PRESS RELEASE : Government puts workers at the heart of new and improved Port Talbot deal [September 2024]

The press release issued by the Department for Business and Trade on 11 September 2024.

The government has announced a new, improved Port Talbot deal for workers which has been agreed with Tata Steel and Trade Unions.

• Negotiations deliver improved redundancy terms and a skills package for employees who want to earn whilst they retrain
• Commitment from Tata Steel to work with the Government to evaluate future investment opportunities
• Government to publish a Steel Strategy next Spring, developed with industry, to ensure bright and sustainable future for UK steelmaking

The workers of Port Talbot are set to get a better deal after co-operative negotiations between Tata Steel and Trade Unions – marking a new, grown-up era in industrial relations.

The new and improved deal goes much further than the previous government’s agreement – delivering a minimum voluntary redundancy payout of £15,000 for full-time employees plus a £5000 ‘retention’ payment and offering paid-for training to give workers a steady income and upskill them for the jobs of the future.

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.

Under the new deal:

• Alongside making the largest investment in the UK steel industry in decades, Tata Steel has also committed to work with the government to evaluate new investments in steel.
• Tata will offer staff at risk of compulsory redundancy a comprehensive training programme as an alternative, providing recognised qualifications in sought-after skills.
• Employees on this training programme will be on full pay for the first month and £27,000 per annum for 11 months following. These salary costs will be funded by Tata Steel, which also anticipates that at least 500 new jobs will be created to support the construction of the Electric Arc Furnace.
• A minimum redundancy payment of £15,000 pro-rota plus a ‘retention’ payment of £5,000 will be received by employees leaving the business. The Business and Trade Secretary stressed the need to reduce compulsory redundancies where possible, and 2,000 staff members have expressed interest in voluntary redundancy under this deal.
• Tata 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 new deal will come at no additional cost to taxpayers and the government’s contribution to the construction remains £500 million. Watertight conditions within the grant funding agreement will ensure that the government can claw back investment should Tata Steel not fulfill its commitments. This includes increased penalty payments should the company not retain 5,000 jobs across its UK business post transformation.

The future of Port Talbot and the steel sector is a shared priority of the UK and Welsh governments. The government is taking a new approach to relations with the nations and regions – resetting the relationship with the Welsh Government to one of close partnership that will deliver a prosperous future for steel in Wales.

The Business and Trade Secretary will also announce today that a new strategy for the steel sector will be published in Spring 2025 after consultation with industry and stakeholders.

It follows Tata’s decision in January to close both blast furnaces at its Port Talbot site, putting 2,800 jobs at risk.

In early July, the future of the site was thrown into doubt as the deal threatened to collapse in polling week, which could have led to more serious consequences for the long-term viability of the whole company. The renegotiation, delivered at pace in the government’s first ten weeks, will enable the transformation project to proceed.

The deal with Tata Steel – agreed on Tuesday 10th September in a meeting between the Prime Minister, the Business and Trade Secretary Jonathan Reynolds, Chancellor Rachel Reeves, and Tata’s Chair Natarajan Chandrasekaran – represents only the beginning of government’s ambitions for the industry. It is the start of a bright future that harnesses industrialisation and decarbonisation as pillars for a long-term and clear strategy.

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.

With the help of independent experts, the government will review the viability of technologies for the production of primary steel including Direct Reduced Iron (DRI). More information about the review will follow in due course.

In an oral statement in the House of Commons the Business and Trade Secretary is also expected to commit to using the new Procurement Act to help deliver value for money, economic growth, and social value through public procurements, including for the steel sector.

ENDS

Background

• £2.5 billion of government investment, in addition to the £500 million allocated to Port Talbot, will rebuild the industry and help it decarbonise.
• As part of deal, Tata Steel will also be releasing 385 acres of their site for redevelopment, valuable real estate which will help bring in more companies and employers not just from the steel sector but from a whole host of other industries.
• 500 job roles are expected to be created to construct the Electric Arc Furnace.
• An Electric Arc Furnace uses an electric current to melt scrap steel or iron and produce steel, whereas blast furnaces use coke, a carbon-intensive fuel made from coal to produce steel.
• Tata Steel’s transformation project will reduce the UK’s overall CO2 emissions by around 1.5%.
• The Steel Strategy will examine how the government can increase steel capacity and capability in the UK. It will identify gaps in current capabilities, assessing future UK steel demand and helping to inform investment decisions which will support economic growth.
• Tata Steel will work with HMG to explore the business case for further investment opportunities in upstream and downstream assets, subject to feasibility.