Industry and Government react to the collapse of British Steel

British Steel was placed into compulsory liquidation yesterday, putting 5,000 jobs at risk and endangering 20,000 in its supply chain.


The company is continuing to trade and supply its customers. The special managers appointed to assist the Government's official receiver are in the process of contacting British Steel's customers to keep them informed about the progress of the liquidation.

Below are comments from Government, the steelworkers’ union and academia.


Business Secretary Greg Clark commented: "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."



UK Steel’s director general, Gareth Stace said: “This news is significant blow for the company, its employees, and the communities across the UK that it supports. British Steel does not sit in isolation but is a critical part of the UK’s wider steel sector, a strategic British industry underpinning a myriad of supply chains.

“Receivership does at least leave options on the table including providing a time to secure a new buyer. All focus now needs to be on securing the future of steel production at the site and avoiding the mistakes seen at Teeside in 2015. We have every confidence that the Government is investigating every available opportunity and pulling out all the stops to ensure a viable solution is found. We stand ready to work with the Government to help it deliver this.”

He continued: “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.


Tim Roache, general secretary of GMB, the steelworkers’ 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.”


Dr Jonathan Owens, supply chain and logistics expert at the University of Salford Business School, commented: “This was a business that was sold by Tata for £1 and rebranded with the old familiar nameplate. However, things have not been plain sailing. They have already been assisted by the government by the way of a bridging loan to the tune of £120 million. They were settling their carbon emissions bill with the EU and these were back dated. However, this new £75 million loan request is a more complex issue as the business is struggling to cope in the competitive market.

“Yes, there is the impact of some European orders that may, or may not materialise due to the Brexit uncertainty, however the weak pound does not help with competitiveness overall.

“So, if British Steel currently cannot cope with this level of pound exchange rate, one would have to ask what strategies are they proposing to put in place to turn this around before parting with £75 million?

“Of course in the immediate term there are 5,000 jobs at risk within the company and approximately 20,000 in the support supply chain and these certainly are giving huge cause for concern. However, if the company cannot be market competitive, then this £75 million loan would perhaps only be delaying the inevitable and we could be looking at administration again in the near future.”

British Steel www.britishsteel.co.uk

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British Steel

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