It is “only right” that a decision on taxpayer support to safeguard Tata’s UK steel plants will have to wait until the new prime minister is in place, Welsh Secretary Sir Robert Buckland has said.

The company has been in talks with the Government about its decarbonisation plans, but the Tory leadership contest looks set to delay the process until either Liz Truss or Rishi Sunak is in No 10.

Unions said they are particularly worried about the future of the giant Port Talbot plant in South Wales as well as Tata’s other Welsh sites.

We are deeply committed to a sustainable future for our steel industry

Decisions will have to be be made by the incoming administration, due to be in place in early September.

Tata is reportedly seeking around £1.5 billion in UK state aid to help fund the closure of two blast furnaces at Port Talbot and their replacement with two electric arc furnaces that are less carbon-intensive.

Sir Robert insisted the Government was committed to maintaining a domestic steel industry but major decisions on the use of public money would have to wait until Boris Johnson’s replacement is in office.

He would not confirm Tata’s £1.5 billion demand – “we need to be careful about the figures” – but some element of state aid was being discussed.

The discussions “have obviously been based for some time on an element of Government subsidy to help the transition” from the old furnaces to “something much less carbon heavy”, Sir Robert told reporters.

“It’s something the British Government strongly supports, we believe fundamentally in the sovereign capability of the UK to produce steel and Port Talbot is the epicentre of that.

“I think it’s only right that those decisions are made by the new prime minister.

“That doesn’t mean that the lines aren’t open between now and then, far from it.”

Sir Robert said the fact that he and Business Secretary Kwasi Kwarteng were “reiterating our belief in a sovereign capacity in the UK to produce steel” should “be a very clear indication to Tata and to others that we are deeply committed to a sustainable future for our steel industry”.

Tata Group’s chairman Natarajan Chandrasekaran used a Financial Times interview earlier this month to warn that a transition to a greener steel plant “is only possible with financial help from the Government”.