Government ministers have been branded “mugs” and accused of falling for Tata Steel’s “empty bluff” to close its Port Talbot plant.

Ministers argue their £500 million rescue package has saved 5,000 direct jobs and thousands more in the supply chain by ensuring Tata continues steelmaking in the town through a greener method using scrap metal.

But Labour MP Stephen Kinnock said they were “spinning this line” about Tata threatening to walk away from South Wales, adding the costs of dismantling and remediating the site were “vast and utterly prohibitive”.

He could be heard shouting “mugs” as business minister Nusrat Ghani rejected the criticism and defended the Government’s position.

Indian conglomerate Tata Steel last week confirmed plans to close the blast furnaces in Port Talbot – its biggest UK plant – with the loss of up to 2,800 jobs in South Wales.

It said continued blast furnace production in Port Talbot was “not feasible or affordable” and the deal with the UK Government would help transition to a more sustainable, greener steel production using electric arc furnaces.

Speaking at business and trade questions, Ms Ghani said the Government’s commitment to the sector is “clear” given it is investing in the Port Talbot site.

She told the Commons: “The option was steelmaking no longer continuing at Port Talbot or the investment that we have provided.”

But Mr Kinnock (Aberavon) said: “So ministers keep spinning this line that Tata Steel was threatening to close down the Port Talbot works and walk away, but they know that that’s an empty bluff because the costs of dismantling and remediating the Port Talbot steelworks were vast and utterly prohibitive.

I think it's extraordinary that the position he's (Mr Kinnock) now putting forward is that it would have been better to risk the loss of absolute steelmaking in the UK then allow the taxpayer to pick up the cost to manage the site

“Against that backdrop let’s be clear, is it the case that there were no strings attached whatsoever to the £500 million of taxpayers’ money that’s been given to Tata Steel and that that £500 million was given by the Prime Minister to Tata Steel along with a green light to make 2,800 steelworkers redundant?”

Ms Ghani replied: “I wouldn’t want steelworkers to think that we aren’t working together, and (Mr Kinnock) and I work together and will be working together on ensuring that steelworkers are protected as much as they can.

“So I think it’s extraordinary that the position he’s now putting forward is that it would have been better to risk the loss of absolute steelmaking in the UK then allow the taxpayer to pick up the cost to manage the site.

“I believe it is far more preferential that we made the largest investment ever in steelmaking to protect over 5,000 jobs at Port Talbot and the 12,500 jobs in the supply chain.”

Commons Speaker Sir Lindsay Hoyle intervened to calm tempers in the chamber, with Mr Kinnock heard saying “mugs” as the minister answered.

The UK Government has committed to invest up to £500 million while Tata will spend £750 million.

Tata said more than £130 million will be spent on measures including redundancy terms, skills retraining and help with job seeking.

Liberal Democrat Christine Jardine (Edinburgh West) said the expansion of wind farms would create a greater demand for the “vital materials” required to build them “which may now need to be sourced from abroad”.

Business Secretary Kemi Badenoch said: “I think it’s really important for us to not misrepresent what is happening around steel.

Our steel industry is not disappearing. Our steel industry is evolving

“Our steel industry is not disappearing. Our steel industry is evolving.

“We will continue to have significant steelmaking capability in the UK.”

She added: “We should also remember that the changes to Port Talbot are part of the decarbonisation that all of the people on the (opposition) side of the House have been asking for.

“This is… the single biggest emitter of carbon in the UK. This House voted to reach net zero by 2050 and everything we are doing is to make sure that we do this in a sustainable and sensible way.”

Conservative MP Martin Vickers (Cleethorpes) asked the Business Secretary to “confirm that it remains the Government’s position to ensure that the UK has the capacity to produce virgin steel here in the UK”.

Ms Badenoch said: “The Government has maintained that we want to make sure that we can keep steelmaking capability in the UK.

“At the moment, we import ore to make steel, so when we talk about virgin steel, many people assume that there are no imports that come into the supply chain. There still are even now. And whatever changes we make will require some imports.

“However, we are making sure that our steelmaking industry is more resilient than ever before.”