British Steel collapses, costing thousands of jobs

Lloyd Doyle
May 23, 2019

Greybull bought the company for just £1 from Tata Steel in 2016, rebranding it British Steel.

British Steel is continuing to trade and supply construction industry customers.

SNP MP Marion Fellows said: "The Tories had an opportunity to take action to provide support for the steel industry and to protect the thousands of jobs that are on the line". It is illegal under European Union law for members to offer state aid to companies in case it reduces competition (inset, the decline in United Kingdom steel manufacturing over the years).

Unions warned earlier this year that government's plans to cut global import tariffs on steel to zero would "destroy" jobs in the event of a no-deal Brexit.

British Steel's Scunthorpe plant is pictured at dawn in north Lincolnshire, north east England on May 22, 2019.

Turning a profit in steel is especially hard in Britain, where steelmakers pay some of the highest green taxes and energy costs in the world and are saddled with high labour costs and business rates.

Greybull had been negotiating with the government for the loan, a source said, adding the government wanted Greybull out of the picture before putting more money into the business for fear those funds will eventually end up in Greybull's hands. Last year British Steel won contracts to supply 86,000 tonnes of rail to Italy's Rete Ferroviaria Italiana, and a four-year agreement to supply up to 40,000 tonnes of rail a year to Belgium's Infrabel.

The Official Receiver said British Steel Ltd had been wound up in the High Court and the immediate priority was to continue safe operation of its sites in Scunthorpe and Teesside.

The European Commission said it had not been formally notified of any concrete plans by the United Kingdom authorities to provide additional public finance to the company.

United Kingdom construction and infrastructure would feel the impact if British Steel collapses. This would not only have placed British Steel into an insolvent financial position, but the charge, attached to its operational assets, would have been likely to prevent any new owner from acquiring these assets in the future.

Freddy Khalastchi, business recovery partner at accountancy firm, Menzies LLP said, "This is a devastating development for the United Kingdom steel industry, and it will have a tsunami-like effect, impacting about 5,000 workers and many more across the supply chain".

The government said it had done all it could for the company, including providing a 120 million pound ($152 million) bridging facility to help meet emission trading compliance costs.

With your permission Mr Speaker, I would like to make a statement about British Steel. Greybull originally sought £75m but then agreed to inject more from its own sources.

Business Secretary Greg Clark said: "This will be a deeply worrying time for the thousands of dedicated British Steel workers, those in the supply chain and local communities".

"Greybull could walk out with millions because they secured all their loans against the assets".

The UK government has a chequered history with Greybull, after the collapse of the firm's airline Monarch in 2017 forced the government to repatriate more than 100,000 stranded tourists at a cost of about 60 million pounds.

British Steel has around 5 000 employees, with its main manufacturing site being the integrated steelworks at Scunthorpe.

Other reports by Iphone Fresh

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