Business
‘Most generous voluntary redundancy package ever’ offered to staff at Britain’s biggest steelworks
An annual payment of £27,000 will be given to thousands of workers being made redundant at Britain’s biggest steelworks under the government intervention to reduce the fallout from closure.
As many as 2,800 jobs are to be lost despite the previous government issuing £500m of funding. In return, the company would invest £750m.
The coal-powered furnace currently used to produce steel is being closed and an electric furnace is being built to replace it. Fewer staff will be needed as a result.
The Tata Steel site in Port Talbot is the UK’s single biggest source of CO2 emissions and its closure will reduce the UK’s overall CO2 emissions by around 1.5%.
It is understood most job losses will have happened by Christmas, with the remaining redundancies taking place by March 2025.
What is the government and Tata doing?
A training programme for laid off staff will be offered and funded by Tata. While on the scheme people will be on full pay for the first month and £27,000 annually for 11 following months.
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No funding beyond the original £500m will be advanced by the government and financial penalties will be applied should Tata renege on the agreement and funding can be clawed back, the Department for Business and Trade (DBT) said
The company committed to retaining 5,000 jobs across its UK business. Five hundred staff will be needed to build the electric furnace.
A government streel strategy developed with industry will be published in the new year in an effort to secure the future of the industry in Britain.
The ‘most generous voluntary redundancy package ever’
Minimum redundancy payments of £15,000 pro-rota will be offered plus a payment of £5,000 will be given to redundant workers.
As many as 2,000 staff members expressed interest in voluntary redundancy, the DBT added.
Those who choose redundancy will be paid 2.8 weeks’ pay per year of service, up to a maximum of 25 years.
The package is described by the government as the “most generous voluntary redundancy package ever for a restructure of this size”.
The workers at the heart of it all
Steelworker Cassius Walker-Hunt, 28, is unsure about his future at the plant and set up a coffee shop in Port Talbot as a back-up.
“I set it up because job insecurity was there. It’s been difficult not knowing what’s happening and rumours and job security, the plant shutting down and a lot of knowledge being lost.”
He told Sky News his new venture was going well:
“We’re a couple of months in – it’s been a brilliant turnout…it’s been organic with it all people are just turning up. We just got to keep positive and just hope they’ll be other opportunities in this closure.”
Fifty miles from Port Talbot – Pro Steel Engineering is one of 50 companies taking on workers like Steve Riddoch, who’d worked as a contractor for Tata for the last 10 years.
“I just went out and got in contact with people I’d worked with before or find out where the work was. A lot of the skilled workers hard to match the money they were earning down there.”
He said on top of the job losses, the hit to those working in the supply chain will be far bigger:
“Down to your local cafes and people supplying food – even the newsagents when they get so many of those workers in every day. I think the bigger picture will hit a lot harder than what people think you know.”
Pro Steel Engineering’s managing director, Richard Selby, says keeping a skilled workforce in South Wales is vital:
“It’s vastly important that within Wales we maintain this high skilled manufacturing base. There’s a huge capability here at the moment and if we’re not careful we’ll lose it”.
Reaction
The announcement has been welcomed by unions as Unite’s general secretary Sharon Graham said the move was “vital for local communities and the long-term future of the steel industry”.
“Make no mistake Unite will be holding Tata’s to account to ensure new investment, new lines and new jobs are fully developed,” she said.
“Unite has secured work for nearly all its members, avoiding compulsory redundancies and is in talks with government and Tata to create new jobs,” she added.
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Chancellor: ‘Steel is vital to economy’
A ‘tragic missed opportunity’
Not all union response was as positive.
A statement from the Community and GMB trade unions said the 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,” a statement read.
“Clearly this is not where we wanted to be, and we know that a better plan was available.”
It added: “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.”