Government faces calls to safeguard British Steel jobs as company edges closer to administration
Whitehall officials this morning faced calls to “put their money where their mouth is” by giving British Steel the funding it needs to avoid administration and safeguard tens of thousands of jobs.
Read more: Troubled British Steel braces for insolvency in last-ditch loan talks
Britain’s second-biggest steel maker has for the last week been lobbying the government for a £75m cash injection to help it address “Brexit-related issues”. It remains unclear this morning as to whether the money will be forthcoming, and whether the company will survive the coming days.
British Steel employs around 5,000 people at its Scunthorpe steelworks and various other sites, and supports about 20,000 more jobs indirectly in its supply chain.
National Officer at GMB union Ross Murdoch said this morning: “Given this latest speculation, these are understandably extremely difficult times for our members. Yesterday the government, alongside trade unions and employers, signed a UK Steel Charter at Westminster.
“They must now put their money where their mouth is. GMB calls on the government and Greybull to redouble efforts to save this proud steelworks and the highly skilled jobs.”
It is believed the request for emergency cash now been reduced to £30m, after British Steel’s private equity firm owner Greybull Capital agreed with lenders to supply new funding. But, Sky News reported last night, the firm could still go into administration within 48 hours if it cannot reach a deal with the government by this afternoon. In this scenario, EY has reportedly been lined up as the company’s administrator.
The Department for Business, Energy and Industrial Strategy (Beis) declined to give any indication as to when an announcement will be made. A spokesperson said: “As the business department, we are in regular conversation with a wide range of companies.”
British Steel, EY and Greybull Capital declined requests for comment this morning. Labour has tabled an urgent question to discuss the issue in Parliament this afternoon at 12.30pm.
On Thursday evening British Steel announced it had the backing of its key stakeholders, including lenders, and thanked the government for its support so far.
Ministers are under mounting pressure to find a solution to the problem in the coming days, but may be hesitant to hand over funding given that little over a fortnight ago they gave the firm £120m to pay an EU carbon emissions bill, which helped it dodge a fine of more than £600m from the bloc.
Read more: Ministers mull bailout for struggling British Steel
Brexit is causing difficulties for British Steel because customers deal with longer timeframes than in many industries. This means the ongoing uncertainty over trading conditions with the UK after the October deadline to exit the EU is especially problematic.