All-round cheer for Tata Steel’s deal with UK unions

Unions and politicians have welcomed a deal under which Tata Steel is set to derisk its pension liabilities and is committed to securing jobs at its Port Talbot plant in Wales at least until 2021, with plans to invest for a further five years.

Questions over the precise future of the plant and its 4,000 employees had hung over the company since Tata Steel stalled plans to sell the plant and began potential merger discussions with German steel producer ThyssenKrupp over its existing European assets.

“This is good news that secures the future of steel making at Port Talbot for at least 10 years,” said Carwyn Jones, the First Minister of Wales, on Thursday.

“They are a company that listened very carefully to the case we made. Earlier this year I was very pessimistic about what the future might hold for steel making. This agreement was achieved by a lot of hard work by everyone involved.”

Roy Rickhuss, general secretary of the Community Union, said: “This proposal would secure jobs for years to come and brings serious investment not just to Port Talbot but also to steel works across the UK.”

The union said that it was a “significant shift” from Tata Steel’s opening offer, which didn’t include any commitments regarding jobs and Port Talbot’s two blast furnaces.

Under the agreement, Tata Steel has agreed to keep both blast furnaces at the site open for at least five years, and will invest £1 billion over a 10-year period to support steel making, and it will avoid making compulsory redundancies for the next five years, similar to one reached with workers in the Netherlands.

Crucially, the company has launched a consultation on replacing its defined benefit British Steel Pension Scheme with a defined contribution scheme, with maximum contributions from the company of 10 per cent and employees of 6 per cent.

That shift had been considered previously but did not take place after unions and the company agreed on changes to the terms of the existing scheme last year. Union members are due to be balloted on the latest proposals regarding the scheme in the New Year.

“This is not the end of the process and it will be for all our members to now vote on this proposal,” said Rickhuss.

Tony Brady of Unite the Union welcomed the “step in the right direction” but called for more steps from the government, specifically an industrial strategy, and a pledge that they would “hold Tata to their word”.

Koushik Chatterjee, Group Executive Director of Tata Steel and Executive Director for European business, said the changes would create a “sustainable” future for British steel in unprecedented times for the industry, while the changes to the pension arrangements would help derisk the company and achieve long-term sustainability.

“The delivery of Tata Steel UK’s transformation plan and generation of free cash flows will be the key enabler for the future sustainability of the business and we are very encouraged by early signs of the delivery of the plan.”

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