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.”