy.

The Energy Act will introduce a number of powers to ensure stronger support for the North Sea oil and gas industry. It will also give local communities a greater say when it comes to the introduction of new wind farms, and it will mean the Renewables Obligation subsidy will face an earlier closure; it will no longer be available to new offshore wind projects.

As a result of the new act, the Oil and Gas Authority will be given a much broader range of powers, and the regulatory controls that were previously the responsibility of the Secretary of State are to be transferred to the Authority.

Commenting on the announcement, Amber Rudd, Secretary of State for Energy and Climate Change said:

“By strengthening the Oil and Gas Authority and giving it powers to drive greater collaboration and efficiency in the industry, this Act shows that the broad shoulders of the UK are committed to helping our oil and gas industry attract investment, support jobs and remain competitive for the future”.

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