It is said Tata Steel could be nationalised

The government would consider nationalising Tata Steel, the minister for small business has said, as she warned leaving the EU could further damage the struggling steel industry.

Giving evidence to MPs on a joint select committee session about the steel industry, Anna Soubry said she remains confident that Tata Steel will find a buyer for its UK business, despite economic volatility triggered by the Brexit vote. She renewed the government’s pledge that it stands ready to lend money “on commercial terms” to any eventual buyer, or take an ownership stake in the business.

“When we faced the crisis with Tata … you can be assured we looked at all options and one of those was whether or not, my phrase, to ‘buy it for a quid’. When you make political determination that you’re going to keep at least one of the blast furnaces [at Tata’s Port Talbot steelworks] open, you look at all options.”

The government has suggested it could co-invest with a potential buyer by taking a 25% stake in the business. Soubry also did not rule out full nationalisation on a temporary basis, if the sale process collapses.

The Labour MP Stephen Kinnock, whose Aberavon constituency includes Port Talbot, asked if full nationalisation was on the table if a buyer can’t be found and Tata Steel shutters the businesss. The small business minister repeated that “all options” were on the table.

Soubry, who campaigned to remain in the EU, warned that Brexit could have profound consequences” for the British steel industry, regardless of Tata’s sale process.

Soubry said Britain’s influence in European efforts to tackle the problem would now be diminished because “everybody knows that you’re going to clear off as soon as you can”. She said a full exit would have a “huge impact” on the steel industry’s ability to export to the EU and pointed to the possible effect on automotive firms such as Nissan, which gets 45% of its steel slab from Port Talbot.

Nissan and Toyota both benefit from tariff-free access to EU customers and Soubry warned that leaving the union could see other countries levy duties on cars coming from the UK. “If you’re a multinational company, you’re not going to make it in Britain if you can make in in the EU to sell it in the EU free of tariffs,” she said.

Soubry also dismissed suggestions that leaving the EU could help the government support the steel industry by freeing it up to provide state aid or slap punitive tariffs on Chinese steel. “If we want access to the single market, we can’t set our own tariffs. I can’t imagine that the EU would allow us access to the single market but not make us party to the state aid rules.”

Despite reiterating that the government could provide financial support to secure a buyer for Tata Steel, Soubry cast doubt on suggestions that the government could change the law to allow the British Steel pension scheme to avoid being folded into the Pension Protection Fund. She said it would set a “dangerous precedent” to make special arrangements for one pension scheme “given that so many pension schemes face difficulties”.

The business minister, Sajid Javid, is due to fly to Mumbai ahead of Friday’s board meeting at Tata, the Indian conglomerate that owns Tata Steel UK. “This is part of our ongoing dialogue with Tata to maintain momentum and achieve a long-term solution for UK steelmaking,” the Department for Business, Innovation and Skills said in a statement.