British Steel put into insolvency
British Steel has collapsed and been put into liquidation, risking 5,000 jobs and threatening a further 20,000 in the supply chain.
The government’s Official Receiver has now taken control of the company. This collapse follows the failure of talks with the government and Greybull, the company’s owner, which centred around a £30 million potential bail-out. The accountancy firm EY will support the Official Receiver in the role of Special Manager.
The collapse of the company has been linked to a decrease in orders from European customers and the increase in material prices, related to Brexit and the decrease in the value of the pound.
Although the business has been placed into liquidation, they will continue to trade normally while looking for a buyer.
British Steel has around 4,000 employees in the UK, with 3,000 based at its site in Scunthorpe and another 800 located in Teeside and the north-east. At the present time, staff will continue to be employed.
EY, the Special Manager, stated that following a “number of weeks” of negotiations to ensure the funding to avoid insolvency, “these efforts were unable to secure a solution before the company’s funding resources were exhausted.”
Greg Clark, the Business Secretary, said: “The government has worked tirelessly with British Steel, its owner, 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.”
He described the current state of affairs as a “ deeply worrying time” for both employees and communities.
Hannah Essex, the co-executive director of The British Chamber of Commerce, stated that: “Failure to find a buyer would be devastating to many areas which rely so strongly on this industry. Small and medium-size suppliers and contractors must be at the forefront of the Official Receiver’s mind throughout this process.”
The Labour Party and several unions, including GMB and TSSA, have called for British Steel to be nationalised. Rebecca Long Bailey, the shadow business secretary, said “The government must act quickly to save this strategically important industry and the livelihoods and communities of those who work in it, by bringing British Steel into public ownership.”