British Steel to enter insolvency in major collapse - putting 5,000 jobs directly at risk

By Claire Schofield
Wednesday, 22nd May 2019, 10:58 am
Updated Wednesday, 22nd May 2019, 1:04 pm
British Steel is to enter an insolvency process in a major collapse putting 5,000 jobs at risk (Photo: Shutterstock)
British Steel is to enter an insolvency process in a major collapse putting 5,000 jobs at risk (Photo: Shutterstock)

British Steel is to enter an insolvency process in a major collapse which puts thousands of jobs at risk.

The move comes after rescue talks with the government failed to secure the future of the manufacturer, prompting uncertainty for workers at the company's plants - mainly in Scunthorpe where more than 4,000 are employed.

Seeking financial support

Greybull Capital, owner of British Steel, had been seeking to secure financial support from the Government in a bid to help it address a number of "Brexit-related issues".

Most Popular

    The Government's Official Receiver will now take control of the company as part of the insolvency process, while accountancy firm EY will attempt to find a buyer for the business.

    Roy Rickhuss, 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."

    Not enough to avoid collapse

    British Steel had sought a £75m loan from the government to help it stay afloat, but later reduced its demand to £30m.

    The company had already received a £120m loan to pay an EU emissions bill last month, but it needed further support to avoid collapse.

    Tim Roache, GMB general secretary, said, "This is devastating news for the thousands of workers in Scunthorpe and across the UK.

    "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."

    In response to the Government’s decision not to provide a loan, 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.”