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British Steel on brink of administration, putting 5,000 jobs at risk British Steel on brink of administration, putting 5,000 jobs at risk
(about 5 hours later)
British Steel is on the brink of collapse unless it can secure £30m in emergency funding from the government, putting about 5,000 jobs directly at risk and endangering thousands more in the supply chain.British Steel is on the brink of collapse unless it can secure £30m in emergency funding from the government, putting about 5,000 jobs directly at risk and endangering thousands more in the supply chain.
The UK’s second-largest steel producer is preparing to call in administrators on Wednesday unless the government steps in with a loan on Tuesday. Andrew Stephenson, a junior minister at the Department for Business, Energy and Industrial Strategy (BEIS), refused to give details in parliament on Tuesday of ongoing talks between the government and British Steel. However, he ruled out nationalisation of the company.
British Steel, which is owned by private equity group Greybull Capital, has been scrambling to secure a £75m rescue package to stave off insolvency. Greybull and the company’s lenders have agreed to inject £30m into the company. “Nationalisation is not the solution here. If this business was nationalised the exact same domestic and European law would apply,” Stephenson said.
British Steel is asking the British government for a £30m loan rather than the £75m originally requested. The UK’s second-largest steel producer was preparing to call in administrators on Wednesday unless the government stepped in with a loan. The professional services firm EY has been lined up to search for a buyer.
A spokesperson for the Department for Business, Energy and Industrial Strategy (BEIS) said: “As the business department, we are in regular conversation with a wide range of companies.” BEIS added the government could only act within the law, meaning any financial support to a steel company can only be made on a commercial basis. British Steel, which is owned by the private equity group Greybull Capital, has been scrambling to secure a rescue package to stave off insolvency. Greybull and the company’s lenders have agreed to inject £30m into the company.
British Steel employs about 5,000 people, mostly in Scunthorpe, Lincolnshire, and supports 20,000 more in the supply chain. The Scunthorpe plant is one of two furnace steelworks left in the UK, along with Port Talbot in south Wales. British Steel is asking the British government for a £30m loan rather than the £75m originally requested. The money would be used to cover the company’s need for cash in its ongoing operations.
The company has blamed Brexit for the squeeze on its finances. Union representatives said British Steel had lost 25% of orders at its Scunthorpe plant because of Brexit uncertainty, according to the Conservative MP Caroline Spelman. EU buyers would have to pay tariffs on British Steel’s products if the UK left without a deal.
A BEIS spokesperson said: “As the business department, we are in regular conversation with a wide range of companies.” BEIS added the government could only act within the law, meaning any financial support to a steel company could only be made on a commercially competitive basis.
British Steel employs about 5,000 people, mostly in Scunthorpe, Lincolnshire, and supports 20,000 more in the supply chain. The Scunthorpe plant is one of two blast furnace steelworks left in the UK, along with Port Talbot in south Wales.
Greybull, which specialises in turning around struggling businesses but failed to save Monarch Airlines, paid a nominal £1 to the loss-making company’s previous owner, Tata Steel, in 2016, and renamed it British Steel.Greybull, which specialises in turning around struggling businesses but failed to save Monarch Airlines, paid a nominal £1 to the loss-making company’s previous owner, Tata Steel, in 2016, and renamed it British Steel.
The crisis comes less than a fortnight after the government provided British Steel with an emergency £120m loan to cover a bill from the EU for its carbon dioxide emissions.The crisis comes less than a fortnight after the government provided British Steel with an emergency £120m loan to cover a bill from the EU for its carbon dioxide emissions.
Gill Furniss, the shadow minister for steel, said: “The UK steel industry is critical to our manufacturing base and is strategically important to UK industry. The government must intervene.Gill Furniss, the shadow minister for steel, said: “The UK steel industry is critical to our manufacturing base and is strategically important to UK industry. The government must intervene.
“Administration would be devastating for the thousands of workers and their families who rely on this key industry in a part of the country which has not had enough support and investment from government over decades. Labour will support our steel industry and the communities, jobs and wider industries which rely on this domestic production.”“Administration would be devastating for the thousands of workers and their families who rely on this key industry in a part of the country which has not had enough support and investment from government over decades. Labour will support our steel industry and the communities, jobs and wider industries which rely on this domestic production.”
The Unite union tweeted that it would be “urgently speaking to government ministers”. The Unite union called for the government to nationalise the company.
Steve Turner, Unite’s assistant general secretary, said: “While Unite is in continuing dialogue with British Steel and the UK government, we are very clear that if a deal cannot be struck to secure the long-term future of the steelmaker under private ownership, that the government must bring it under public control in the national interest.
“It is a national asset supporting UK Plc that cannot simply be left to the market.”
Alasdair McDiarmid, the operations director for the union Community, said: “The public should know that if British Steel were liquidated, on top of the devastation of yet more steel communities, the clean-up costs for the industrial sites could end up costing taxpayers hundreds of millions of pounds. Pragmatic decisions in the coming days could avert another industrial disaster”Alasdair McDiarmid, the operations director for the union Community, said: “The public should know that if British Steel were liquidated, on top of the devastation of yet more steel communities, the clean-up costs for the industrial sites could end up costing taxpayers hundreds of millions of pounds. Pragmatic decisions in the coming days could avert another industrial disaster”
Andy McDonald, the shadow transport secretary, tweeted:Andy McDonald, the shadow transport secretary, tweeted:
Deeply worrying. Just when we thought the position had been stabilised we hear this. Hopefully a deal can still be struck. British Steel made it clear to me yesterday that the spectre of a No Deal crash out of the EU is hurting them very badly. https://t.co/wr2CWuk1TKDeeply worrying. Just when we thought the position had been stabilised we hear this. Hopefully a deal can still be struck. British Steel made it clear to me yesterday that the spectre of a No Deal crash out of the EU is hurting them very badly. https://t.co/wr2CWuk1TK
Steel industrySteel industry
Brexit
Labour
Conservatives
Caroline Spelman
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