UK to provide £500 million for Tata’s Port Talbot steel plant

THE UK government is set to confirm a £500 million (S$851.5 million) support package for Tata Steel’s plant in Port Talbot, one of the first major tests of the Labour Party’s industrial policy to boost British industry.

Business Secretary Jonathan Reynolds said the deal – which was drawn up by the last Conservative Party government but had been subject to further negotiation by the new Labour administration – included better support for workers facing redundancy.

This comes as Tata closes its blast furnaces and invests in a new, greener, less labour-intensive electric arc furnace. However, Reynolds also blamed the Tories for the situation that the Labour Party had inherited at Port Talbot.

“Whilst this deal is much improved, I acknowledge very much it falls short of what would be my ideal,” Reynolds said in the House of Commons on Wednesday (Sep 11). “We could have done more.”

Reynolds has previously said he wanted to see jobs saved at the site in Wales, with Tata warning the blast furnace closures would put 2,800 jobs at risk.

Yet the deal did not protect those roles. Instead, the government said voluntary redundancy would be more generous than under the previous Tory deal, and there would be more opportunities for retraining.

India-based Tata Steel is one of Britain’s biggest steelmakers. In April, the company said it would proceed with a plan – costing about £1.3 billion – to build an electric arc furnace at Port Talbot and start closing existing heavy-end assets.

That followed months of national-level discussions with UK trade unions that threatened industrial action over expected job losses.

Tata has said the plan to close the blast furnaces would affect up to 2,800 workers, and was designed to reverse more than a decade of losses at the plant. Whether those job losses will be reduced is expected to be part of Reynolds’s announcement on Wednesday. 

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Tata’s British steelmaking operations have struggled for years to turn a profit. Sales in Europe have been weak amid rising cost pressures and competition from Asian imports.

Yet the new Labour government has said it wants to support Britain’s steel industry, and made a commitment in its manifesto to establish a £2.5 billion green steel fund. BLOOMBERG