Saturday, 7 Dec 2019

British Steel plunges into insolvency in collapse putting 5,000 jobs at risk

British Steel was plunged into insolvency today in a major collapse that puts thousands of jobs at risk.

Rescue talks with the government broke down in a move the GMB union warned was "devastating for thousands of workers".

The UK's second-biggest steel producer employs 4,500 people mostly in Scunthorpe, and 20,000 more depend on its supply chain.

The government's Official Receiver is set to take control of the company as part of an insolvency process, the BBC reported.

Business Secretary Greg Clark was due to address the Commons urgently this afternoon as he refused calls to nationalise the firm – insisting he could only offer help on a "commercial basis".

Roy Rickhuss, the general secretary of the Community trade union said: "This news will heap more worries on workers and everyone connected with British Steel but it will also end the uncertainty under Greybull's ownership and must be seized as an opportunity to look for an alternative future.

"It is vital now that cool heads prevail and all parties focus on saving the jobs.

"In these very difficult circumstances we know the workforce will continue to fight for the business as they have done for so many years.

"We would urge the management, contractors, suppliers and customers to support them in that fight for the future."

Tim Roache, general secretary of the GMB union, said: "Consecutive UK governments have failed to protect our proud steel heritage, and now this Prime Minister is overseeing its demise.

“Ministers should have been ready to make use of all the options – including nationalisation – in order to save British Steel but they either don’t care or wouldn’t take off their ideological blinkers to save hard working people and communities. 

"GMB demands urgent reassurances on what the future holds for the thousands of British steel workers and their families.”

British Steel is owned by investment firm Greybull Capital, which specialises in trying to turn around distressed businesses.

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The firm paid former owners Tata Steel a nominal £1 in 2016 for the loss-making company.

Unite assistant general secretary Steve Turner 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."

British Steel had asked the government for a £75m loan but later reduced its demand to £30m, a source close to the negotiations told Reuters.

The firm had already received a £120m loan to pay an EU emissions bill last month but needed more money to avoid collapse.

Labour leader Jeremy Corbyn warned: “The collapse of British Steel would be devastating for thousands of jobs in Scunthorpe, as well as in the wider supply chain.

“The Government must act to secure the long term future of the steelworks – protecting people’s livelihoods and the community.”

MP Anna Turley, who represents the Redcar constituency in Teesside where a number of British Steel employees are based, tweeted: "This is absolutely gutting. So many people have given everything to try & make British Steel a success.

"My thoughts are with everyone at the Beam Mill, Skinningrove & Scunthorpe today. Trying to get more info on implications & next steps."

Business Secretary Greg Clark said: “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. 

“We have shown our willingness to act, having already provided the company with a £120 million 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.

“This will be a deeply worrying time for the thousands of dedicated British Steel workers, those in the supply chain and local communities.

"In the days and weeks ahead, I will be working with the Official Receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside.”

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