Labour to pledge better deal for Port Talbot steelworks

Jonathan Reynolds, shadow business secretary, will visit the Port Talbot steelworks in south Wales on Monday where he will claim that a Labour government would cut a better rescue deal for the site. 

The Conservative government last September struck an agreement to hand over £500mn of taxpayer money to Indian owner Tata Steel to ensure the future of the site as it shifts to low-carbon production. But the closure of the two blast furnaces at Port Talbot — scheduled for this year — and their replacement by a less carbon-intensive electric arc furnace are set to lead to up to 2,800 job losses. 

Labour has consistently criticised the deal and previously urged the company to reconsider a trade union-backed compromise plan to retain one of the blast furnaces, which has a lifespan into the early 2030s, until the electric arc furnace is operational.

That plan would, however, cost more taxpayer money. It has also been rejected by Tata executives as not feasible operationally and financially unaffordable, as their UK operations are losing more than £1mn a day. Tata will invest £750mn to decarbonise its UK operations as part of the deal with the government.

It emerged last week that the agreement has yet to be signed off by the Department for Business and Trade. Tata executives have, however, insisted that despite the upcoming UK general election on July 4, they expect to press ahead with their plans to install the electric arc furnace. 

Rajesh Nair, chief executive of Tata Steel UK, told employees in a letter at the end of May that “neither the general election nor its outcome has any impact on the timings or our decision to proceed with the winding down of our heavy-end operation”, in reference to the blast furnaces and their associated facilities. 

But when Reynolds meets steelworkers at the plant on Monday he is likely to face questions about what precisely a Labour government would do if the party wins the election — and whether he backs the “multi-union” plan to keep a blast furnace open for longer, which has the support of the Community steel union and GMB. 

Labour leader Sir Keir Starmer was asked by the Financial Times last week what he would do with Port Talbot if his party won the election. He replied: “We are not just vested in saving those jobs but also the future of steel in this country, if we lose it we’ll never get it back.”

Key to Labour’s position is that it has promised a £3bn “green steel fund” designed to give greater support to the industry as a whole as it transitions towards a low-carbon future. That means that the party could in theory strike a deal that could save more of Tata’s workforce, according to officials. 

Industry stakeholders have said they are unclear what a Labour plan would entail. Officials said the party still hoped to talk to Tata about keeping one blast furnace open. 

Reynolds on Sunday sent a letter to Kemi Badenoch, Tory business secretary, in which he repeated his criticism of the government’s deal with Tata.

“I do not believe the deal the government struck with Tata to hand over £500mn of taxpayers’ money, to make thousands of steelworkers in South Wales redundant, with no guarantees or plans for the future was the right one,” he wrote. 

In his letter Reynolds sought assurances from Badenoch that no irreversible decisions should be made on the future of Port Talbot before the election.

A spokesman for Badenoch said: “Our deal safeguards 5,000 immediate jobs and tens of thousands more in the wider steel supply chain. Any delay would jeopardise livelihoods, risk losing a key national industry and cost the taxpayer even more.

“Tata have themselves ruled out changes at this late stage, and with good reason. The switch to electric will preserve thousands of jobs and cut emissions at the plant by 85 per cent.”