The two largest steelmakers in Britain will have to protect thousands of jobs for a decade to unlock a promised £600m in state funding for their plans to decarbonise, it has emerged.
The business secretary, Grant Shapps, has told British Steel and Tata Steel that they must guarantee a certain number of UK jobs until 2033 as part of an agreement to land £300m each in government aid.
British Steel employs about 4,000 people across its operations, which include its steelmaking plant in Scunthorpe, and India’s Tata employs 3,500 people at its vast Port Talbot steelworks in south Wales.
Sources told Sky News, which first reported the job protection demand, that the number of roles that would need to be guaranteed has not been agreed and are subject to further discussions with officials. A six-month moratorium on redundancies may also be stipulated in return for the taxpayer funding.
Ministers are in talks with the two steel firms over their plans to replace huge blastfurnaces with electric arc furnaces to cut their carbon footprint.
It emerged a week ago that the chancellor, Jeremy Hunt, was ready to approve a £300m financial support package for British Steel designed to cut its carbon footprint and avoid thousands of jobs being lost. A few days later it was confirmed that Tata was negotiating over a similar offer.
British Steel was bought out of liquidation in March 2020 by the Chinese group Jingye. It is understood government funding is contingent on Jingye committing to retaining jobs and investing at least £1bn in British Steel by 2030, with Tata expected to be required to make an equivalent commitment.
Talks between the steelmakers and ministers have dragged on for months, with negotiations between the government and British Steel starting in October, led by the then business secretary, Jacob Rees-Mogg.
In a letter to Hunt sent last month laying out the requirements of any aid package for British Steel, Shapps and the levelling up secretary, Michael Gove, estimated that closing both blastfurnaces at Scunthorpe could cost the region £360m to £640m, as well as up to £1bn in extra costs to the government in decommissioning and other liabilities.
Tata made a £1.5bn demand for government subsidies last summer. Tata Steel UK (TSUK) reported its first annual profit since 2009 last financial year and employs about 8,000 people in total across the country.
The Department for Business, Energy and Industrial Strategy and Tata Steel have been contacted for comment. British Steel declined to comment.