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Tata Steel and UK Steel Strategy

Volume 753: debated on Wednesday 11 September 2024

The Government have secured an improved deal for the workers impacted by the transformation plans of Tata Steel and are setting out their ambition for a new UK-wide steel strategy, one which equips our steel-making industry with the right support to adapt and thrive in the new green economy.

I can announce today that we have agreed a process with Tata to assess investment opportunities for new capabilities that will deliver more, secure, long-term jobs than the deal that we inherited. I will report back to the House on progress.

Tata Steel has agreed to offer a comprehensive training programme for up to 500 employees as an alternative for those at risk of compulsory redundancy. This would be on full pay for one month, then £27,000 per annum per employee for 11 months. Tata will fund those costs. Employees will be able to choose from recognised qualifications to develop sought-after skills which will be in high demand in the local economy now and long into the future.

Tata also expects that at least 500 new jobs could be created during the construction of the electric arc furnace, which will tap into the local labour market wherever possible.

The Government have helped to secure improved terms for those at risk of redundancy by working closely with unions.

Tata Steel’s employees are now able set out their expression of interest in the most generous voluntary redundancy package the company has ever offered for a restructuring of this size. Employees will now be paid 2.8 weeks of earnings for each year of service up to a maximum of 25 years.

There is also a minimum redundancy payment of £15,000 pro-rata and a “retention” payment of £5,000 for employees leaving the business because of these closures. Over 2,000 employees have expressed interest in voluntary redundancy on these terms.

As part of the deal, the company will also be releasing 385 acres of their site for sale or transfer. This is valuable real estate which will help bring in more companies and more employers not just from the steel sector but from a whole host of other industries too.

Taxpayers should know the improved terms for workforce are not dependent on additional money.

Strong conditions are included within the grant funding agreement to claw back investment if Tata Steel reneges on its promises or fails to keep its end of the bargain. For example, there is now an improved grant repayment of £40,000 for every job Tata Steel does not retain post transformation. It was £30,000 per job under the previous deal. In the event of this condition being enacted, this money will be repaid directly to the Government—a powerful incentive to ensure Tata Steel meet its 5,000 UK jobs target.

The Government know this is the start of a journey towards a greener future for the steelworks in Port Talbot—reducing the site’s carbon emissions by as much as 85% a year. However, decarbonisation should not mean deindustrialisation. As part of the agreement the Government will be working with Tata Steel over the coming weeks and months to consider business cases for further investment and job creation opportunities.

However, the Government’s ambition for steel is so much bigger and broader than one single company. It is about the whole sector. The UK has always been a proud steelmaking nation, with a rich heritage stretching back to the industrial revolution. From cars to cranes, ships and scaffolding, British steel has been and is still used the world over, embodying our industrial might and innovation. For years, steel has been a neglected industry in this country. Crude steel production has declined by more than 50% in the last 10 years. Some proclaimed the industry’s decline to be inevitable in the 21st century, but this Government do not believe that decline is inevitable. While the industry faces challenges today, we want to do everything we can to ensure that it can adapt and grow tomorrow.

That is why I am pleased to announce that the Government will introduce a new steel strategy, which will be published in spring 2025.

Our manifesto announced £2.5 billion for steel, on top of the £500 million for this transformation at Port Talbot. Our intention is to use the money we are investing to increase our UK capabilities so that we can create a more vibrant, competitive steel sector in the UK.

As part of our steel strategy, this Government will look seriously at the options to improve steel capabilities across the whole supply chain, including for primary steelmaking in the UK. We are also clear that we will not be able to prioritise short-term subsidies over long-term jobs. That is why with the help of independent experts, we will also be reviewing the viability of direct reduced iron in the UK.

Steel is essential to delivering on our net zero goals and building the next generation of green infrastructure, which Members know this Government are passionate about. It is why, as part of our steel strategy, we intend to use the new procurement Act to drive economic growth and account for social value in the things Government buy and the projects we commission. This work is already under way to increase the role of steel as we build our manufacturing base.

This Government also recognise that for far too long British energy-intensive industries, including the steel sector, have been held back by high electricity costs. More often than not, this has made the UK less attractive to international investors. The Government’s clean energy mission will ensure we are no longer exposed to the kinds of gas price shocks we have seen in recent years, helping British businesses to compete and win in the global market. To support that ambition, we are also working with like-minded nations to tackle global trade distortions, including through our chairing of the Global Forum on Steel Excess Capacity this year.

The steel strategy will be developed and delivered in partnership with the steel sector and trade unions, and it will work in lockstep with the Government’s industrial strategy. The Government’s ambition is to ramp up investment, strengthen our supply chains and create more well-paid jobs in the places where they are most needed.

To drive our partnership on the steel strategy forward, the Secretary of State for Business and Trade will shortly meet with industry experts and interested parties to discuss the future of the industry.

This Government care about steel, the communities it supports and recognise its fundamental importance to the economy.

And supporting steel in this country is about being involved in the detail, shepherding individual plants into the future while protecting the people in them. But it is also about providing a direction of travel. An inspiration for investment and a cause for confidence, so that the sector can play its part in the next 10 years and beyond.

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