£80m available for Redcar steel workers after government rejects plea for state aid

The government is providing up to £80m to support workers affected by the mothballing of SSI’s steelmaking plant in Redcar but has rejected a request for state aid from the company.

The package includes funding for workers to train at local further education colleges plus finance to assist workers if they want to start up their own business and for local small businesses to create jobs.

According to the department for business, innovation and skills, full details of the package are being worked through and discussed with local stakeholders. The government said it would also consider proposals put forward locally by a taskforce led by Amanda Skelton, chief executive of Redcar and Cleveland Borough Council.

Business secretary Sajid Javid and business minister Anna Soubry will both be attending a meeting of the taskforce in Redcar today.

Javid said: “This is an extremely difficult time for the workforce at SSI and the local community. The package we are announcing today will provide important support to workers and the local economy. Across government we will continue to focus on providing assistance where we can.

“After weeks of discussions the government can also confirm that the company made a last minute and unrealistic request for the taxpayer to make an open-ended funding commitment to maintain the coke ovens in Redcar.

“The government cannot accept the request. On the basis of the limited business case it was given, the government has no confidence that this is a realistic proposal for taxpayers to support. In addition, it would be illegal and in breach of state aid rules. The company has never made a profit and the board’s proposal would do nothing to address the huge debts outstanding to local suppliers and other parties.

“The Thai parent company of SSI UK has also posted on its website that it has entered “rehabilitation” under Thai law. Clearly liquidation in the UK is a risk.

The government will be holding a steel summit on Friday 16 October 2015 where steel companies, MPs, trade unions, plus Welsh and Scottish government representatives will consider solutions to the challenges being faced in the steel industry.

Commenting on today’s announcement, Gareth Stace, director of UK Steel, said: “Government has put this marker down as a sign of intent and it is an important first step in ensuring vital skills are not lost and livelihoods are supported.

“It is for government to decide whether there was a case for using taxpayers’ money and if this wasn’t made for business reasons then we have to accept that.

“However, the much bigger issue is the future of the steel industry in the UK which, make no mistake, is in crisis. The forthcoming summit now assumes ever greater importance and it is critical that the business secretary spearheads a campaign to secure a sustainable future for the sector.”