Tata Steel to lose 2,800 jobs despite £500m government support

The government will provide £500 million of support to the Tata steelworks in south Wales, but about 2,800 jobs are still expected to be lost.
Those made redundant at the Port Talbot site will receive better terms under an “improved” deal between Tata and the government, which amends an agreement made by the previous Conservative administration.
Tata said in January that up to 2,800 jobs were at risk from the closure of its two blast furnaces at the site, with about 2,500 job losses likely in the next year. It is the result of a 2023 government-backed plan to shut the blast furnaces and build an electric arc furnace, a less carbon-intensive production method.
About £500 million of public grant funding would be provided to help the plant to move towards greener forms of steelmaking, the government said, matching the amount agreed by the previous Conservative administration. While more environmentally friendly, the “electric arc furnace” that will be developed is less labour-intensive.
Under the new deal between Tata and Westminster, Tata will evaluate future investment opportunities in steel in Britain and has promised to retain 5,000 jobs throughout its UK business after the blast furnace closure job losses.
The government said that about 2,000 Tata staff had expressed an interest in taking voluntary redundancy.
Tata Steel agreed to inject a further £750 million into the “green steel” project. TV Narendran, Tata Steel’s chief executive, said the deal had “the potential to make the plant one of Europe’s premier centres for green steelmaking”.
The government can claw back its investment if Tata pulls out of the deal.
The UK’s steel industry is facing problems including high costs, global surpluses, weak demand and difficulties in attracting investment. The next step on the path to recovery for the industry will be government action to deliver affordable electricity prices.
An analysis by UK Steel, a trade body, found that British producers paid up to 50 per centmore than competitors in France and Germany, adding £37 million to the industry’s costs. With a switch to more electric arc furnaces, the sector’s electricity consumption is forecast to double.
Before Tata began the process to close its blast furnaces — the first was shut in July and it will close its second one this month — it had said that it had been losing about £1 million a day.
Jonathan Reynolds, the business secretary, said the deal was the best he could achieve, given his short time in office. “Had we had the opportunity the previous government had over so many years, we could have done more,” he said.
Reynolds said Tata would assess investment opportunities for “additional capabilities that will deliver more long-term jobs than the deal we inherited”, thought to include wind turbines made in Wales.
People taking voluntary redundancy will be offered 2.8 weeks of salary for every year of service up to a maximum of 25 years and a one-year paid training programme will be established.
The Conservatives said Labour had raised “false hopes” about saving jobs. Trade unions said the plan was “not something to celebrate” but was “better than the devastating plan announced by Tata and the Tories back in September 2023”.
The Chinese-owned British Steel, which has two blast furnaces in Scunthorpe, is also in talks with the government about shifting to cleaner manufacturing.