The government has confirmed improved redundancy terms for Port Talbot steelworkers as 2,500 job cuts are confirmed at Tata Steel.
Negotiations between ministers, Tata Steel and trade unions have led to a commitment to deliver an improved redundancy deal and skills package for employees who want to earn while they retrain.
It follows Tata’s decision in January to close both blast furnaces at its Port Talbot site, putting 2,800 jobs at risk. Tata said the deal secures steelmaking in Port Talbot and preserves 5,000 jobs. The first furnace closed in July, with the second one expected to shut down within weeks.
The deal goes much further than the previous government’s agreement – delivering a minimum voluntary redundancy pay-out of £15,000 for full-time employees plus a £5,000 ‘retention’ payment and offering paid-for training to give workers a steady income and upskill them for the jobs of the future.
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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 £3bn of government investment.”
Reacting to Reynolds’ statement to the House of Commons, shadow business and trade minister Greg Smith said: “Today’s deal now means 100% of output gone at Port Talbot with an electric arc furnace taking – at best – five years to get up and running with some suggesting eight to nine years before a single new job is created, if we see any new jobs at all.”
Tata redundancy terms
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 the training programme will receive full pay for the first month and £27,000 per year for the following 11 months. These 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-rata plus a ‘retention’ payment of £5,000 will be received by employees leaving the business. Reynolds stressed the need to reduce compulsory redundancies where possible, and last month 2,000 staff members expressed interest in voluntary redundancy under this deal.
Tata is offering employees who choose voluntary redundancy 2.8 weeks’ pay for each year of service, up to a maximum of 25 years.
Union reaction
A joint statement from the Community and GMB trade unions said: “This deal is not something to celebrate, but – with the improvements the unions and the government have negotiated – it is better than the devastating plan announced by Tata and the Tories back in September 2023.
“Through the [memorandum of understanding] discussions, the unions were able to secure concessions including a comprehensive skills and retention programme, and extensive investment commitments. We welcome the Labour government’s intervention which has served to strengthen and lock down the terms of the MOU.
“Clearly this is not where we wanted to be, and we know that a better plan was available. Back in November last year, Community and GMB published the Multi-Union Plan, an alternative approach that would have safeguarded Port Talbot steelmaking and secured a just transition for the workforce. Regretfully, we couldn’t secure the support of all stakeholders for our credible alternative decarbonisation strategy, and ultimately the company rejected the basis of our proposals, representing a tragic missed opportunity.
“Under the circumstances, representatives of all the steel unions resolved to negotiate the best possible deal, and then put it to a ballot of the membership. This is what we have done, and voting is underway. Our members will decide whether or not to accept the MOU, and the next steps we take together will be informed by the outcome of the ballots.”
Unite general secretary Sharon Graham 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 it 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.
“Unite which secured the additional funding will ensure that the substantial second-stage investment in South Wales means new jobs will be available and secure the future of Port Talbot and Llanwern. It is now imperative on Tata to bring forward the second-stage proposals to develop increased steel capacity at its South Wales sites, a jobless transition will not occur on our watch.”
The new deal comes 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 fulfil its commitments. These include increased penalty payments should the company not retain 5,000 jobs across its UK business post-transformation.
As part of the deal, Tata Steel will also be releasing 385 acres of its site for redevelopment, valuable real estate which will help bring in more employers, not just from the steel sector.
Reynolds also announced a new strategy for the steel sector to be published in Spring 2025 after consultation with industry and stakeholders.
Redundancy support
Last week, talent solutions provider LHH, part of the Adecco Group, announced it had been appointed by Tata Steel as its outplacement partner to support the company’s employees through the transition to low-CO2 steelmaking.
Chris Jaques, chief HR officer for Tata Steel UK, said: “The review team was really impressed by the experience and levels of support that LHH can offer, which will be a vital part of the transition process. We want to ensure all affected employees are given the support needed to help them through this transition.”
Affected staff will have access to workshops around how best to conduct a job search, structural support on CV writing and interview preparation, as well as sessions for those looking to embark on retirement. These sessions will be directly tailored for departments and their roles, as well as individual needs and skill sets that sit within these teams. Portals will also be set up, enabling staff to access resources and workshops digitally, to complement in-person support on the ground.
JC Townend, LHH chief executive, said: “We are ready to take on the important role of supporting impacted employees at Tata Steel UK. We will have an outstanding team on the ground, getting to know staff on an intimate level, to ensure we can best meet their needs through workshops, skills building and one-to-one coaching support.”
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