Steel big Tata to bag £500m of taxpayers’ cash – regardless of 2,000 dropping jobs

The Government claimed handing £500million of taxpayers’ money to India steel giant Tata would “give hope” to South Wales, despite more than 2,000 jobs being lost.

Ministers confirmed details of a grant towards the £1.25billion cost of building a new electric arc furnace at Tata’s vast Port Talbot plant – and the prospect of more government-backed investments at the site and elsewhere.

Labour insisted it came with “watertight conditions” – including around Tata retaining a certain number of workers – with a clawback should the company break its commitments.

But the closure of the plant’s last blast furnace will still lead to large-scale job losses, despite pressure from Labour when it was in opposition, and from unions.

Tata has agreed to an enhanced redundancy retraining package. More than 2,000 workers have already expressed interest in voluntary redundancy. That, along with the fact that hundreds of workers have already left, means the number of job losses is expected to be lower than the original 2,800 feared.

The deal was signed off on Tuesday in a meeting between Prime Minister Keir Starmer, Chancellor Rachel Reeves, Business Secretary Jonathan Reynolds, and Tata’s Chair Natarajan Chandrasekara.

Tata – which also owns Jaguar Land Rover – has managed to secure money for the arc furnace despite the group’s companies having a combined stock market value of more than £300billion.

The company could receive hundreds of millions more from the UK government. Alongside making the deal, Tata Steel has also committed to work with the government to “evaluate new investments in steel.”

Those are believed to include possible manufacturing facilities at Port Talbot and other existing sites in Wales. They could include opportunities in offshore wind farms. However, nothing has been agreed and it could take years for anything to happen.

Work on the new electric arc furnace – a greener technology – will begin next year but it will not be operational until the end of 2027 or the start of 2028. It will require hundreds of workers, rather than the thousands needed for its blast furnaces.

Mr 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.”

He went on: “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 £3billion of government investment.”

Mr Reynolds also announced yesterday that a new strategy for the steel industry will be published next spring.

Sharon Graham, general secretary at the Unite union, said: “The two-stage government commitment to provide serious funding for steel in South Wales is vital for local communities and the long-term future of the steel industry.

“The last government was quite frankly asleep at the wheel. The present crisis is a direct result of its failing to invest in the UK steel industry and allowing the companies involved to rundown their operations and let them fall into disrepair. Conservative inaction and disdain have resulted in wholly avoidable job losses.”