Around 5,000 direct jobs and thousands more in the supply chain are at risk following the High Court’s decision to wind up British Steel.
The company, which employs 3,000 staff at its Scunthorpe plant and 800 on Teesside and north-east England, has been placed into receivership after rescue talks collapsed between the government and Greybull Capital, which bought Tata Steel’s long products business in 2016 and rebranded it as British Steel.
“The government has worked tirelessly with British Steel, its owner Greybull Capital, and lenders to explore all potential options to secure a solution for British Steel,” said business secretary Greg Clark. “We have shown our willingness to act, having already provided the company with a £120m bridging facility to enable it to meet its emissions trading compliance costs.
“The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made.”
British Steel had sought a further £30m to keep it viable in the face of cheap Chinese imports and a slump in orders attributed to ongoing uncertainties surrounding Brexit, which have been described by a spokesperson from Greybull Capital as ‘insurmountable’.
Commenting on today’s announcement, UK Steel’s director general, Gareth Stace said: “Receivership does at least leave options on the table including providing a time to secure a new buyer.
“Despite the challenges the sector faces at the current time, the outlook for steel demand and consumption in the UK, and across the globe, remains positive. Economies around the world continue to require increasing volumes of steel and UK steel producers will continue to supply high quality products to meet this demand.”
Today’s news prompted Unite, the UK and Ireland’s largest union, to call for the nationalisation of British Steel.
Steve Turner, Unite’s assistant general secretary said: “Despite today’s announcement to place British Steel into official receivership, Unite will continue to engage all parties in the fight to secure the future of the company.
“We are clear that the government must now step up and step in and bring British Steel into public ownership until a buyer can be found to avoid an economic and industrial catastrophe.
“While Greybull cannot be allowed to walk away scot free and must be held to account for its stewardship of Britain’s second largest steelmaker, ministers cannot wash their hands of the Brexit farce and on-going uncertainty that has placed the company in difficulty, nor allow a business of such strategic importance to UK plc to disappear.”
…and this is why some voted for Brexit in the first place. The jobs here are going as they now have a steel plant in France to produce the rails previously made here. The playing field is not level and probably never will be. When our politicians finally get their fingers out and the quicker we get away from the eu the better.
Doubt whether most of our MPs and civil servants even know where Scunthorpe is. However, it is not in London or the SE, so too bad.
With the houses of parliament needing rebuild, it is a good time to move them all to a distant part. Many years ago, parliament relocated to Coventry, why not again? Although I’d prefer to use the centre of gravity of the UK which is 2 miles off-shore in Morcambe Bay.
The wholesale Sell-Off of the UK’s Basic Industrial Industries and Transportation sectors has resulted in Huge sections of the UK’s economy being ravaged for “Profit” with NO Government over sight or control.
The Walleyes in Government and Parliament now need to step-up and re-establish the Steel industry before “Brexit” really hits home and tens of thousands are out of a JOB and many towns/cities lose Taxes, closing of local businesses, and the Government has to hand-out and give these folks “Dole Money” to survive.
Also make “Greybull Capital” liable for their “Greed” in not being Financially responsible from day-ONE. Make them hand back any Profits they made or took to keep the Financial/Wall St people Satisfied, instead of the British Steel Plants running [just make a lower profit]!
The whole Economy will suffer otherwise and will take years to recover on top of Brexit!
Am I right in believing that an EU rule demands that our government is not allowed by help businesses in difficulties………..
Maybe Mr Branson would like to donate a few pennies to a very British business to at least keep it here and supplying top grade products to the world.
Greybull are a business that make cash out of declining companies, so this shouldn’t be a suprise. They persuaded the workers to take a pay & pension cut and walked away with a decent profit in the first two years.
While the top producers of steel are the usual suspects of China, India, USA and so on, the fact that Germany, Italy, France, Spain, Poland and Belguim all produce more steel than the UK should indicate that the problem is firmly on our own shores.
As someone that lives in scunthorpe i hope that a buyer is found that genuinely intends to drive the company forward, either that or help is given to the workers to find work in local SME’s.
The BBC apparrently quoted that 70% of carillion workers were found alternative jobs whilst in receivership, couldn’t hope for much better
Last night, I found myself reeling from this sad intrigue, the bitter dregs that perfidious Albion sups from the bottom of its barrel. So upset was I that I stayed up reprehensibly late watching old clips of Heartbeat on a popular streaming service to remind myself when British Steel was Great British Steel and Britain was the Greatest of Britains.
Let me give you an example of how far our nation has sunk. A couple of years ago I purchased some cheap Chinese cutlery that quickly rusted over. In my rage, I half-imagined that I saw the image of Vince Cable, one of the arbiters of our national decline, in the rust of my table knife.
Imagine a different future: British Steel knives that could double as bayonets in an emergency and if perchance they do rust the image only resolves itself as that of a true British hero (Churchill, Nigel Farage, that bloke off Homes Under The Hammer).
This is a sad time; these are sad days. British Steel is no more. We only have Judas Priest to remind us.
The thing is, is it cheaper to pay all of those people on the dole approx. 1.4 million pounds per week or keep them working. Also the main problems with lots of these companies is lack of investment over the last 30 years. The plants are inefficient and old. Plus the people who run them are after lots of money for themselves and nothing for the workers who suffer lost pension contribution and other benefits. Tata steel was a prime example of that!
I’ve never quite bought into Ricardo’s theory of comparative advantage . In my naivety (as a non economist) I just do not accept that ‘free trade’ is in fact always mutually advantageous (in spite of what i think the respected Tim Harpford (R4’s More or Less) said – nor that the induced ‘domestic specialisation’ is desirable as optimal ( it does not last long, obviously) or that it is that ‘free’ – For one thing I feel that this assumes moral equivalence between the parties and that the desirable asset one requires will always be available at a price – the problem is at what price ! The UK, the birthplace of the industrial revolution – has been losing historic skillsets and capabilities which are still required at a fundamentally strategic level. It does matter who owns the assets as these provide leverage under duress. Political and social cohesion requires more than just simple ‘economic efficiency’ considerations. Maintaining resilience in capability for surviveability costs – it is true in hardy biological systems and I believe its true generally. I hope the relevance of all this to the article is not too obtuse.
Yes you are, EU anti competition legislation prevents this, and Grey bull also sold off the carbon emissions permits so they cannot produce steel without breaching EU environmental legislation.
There are also other problems, EU legislation prevents the industry having subsidised energy and they simply ignore this for Germany, there is an oversupply of steel in Europe and this is exacerbated by an overproduction from China which is flooding the European market.
Finally; we dont make anything in the UK anymore and the demand for steel locally has dropped substantially due to the EU closing coal mining, very little car manufacturing, no lorry making, and the host of secondary industries supplying these industries have closed due to little or no demand.
It is a great shame that uncertainty over Brexit is cited as one of the reasons for this situation. If our inept politicians had pulled their fingers out then we would be clear of that European bureaucratic mess by now, there would be no Brexit uncertainty and we would be free of European rules telling us how much of our money we can invest in our own industries.
However, Unite must be a very rich union. If it was really supportive of its members and has long term confidence in British Steel then why don’t they underwrite a £30m loan?
“Should aid be granted to firms in difficulty”
“A study on counterfactual scenarios to restructuring state aid – Study” Dated 2009. Between 1995 and 2003 state aid was allowed in 86 cases (10 EU states), some of which were in the cases of downstream companies being adversely affected by closure. This 189 page document showed that state aid is possible with 77% of cases surviving at least five years following the aid. This document shows that aid can be given in certain circumstances. My view is that if there is a will there is a way and it needs someone who knows their way around the legislation (certainly not me) to explore what is possible.
You mean like a lawyer or patent agent? A manipulator of words, not metal. equations or process?
Good luck! It was these ******** who precipitated the problem in the first place