The Labour MP for Aberavon, which contains Tata Steel’s Port Talbot steelworks, has written to chancellor Rishi Sunak asking him to lift the cap on the size of loans large companies can receive to limit the coronavirus damage.
Yesterday it was reported that the firm, a subsidiary of giant Indian conglomerate Tata, was seeking £500m in funding for its facilities in Port Talbot.
In today’s letter, Sky News reported, Kinnock has called on the chancellor to give such firms “access to the support they need based on their turnover rather than an arbitrary cap”.
Under the Coronavirus Large Business Interruption Loan Scheme, businesses with a turnover of above £250m are guaranteed a loan of £50m.
This, however, is far short of the figure the Indian firm has indicated it needs to keep its business going.
Kinnock wrote: “I am sure that I don’t need to point out that if there were to be a catastrophic collapse and these jobs were to be lost, then the cost to the British taxpayer would be astronomical”.
The letter follows on from last week when Kinnock challenged first secretary Dominic Raab over the cap in the House of Commons.
“The £50m cap on loans that are now available under the government support scheme is only about 10 per cent of what Tata Steel actually needs,” he said.
“Tata Steel estimates that it will take around six months to get back to business as usual, or as close as possible to it and the challenge they have is cashflow over that six month period.
“And the estimation is in the region of £500m.”
Raab said: “I know that the chancellor is looking carefully at the steel sector in the hon. gentleman’s constituency, and at all those who are not directly benefitting from this particular scheme to ensure that in the round we are providing the measures that we need in a targeted way to support all the different crucial elements of the economy.”
The loan request comes after the government was forced to support British Steel for almost a year after the firm fell into insolvency last year.
Earlier this year the steelmaker was bought by Chinese conglomerate Jingye after months of speculation and uncertainty.