Tata Steel has forged an agreement with the UK’s largest steel unions to rescue the Port Talbot steelworks and other sites, throwing a lifeline to 11,000 jobs provided that changes can be made to the British Steel Pension Scheme (BSPS).
Senior union representatives met Tata Steel executives yesterday to hammer out the deal, which will see the Indian conglomerate plough £1bn into the UK’s largest steel plant and the group’s strip products business for 10 years, unions said.
Workers have been offered a jobs pact that includes a commitment to seek to avoid any compulsory redundancies for five years, while the company has agreed to a guaranteed, minimum five-year commitment to keeping two blast furnaces at the site in operation.
Port Talbot had been under threat since Tata announced it would divest its entire UK operation in March.
The company has agreed to a guaranteed, minimum five-year commitment to keeping two blast furnaces at the site in operation and to reinvest in Blast Furnace 5, which requires relining.
The Welsh government also announced an extra £4m to develop skills and training for Tata employees, as well as "significant progress" towards a wider package of support for Tata and its workers.
Koushik Chatterjee, group executive director of Tata Steel, said the agreement marks an “important step forward in the journey to develop a sustainable future for our UK steel business”.
“This news is a step forward, but there is still much to be done. We will continue to fight for a level playing field for our industry; for action on energy costs, on business rates, and on the dumping of foreign steel,” said GMB national officer Dave Hulse.
The MP for Aberavon, where Port Talbot is located, Stephen Kinnock, said: “In principle, today’s news brings to an end almost nine months of uncertainty since Tata Steel announced plans to sell its UK operation, including the Port Talbot steelworks in my Aberavon constituency.
“However, serious questions and concerns remain around the pension scheme, and further detail will clearly be required, before the package is put to an all-member ballot.”
Tata Steel will begin a consultation next week on the closure of BSPS to future accrual, replacing it with a defined contribution scheme, the company said.
However, the scheme’s trustee believes that entry into the Pension Protection Fund, dubbed the pensions lifeboat, remains the most likely outcome for the scheme. This would see payouts reduced.
A Community spokesman said members would be balloted on the future of the pension scheme. “We are fighting hard against it [the pension going to the PPF]. The PPF would be a disaster for existing members and pensioners. Everyone would take an immediate hit of at least 10 per cent and possibly more, and many of the other pension benefits will not appear,” he said.
A spokesperson for the PPF said: “In the event that there is no future employer able to support a scheme, the PPF will work with all parties to find a solution that is in the best interest of our levy payers, including the members of the British Steel scheme.”
Last week Tata entered exclusive negotiations with Liberty House over the sale of several sites in South Yorkshire.
Tata has been in disarray since former chairman Cyrus Mistry was removed from the position last month. Mistry's predecessor Ratan Tata became interim chairman, and has since pushed Mistry off the board of Tata Steel as well.