After months of rumour, the giant Indian conglomerate Tata has announced a plan for 2,800 job cuts at the UK’s largest remaining steelworks in Port Talbot, the closure of its blast furnaces and, with it, a large chunk of the UK’s capacity to produce its own crude steel. The country risks making the same economic mistakes as it did in the 1980s, when Margaret Thatcher’s government allowed much of our critical industrial capacity to be privatised or offshored – but now we know far more about the environmental risks, too. With the future of mass steel production in Britain and our commitment to net zero at stake, it really is time to make some tough choices.
Do we continue, out of step with much of the global north, surrendering meekly to the ransom notes delivered by the market? Do we give a group such as Tata an effective veto on the survival of an industry that underpins 26.6% of our GDP? Or do we choose another path – one of industrial renewal, and with it, a new framework for our security and self-sufficiency?
In a globalised economy, security is not just a matter of arms and diplomacy, but one of supply chains and pinch points. To keep a country safe, its leaders need to think seriously, not only about securing imports but about the resilience and capacity of domestic production. If this capacity is lost, a trade dispute or international crisis (such as Covid-19) could render us unable to meet demand for vital defence or aerospace applications. Instead, we are seeing a familiar story play out: Tata threatens to quit, a panicked government writes a cheque and we’re asked to swallow more job losses. Under the current proposal, the government is offering £500m to boost the value of the company’s assets, without anything in return: no guarantees on jobs, and no public stake whatsoever.
Inevitably, some on the right have quickly seized on the opportunity to portray the news as Port Talbot being “sacrificed to the altar of net zero”. It’s a lie. Across Europe, other major steelworks are decarbonising, including Tata’s major IJmuiden plant in the Netherlands. But only Port Talbot is doing so with no phased transition and a 40% loss of capacity.
This is how, cut after cut, we’ve reached a position where the UK produces just one sixth as much steel as Germany, with 60% of domestic demand met by imports. And common sense tells us that we shouldn’t rely on any multinational conglomerate to deliver long-term investment in foundation industries. This is about basic private interests. If they can make bigger profits importing steel from India or the Netherlands, they will. That’s the law of the market.
It’s time for politicians to act. We need an active industrial strategy that includes two main elements to secure a just transition to net zero, for the UK’s future and the world’s. First, serious investment to decarbonise and rebuild the Port Talbot plant, which has been run down by decades of underinvestment. Unite’s calculation is that an investment of £3.5bn over eight years is needed. Second, and equally importantly, action to tackle the main source of losses: electricity costs for UK steel producers that are 85% higher than our main European competitors.
Fortunately, Unite’s campaign to stop this act of industrial vandalism is winning results. Tata has now said it is open to investing in an additional direct reduced iron (DRI) facility at Port Talbot. The Labour party, despite needlessly ditching its commitment to serious green investment, has ringfenced £3bn in the next parliament for a green steel fund. It has also told Tata not to make any “irreversible decisions” before the general election. The shadow chancellor, Rachel Reeves, told Radio 4 recently that Britain’s steel industry would be “protected and preserved” under Labour.
So, there are causes for hope. But only determined action can break the spiral of decline. Demand for low-carbon steel is expected to grow. We should be rebuilding domestic production, not continuing to offshore it. And we should be investing in green industrial zones: circular economies linking steel with new renewable energy and manufacturing plants. This vision – a workers’ plan for steel – would not just safeguard existing jobs, but create new, well-paid, unionised jobs to support thriving communities.
These ideas are basic compared with other countries’ plans. Take the Netherlands, where Tata intends to deliver a phased transition at its IJmuiden site – replacing traditional furnaces with DRI as well as electric arc furnace capacity. No immediate shutdown like Port Talbot, but a transition that runs to 2035.
Take Germany, where the government has committed €2bn (£1.7bn) for the first phase of Thyssenkrupp’s green steel plant at Duisburg, plus a further €1bn (£855m) to Salzgitter, Germany’s second-largest steelmaker, to decarbonise its steel production. Again, both these plans keep blast furnaces open in a gradual transition until they are replaced by DRI alternatives.
And while Tata’s plan for Port Talbot devastates the site, at Duisburg, decarbonisation goes together with a boost to production. Germany is also proposing an 80% subsidy of its industrial energy prices, which are already significantly lower than here.
So, this is the picture. The US and major European countries such as Germany, France and the Netherlands invest in the future of their critical industries. In the UK, stuck in the trap of free market ideology, we watch the last of our infrastructure crumble and with it, our industrial security and self-sufficiency.
But what is clear is this. It does not have to be this way. There are other choices available. We just have to have the courage to make them.
Sharon Graham is the general secretary of Unite
