British Steel seeks further £75m loan from government to avert collapse

Alex Daniel
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Jeremy Corbyn Visits British Steel Plant In Skinningrove
British Steel employes 5,000 people in the UK and owns a huge plant in Scunthorpe whose future could be put at risk (Source: Getty)

Britain’s second-largest steel manufacturer is looking to Whitehall for a second emergency loan in a matter of weeks.

British Steel today said it has asked the government for a support package, believed to be as much as £75m, citing “Brexit-related issues”. Little over a fortnight ago the company was handed £120m to pay an EU carbon emissions bill, dodging a fine of more than £600m from the bloc.

Ministers are reportedly drawing up contingency plans to deal with the potential collapse of the company, which was saved by private equity firm Greybull Capital in 2016 and recently returned to making profit.

The private equity-owned firm employs around 5,000 people at its Scunthorpe steelworks and various other sites, and supports about 20,000 more jobs indirectly in its supply chain.

A British Steel spokesperson said: “Uncertainties around Brexit are posing challenges for all businesses including British Steel, and we are holding constructive discussions with our stakeholders on how to navigate them.

“Discussions are continuing about a package of additional support to assist the company address broader Brexit-related issues,” they said.

The news was first reported by Sky News.

Last week, the future of Britain’s other major steel maker, Tata, was thrown into doubt after its planned merger with German rival Thyssenkrupp collapsed.

Nic Dakin, Labour MP for Scunthorpe where British Steel’s main plant operates, told City A.M. the firm’s problems have been “created by the mess the government is making of the Brexit process”.

“This is a sound business producing high quality steel. It is being hit by headwinds beyond its control so it is right and proper that the government should be working with the company.”

The government has declined to comment.

GMB national officer Ross Murdoch said: “This government has a track record of sitting on its hands while UK manufacturing collapses round its ears.

“Now is the time to take action.”

British Steel also runs plants in North Yorkshire. Anna Turley, Labour MP for nearby Redcar, said the firm “cannot be allowed to fail”.

But head of research at the Adam Smith Institute Matthew Lesh said such a loan was like “shovelling taxpayer cash into a furnace”.

“The British public should not be forced to subsidise failing, heavily polluting businesses like British Steel,” he said.