New deal announced to help transition of steel production at Port Talbot

The UK Government has unveiled a “new and improved” deal to help the transition to a greener way of producing steel at the country’s biggest steel plant.

Ministers said workers at Tata Steel’s giant site in Port Talbot, south Wales, will get improved redundancy terms and the offer of a skills package.

Around 2,800 jobs are still set to be lost as a result of the shutdown of blast furnaces and switch to using an electric arc system of production.

The government confirmed it will contribute £500 million to the transition, but said investment can be clawed back if the company does not retain 5,000 jobs across its UK business after the change.

‘Payout’

Ministers said Wednesday’s “new and improved deal” goes much further than the previous government’s agreement, including a minimum voluntary redundancy payout of £15,000 for full-time employees plus a £5,000 ‘retention’ payment and offering 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.

“Steel is fundamental to the UK’s economy, sovereignty and communities, but previous government inaction has blighted the steelmaking industry.

“That’s why this Government is taking strong action through a new deal and strategy which will reverse the industry’s stagnation and set out a long-term vision for a bright and sustainable future.

“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.”

Tata will close the remaining blast furnace at Port Talbot by the end of the month in readiness for switching production with a new electric arc furnace which needs fewer workers.

The company says it has offered its most generous voluntary redundancy package ever for a restructure of this size.

Employees who choose redundancy will be paid 2.8 weeks’ earnings for each year of service, up to a maximum of 25 years.

The deal with Tata was agreed on Tuesday in a meeting between the Prime Minister, the Business and Trade Secretary, Chancellor Rachel Reeves and Tata’s chairman Natarajan Chandrasekaran.

‘Bright future’

Ministers said it was the beginning of the government’s ambitions for the industry, adding it was the start of a “bright future” that harnesses industrialisation and decarbonisation.

Secretary of State for Wales Jo Stevens said: “This improved deal secures the immediate future of Port Talbot steelworks, lays the foundations for future investment and enhances protections for the workforce across South Wales, all without further cost to the taxpayer.

“As well as negotiating a better deal than the previous government, we have already released millions of pounds of funding from the Transition Board to support businesses and workers in Port Talbot and across south Wales.

“While this is a very difficult time for Tata workers, their families and the community, this government is determined to support workers and businesses in our Welsh steel industry, whatever happens.”

First Minister Eluned Morgan said: “I welcome today’s funding announcement. The Welsh Government stands shoulder-to-shoulder with the UK Government in doing all we can to support workers at Tata Steel and provide a new future for steel production in Wales.

“In what continues to be an incredibly unsettling situation for many, we will continue to work with all parties to ensure that workers, suppliers and the wider community are supported as the industry transitions to making the green steel that will be vital to the future of the UK economy.”

Criticised

The Shadow Parliamentary Under Secretary of State for Wales John Lamont accused Labour of extending a deal for Tata Steel that it had previously criticised when in opposition.

He said: “…it seems that the core of this new deal is the same deal, worth hundreds of millions of pounds, that was agreed by the last Conservative government.

“At the time, the minister and the Welsh Labour Party appeared to rubbish the deal and suggested that a better deal was possible. Does the minister now regret previous criticism of the deal by the Labour Party?”

‘Reheated’

Plaid Cymru spokesperson for Economy and Energy, Luke Fletcher MS described the deal as “nothing more than a reheated version of the deal put forward by the previous Conservative government, despite Labour’s repeated promises of a “better deal” for Wales”.

He added: This is yet another instance of Westminster’s chronic failure to deliver meaningful support for Welsh industries and workers.

“The steel industry a fundamental part of our industrial heritage and a vital strategic asset. Plaid Cymru calls on the Labour government to take decisive action – to preserve jobs and to secure the long-term viability of steel production in Wales through strategic public ownership.

“We are seeing both the Labour and Conservative parties presiding over the biggest industrial policy disaster since the closure of the mines and the dismantling of yet another Welsh industry. We demand answers and real leadership to prevent further erosion of Wales’s industrial base.

“It’s time for Labour to deliver on their promises, not just repeat the mistakes of their predecessors. We need to understand what Labour is offering differently to what the Conservatives have already proposed.”

‘Binding commitments’

Charlotte Brumpton-Childs, GMB national officer, said: “Since the election the Government has had extensive discussions with Tata and has strengthened investment assurances.

“Tata has now given binding commitments to work quickly to invest and unlock further investments.”

A joint statement from the Community union and the GMB said: “This deal is not something to celebrate, but with the improvements the unions and the Government have negotiated it is better than the devastating plan announced by Tata and the Tories back in September 2023.”

Unite general secretary Sharon Graham said: “The two-stage government commitment to provide serious funding for steel in South Wales is vital for local communities and the long-term future of the steel industry.

“The last government was quite frankly asleep at the wheel.

“The present crisis is a direct result of it failing to invest in the UK steel industry and allowing the companies involved to rundown their operations and let them fall into disrepair. Conservative inaction and disdain have resulted in wholly avoidable job losses.”