STEEL MELT DOWN FURY
Jobs in the balance as ministers say British Steel rescue breaks EU law
FURY erupted over the collapse of British Steel last night after ministers refused a bailout and unions blamed an investment firm for the company’s demise.
Tens of thousands of jobs are now hanging in the balance after the Government refused to hand over the £30million needed to keep British Steel going, triggering liquidation.
Business Secretary Greg Clark said a bailout would have been illegal because under EU ‘state aid’ rules, governments can only help companies which are financially viable.
Amid anger and recriminations, the unions demanded an investigation into British Steel’s owner, Greybull Capital, blaming it for a ‘trail of corporate destruction which has wreaked havoc on the lives of working people.’ Workers at the company’s plants now face weeks of uncertainty as efforts are made to rescue the business.
The grim news was given to employees after a week of speculation, with the plant at Scunthorpe most affected, employing more than 4,000 workers. Another 1,000 workers are directly employed by British Steel, while some 20,000 who work for the company’s suppliers could also be hit.
Mr 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.’
He said the Government had already shown its ‘ willingness to act’, having provided British Steel with a £120million bridging loan in April to meet EU emission rules and avoid a steep fine.
He added: ‘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.’
Unite union assistant general secretary Steve Turner said: ‘Greybull cannot be allowed to walk away scot free and must be held to account for its stewardship of Britain’s second largest steelmaker.
‘Unite will press for a full investigation into the financial engineering of Greybull that has left the taxpayer picking up the tab for a
‘Disaster capitalists’
trail of corporate destruction which has wreaked havoc on the lives of working people.’
He said it was important that British Steel was not simply not sold off to ‘disaster capitalists wanting to make a quick buck’.
‘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.’
yesterday one worker drove into the Scunthorpe plant and shouted: ‘Get those Greybull crooks out.’
In the morning, the High Court granted an application by the directors of British Steel to enter an insolvency process. Control of the company passed to the official receiver – an employee of the Insolvency Service – who will run a compulsory liquidation. Accountancy firm Ey has been lined up to assist with the liquidation.
The official receiver, David Chapman, said the company would continue to trade and supply its customers as it tries to find a buyer.
‘I appreciate that this a difficult time for the company’s employees,’ he said. ‘The company in liquidation is continuing to trade and supply customers while I consider options. Staff have been paid and will continue to be employed.’
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 all parties focus on saving the jobs.’A spokesman for Greybull Capital said: ‘Having rescued the business from closure over three years ago, we have worked hard to bring this important company back on its feet. The turnaround was always going to be a challenge, and yet the business overcame many difficul
ties, and until recently looked set for renewed prosperity.’
Greybull’s managing partner Marc Meyohas last night said it had done everything possible to keep British Steel afloat. he told the Financial Times: ‘We took a very challenging and important turnaround when nobody else wanted to. There are a number of reasons why t the turnaround has been very badly blown off course but the main one is Brexit.
‘This is not a UK-oriented business but a european one, and the customer base has lost confidence in our long-term ability to be their supplier because of Brexit.’
A former Royal Navy chief warned t that Britain needed its own independent supply of steel for its military needs. Lord West of Spithead pointed out that warships needed to be replaced and that at times of war foreign supplies could not be guaranteed.
he said in the Lords: ‘This is an absolute strategic defence requirement for our nation to have the ability to produce steel.’