British Steel and Tata to Protect Jobs Until 2033 in order to Unlock £600m Funding

It has been revealed that the two biggest steelmakers in Britain will need to protect thousands more jobs over the next decade in order to receive a £600m of state funding to support their plans to decarbonize.

Grant Shapps (business secretary) has informed Tata Steel and British Steel that they must guarantee certain numbers of UK jobs up to 2033 under an agreement to receive £300m in government aid.

British Steel employs approximately 4,000 people in its operations. This includes its Scunthorpe steelmaking plant. India’s Tata employs 3,500 workers at its Port Talbot steelworks in south Wales.

Sky News first reported the job protection request. Sources said that the number and type of jobs that needed to be guaranteed had not been determined. They are currently in discussions with officials. In return for taxpayer funding, a six-month moratorium may be imposed on redundancies.

Ministers have been in discussions with the steel companies about their plans to replace large blastfurnaces by electric arc furnaces, to reduce their carbon footprint.

A week ago, it was revealed that Jeremy Hunt, the chancellor of British Steel, is willing to approve a £300m financial assistance package to help reduce its carbon footprint and prevent thousands of job losses. Tata confirmed that it was in negotiations for a similar offer a few days later.

Jingye, a Chinese company, bought British Steel out of liquidation in March 2020. Jingye must commit to investing in British Steel at least £1bn by 2030 and retaining British Steel jobs. Tata will likely need to make an equal commitment.

Talks between steelmakers and ministers drag on for months. Negotiations between the government, British Steel, and British Steel began in October, under the leadership of Jacob Rees Mogg, the former business secretary.

Last month, Shapps and Michael Gove sent a letter to Hunt describing the requirements for any aid package for British Steel. They estimated that the closure of Scunthorpe’s blastfurnaces could cost the region £360m-£640m as well as additional costs to the government in decommissioning other liabilities up to £1bn.

Last summer, Tata had a £1.5bn demand to receive government subsidies. Tata Steel UK (TSUK), which reported its first annual profit since 2009, employs approximately 8,000 people across the country.

For comment, the Department for Business, Energy and Industrial Strategy and Tata Steel were contacted. British Steel declined comment.