The new government is prioritising avoiding job losses in its talks with Tata Steel over a controversial government aid package to make greener steel, Business Secretary Jonathan Reynolds said.
Guarantees on jobs will be part of the negotiations between the Government and steel group Tata about its Port Talbot site in south Wales. As many as 2,800 jobs are scheduled to go under the company’s plans to de-carbonise the plant and switch to an electric arc steelmaking process which although cleaner, requires fewer staff.
Tata has already shut down one of two blast furnaces at its biggest plant under the plans. The second blast furnace is due to shut down in September. Labour has already promised the wider steel industry £2.5bn more than the previous government.
“It’s not about underwriting loss-making businesses in perhaps the way we might have thought of industrial policy in the past. It is about being a partner for investment in the future,” Mr Reynolds said.
“There is more money available for the steel industry under our plans for government, but that’s about making sure we make this transition with the private sector together and recognise how we have to make sure that decarbonisation is not de-industrialisation and we’ve got to do that together.”
“There is a better deal available for Port Talbot and the steel industry as a whole”, he told the BBC’s Sunday With Laura Kuenssberg: “I do want things in exchange for money we’ll co-invest with the private sector around jobs and technology.
“I think that’s a reasonable way to make sure public money is being well spent and I believe there are things, capacities, the steel industry needs in future that could be part of that conversation and that’s what I’ll be having in the next few days.”
The government could not guarantee all jobs at the plant he said as newer steelmaking processes required fewer workers but added: “I absolutely agree with the point that we have to make sure that this is a transition which works for working people and that they’re part of that.”
He added: “I’m going to make sure that job guarantees are part of the negotiation that we’re having.”
The blast furnace closures are part of restructuring being carried out by Tata to stem what it calls “unsustainable” losses of more than £1m a day. Under a deal agreed with the Conservative government Tata will receive £500m taxpayer support for the move although the new government still has to sign off on the details. Tata will invest £750m.
But unions are opposed to the plans, which could lead to the loss of thousands of jobs, mostly at Port Talbot but also at other Tata plants in Wales and around the UK.
The fate of Tata workers in south Wales was also raised by Vaughan Gething, Labour’s First Minister in Wales, when he spoke to Sir Keir Starmer in Downing Street on Friday.
Sir Chris Bryant, Labour MP in neighboring Rhondda and Ogmore, said he is “hopeful” ministers in Cardiff and Westminster could agree a deal with Tata to save jobs.
Sir Chris said: “We need to make sure that Tata don’t make any sudden moves that make it impossible for us to unpick what was a very bad deal that was originally agreed by the Conservative government. The job of politicians is to try to make the impossible possible and that’s exactly what we’re going to try and do here.”
Rajesh Nair, Tata Steel UK boss, congratulated Sir Keir Starmer on his election victory and said Tata was looking forward to “working with the new government on our shared goals of growing the production of green steel in the UK, and building a positive operating environment for this critical industry.
“In the coming days and weeks we will be engaging with new ministers over our ambitious plans to invest in and transform Port Talbot with electric arc furnace steelmaking, and to supporting our workers through this necessary but difficult transition.”
The company has been steadfast in rejecting changes to its plans to restructure the plant. It knocked back a union compromise to keep one blast furnace open saying it was operationally and financially impossible.
When it agreed to reopen talks with unions last week after the Unite union called off a strike the company insisted the fresh negotiations would “focus on the future investments and aspirations for the business, and not on a renegotiation of our existing plan for the heavy-end closure or the enhanced employment support terms.”