Tata Steel said it was ‘very concerned’ about the long-term future of the industry after the Government yesterday watered down plans to protect British operators from cheap imports.

Measures next month will cut by 51 per cent the volume of steel that can be imported, tariff-free. That is less than the previously proposed 60 per cent reduction.

Imports above the quota face a 50 per cent tariff. The policy is meant to safeguard UK firms being battered by rising energy costs and a glut of cut-price Chinese steel.

But Rajesh Nair, chief executive of Tata Steel UK, which employs thousands of people at Port Talbot, Wales, said: ‘We do not believe the final quota levels reflect UK market conditions.

‘We are very concerned about implications for the long-term competitiveness, sustainability, growth and future investment outlook for the UK steel sector.’

UK importers, seeking cheaper steel, lobbied for the change. William Bain, at the British Chambers of Commerce, said: ‘The Government is walking a precarious tightrope in trying to balance the needs of steel producers and users.’