Fears are growing that thousands of jobs will be axed at Tata’s giant Port Talbot plant despite a Government bailout worth £500million as the Indian-owned steel conglomerate pursues Net Zero.
Reports suggest the deal will see the firm’s Indian parent Tata Group pump £700million into the business as it switches to more environmentally-friendly forms of steelmaking.
Tata Steel employs 8,000 workers in Britain – half of them at Port Talbot in South Wales. Around 3,000 jobs at the firm are set to be axed despite the deal.
The package comes just weeks after the Government handed the Tata industrial empire another £500 million subsidy to persuade it to build a UK ‘gigafactory’, where it will make vehicle batteries for Tata-owned car maker Jaguar Land Rover. Ministers have separately been in talks for months with Scunthorpe-based British Steel, another producer, over an additional £500 million support package.
Britain’s steel industry employed more than 300,000 in its 1970s heyday. By 2021 the number had dwindled to just over 33,700, with the sector’s economic output of £2.4billion accounting for just 0.1 per cent of the British economy.
Tata Steel employs 8,000 workers in Britain – half of them at Port Talbot in South Wales. Around 3,000 jobs at the firm are set to be axed despite the deal (File Photo)
The industry has struggled against competition from foreign factories – in 2019, the UK produced just 7 million tonnes of steel to China‘s 996 million. Yet politicians see maintaining it as strategically vital given its importance to wider industry and infrastructure.
Earlier this year, business and trade secretary Kemi Badenoch told The Mail on Sunday: ‘The reality is that steel is very, very challenging, but we do need steel, certainly from an economic resilience perspective. We can’t just decide that we’re going to rely on China.’
Tata Steel has warned in the past that without government support it would need to consider closing its sites, which include operations in Corby, Hartlepool, Flintshire and Cumbria.
A challenge for Tata would be winding down its two blast furnaces to switch to less carbon-intensive electric arc furnaces. Union sources say the resulting job cuts would be ‘devastating’.
Labour’s business spokesman Jonathan Reynolds said last night: ‘Only this government could spend £500million to make thousands of people redundant and deliver no safeguards on the nation’s investment.
Tata Steel’s Port Talbot plant. Britain’s steel industry employed more than 300,000 in its 1970s heyday. By 2021 the number had dwindled to just over 33,700, with the sector’s economic output of £2.4billion accounting for just 0.1 per cent of the British economy (File Photo)
‘This is not a serious plan for the long term of our steel industry. It is yet another sticking plaster.’
The Government has said the steel sector ‘plays a vital role within the economy’ supporting jobs and economic growth and that it is ‘committed to securing a decarbonised, sustainable and competitive future’ for it.
A spokesman said last night: ‘We are not commenting on speculation with regards to timings of any announcement as negotiations are ongoing.’ Ministers were previously reported to have offered a lower sum of £300 million to help Tata shift to greener forms of production.
But executives were said to have dismissed that given the £2-£2.5 billion investment they said was needed. The subject was likely to have been on the agenda when Tata Group chairman Natarajan Chandrasekaran met Rishi Sunak earlier this year.
An official told the Financial Times: ‘The alternative to any deal is 8,000 jobs lost. This is another example of the Prime Minister resolving a longstanding issue. Tata’s original asks were in the billions, so this would represent a big government win for value for money.’ Tata Steel did not respond to a request for comment.