A deal with Tata Steel to secure the future of steelmaking in the UK appears to be one of the top priorities of the new Labour government.

The Labour party leader and British Prime Minister, Keir Starmer, and new business secretary Jonathan Reynolds are understood to have already discussed the matter with senior Tata Steel officials within a week of forming the government.

Starmer visited Wales, where Port Talbot is located, soon after winning the election and met representatives there. Reynolds also held discussions with all the major trade unions, Community, Unite and GMB.

Tata Steel had reached an understanding with the previous Conservative government, led by Rishi Sunak, in September 2023 to resuscitate the loss-making UK operations.

As part of the plan, Tata Steel is closing down coal fired and polluting blast furnaces in Port Talbot and readying plans to build an electric arc furnace of 3 million tonne capacity.

While Tata Steel will bring in £725 million (₹7,800 crore), the Conservatives had promised £500 million (₹5,400 crore) in grants.

However, the grant funding agreement between Tata and the Conservative government could not be signed as Sunak called a snap election on July 4.

In the run up to the polls, the Labour leaders blasted the Conservative party for a bad deal in which millions of government money would be spent despite losing thousands of jobs.

As part of the transition to EAF, 2,800 jobs will disappear but Tata insisted it would secure 5,500 jobs for the future. The Labour party has committed itself to spend £3 billion to support the UK steel industry. However, a bigger commitment from the government must translate into fewer job losses.

It appears that Labour may seek to extract additional financial commitments for future investment from Tata Steel, which may call for some additional manpower.

The challenge for the government and the company would be to find a way to reduce job loss in the interim period. The EAF will not be built before 2027 while the blast furnace operations at Port Talbot will cease operations in September 2024.

“There’s no doubt that time is running short, and we call on Tata to engage urgently in meaningful discussions with the government to unlock greater investment and protect jobs. The uncertainty must come to an end, and our members need and deserve to know what their future holds,” Roy Rickhuss, general-secretary of Community Union, said after meeting business secretary Reynolds on Wednesday.

Emphasising that the new Labour government has made securing the future of Port Talbot and downstream sites a top priority, Rickhuss said the draft memorandum of understanding between the unions and Tata management would now form the basis of the ongoing discussion with Tata Steel.

Unite union, which had called a strike at Port Talbot before withdrawing it, described the meeting with Reynolds as ‘extremely positive.’

“The commitment given to achieving a sustainable, profitable UK steel industry is very welcome and as was said this morning, decarbonisation must not mean deindustrialisation,” Unite general secretary Sharon Graham, said.