Tata Steel / Port Talbot steelworks Q&A

19 Feb 2024 03:04 PM

This document provides information on the UK Government’s response to Tata Steel’s recent announcements on Port Talbot steelworks and its other UK operations.

What deal has been agreed between Tata Steel and the UK Government?

• The UK Government has put in place one of the biggest support packages in history to secure the future of the Welsh steel industry. On 15 September 2023, the UK Government and Tata agreed a plan which would see the two blast furnaces at Port Talbot replaced with an electric arc furnace. 
• The arc furnace will cost £1.25 billion. The UK Government will pay £500 million and Tata will pay the rest. The arc furnace proposal will secure 5,000 of the 8,000 jobs at risk across Tata Steel UK and many thousands more in the supply chain, while ensuring that steel continues to be made in Wales into the future.
• Additionally, £100 million has been put towards the creation of a Transition Board, chaired by the Secretary of State for Wales and including representatives from Welsh Government, local authorities and industry, which is directly supporting those affected. £80 million of this is from the UK Government and £20 million from Tata.

Is this amount of money enough to secure Welsh steelmaking?

• The UK government has put one of the biggest government support packages in history in place to develop a sustainable future for Port Talbot and secure Welsh steel. This deal has saved thousands of jobs in the UK: 5,000 directly in Tata, and thousands more in the UK supply chain.
• The UK government package will see £500m granted as part of £1.25 bn invested by Tata.
• This record level of support shows just how much the UK Government values the Welsh steel industry and the people and communities whose livelihoods depend on it.
• The Welsh Government has not yet provided any support to assist steel workers or to secure the future of the steel industry in South Wales.

The UK Government has not engaged with Welsh politicians or steel unions?

• This is incorrect. The Chancellor spoke to the Welsh First Minister in September, a day before Tata’s original announcement.
• Additionally, the Welsh Secretary offered to speak to the Welsh First Minister before Tata made its announcement in January over job losses, but the offer was not accepted.
• The Welsh Secretary met all three steel unions in October 2023 and the unions have since attended the Transition Board which the Welsh Secretary chairs.
• The Secretary of State for Business and Trade visited Port Talbot last Spring as well as in September when this proposal was announced, and has met Tata representatives many times, both in the UK and India. She is personally committed to supporting the UK steel industry.
• The UK government is providing £80 million of funding for a dedicated Transition Board, a forum which is working closely to support affected employees and the local community. This is chaired by the Secretary of State for Wales. The Deputy Chairs are the Secretary of State for Levelling Up, Housing and Communities and the Welsh Government Minister for the Economy. Tata is providing £20 million on top of this, bringing the total funding for the Transition Board to £100 million.
• The Welsh Government has not yet provided any financial support to assist steel workers or to secure the future of the steel industry in South Wales.

The £500 million invested by UK Government has simply paid for nearly 3,000 redundancies.

• This is incorrect. This deal has saved thousands of steel jobs in Port Talbot, South Wales and across the UK and thousands more in the wider supply chain.
• It has saved the south Wales steel industry by converting to electric arc steelmaking, giving it a competitive and green future.
• It offers a sustainable future, not only for South Wales but also for the wider supply chain industries. The alternative was the whole plant closing and all jobs lost. The UK Government was not prepared to let that happen.
• Tata Steel UK was losing an enormous amount of money - hundreds of millions of pounds a year - and the whole operation was at risk of closure with a loss of over 8,000 jobs without UK Government support. The UK government has worked tirelessly to provide practical and financial support, saving thousands of jobs and guaranteeing a sustainable future for people in Port Talbot.
• However, we all recognise this is a devastating blow for the community of Port Talbot and we are committed to doing everything we possibly can to save jobs and support anyone who loses their job. This is why the UK Government has set up the Port Talbot Transition Board, backed by £80 million from the UK Government and £20 million from Tata.
• Tata has itself confirmed that it will not receive any money from the UK Government until building is underway on the new electric arc furnace.

What is the Port Talbot Transition Board, and how will it help those affected by Tata’s announcement?

• The Port Talbot Transition Board is developing a response to the transition at the Tata steelworks. 
• The Board is chaired by the Secretary of State for Wales, David TC Davies MP, and brings together representatives from Welsh Government, Tata Steel, local politicians, local government and a broad range of experts from different backgrounds. The Deputy Chairs are the Secretary of State for Levelling Up, Housing and Communities and the Welsh Government Minister for the Economy.
• The UK Government has funded it with £80m and Tata is providing £20 million on top of this, bringing the total funding for the Transition Board to £100 million.
• The Board will invest in skills and regeneration programmes for the local area once the outcome of formal consultation between Tata and its workforce is known.
• It will deliver support for the people, businesses and communities directly affected by the proposed transition to low-CO₂ steelmaking at Port Talbot and a plan for local regeneration and economic growth for the next decade. 

The deal will mean the UK is now dependent on imports.

• This is untrue. Electric arc furnaces mean the UK will be more self-sufficient in steel, and will not be dependent on imports of raw materials.
• The UK currently exports most of its scrap steel – this could be put to much better use at home.
• We do not expect steel for defence and critical national projects to be affected by changing these blast furnaces to electric arc furnaces.   
• Blast furnaces are also coming to the end of their lives and we will not be able to rely on them to provide the steel we need for a secure and prosperous future in the UK. Without electric arc furnaces, there is a very real risk we would lose steel production in the UK altogether.

Could the blast furnace have been kept open?

• This deal will deliver the implementation of state-of-the-art technology; an electric arc furnace, which will ensure sustainable steel-making in South Wales for years to come.
• Tata has said it considered this,  but rejected it because of excessive costs and also because of the difficulty of building an electric arc furnace on the same site as an operating steel plant.

UK jobs are being sacrificed in the interests of green targets.

• Tata has said that its businesses in the must be both environmentally and financially sustainable.
• The proposed electric arc development helps achieve both goals, including the one of reducing the company’s significant financial losses.
• Tata’s publicly-available accounts show that since 2007, Tata Steel UK has lost more than £4 billion after tax.
• Tata Steel UK is losing more than £1 million a day and says there is an urgent need to ensure the business is financially sustainable.

How is this a good deal for Port Talbot when half of all jobs will be lost?

• This deal – which includes one of the largest government support packages in history – ensures steel remains viable and competitive in the future, whilst protecting thousands of skilled jobs and the strong steel-making heritage in South Wales.
• Without this investment, the whole Port Talbot site would face closure and every job would be lost, with the end of steelmaking in the area.

Were other alternatives to this deal considered?

• Tata has said that it considered alternatives but that they were not viable because of excessive costs or because the technology required was currently not fully developed.
• However, the Port Talbot transformation project does not prevent further technologies being deployed in time.

How else is the UK Government supporting the future of Port Talbot/the South Wales economy?

• The UK Government is providing substantial support and investment for the economy of Port Talbot and South Wales.
• Projects include the development of the Celtic Freeport in Port Talbot and Milford Haven, backed by up to £26 million in UK Government funding, which will focus on low carbon technologies. It aims to create some 16,000 jobs by mid-2030. The Celtic Sea is also a prime location for floating offshore wind, and any future development could see thousands of skilled jobs created.
• The Swansea Bay City Deal – which covers Port Talbot – continues to deliver investment across the region.