The government has struck a deal with Tata Steel to secure some jobs while the Port Talbot plant moves to a low-carbon system for producing steel.
Agreed between Tata Steel’s Chairman Natarajan Chandrasekaran, Prime Minister Sir Keir Starmer, and senior members of the Cabinet on Tuesday, the deal also includes a minimum compulsory redundancy payout of £15,000, a £5,000 “retention” payment, and offers of paid-for training.
Business and Trade Secretary Jonathan Reynolds said: “Port Talbot has always been and will always be a steelmaking town. This deal does what previous deals failed to do – give hope for the future of steelmaking in South Wales.”
Reynolds added: “We know that a cleaner, greener future for UK steelmaking is vital to the industry’s long-term economic stability. The road ahead is not without its challenges but our steel strategy will set forth a positive vision for the future of the industry, backed by our manifesto commitment to £3 billion of government investment.”
Earlier this year, Indian steel giant Tata Steel announced a decarbonisation plan for the Welsh plant, which would see its two blast furnaces shut and the system be transitioned to an electric arc furnace (EAF), which makes steel from scraps of steel and iron.
Redundancies Expected
Despite the deal to protect around 5,000 jobs across the country, some 2,800 people will lose their jobs at the plant when the last blast furnace is closed, because the electric arc system will take years to construct and when it is completed, will need fewer workers.The government said to protect the Port Talbot community, it had agreed the £15,000 minimum compulsory redundancy package and secured a “generous” voluntary redundancy deal where employees who choose redundancy will be paid 2.8 weeks’ earnings for each year of service, up to a maximum of 25 years.
Tata Steel has also agreed to provide a comprehensive training programme for those at risk of compulsory redundancy, where employees will be on full pay for the first month and then £27,000 per annum for 11 months thereafter while they learn.
The steel company says that at least 500 new jobs will be created to support the construction of the EAF, which is expected to be operational in three years.
De-Industrialisation for Net Zero
While this deal was agreed on by trade unions, not all leaders were happy with the direction of travel net zero was taking British industry.Gary Smith, leader of the GMB union, said that the next few weeks are going to be tough, because thousands will lose their jobs.
Smith said that while he welcomed the fact that Labour had adopted a lot of the trade unions’ plans, the effect on the Port Talbot community and the industry was going to be “huge.”
“We’re going to lose steel-making capacity,” Smith told BBC News.
He continued: “Thousands of jobs are going to go, a community is going to be hollowed out. We are going to see reductions in our emissions in the UK—huge reductions in our carbon emissions—but at what price?”
“We really have to stop this decarbonisation through de-industrialisation. Serving up P45s to working-class people, hollowing out working-class communities, is not the way to decarbonise this country,” he added.
The GMB leader also said that the UK will still need “lots of steel,” but that the UK will instead be importing it from countries like China—which still burns coal to produce it.
“It’s not great for national security,” he said, “and it makes no sense in terms of the environment.”
He added: “There’s been a lot of talk about the transition to net zero, but the wind farms all around the coast are invariably built in China and Indonesia. Anywhere but the UK and they’re certainly not being built with UK components.”
Smith called for an “honest debate” on how environment policy is impacting jobs, “because it’s costing us jobs.”
