Can jobs at Tata in Port Talbot really be saved by Keir Starmer's government?

First Minister of Wales Vaughan Gething
-Credit: (Image: PA)

In the days since Labour began moving its boxes into the buildings in Whitehall, job losses at Tata has been one of the topics it is keen to push as something it is going to tackle.

Within hours of his appointment, business secretary Jonathan Reynolds was joined on a call with Tata bosses by the Prime Minister, and on a flying visit to Wales, Keir Starmer spoke to Vaughan Gething about it too. In her first interviews, the new Welsh secretary Jo Stevens has been speaking of hopes for Tata too.

The last government had agreed a deal with Tata that it would provide a £500m grant to assist with the transition to electric-steel making. That will bring with it 2,800 job losses with 1,900 of those directly from the Port Talbot plant. The company however said that without the grant it would withdraw completely and the deal was the only way to secure any jobs.

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Its bosses say they are losing £1m a day, and those losses are unsustainable. Labour called on the company not to make any decisions before the election result, saying it had its own plan that it wanted consideration.

Labour had campaigned on a pledge to give £2.5bn to British steel, but with no detail of what it would be spent on, and the £500m grant already agreed. However, the company was clear the only way it could keep jobs at the site was to stem that £1m loss it was costing a day, which no government could agree to do.

However, on election day (Thursday, July 4) the first of the remaining two blast furnaces at the site was turned off, for good. That, we understand, will worsen the financial losses the company endures on a daily basis because the fixed costs are the same but production is less.

So where, in the first days of this new administration do we stand?

1. Blast furnace five cannot now be turned back on with blast furnace four's last day expected to be in September, a move which triggers the mass redundancies elsewhere at the site. Tata has no plans to change that date.

2. The £500m grant agreement has yet to be signed.

3. Contracts for new materials for products that will effectively bridge the gap between production from the electric arc furnace being set up and blast furnace production ending, have been signed by the company, we understand.

4. Labour has repeated it would provide £2.5bn and the £500m grant, but said it wanted "job guarantees" in return.

When the BBC's Laura Kuenssberg asked the new business secretary how much the new Labour government were willing to spend to guarantee jobs and Mr Reynolds said: "I am now involved in a negotiation and I am not going to reveal my hand. I do want things in exchange for money we will co-invest with the private sector around jobs and technology.

"I think that is a reasonable way to make sure public money is well spent. I am going to make sure that job guarantees are part of the negotiations that we have. We have to make sure this is a transition that works for working people. We can't simply give money out without getting guarantees in return."

He admitted: "It's not about underwriting loss making businesses".

The plan, backed by two of the three unions which represents workers at the site, called for blast furnace four to be kept going until the end of its life in the early 2030s. Their position has not changed on that, neither has the company's to close it in September. In fact, when unions threatened strike action, that date was brought forward until the strike was called off.

Politics is now at play, as Labour refuses to reveal its plans in terms of the £2.5bn it has long said it will give to the industry as a whole. The company is seemingly steadfast in its approach. It wants to switch to the electric arc furnace, and will only do that with the £500m grant. Without that grant, the job losses would be greater and it has made clear it doesn't think a change in government can change anything for it because, simply, no government can agree to give a business money to make its balance sheet look healthier.
There could be, hypothetically, wiggle room in terms of the conditions of redundancy, so maybe an agreement to lengthen the period staff are given working at site, or introduce furlough type arrangements.

A statement from Tata during the election campaign read: "We wish to inform that (Tata Steel) confirms that it will continue with the announced closure of the heavy end assets and restructuring programme at Port Talbot in the coming months.

"We urge and request the current and the incoming government post-elections, to adhere to and safeguard the agreed terms of the £500m package of support for the Electric Arc Furnace (EAF) project announced in September 2023.

"This project has been developed to ensure production of low-emission high-quality steel in Port Talbot, preserving primary steelmaking in Britain and creating the potential for a future green manufacturing cluster in South Wales. The current heavy end assets of Port Talbot are nearing their end of life, are operationally unstable and are resulting in unsustainable financial losses.

"The coke ovens, a critical facility for primary steelmaking, had to be closed in March 2024, as operations became infeasible and unsafe. Therefore, the company is compelled to continue with its plans to decommission Blast Furnace #5 at the end of June, followed by decommissioning of Blast Furnace #4 by the end of September."

However, any total policy reversal seems impossible.